Chapter 1: The Study of

cottonseedfearnotΗλεκτρονική - Συσκευές

7 Νοε 2013 (πριν από 4 χρόνια και 6 μέρες)

67 εμφανίσεις

Chapter 1: The Study of
Accounting Information
Systems

Slides Authored by

Somnath Bhattacharya, Ph.D.

Florida Atlantic University

What Is Accounting?


It is the principal way of organizing and reporting
financial information. It has been called the
“language of business.”


Accounting and information systems comprise
the functional area of business responsible for
providing information to the other areas to
enable them to do their jobs and for reporting the
results to interested parties.


To that end, an accounting system is used to
identify, analyze, measure, record, summarize,
and communicate relevant economic information
to interested parties.

What Is An AIS?


A system is a set of two or more
interrelated components that interact to
achieve a goal.


Systems are almost always composed of
smaller subsystems, each performing a
specific function supportive of the larger
system.


An accounting information system (AIS)
consists of:


People


Procedures


Data


Software


Information technology infrastructure

What Is An AIS?


What important functions does the
AIS perform in an organization?

1
It collects and stores data about
activities and transactions.

2
It processes data into information
that is useful for making decisions.

3
It provides adequate controls to
safeguard the organization’s assets.

Why Study AIS?


To understand how the accounting
system works.


How to collect data about an organization’s
activities and transactions


How to transform that data into information
that management can use to run the
organization


How to ensure the availability, reliability,
and accuracy of that information


Why Study AIS?


Auditors need to understand the
systems that are used to produce a
company’s financial statements.


Tax professionals need to
understand enough about the
client’s AIS to be confident that the
information used for tax planning
and compliance work is complete
and accurate.

What Is a System?


A

System
is an entity consisting of interacting
parts that are coordinated to achieve one or more
common objectives. Systems must possess


Organization:


Transactions
-
Journals
-
Ledgers
-
Financial Statements


Interrelationships:


The relationship between Subsidiary ledgers and the
General Ledger


Integration:


Individual transactions to Financial Statements


Central Objectives:


Financial Reports, Budgets, Management Reports


Data

are raw facts and figures
that are processed to produce
information


Information

is data that have
been processed and are
meaningful and useful to users.
The terms “meaningful” and
“useful” are value
-
laden terms and
usually subsume other qualities
such as timeliness, relevance,
reliability, consistency,
comparability, etc.

Data Versus Information

Functional Steps in Transforming
Data into Information


Data collection
-

capturing, recording,
validating and editing data for
completeness and accuracy


Data Maintenance/Processing
-

classifying, sorting, calculating data


Data Management
-

storing, maintaining
and retrieving data


Data Control
-

safeguarding and securing
data and ensuring the accuracy and
completeness of the same


Information Generation
-

interpreting,
reporting, and communicating information

What Is an Information
System?


An
Information system
is a framework in which
data is collected, processed, controlled and managed
through stages in order to provide information to
users


It evolves over time and becomes more formalized as
a firm grows and becomes more complex. It can be
a manual or computerized system


Firms depend on information systems in order to
survive and stay competitive

The Universal Data Processing
Model

Processing

Storage

Consumers

Exchange Events

Internal Events

Environmental Events

}

Accounting Information
System


An
Accounting Information
System
is a unified structure that
employs physical resources and
components to transform economic
data

into accounting
information
for external and internal users.

Objectives and Users of AIS


Support day
-
to
-
day operations


Transaction processing


Support Internal Decision
-
Making


Trend Analyses


Quantitative & Qualitative Data


Non
-
transactional sources


Help fulfill Stewardship Role

Resources Required for an AIS


Processor(s):

Manual or Computerized


Data Base(s):

Data Repositories


Procedures:

Manual or

Computerized


Input/Output Devices


Miscellaneous Resources

AIS


Sales/

Marketing


Personnel

Production

Info

Finance

AIS as an MIS Subsystem

Relationship of AIS & MIS

Sales/Marketing

Production

AIS

Personnel

MIS

Finance

Order entry/Sales

Billing/A.Rec./Cash receipts

Production

General ledger

Payroll

Inventory

Purchasing/A. Pay./Cash disb.

