Introduction to AIS Chapter 1 1 Accounting Information
- Slides: 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 c. expenditure process d. revenue process Chapter 1 -10 1. Revenue Processes a. Sales b. Sales return c. Cash collection SO 1 An overview of business processes
The Accounting Information System Various Business Processes Chapter 1 -11 Exhibit 1 -1 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 d. a bar code Chapter 1 -12 A bar code is usually an input to the accounting information system. SO 2 An overview of an accounting information system
Business Processes Throughout The 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: Chapter 1 -13 Vendors Customers Service providers Intermediaries SO 3 The business process linkage throughout the supply chain
Business Processes Throughout The Supply Chain A simplified Supply Chain for Mc. Donald’s Chapter 1 -14 Exhibit 1 -2 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 Data Structures Data hierarchy: 1. Bit, or binary digit 2. Byte 3. Field 4. Record 5. File 6. Database Chapter 1 -19 Smallest unit Values = zero or one One character Eight bits One item within record Example - last name Set of related fields Example – employee #, name, pay rate, etc. Set of related records Entire collection of files 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 Database Chapter 1 -21 Example - relationship in data of a customer having more than one order. Master File Example - payroll master file maintains the relatively permanent data to process payroll transactions. Transaction File Example - transaction file is processed against the master file, and year-to-date balances are updated in the master file. 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: Ø Online electronic trading Ø Consumer-based e-commerce Ø Business-to-business electronic trading Ø Business-to-business process integration Ø Internal use of IT Chapter 1 -26 Examples, buying: ü a book at Amazon. com ü clothes at Landsend. com 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, sales, purchasing, Chapter 1 -31 inventory management, manufacturing, and human resources. 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: Ø Internal Environment Ø Objective Setting Ø Event Identification Ø Risk Assessment Ø Risk Response Ø Control Activities Ø Information and Communication Ø 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 Ø users of the AIS, Ø part of the design or implementation team of an AIS, and/or Ø 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: Ø Fraudulent financial reporting Ø Revenue inflation Ø Expense account fraud Ø Inflating hours worked for payroll purposes Ø Computer fraud Ø Hacking Ø 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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