lect1 2013 ais 200
TRANSCRIPT
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Impact of Information Age
fewer workers are making products, and
a large segment of the employee
population is involved in producing,
analyzing, and distributing information. Knowledge workers comprise much of
the labor force.
A major contributor to the informationage is the Internet.
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WHAT IS A SYSTEM?
A group of interrelated multiple components or subsystems thatserve a common purpose/ goal
Characteristics of a system
Has parts / subsystem that related
Has goal /purpose
There will be input and output
Has an environment that it resides
Has a boundary that separate it from environment and/or other system
There is limit to what it can accomplish
A system is called a subsystem when it is viewed as a component of
a larger system. A subsystem is considered a system when it is the
focus of attention.
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SYSTEM INTERFACE
Interface occurs at the connecting pointwhere the boundaries of two systems meet.
Interface acting as connecting point for two
systems, it eases the flow of one systemsoutput into another system.
The designers of a system should plan for
an interface which copes with the waitingperiod between two processes
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Definition Information System
An Information system is a set of interrelated
subsystems that work together to collect, process,
store, transform, and distribute information for
planning, decision making, and control.
Firms depend on information systems in order to
stay competitive.
Thus, Information is a business resourcethat:
needs to be appropriately managed
is vital to the survival of contemporary businesses
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TYPES OF SYSTEM
Systems have been classified in different ways.
Common calcification are:-
1) Physical or abstract.
2) Open or closed.
3)Natural or man-made informationsystems
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PHYSICAL VS ABSTRACT
Physical systems tangible entities that may be static ordynamic in operation.
Eg, the physical parts of the computer center are the offices, desks,and chairs that facilitate operation of the computer (static). A
programmed computer is a dynamic system. Data, programs,
output, and applications change as the users demands or thepriority of the information requested changes
Abstract systems
are conceptual or nonphysical entities.
A model is an easier way for the analyst to visualize relationshipsin the system under study.
The objective is to point out the significant elements and the keyinterrelationships of a complex system.
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OPEN OR CLOSED SYSTEMS
systems is based on their degree of independence. An open system
has many interfaces with environment.
It receives inputs from and delivers outputs to the outside.
must adapt to the changing demands of the user.
A closed system
does not interface with its environment, i.e. it has no input oroutput.
more relevant to scientific systems than to social systems.
Completely closed system is very rare. The nearest we can get to aclosed social system would be a completely self-containedcommunity that provides all its own food, materials and power,and that does not trade, communicate or come into contact withother communities.
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Concept of Closed and open System
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Data are raw facts about events
that have no organization ormeaning.
Information is data that have
been processed and ismeaningful and useful to users.
Data versus Information
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CHARACTERISTIC OF USEFUL
INFORMATION
Relevance It reduces uncertainty by helping you predict what will happen or
confirm what already has happened.
Reliability Its dependable, i.e., free from error or bias and faithfully portrays
events and activities.
Completeness It doesnt leave out anything thats important.
Timeliness
You get it in time to make your decision.
Understandability
Its presented in a manner you can comprehend and use Verifiability
A consensus notionnature of the information is such thatdifferent people would tend to produce the same result
Accessibility
You can get to it when you need it and in a format you can use
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AIS: ACCOUNTING AND IS?
Accounting
Information
Systems
AccountingInformation
Systems
Accounting is an information system.
It identifies, collects, processes, and communicates economic
information about a firm using a wide variety of technologies.
It captures and records the financial effects of the firmstransactions.
It distributes transaction information to operations personnel to
coordinate many key tasks.
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Accounting Information Systems
An Accounting Information System (AIS) is the
information subsystem within an organization
that accumulates information from the entitys
various subsystems and communicates it to theorganizations information processing subsystem.
Functions of AIS
To Collect and store data on business activities and
transactions in more efficient & effective
To Provide useful information for decision making
To provide adequate control, data recorded accurately
Well organized business
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An Accounting Information System
Inputs: Data/Information from
Internal/External sources
Processes: Sort, Organize,
Calculate
Outputs: Information for Internal/
External Decision Makers
DataRepository/
Files,
Databases,
Etc.
