Accounting

Information Systems
OLFU

Mon 10:20 – 12:20PM – LEC

Wed 10:20 – 1:20PM – LAB

 Accounting
Information Systems
20XX 2
Organizational
Structure
The distribution of responsibility, authority and
accountability throughout the organization.
Operating Segments
➢ To promote internal efficiencies through the specialization of labor and cost-effective resource
allocations. Managers within a segment can focus their attention on narrow areas of responsibility
to achieve higher levels of operating efficiency.

3 Methods of Business Segmentation

1) Geographic Location

2) Product Line – creating separate divisions for each diverse products

3) Business Function – most common method of segmentation. It divides the organization into
areas of specialized responsibility based on tasks (e.g. Production / Marketing / Operations /
Finance)
The Flow of Responsibility, Authority and Accountability

President

VP Human
VP Marketing VP Production VP Finance
Resources

Manager Manager Manager

Plant 1 Plant 2 Plant 3

Unit 1 Unit 2 Unit 3

Manager Manager Manager
Relationship between Functional Segments and Resources

R E S O U R C E S

Financial
Materials Labor Information
Capital

Human Information
Inventory
Resources (HR) Finance Dept. Technology
Management
Dept. Dept. (IT)

Production
Dept.

Marketing Dept.
Materials
Management
➢ To plan and control the materials inventory of the company.
➢ A manufacturing firm must have sufficient inventories on hand to
meet its production needs and yet avoid excessive inventory levels.

3 Functions under Materials Management

1) Purchasing
- Responsible for ordering inventory from vendors when
inventory levels fall to their reorder points.
2) Receiving
- Accepting the inventory previously ordered by
Purchasing.
- Counting and checking the physical condition of items
received before issuance to production floor.
3) Stores or Warehousing
- Physical custody of the inventory received and
releases these resources into the Production floor when
required.
Production
Raw materials, labor and
plant assets are used to
create finished products.

2 Classes
1) Primary Manufacturing
activities
2) Production Support
Activities
 Production
Raw materials, labor and plant assets
are used to create finished products.

2 Classes

1) Primary Manufacturing activities

- Assemble raw materials into finished products

2) Production Support Activities

2.a. Production Planning
2.b. Quality Control
2.c. Maintenance
Functional Areas
Business
Organization

Materials Human
Production Marketing Distribution Finance Accounting IT Services
Management Resources

Inventory
Portfolio Control Data
Purchasing Manufacturing Promotion Warehouse Recruiting Management Processing

Cost
Accounting
System
Receiving Support Advertising Shipping Training Treasury Development
and Maintenance
Payroll

Market Accounts Database

Stores Benefits Credit
Research Payable Administration

Accounts
Cash Receivable
Sales Counseling Disbursement

Fixed Assets General Ledger

Cash Receipts
 Distribution
➢ getting the product to the customer
after sale.

➢ Excessive delays between taking

orders, incorrect shipments or damaged
merchandise can result to customer
dissatisfaction and lost sales.
Information Value
➢ The value of information to a user is determined by its reliability.

➢ Information must possess the following:

a) Relevance
b) Accuracy
c) Completeness
d) Summarization
e) Timeliness
*** When these attributes are consistently present, information has
reliability and provides value to the user.

Unreliable information has no value and just a waste of resources.

Segregation of Accounting Duties
➢ Separating incompatible duties to avoid having the same person record, monitor
and control possession of company assets.

Authorization – approving
Safekeeping – custody of assets
Recordkeeping – keeping track of the asset or liability
 IT Function
Centralized Data Distributed Data
Processing Processing

All data processing is performed by

Data processing is distributed to
one large computer housed at a
business segments
central site

Reorganizing the IT function into small

information processing units (IPUs) that
are distributed to end users and placed
under their control.
 Centralized Data Processing
➢ IT activities are consolidated and managed as a shared organization resource.

➢ End users compete for these resources on the basis of need.

IT Areas of Operation:

1. Database Administration
2. Data Processing
3. Systems Development and Maintenance
Database Administration
➢ Under shared data arrangement, the Database administrator is responsible for the security and
integrity of the database.

Production Sales

IT
Services

Marketing
Finance
Centralized Data Processing

Production Sales

IT Services

Finance Human Resources

IT Function in a Centralized System

Business Organization

Marketing Human
I.T. Finance
Resources

Systems Database Data

Development Administration Processing

New Systems Systems Data Computer

Data Control Data Library
Development Maintenance Conversion Operations
Data Processing
➢ Manages the computer resources used to perform the daily processing of
transactions.

Functions under Data Processing:

1) Data Control
▪ Receiving batches of transaction documents for processing from end users and then
distributing computer output (reports) back to the users.
2) Data Conversion
▪ Transcribes transaction data from source (paper) documents to digital media (tape or disk)
suitable for computer processing by the central computer which is managed by computer
operations group.
3) Computer Operations

4) Data Library
▪ Room adjacent to the computer center that provides safe storage for the offline data files
such as magnetic tapes and removable disk packs.
▪ Data Librarian is responsible for the receipt, storage, retrieval and custody of data files
control access to the library.
Systems Development and Maintenance
1) Systems Development
➢ Responsible for analyzing user needs and for designing new systems to satisfy those
needs.
2) Systems Maintenance
➢ Takes place after the successful system development.

Participants in system development

1. Systems Professionals
--- system analysts, database designers and programmers who design and build the system.
--- Gather facts about the user’s problem, analyze the facts, and formulate a solution. The product
of their efforts is a new information system.

2. End Users

3. Stakeholders – individuals from inside or outside of the firm who have an interest in the system but are not
end users. They include management, internal auditors, and consultants who oversee systems development.
Org. Structure in a Distributed Processing System

Business Organization

Marketing Finance Administration Production

Plant Plant
Treasurer Controller
Manager 1 Manager 2

Information Information Information Information Information Information

Processing Units Processing Units Processing Units Processing Units Processing Units Processing Units
Distributed Data Processing
Advantages Disadvantages
1 Cost reductions 1. Mismanagement of organization-wide resources.
1.a. Data can be entered and edited at the IPU, thus eliminating the
centralized tasks of data conversion and data control.
1.b. Application complexity can be reduced, which in turn reduces
development and maintenance costs.
2 Improved cost control responsibility 2. Hardware and software incompatibility
Managers assume the responsibility for the financial success of Purchasing functions also delegated to operating
their operations. segments/unit could lead to wrong purchase of software

3 Improved user satisfaction 3. Redundant Tasks

3.a. Users desire to control the resources that influence their Autonomous systems development activities distributed
profitability. throughout the firm can result in each user area reinventing the
3.b. Users want system professionals who are responsive to their wheel.
specific situation
3.c. Users want to become more actively involved in developing and
implementing their own systems
*** increased morale and productivity

4 Back-Up 4. No segregation of duties

Protection against potential disasters such as fires, floods, sabotage Consolidating incompatible activities
and earthquakes.
Distributed Data Processing
Advantages Disadvantages
5. 5. Difficulty in hiring qualified computer professionals
End user managers may lack knowledge to evaluate the technical credentials and
relevant experience of candidates for IT positions.

6. 6. Lack of Standards
Standards for developing and documenting systems, choosing programming
languages, acquiring hardware and software and evaluating performance may be
unevenly applied or non-existent.