Reasons for Studying
Accounting Information Systems


Career accountants will be users, auditors, and
developers of AIS


Modern
-
day AIS are complex because of new
technologies


Concepts studied in AIS are integrated into
every other accounting course

Information
-
Oriented
Professionals


An array of professionally trained persons
from different fields of study have focused on
providing information to users


These professionals include
system

and
managerial accountants

and
auditors
,
system analysts

and
industrial engineers


Professional certifications are increasing.
These include
Certified Computing
Professional
,
Certified Information
Systems Auditor
,
Certified Managerial
Accountant
,
Certified Fraud Examiner
,
etc.

The Business Environment
and the AIS

The Business Firm as a System





Business

Firm

Environment

of the Firm

Organization’s

functions

AIS Transaction

Cycles

Business Events

from Operations

Organization

Information

System

Operational

System

Figure 2
-
1

System Characteristics of
Business Firms


Objectives


Environment


Constraints


Input
-
Process
-
Output


Feedback


Controls


Subsystems

Examples of AIS Subsystems

(Merchandising)

No Planning/Control, Investment, or Production Cycles reflected here

Inventory

System

General

Ledger

System

Order entry

Sales

System

Billing
/

A
.
Receivable

Cash

Receipts

System

Purchasing
/

A.

Payable
/

Cash

Disb
.

System

Human

Resource

Management

(
Payroll
)

System

Revenue

Cycle

Expenditure

Cycle

Shipping

Receiving

Ext/Fin. reporting

Tax & req. reporting

Internal reporting

Examples of AIS
Subsystems:
Service Firm Revenue

General

Ledger

System

Human

resource

Management

System

(
payroll
)

Service firm Revenue Cycle

Billing
/

A
.
Receivables

Cash

Receipts

System

No Purchasing, Production, Planning/Control, Investment Cycles

reflected here

Examples of AIS
Subsystems:
Production Cycle

Inventory

System

Human

Resource

Management

(
Payroll

System

General

Ledger

System

Purchasing
/

A
.

Payable
/

Cash

Disb
.

System

Production

System

Production Cycle

No Revenue, and Investment Cycles reflected here

Organizational Structure in
Business Firms


Hierarchical


Matrix: Blend functional and project
-
oriented structures


Decentralized


Network

A Networked
Organizational Structure

Consultant

Training

Marketing

Consulting

Services

Consultant

Recruitment

Operation

Management

Customer

Project

Team

Customer

Services

Management

Figure 2
-
5

The Operational System of
a Manufacturing Firm

Facilities

Labor

(human

services)

Data

Funds

Acquiring

Materials

Producing

Finished

Goods

Storing

Finished

Goods

Shipping

Finished

Goods

Goods

to

Customer

Supporting

Operations

AIS

Information

Funds

Material

from

Supplier

Manufacturing Firm

Data and information flow

Physical flows

Figure 2
-
7

Useful Data Elements
Concerning a Business Event


The nature of the element and when it
occurred


Which “agents” were involved


What kinds of resources were involved
and in what quantities


Where the event took place

Data Management:

Some Specifics

Field 1
Field 2
Field 3
Field 1
Field 2
Field 3
Field 1
Field 2
Field 3
Records

{

File

Some More Specifics


The manual activity of journalizing transactions is
equivalent to the computerized recording of
transactions in a transaction file


In general, manual accounting journals are
equivalent to computerized transaction files


Similarly, manual general ledger and subsidiary
ledgers are equivalent to computerized Master
files. e.g., There is typically 1 record in the
general ledger for each account in an entity’s
chart of accounts


Examples of Master files include:


Accounts Receivable Master File


Accounts Payable Master File


Inventory Master File


AIS Enhancements Through
Information Technology and
Networks

Importance of IT and Computer
Networks to Accountants


To use, evaluate, and develop a modern
AIS, accountants must be familiar with IT


Computers enable accountants to perform
their duties more quickly, accurately, and
consistently than by manual methods


Software such as electronic spreadsheets
aid accountants in analyzing financial
statements and in developing budgets

IT Components of Interest
to Accountants


Devices for data entry


Data Processing


Data Communication


Information Generation


Data Bases


Data Modeling concepts


Evaluation of internal controls in AIS


Variety of software packages


Computer Networks

Networks & Accountants


Because they
transmit data and information
,
networks are an integral part of AIS


Networks are
vulnerable to high level risk

thus
requiring
special controls and security
measures
.


