THE INFORMATION ENVIRONMENT VERTICAL FLOW

 Distributes information downward

from senior managers and junior
BUSINESS OPERATIONS at the base of the managers and operations personnel
pyramid in the form of instructions, quotas
 Consists of the product-oriented and budgets.
work of the organization  Summarized information pertaining
(manufacturing sales and to operations and other activities
distribution) flow upward to managers at all level.

OPERATIONS MANAGEMENT as info goes up pa summary ng pasummary

brief information. andon details na
 directly responsible for controlling kelangan.
day-to day operations.

EXTERNAL USERS
MIDDLE MANAGEMENT
(1) TRADING PARTNERS
 Accountable for the short term
planning and coordination of  exchange include customers sales
activities necessary to accomplish and billing information, purchase
organizational objectives. information for suppliers, and
inventory receipts information.
need to know the detail of customers.
TOP MANAGEMENT address name bank details contact persons,
 Responsible for long-term planning number of orders, amount of accounts
and setting organizational receivable same with the suppliers, the
objectives. name of supplier, which specific product
offering in the org. included in the record.

HORIZONTAL FLOW
(2) STAKEHOLDERS
 supports operations level tasks with
highly detailed information about are entities inside or outside the
many business transactions affecting organization with a direct or indirect
the firm (1) sale and shipment of interest in the firm.
goods, (2) use of labor and materials
in the production process and (3)
internal transfer of resources from
one
External stakeholders 2.) NON FINANCIAL TRANSACTION- are
events that do not meet the narrow
(1) stockholders
definition of a financial transaction. The
(2) financial instituitions firm has no legal obligation to process it
correctly - or at all.
(3) government agencies
ex. when enter into a contract with specific
Internal Stakeholders
supplier
accountants and internal auditors
AN INFORMATION SYSTEMS FRAMEWORK
AIS is composed of (3) three major
subsystems:

INFROMATION SYSTEM
 is the set of formal procedures by (1) Transaction Processing System (TPS) -
which data are collecter, processed which supports daily business operations
into information, and distributed to with numerous reports, documents and
users. messages for users throughout the
organization.
 the information system accepts
input called transactions, which are
converted through various processes (2) General Ledger/ Financial Reporting
into output information that goes to System (GL/FRS)- which produces the
user traditional financial statements such as
 TRANSACTION is an event that income statement, balance sheet,
affects or is of interest to the statement of cash flows, tax returns.
organization and is processed by its
*payroll
information system as a unit of
work.
(3) Management Reporting System (MRS) -
which provides internal management with
TWO CLASSES OF TRANSACTIONS
special purpose financial reports and
1.) FINANCIAL TRANSACTIONS- is an information needed for decision making
economic event that affects the assets and such as budget, variance reports, and
equities of the organization, is reflected in responsibility reports.
its accounts, and is measured in monetary
terms. Every organization is legally bound to
correctly process these types of
transactions.
-has monetary involvement
TRANSACTIONS PROCESSED BY THE A GENERAL MODEL FOR AIS
INFORMATION SYSTEM
 The elements of the general model
Financial Transactions and Nonfinancial are: (1) end users; (2) data sources;
Transaction -> Information System -> (3) data collection; (4) data
Information -> User Decisions processing; (5) database
management; (6) information
MANAGEMENT INFORMATION SYSTEM
generation; (7) feedback
(MIS)
 Processes nonfinancial transactions
that are not normally processed by (1) END USERS
traditional AIS.