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VALUES OF AIS
provide accurate and timely information
Improve products or servicesincrease
quality, reduce cost, add special features
Increase efficiencydeliver timelyinformation
Reliable information will improve decision
making capabilities
Improve sharing of knowledge and
expertise
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MIS versus AIS
Management InformationSystem (MIS)
Historically, provided financial and nonfinancial
information to internal users.
e.g., tracking customer complaints
Accounting Information System
Traditionally provided financial information to
both external and internal users. Now, the two systems overlap and provide much
of the same information focusing on
business processes.
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IS
AIS MIS
GLS/
FRS TPS MRS Finance Marketing Production HRS Logistic
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Financial Accounting System
The objective offinancial accounting is to provide
relevant information to individuals and groups
outsidean organizations boundaries.
Mainly to external users include investors, taxagencies, and creditors. Not forgetting to internal
users.
Objectives achieved through preparation of
financial statements by using GAAP.
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Managerial Accounting System
Objective ofManagerial Accounting is to
provide relevant information to a companys
managers, who are internal users.
Main components of managerial accounting
are Cost Accounting, Budgeting, Systems study
whereby using their own guidelines.
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TRANSACTION PROCESSING SYSTEM
incorporated into structure of AIS, records every economic event ortransactions.
1. Revenuetransactions of selling goods and services
2. Expenditure- payments for goods and services received and
procurement system
3. Production- processing data of manufacturing goods.
4. Human resource management- recording personnel
information of an organization such as attendance, award
systems and pay calculation
5. Reporting- cores the maintenance of general ledger andsubsequently, production basic report
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AIS (super system)
1. Transaction processing systemRecord transactions carried out by an organization and provide
information to personnel at various operational levels.
2. Budgeting system
Uses information from the TPS and operational plans of the
organization to produce control, information which will be used
by the management of an organization.
3. Responsibility reporting systemSummarizes historical data and provides reports comparing
these data with the budget or target set for managers.
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AIS HELPS ACCOUNTANTS?
As UsersAccountants 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 appropriate systemsdesign.
As System Auditors
External Auditors - attest to fairness of financial
statements, assurance service: broader in scope thantraditional attestation audit
IT Auditors - evaluate IT, often as part of external audit
Internal Auditors - in-house IS and IT appraisal services
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AIS AND DECISION MAKINGVarious activities in the decision-making1. Strategic planning activities (Senior management)
2. Management control activities (middle management, sales
manager, production managers)
3. Operational control activities (lower-level management)
Activity levels and decision types
1. Structured decisions ( are repetitive and routine for lowest
management level)
2. Unstructured decision (are non recurring and non-routine forhigher level management)
3. Semistructured decision (combine the characteristics of both
structured and unstructured decision)
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AIS and Value-added activities5 primary business groups1. Inbound logistics
Involves receiving, storing and distributing materials.
2. Operational activities
Convert the material input into a finished product or service.
3. Outbound logistics
Involves distributing finished products or services to customers.
4. Marketing and sales activities
Promote the organization product s or services.
5. ServiceInvolves the provision of after sales repair and maintenance of
products sold.
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AIS and Value-added activities4 support groups of business process1. Human resources
Including of hiring and training employees.
2. Procurement
Including negotiating prices, and ordering and purchasing.
3. Organization infrastructure
General activities such as accounting and legal and finance.
3. Technology
R&D, product design, which are aimed at improving products
or services.
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MAJOR TYPES OF SYSTEM
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TRANSACTION PROCESSINGCYCLES
1. Revenue cycle - deals with the income.2. Expenditure cycle - deals with the expenses.
3. Conversion cycle - deal with converting raw
materials into finished products.
4. Payroll cycle - deal with the human resources.5. Financial cycle - deals with the acquisition and
use of capital.