Need to prevent loss of accounting records &
information


Need to ensure accuracy of data


Networks may be used to
consolidate data

into
financial information

Gains from IT for Accountants


Faster processing

of transactions and other data


Greater accuracy

in computations of and
comparisons with data


Lower cost

of processing each transaction


More timely

preparation of reports and other
outputs


More concise

storage of data, with
greater
accessibility

when needed


Wider range of choices

for entering data and
providing outputs


Higher productivity

for employees and managers,
who learn to use computers effectively in their
routine and decision
-
making responsibilities

Task Matching to Computers


Manual


Exceptional/infrequent
transactions


Setting objectives and policy
-
making judgments


New problems


Supervising employees


Social communications


Making complex strategic
decisions


Computerized


Collecting and processing large
volumes of routine
transactions


Storing large quantities of data
and information


Monitoring and controlling
continuous processes


Answering specific inquiries
based on stored data


Preparing complex analyses
and extensive reports


Helping gather data and
understanding the
relationships between all types
of decisions

Figure 3
-
1

Limitations of Infoage’s
Legacy AIS


Large portion of personnel time and effort spent
on systems maintenance


Little time & effort for value
-
added services


Little flexibility to changing business conditions


Financial and Operational data not integrated


Difficult to generate data with both financial and non
-
financial
components


The transaction processing systems focus on
chart of accounts classification


Ignore the multidimensional aspects of transactions


Files related to applications are not integrated


Inefficiencies of the manual system remodeled in
automated form


Business processes and accounting procedures not analyzed and
improved upon prior to conversion to automated form


System not geared to generate timely decision
-
support information


Computer programmers required to write new programs for ad hoc
queries

Types of Network
Architectures


Wide
-
Area Networks


Formed among computers and inter
-
connected devices that are
geographically
distant

from one another


Local
-
Area Networks


A type of distributed network created when
two or more linked computers are grouped
within a
limited geographical area

Centralized WANs
-

I


Concentrates

all application processing at
one
geographical location


Consists essentially of
one (or a cluster of) central
mainframe computer(s)

and one or more physically
remote terminals


Typically all hardware, software, and data processing
personnel are located at corporate headquarters


Advantages include:



the
concentrated computing power

of a large processor


low operating costs per transaction

leading to
economies of
scale


can facilitate the
use of a database approach


facilitate
better security provisions


allow for greater
standardization

and
professional planning

and
control of information
-
related activities

Centralized WANs
-

II


Best suited for


Firms with centralized organizational structures


Firms with homogeneous operations


Firms with low processing activity at remote sites


Examples include


Savings and loan institutions


Banks with many ATMs and branches


Merchandizing chains


Motels


Airlines


Drawbacks include


Inflexibility


Expensive and complicated software needed


Vulnerable to disasters as a result of complete dependence on
central computer


Not user
-
friendly

Distributed WANs
-

I


This links fully functional computers in
different
geographical locations
.


Each remote site processes its own applications.
However, users
may not have easy access

to
centralized data or be able to transmit data and
information rapidly.


Computers may be
interconnected by data
communications hardware and software

to other
remote sites and to a central computer facility
to form an
“enterprise
-
wide”

network
.

Distributed WANs
-

II


Distributed databases

are useful when:


Large volumes of data

need to be processed at
remote locations


Managers and employees need very
fast access to data

on a
frequent basis


Databases may be distributed by replication or partition.


Replication: Copies of files from the main data base are stored
at
remote locations


Partition: Segments of files are allocated to various
locations
within the network


This avoids data redundancy, but increases the complexity of
transmitting data throughout the network


Likely to become the dominant approach as technology improves


At present most data bases are a hybrid of the two approaches

Benefits of Distributed
WANs


Can be
responsive to diverse needs

of users


Enable network facilities to be used efficiently
since processing
jobs can be routed to unused
computer systems

in the network


Are
robust against individual computer failures


Flexible
and
adaptable

to change


Best suited for firms with:


Decentralized organizational structures


Diverse operations or user groups


Clustered functions at various locations


Multiple products


Manufacturing operations


A variety of services


Drawbacks of Distributed
WANs


Difficulty

in maintaining
adequate control and
security


Each distributed processing location needs its own
set of controls and security measures


Given the smallness of each location,
organizational independence is not easily
achieved


Managers may
sacrifice control and security

for
greater productivity


Difficulty and cost of coordinating

the relatively
independent and sometimes incompatible
computer systems


Added costs for multiple computers, other system
components, and communication services