 Two general groups: (a) external; (b)

EXAMPLES OF MIS APPLICATIONS IN internal.
FUNCTIONAL AREAS

Example of MIS
Function  External Users include creditors,
Application
stockholders, potential investors,
Finance Portfolio
management regulatory agencies, tax authorities,
systems suppliers and customers
Capital budgeting
systems
Marketing Market Analysis  Internal Users include management
New product at every level of the organization, as
development well as operations personnel.
Product analysi
Distribution Warehouse DATA VS. INFORMATION
organization and DATA- are facts, which may or may not be
scheduling processed (edited, summarized, or refined)
Delivery Scheduling
and have no direct effect on the user.
Vehicle loading and
allocation models
Personnel Human resource
management INFORMATION- causes the user to take an
action that he or she otherwise could not,
 Job skill or would not, have taken; simply defined as
tracking processed data.
system
 Employee
benefits
system
(2) DATA SOURCES  EFFICIENCY- efficient data collection
procedures are designed to collect
 Are financial transactions that enter
data only once; capturing data more
the information system from both
than once results to data
internal and external sources.
redundancy overloads facilities and
reduces the overall efficiency of the
system.
 External financial transaction
sources- sales of goods or services,
purchase of inventory, receipts of
(4) DATA PROCESSING
cash, disbursement of cash
(including payroll)  Data requires processing to produce
information
 tasks in the data processing stage
 Internal financial transaction- range from simple to complex
involve exchange or movement of  examples: linear programming
resources within the organization. models used for production
scheduling applications, statistical
techniques for sales forecasting, and
(3) DATA COLLECTION posting and summarizing procedures
used for accounting applications.
 first operational stage in the
information system
 objective is to ensure that event
(5) DATABASE MANAGEMENT
data entering the system are valid,
complete and free from material  Database is the organization's
errors. physical repository for financial and
non financial data.
 It can be a filing cabinet or a
 most important stage in the system computer disk
 Levels in data hierarchy: attribute,
record and file
 two rules that govern the design of
THE DATA HIERARCHY
data collection : (a) Relevance; (b)
Efficiency
DATA ATTRIBUTE

 RELEVANCE- the information system  is a logical and relevant

should capture only relevant data characteristic of any entity about
which the firm captures data.
RECORD  Information can be an operational
document such as a sales order, a
 is a complete set of attributes for a
structured report, or a message on a
single occurrence within an entity
computer screen.
class
 every record in the database must
be unique in at least one attribute;
 Characteristics of a useful
the unique identifier attribute is the
information (a) Relevance; (b)
primary key.
Timeliness; (c) Accuracy; (d)
Completeness; (e) Summarization
FILES
 is a complete set of records of an (7) FEEDBACK
identical class.
 is a form of output that is sent back
 *multiple sources types of acct. A/R
to the system as a source of data
madami customer supplier A/P

 may be internal or external and is

DATABASE MANAGEMENT TASKS
used to initiate or alter a process
it includes three fundamental tasks:
(1) storage (2) retrieval and (3) deletion
 *systems own code for the system.
 Storage task assigns keys to new vendor supported may codes na can
records and stores them in their request some supplier na pede mo
proper location in the database. ilagay sa systems design.
 Retrieval is the task of locating and
extracting an existing record from
MULTIPLE CHOICE
the database of processing.
 Deletion is the task of permanently PPT. HINDI NA ISEND BUT I WILL BE
removing obsolete or redundant POSTING A MODULE SA CANVAS ACCT.
records from the database.
25 items
August 19.
(6) INFORMATION GENERATION
No need to meet because we’ll be having
 is the process of compiling , our quiz.
arranging, formatting and presenting
information to users.
INFORMATION SYSTEM OBJECTIVES THREE BASIC TYPES OF COMMERCIAL
SOFTWARES

Three fundamental objectives are:

TURNKEY SYSTEMS
1) To support the stewardship function
of management  Are completely finished and tested
2) To support management decision systems that are ready for
making implementation. Typically, they are
3) To support the firm’s day-to-day general-purpose systems or systems
operation customized to a specific industry.
 The better turnkey systems have
built-in-software options that allow
ACQUISITION OF INFORMATION SYSTEM the user to customize input, output
and processing through menu
Organization may obtain information
choices.
system in two ways:

