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Introduction To AIS

The document provides an overview of accounting information systems and related concepts over several chapters. It introduces business processes, describes the four general types of processes, and explains how information technology can enable more efficient processes. It also outlines the basic concepts of computer and information technology, including data hierarchy, databases, file access and processing modes, and data warehousing and mining. The goal is to provide students with foundational knowledge of accounting information systems.

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0% found this document useful (0 votes)
100 views41 pages

Introduction To AIS

The document provides an overview of accounting information systems and related concepts over several chapters. It introduces business processes, describes the four general types of processes, and explains how information technology can enable more efficient processes. It also outlines the basic concepts of computer and information technology, including data hierarchy, databases, file access and processing modes, and data warehousing and mining. The goal is to provide students with foundational knowledge of accounting information systems.

Uploaded by

Sabaa if
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 41

Introduction to AIS

Chapter
1-1 Accounting Information Systems
Study Objectives

1. An overview of business processes


2. An overview of an accounting information system
3. The business process linkage throughout the supply chain
4. The IT enablement of business processes
5. Basic computer and IT concepts
6. Examples of IT enablement
7. The internal control structure of organizations
8. The importance of accounting information systems to
accountants
9. The relation of ethics to accounting information systems

Chapter
1-2
An Introduction To Business Processes

Accounting Information System must identify


Transactions to record,

Capture all details,

Properly process into correct accounts, and

Provide reports externally and internally.

Chapter
1-3 SO 1 An overview of business processes
An Introduction To Business Processes

Business Process - a sequence of work steps


performed in order to produce a desired result.

Examples:
Completing a sale
Purchasing raw materials
Paying employees
Paying vendors

Chapter
1-4 SO 1 An overview of business processes
An Introduction To Business Processes

Four general types of business processes:

1. Revenue Processes (Chapter 8)

a. Sales

b. Sales return

c. Cash collection

Chapter
1-5 SO 1 An overview of business processes
An Introduction To Business Processes

Four general types of business processes:

2. Expenditure Processes (Chapters 9 and 10)

a. Purchase

b. Purchase return

c. Cash disbursement

d. Payroll

e. Fixed asset

Chapter
1-6 SO 1 An overview of business processes
An Introduction To Business Processes

Four general types of business processes:

3. Conversion Processes (Chapter 11)

a. Planning

b. Resource management

c. Logistics

Chapter
1-7 SO 1 An overview of business processes
An Introduction To Business Processes

Four general types of business processes:

4. Administrative Processes (Chapter 12)

a. Capital

b. Investment

c. General ledger

Chapter
1-8 SO 1 An overview of business processes
An Introduction To Business Processes

Internal controls are the set of procedures and policies


adopted to:

1. safeguard assets,

2. check accuracy and reliability of data,

3. promote operational efficiency, and

4. encourage adherence to prescribed managerial


practices.

Chapter
1-9 SO 1 An overview of business processes
An Introduction To Business Processes

Quick Review
When a customer returns goods that were
purchased, the business process to accept the
return would most likely be a(n)
a. administrative process
b. conversion process
1. Revenue Processes
c. expenditure process a. Sales
d. revenue process b. Sales return
c. Cash collection
Chapter
1-10 SO 1 An overview of business processes
The Accounting Information System
Various Business Processes
Exhibit 1-1

Chapter
1-11 SO 2 An overview of an accounting information system
The Accounting Information System

Quick Review
Which of the following is least likely to be an output
of the accounting information system?
a. a check
b. a report

c. an invoice A bar code is usually


an input to the
d. a bar code accounting
information system.

Chapter
1-12 SO 2 An overview of an accounting information system
Business Processes Throughout The Supply Chain

Supply Chain - processes and information flows that


involve the movement of materials, funds, and related
information through the full logistics process, from the
acquisition of raw materials to the delivery of finished
products to the end user.
The supply chain includes all:
Vendors Customers
Service providers Intermediaries

Chapter
1-13 SO 3 The business process linkage throughout the supply chain
Business Processes Throughout The Supply Chain

Exhibit 1-2
A simplified Supply Chain for McDonald’s

Chapter
1-14 SO 3 The business process linkage throughout the supply chain
Business Processes Throughout The Supply Chain

Quick Review
Which of the following is not true of the supply
chain?
a. The supply chain includes vendors.
b. The supply chain excludes customers.

c. The supply chain includes information flows.


d. The supply chain includes secondary suppliers.

