9/27/23, 10:39 PM Chapter 1 PPT AIS James HallChapter 1 PPT AIS James Hall

What is a ?
Chapter 1 A group of interrelated multiple components or
subsystems that serve a common purpose
The Information System or subsystem?

System:  A system is called a

viewed as a
when it is
.
 A subsystem is considered a when it is
An Accountant’s the .

Perspective System Decomposition versus System

Interdependency

THE INFORMATION ENVIRONMENT

 the process of dividing the system into
Internal & External Information Flows parts

 distinct parts are

 they are upon the functioning of the
other parts of the system
 distinct parts must be functioning or the
system will fail

What is an Information System?

An is the set of
by which data are collected, processed into information,
and distributed to users.
Internal Information Flows
 flows of information used primarily Transactions
at the to capture transaction A is a .
and operations data 
 flows of information o economic events that affect the assets
o flows — instructions, and equities of the organization
quotas, and budgets o e.g., purchase of an airline ticket
o flows — aggregated transaction 
and operations data o all other events processed by the
Information Requirements organization’s information system
Each user group has . o e.g., an airline reservation — no
commitment by the customer
The the level of the organization, the greater the
need for information and less need for
detail.

Information in Business
is a that:

 needs to be appropriately managed

 is vital to the survival of contemporary What is an Accounting Information System?
businesses Accounting is an information system.

 It identifies, collects, processes, and General Model for AIS

communicates economic information about a
firm using a wide variety of technologies.
 It captures and records the financial effects of
the firm’s transactions.
 It distributes transaction information to
operations personnel to coordinate many key
tasks.

AIS versus MIS

(AIS) process

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9/27/23, 10:39 PM Chapter 1 PPT AIS James HallChapter 1 PPT AIS James Hall
 is vital to the survival of contemporary What is an Accounting Information System?
businesses Accounting is an information system.

 It identifies, collects, processes, and General Model for AIS

communicates economic information about a
firm using a wide variety of technologies.
 It captures and records the financial effects of
the firm’s transactions.
 It distributes transaction information to
operations personnel to coordinate many key
tasks.

AIS versus MIS

(AIS) process
 transactions; e.g., sale of goods
 transactions that directly affect the
processing of financial transactions; e.g.,
Data Sources
addition of newly approved vendors are that enter the
information system from .
(MIS) process
 are the
 transactions that are not normally source of data for most organizations.
processed by traditional AIS; e.g., tracking o E.g., sale of goods and services,
customer complaints purchase of inventory, receipt of cash,
and disbursement of cash (including
payroll)
 involve the
IS exchange or movement of resources
.
AIS MIS o E.g., movement of raw materials into
Financial
Marketin Distributi Human
work-in-process (WIP), application of
Managem g
GLS/FRS TPS MRS ent
Systems
on
Systems
Resource
Systems labor and overhead to WIP, transfer of
Systems
WIP into finished goods inventory, and
depreciation of equipment

AIS Subsystems Transforming the Data into Information

 (TPS) Functions for transforming data into information
o supports according to the general AIS model:
 1. Data Collection
(GL/FRS) 2. Data Processing
o produces 3. Data Management
4. Information Generation
 (MRS)
o produces for 1.
internal use  Capturing transaction data
 Recording data onto forms
 Validating and editing the data

2.
 Classifying
 Transcribing
 Sorting
 Batching
 Merging o production planning, quality control,
 Calculating and maintenance
 Summarizing  Marketing
 Comparing  Distribution
 Personnel
3.  Finance
 Storing
 Accounting
 Retrieving  Computer Services
 Deleting
Accounting Independence
4.
Information reliability requires
 Compiling
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 Sorting
 Batching
 Merging o production planning, quality control,
 Calculating and maintenance
 Summarizing  Marketing
 Comparing  Distribution
 Personnel
3.  Finance
 Storing
 Accounting
 Retrieving  Computer Services
 Deleting
Accounting Independence
4.
Information reliability requires
 Compiling
.
 Arranging
 Formatting  Accounting activities must be and
 Presenting of the functional areas maintaining
resources.
Characteristics of Useful Information  Accounting these functions with
Regardless of physical form or technology, useful information but .
information has the following characteristics:  Decisions makers in these functions require that
 : serves a purpose such vital information be supplied by an
 : no older than the time period of the independent source to ensure its .
action it supports
The Computer Services Function
 : free from material errors
 : all information essential to a
decision or task is present
 : aggregated in accordance with
the user’s needs

Information System Objectives in a Business

Context
The of an information system is to support

 the function of management

 management
 the firm’s day Organization of IT Function in a Centralized
System
ORGANIZATIONAL STRUCTURE
The of an organization helps to allocate

 responsibility
 authority
 accountability

by is a very common
method of organizing.

Functional Areas
 Inventory/Materials Management
o purchasing, receiving and stores
 Production

The Model
Organizational Structure for a Distributed
Processing System

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 Production

The Model
Organizational Structure for a Distributed
Processing System

Potential Advantages of DDP Data Redundancy Problems

 Cost reductions in hardware and data entry  - excessive storage costs of paper
tasks documents and/or magnetic form
 Improved cost control responsibility  - changes or additions must be
 Improved user satisfaction since control is performed multiple times
closer to the user level  - potential problem of
 Backup of data can be improved through the failing to update all affected files
use of multiple data storage sites  - user’s inability to
obtain additional information as needs change
Potential Disadvantages of DDP
 - separate files are difficult to
 Loss of control
integrate across multiple users
 Mismanagement of company resources
 Hardware and software incompatibility The Model
 Redundant tasks and data
 Consolidating tasks usually segregated
 Difficulty attracting qualified personnel
 Lack of standards

THE EVOLUTION OF INFORMATION

SYSTEM MODELS
Model
Transaction processing, information processing, and Model
accounting are physically performed by people, usually The REA model is an accounting framework for
using . modeling an organization’s
Useful to study because:  economic ; e.g., assets
o helps link AIS courses to other  economic ; i.e., affect changes in
accounting courses resources
o often easier to understand business  economic ; i.e., individuals and
processes when not shrouded in departments that participate in an economic
technology event
o facilitates understanding internal  Interrelationships among resources, events and
controls agents

(ERD) are often used to

model these relationships.

THE ROLE OF THE ACCOUNTANT

Accountants as Information System Users
Accountants must be able to clearly convey their needs
to the systems professionals who design the system.

The accountant should actively participate

in systems development projects to ensure

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o facilitates understanding internal
controls agents

(ERD) are often used to

model these relationships.

THE ROLE OF THE ACCOUNTANT

Accountants as Information System Users
Accountants must be able to clearly convey their needs
to the systems professionals who design the system.

The accountant should actively participate

in systems development projects to ensure
.

Accountants as System Designers

The function is responsible for the
system, while the is
responsible for the system.

The determines the of the

information required, its , its , and
the that must be applied.

Accountants as System Auditor

 Auditors
o attest to fairness of financial statements
o assurance service: broader in scope
than traditional attestation audit
 Auditors
o evaluate IT, often as part of external
audit
 Auditors
o in-house IS and IT appraisal services

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