BACKBONE SYSTEM
1) They develop customized systems
from scratch through in-house
systems development activities; and
 Consist of a basic system structure
2) They purchase preprogrammed
on which to build
commercial systems from software
 The primary processing logic is
vendors
preprogrammed and the vendor
then design the user to interfaces to
suit the client’s unique needs
The formal process by which this
 A backbone system is a compromise
accomplished is called then system
between a custom system and a
development life cycle.
turnkey system
 This approach can produce
satisfactory results. But customizing
the system is costly
VENDOR-SUPPORTED SYSTEMS
 Are custom (or customized) systems FUNCTIONAL SEGMENTATION
that client organizations purchase
commercially rather than develop
in-house MATERIALS MANAGEMENT
 Under this approach, the software
 The objective is to plan and control
vendor designs, implements and
the materials inventory
maintains the system for its client.
a) Purchasing - is responsible for
ordering inventory from vendors
when inventory levels fall to their
ORGANIZATIONAL STRUCTURES
reorder points.
 The structure of an organization b) Receiving - is the task of accepting
reflects the distribution of the inventory previously ordered by
responsibility, authority and purchasing; includes counting and
accountability checking the physical condition of
these items.
c) Stores - takes physical custody
BUSINESS SEGMENTS received and release these
resources into the production
 Business organizations consist of
process as needed.
functional units or segments
*very crucial ang raw materials because
need to have enough to convert into
THREE MOST COMMON APPROACHES finished goods. it is related to the number
INCLUDE SEGMENTATION BY: of products or units produced. pedeng
maging scrap or spoiled yung materials. so
1) Geographic location - they do this to
in order to manage materials effectively
gain access to resources, markets, or
may different division na nagmamange
lines of distribution.
2) Product line - companies that
produce highly diversified products
PRODUCTION
often organize around product lines,
creating separate divisions for each.  Occurs in the conversion cycle in
3) Business function - functional which raw materials, labors and
segmentation divides the plant assets are used to create
organization into areas of finished products.
specialized responsibility based on
Two activities:
task. Examples are marketing,
production, financing and 1) Primary manufacturing activities -
accounting. shape and assemble raw materials
into finished products,
 2) Production support activities - Finance - manages the financial resources
ensure that primary manufacturing of the firm through banking and treasury
activities operate efficiently and activities, portfolio management, credit
effectively. evaluation, cash disbursements and cash
reciepts
FUNCTIONAL AREAS OF A FIRM
PRODUCTION
Accounting Function
1) Production planning - involves
scheduling the flow of materials,  Manages the financial information
labor and machinery to efficiently resource of the firm
meet production needs.
The two important roles in transaction
2) Quality control - monitors the
processing:
manufacturing process at various
points to ensure that the finished 1) Accounting captures and records the
products meet the firm’s quality financial effects of the firm’s
standards. transactions
3) Maintenance - keeps the firm’s 2) Distributes transaction information
machinery and other manufacturing to operations personnel to
facilities in running order. coordinate many of their key task.