Chapter
1-15 SO 3 The business process linkage throughout the supply chain
IT Enablement of Processes and the AIS

Information Technology - Computers, ancillary


equipment, software, services, and related resources as
applied to support business processes.

IT Enablement - Using IT systems to enhance


efficiency and effectiveness of internal or supply chain
processes.

Chapter
1-16 SO 4 The IT enablement of business processes
IT Enablement of Processes and the AIS

IT usage accomplishes one or more of the following


objectives:
1. Increased efficiency of business processes
2. Reduced cost of business processes
3. Increased accuracy of the data related to business
processes

Business Process Reengineering (BPR) is the purposeful


and organized changing of business processes to make
them more efficient.
Chapter
1-17 SO 4 The IT enablement of business processes
IT Enablement of Processes and the AIS

Quick Review
Which of the following is not an objective of IT
enablement?
a. increased accuracy of data
b. reduced cost

c. reduced security problems


d. increased efficiency

Chapter
1-18 SO 4 The IT enablement of business processes
Basic Computer and IT Concepts
Basic Computer Smallest unit
Data Structures Values = zero or one

Data hierarchy: One character


Eight bits
1. Bit, or binary digit
One item within record
2. Byte
Example - last name
3. Field
Set of related fields
4. Record Example – employee #,
name, pay rate, etc.
5. File
Set of related records
6. Database
Entire collection of files
Chapter
1-19 SO 5 Basic computer and IT concepts
Basic Computer and IT Concepts

Quick Review
The correct order of the computer data hierarchy
is
a. byte, bit, record, field, file, database
b. bit, byte, record, field, file, database

c. bit, byte, field, record, file, database


d. bit, byte, field, record, database, file

Chapter
1-20 SO 5 Basic computer and IT concepts
Basic Computer and IT Concepts

Relational Example - relationship in data of a


Database customer having more than one order.

Example - payroll master file


Master File maintains the relatively permanent
data to process payroll transactions.

Example - transaction file is


Transaction processed against the master file, and
File year-to-date balances are updated in
the master file.
Chapter
1-21 SO 5 Basic computer and IT concepts
Basic Computer and IT Concepts

File Access and Processing Modes

Sequential access
Random access
Indexed Sequential Access Method (ISAM)
Batch processing
Online processing
Real-time processing

Chapter
1-22 SO 5 Basic computer and IT concepts
Basic Computer and IT Concepts

Data Warehouse and Data Mining

Data warehouse
Operational database
Data mining

Chapter
1-23 SO 5 Basic computer and IT concepts
Basic Computer and IT Concepts

Quick Review
The process of searching for identifiable patterns
in data is called
a. sequential processing
b. data warehousing

c. data mining
d. real-time processing

Chapter
1-24 SO 5 Basic computer and IT concepts
Basic Computer and IT Concepts

Networks and the Internet

Network (two or more computers linked together)


Types important to accounting:
Local Area Network (LAN)
Internet
Extranet
Intranet

Chapter
1-25 SO 5 Basic computer and IT concepts
Examples of IT Enablement

E-Business
Encompasses all forms of:
 Online electronic trading
 Consumer-based e-commerce
 Business-to-business electronic trading
 Business-to-business process integration
 Internal use of IT Examples, buying:
 a book at Amazon.com
 clothes at Landsend.com
Chapter
1-26 SO 6 Examples of IT enablement
Examples of IT Enablement

Electronic Data Interchange


The intercompany, computer-to-computer transfer of
business documents in a standard business format.

Example: Transmit purchase orders, invoices, and


payments electronically between trading partners.

Chapter
1-27 SO 6 Examples of IT enablement
Examples of IT Enablement

Point of Sale System


A system of hardware and software that captures
retail sales transactions by standard bar coding.

Example: Customer
• checks out through the cash register,
• bar codes are scanned on the items purchased,
• prices are determined by access to inventory and
price list data,
• sales revenue is recorded, and
• inventory values are updated.
Chapter
1-28 SO 6 Examples of IT enablement
Examples of IT Enablement

Automated Matching
A computer system in which the software matches an
invoice to its related purchase order and receiving
report.