LANs


A LAN may be connected to other LANs
and/or WANs via hardware devices known
as
gateways
or
bridges


At the heart of a LAN is the
workstation


Microcomputer
-
based

workstation


Traditional

workstation


Super

workstation

Peer
-
to
-
Peer LANs


In smaller LANs, every workstation

functions as both a

client

and a
server


This allows all users to
share data

and files on
all workstations


Called
peer
-
to
-
peer network

since
no
workstations are dedicated to perform only
server functions


Compared to a server network, peer
-
to
-
peer
networks are
less costly, easier to install
, and
compare well against server networks of
similar size


Number

expected to
significantly increase

in
the near future

Server Networks


May
interconnect hundreds of workstations


More
difficult to manage

and interpret than peer
-
to
-
peer
networks


Provide
greater security

than peer
-
to
-
peer networks


At least
one workstation is dedicated

to performing
specific server tasks


Examples include:


Servers


Database servers


Print servers


Communications servers


Transaction processing servers


Large server

networks often contain
multiple servers

The Network Operating
System


In peer
-
to
-
peer networks, the
Network Operating
Software (NOS)

is installed in each user workstation


In a server network, most of the NOS is installed in the
file server and a portion also resides in each workstation


To run centralized LAN applications, the NOS installed in
the file server interacts with the NOS and the local
operating system installed in the workstation. The client
workstation NOS initiates a request to the file server
NOS to load files and programs into the client
workstation’s RAM


In a peer
-
to
-
peer network, a client NOS initiates a
request to another client NOS, which also functions as a
server, to load the requested files and/or programs into
RAM

More Networks


Examples of pre
-
developed network
configurations resident in Network Interface
Cards include:
Ethernet, Token Ring
, and
ARC
-
net


The
International Standards Organization

has
issued the
Open Systems Interconnection (OSI)

model


Open Systems Architecture


Seamless exchange of data
, files, and software
between LANs and WANs built with multiple vendors’
hardware, software, and networking components

Client/Server Networks


This model
splits data processing

between
a user workstation

(client) and one or
more
servers


Majority of servers are
dedicated
database servers
, thereby enabling client
to share data and files, conduct database
searches, and update the database


One of the
fastest growing

segments of
IT

Cooperative Client/

Server Computing


Most commonly implemented mode

of
client/server architecture


Facilitates the
optimal sharing of
computer resources

since the client(s) and
server(s) jointly process the data


Clients typically employ
Graphical User
Interfaces (GUIs)


Data
-
processing
locale

is
transparent

to
the user

Network Topologies


The
STAR

and
RING

topologies apply to
both
distributed WANs and LANs


The
BUS

topology applies only to
LANs


All three found in client/server networks


All three may be combined to form
hybrid
configurations

The STAR Configuration

Figure 3
-
3a

The RING Configuration

Figure 3
-
3b

The BUS Configuration

Figure 3
-
3c

Enterprise
-
wide Processing
and Data Systems


Enterprise
-
wide on
-
line transaction processing systems

collect and process mission
-
critical accounting and
operational applications


Enterprise Resource Planning Systems (ERP)

such as
SAP R/3

overcome the limitations of legacy applications


Firms typically develop two types of
On
-
line Analytical
Processing (OLAP) systems

that supplement ERP or
legacy systems


A firm can model the relevant aspects of business events
contained within the business processes allowing for the use of
relational database
-
related query language commands


Firms can create a
data mart or data warehouse

to generate
predefined reports for executives and other managers

Data Marts and Data
Warehouses


Both
Data Marts and Data Warehouses

organize and
store copies of
“informational”

or decision support data


A
Data Mart

stores copies of
decision support data

in a
data base for a portion of a company


A
Data Warehouse

stores copies of decision support
data in an
integrated data base

for an
entire enterprise


As opposed to
applications
-
oriented data in legacy
systems
, data in a data mart or warehouse are stored
by
subject areas (e.g., customers)


Data may be stored in both summarized or
“raw”

form


Both have
“drill down”

and
“data mining”

features

Specialized Inter
-
organizational
Systems/Networks


Internet Commerce and Electronic Commerce


Point
-
of
-
Sale Systems/Networks


Electronic Funds Transfer (EFT) Systems


Electronic Data Interchange (EDI) Systems


Value Added Networks (VANs)


The Internet (TCP/IP)


The World Wide Web (WWW)


Hypertext information retrieval system


Intranets


Extranets