MARKETING INFORMATION TECHNOLOGY FUNCTION

 deals with the strategic problems of
product promotion, advertising, and
CENTRALIZED DATA PROCESSING MODEL
market research; on an operational
level, marketing performs such daily  All data processing is performed by
activities as sales order entry one or more large computers
housed at a central site that serve
users throughout the organization
FUNCTIONAL AREAS OF A FIRM
Distribution - activity of getting the product
DATABASE ADMINISTRATION
to the customer after the sale
 In this shared data arrangement, a
Personnel - objective to effectively manage
special independent group database
employees; a well-developed personnel
administrator is responsible for the
function includes; recruiting, training,
security and integrity of the
continuing education, counselling,
database.
evaluating, labor relations, and
compensation administration.
INFORMATION TECHNOLOGY FUNCTION
CENTRALIZED DATA PROCESSING MODEL FLAT-FILE MODEL
 Most associated with the so-called
“legacy systems”; these are large
DISTRIBUTED DATA PROCESSING MODEL
mainframe systems that were
 Involves reorganizing the IT function implemented in the late 1960’s
into small information processing through 1980’s
units (IPUs) that are distributed to  This model describes an
end user and place under their environment in which individual
control data files are not related to other
 The loss of control is one of the most files. End users in this environment
serious disadvantages of this model; own their data files rather than
other potential problems are share them with other users.
inefficient use of resources,  Problems of this model includes;
destruction of audit trails, data storage, data updating,
inadequate segregation of duties, currency of information, task data
increased potential in programming dependency
errors and systems failures
*hindi shared yung data bale bahala na sila
*it could be the audit trail masisira na kasi
*access is limited. There’s a data
may sarili silang control sa department nila
redundancy.
unlike sa centralized na isahan lang.
*nagiging double na yung work niya kasi si
THE EVOLUTION OF INFORMATION
acctg wala naman access kay marketing.
SYSTEM MODELS
*data updating- same data there’s a need
for that data to be updated kailangan
MANUAL PROCESS MODEL magupdate din sila dalawa if one of them
failed to update the data it woulld be
 The oldest and most traditional form
irrelevant.
of accounting systems
 This includes task such as order-
taking, warehousing materials,
DATABASE MODEL
manufacturing goods for sale,
shipping goods to customers, and  Access to data resource is controlled
placing orders with vendors by a database management system
 Includes physical task of record- (DBMS)
keeping  DBMS is a special software systems
that is programmed to know which
data elements each user is
authorized to access
  They can result from activities such
as production, exchange,
*under this there's only one system and is
consumption and distribution.
shared but there is an authority to access
such data. ex: acctg there's a limit kung ano *conversion cycle.
lang data kelangan niya they have different
*makita mo din yung track niya dito.
levels of access to the shared dabtabase.
DBM-naiiwasan data redundancy
AGENTS
THE REA MODEL
 Are individuals and departments
 REA is an accounting framework for
that participate in an economic
modeling an organization’s critical
event
Resources, Events, and Agents and
 Parties both inside and outside the
the relationships between them.
organization with discretionary
*main function sa resources niya kayang power to use or dispose economic
itrack yung nangyayare. kung ilan na asa resources. Examples: sales clerks,
part of production or sa cost of goods. production workers, shipping clerks,
There's a security of the managemenet of customers, and vendors
the resources. for example: materials na
*mga personnel na may mga power para
ginagamit sa production di naman magiging
magamit yung resources. ex" sales clerks,
available agad. . under this model there's no
then production convert materials into
a/r it records the receivable by subtracting
finished goods.
the receivables sa . a/r are imaginary

ENTERPRISE RESOURCE PLANNING

RESOURCES
SYSTEMS
 Are the assets of the organization
 It is an information system model
 Identified as objects that are both
that enables an organization to
scarce and under the control of the
automate and integrate its key to
enterprise. This departs from the
business processes. ERP breaks
traditional model because it does
down traditional functional barriers
not include accounts receivable (AR)
by facilitating data sharing,
information flows, and the
introduction of common business
EVENTS
practices among all organization
 Are phenomena that affect changes users.
in resources  Examples: SAP and Oracle
 ERP packages are sold to client in
modules that support standard
 process such as: “asset
management, financial accounting,
human resources, industry-specific
solutions, plant maintenance,
production planning, quality
management, sales and distribution,
inventory management.
*ginagamit sa trading, galing sa abroad,
widely used by large companies.
main problem the inventory management
becoz the system failed and di nadeliver sa
management stores. kelangan may tracking
di pede ship lang ng iship.
*importante sa macro entities.

THE ROLE OF THE ACCOUNTANT

Accountants are primarily involved as:
1) Systems users
*hindi naman manually ginagawa yung
reports we accountant are user of that
system. and also the design of system
tinatanong na cctnts kung ano na
information need para malagay na sa sytem
2) Designers
3) Auditors.
*mga systems ngayon in terms of audit kasi
may mga audit trail yung systems.