Example: Ford Motor Company described in text


illustrated an automated matching system.

Chapter
1-29 SO 6 Examples of IT enablement
Examples of IT Enablement

Evaluated Receipt Settlement (ERS)


An invoice-less system in which computer software
completes an invoice-less match that is a comparison
of the purchase order with the goods received.

E-Payables and Electronic Invoice


Presentment and Payment (EIPP)
Web-enabled receipt and payment of vendor invoices.

Chapter
1-30 SO 6 Examples of IT enablement
Examples of IT Enablement

Enterprise Resource Planning Systems (ERP)


Multi-module software system designed to manage all
aspects of an enterprise.

Usually broken down into modules such as


financials, inventory management,
sales, manufacturing, and
purchasing, human resources.

Chapter
1-31 SO 6 Examples of IT enablement
Examples of IT Enablement

Quick Review
An IT enabled system for purchasing that is an
“invoice-less” system is called a(n)
a. automated matching system
b. evaluated receipt settlement

c. e-payables
d. point of sale system

Chapter
1-32 SO 6 Examples of IT enablement
The Control Environment of Organizations

Risks that impact financial standing:


1. Assets will be stolen or misused
2. Errors in accounting data or information
3. Fraudulent activity
4. Risks inherent in IT systems, such as
a. Erroneous input of data
b. Erroneous processing of data
c. Computer fraud
d. Computer security breaches
e. Hardware or software failure
f. Natural disasters
Chapter
1-33 SO 7 The internal control structure of organizations
The Control Environment of Organizations

Enterprise Risk Management (ERM)


ERM is defined as
. . . a process, effected by an entity’s board of directors,
management and other personnel, applied in strategy setting and
across the enterprise, designed to identify potential events that
may affect the entity, and manage risk to be within its risk
appetite, to provide reasonable assurance regarding the
achievement of entity objectives.

Chapter
1-34 SO 7 The internal control structure of organizations
The Control Environment of Organizations

Enterprise Risk Management (ERM)


Requires management set policies and procedures related to:
 Internal Environment
 Objective Setting
 Event Identification
 Risk Assessment
 Risk Response
 Control Activities
 Information and Communication
 Monitoring
Chapter
1-35 SO 7 The internal control structure of organizations
The Control Environment of Organizations

Enterprise Risk Management (ERM)


Management should ensure the following types of control
structures exist:
1. Code of ethics (Chapter 3)
2. COSO accounting internal control structure (Chapter 3)
3. IT system control structure (Chapter 4)
4. Corporate governance structure (Chapter 5)
5. IT governance structure (Chapter 6)

Chapter
1-36 SO 7 The internal control structure of organizations
The Control Environment of Organizations

Quick Review
The COSO report written for the purpose of
assisting managers in the challenge of managing risk
in their organizations is entitled
a. “Internal Controls—Integrated Framework”
b. “Enterprise Risk Management—Integrated
Framework”
c. “Corporate Governance”
d. “IT Governance”
Chapter
1-37 SO 7 The internal control structure of organizations
The Accountant’s Role in AIS

Accountants may be
 users of the AIS,
 part of the design or implementation team of an
AIS, and/or
 auditors of an AIS.

Chapter
1-38 SO 8 The importance of accounting information systems to accountants
The Accountant’s Role in AIS

Quick Review
Accountants have some form of use of the AIS in all
but which role?
a. user
b. programmer

c. auditor
d. designer

Chapter
1-39 SO 8 The importance of accounting information systems to accountants
Ethics and the AIS

Examples of potential unethical behaviors:


 Fraudulent financial reporting
 Revenue inflation
 Expense account fraud
 Inflating hours worked for payroll purposes
 Computer fraud
 Hacking
 Browsing confidential data

Chapter
1-40 SO 9 The relation of ethics to accounting information systems
Ethics and the AIS

Quick Review
Which of the following is not true of unethical behavior?
a. The only category of unethical behavior for
accountants is inflating revenue.
b. Accountants are often pressured to help commit or
cover up unethical behavior.
c. Hacking is an unethical behavior that accountants
should be concerned about.
d. An accounting information system can be used to
cover up unethical behavior.
Chapter
1-41 SO 9 The relation of ethics to accounting information systems

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