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Chapter1-1

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Chapter1-2 Accounting Information Systems, 1st Edition

Introduction

to AIS

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Chapter1-3

1. An overview of business processes2. 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 toaccountants

9. The relation of ethics to accounting information systems

Study Objectives

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Chapter1-4

An Introduction To Business Processes

SO 1 An overview of business processes

Accounting Information System must identify

Transactions to record,

Capture all details,Properly process into correct accounts, and

Provide reports externally and internally.

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Chapter1-5



Business Process - a sequence of work stepsperformed in order to produce a desired result.

Examples:

Completing a sale

Purchasing raw materials

Paying employees

Paying vendors

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Chapter1-6



Four general types of business processes:

1. Revenue Processes(Chapter 8)

a. Sales

b. Sales return

c. Cash collection

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Chapter1-7




2. Expenditure Processes(Chapters 9 and 10)

a. Purchase

b. Purchase return

c. Cash disbursement

d. Payroll

e. Fixed asset

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Chapter1-8




3. Conversion Processes(Chapter 11)

a. Planning

b. Resource management

c. Logistics

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Chapter1-9




4. Administrative Processes(Chapter 12)

a. Capital

b. Investment

c. General ledger

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Chapter1-10



Internal controlsare the set of procedures and policiesadopted to:

1. safeguard assets,

2. check accuracy and reliability of data,

3. promote operational efficiency, and

4. encourage adherence to prescribed managerial

practices.

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Chapter1-11

d. revenue process

When a customer returns goods that were

purchased, the business process to accept the

return would most likely be a(n)

Quick Review



1. Revenue Processesa. Sales

b. Sales return

c. Cash collection

b. conversion process

c. expenditure process

a. administrative process

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Chapter1-12

The Accounting Information System

SO 2 An overview of an accounting information system

Various Business Processes Exhibit 1-1

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Chapter1-13

d. a bar code

Which of the following is least likely to be an output

of the accounting information system?

Quick Review

A bar code is usually

an input to theaccounting

information system.

The Accounting Information System

SO 2 An overview of an accounting information system

b. a report

c. an invoice

a. a check

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Chapter1-14

Supply Chain - processes and information flows thatinvolve 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

Service providers

Business Processes Throughout The Supply Chain

SO 3 The business process linkage throughout the supply chain

Customers

Intermediaries

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Chapter1-15

A simplified Supply Chain for McDonaldsExhibit 1-2



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Chapter1-16

b. The supply chain excludes customers.

Which of the following is not true of the supply

chain?

Quick Review



c. The supply chain includes information flows.

a. The supply chain includes vendors.

d. The supply chain includes secondary suppliers.

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Chapter1-17

Information Technology- Computers, ancillaryequipment, software, services, and related resources as

applied to support business processes.

IT Enablement - Using IT systems to enhanceefficiency and effectiveness of internal or supply chain

processes.

IT Enablement of Processes and the AIS

SO 4 The IT enablement of business processes

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Chapter1-18

IT usage accomplishes one or more of the followingobjectives:

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.

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Chapter1-19

Which of the following is not an objective of IT

enablement?

Quick Review



c. reduced security problems

a. increased accuracy of data

b. reduced cost

d. increased efficiency

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Chapter1-20

Basic ComputerData Structures

Basic Computer and IT Concepts

SO 5 Basic computer and IT concepts

Data hierarchy:

1. Bit, or binary digit

2. Byte

3. Field

4. Record

5. File

6. Database

Smallest unitValues = zero or one

One characterEight bits

One item within recordExample - last name

Set of related fieldsExample employee #,

name, pay rate, etc.

Set of related records

Entire collection of files

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Chapter1-21

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

The correct order of the computer data hierarchy

is

Quick Review



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

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

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

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Chapter1-22



RelationalDatabase

Master File

TransactionFile

Example - relationship in data of acustomer having more than one order.

Example - payroll master filemaintains the relatively permanentdata to process payroll transactions.

Example - transaction file isprocessed against the master file,and year-to-date balances areupdated in the master file.

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Chapter1-23

Sequential access

Random access

Indexed Sequential Access Method (ISAM)

Batch processing

Online processing

Real-time processing

File Access and Processing Modes



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Chapter1-24

Data warehouse

Operational database

Data mining

Data Warehouse and Data Mining



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Chapter1-25

c. data mining

The process of searching for identifiable patterns

in data is called

Quick Review



a. sequential processing

b. data warehousing

d. real-time processing

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Chapter1-26

Network(two or more computers linked together)

Types important to accounting:

Local Area Network (LAN)

Internet

ExtranetIntranet

Networks and the Internet



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Chapter1-27

E-Business

Examples of IT Enablement

SO 6 Examples of IT enablement

Encompasses all forms of:

Online electronic trading

Consumer-based e-commerce

Business-to-business electronic trading

Business-to-business process integration

Internal use of ITExamples, buying:

a book at Amazon.com

clothes at Landsend.com

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Chapter1-28

Electronic Data Interchange



The intercompany, computer-to-computer transfer of

business documents in a standard business format.

Example: Transmit purchase orders, invoices, andpayments electronically between trading partners.

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Chapter1-29

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 andprice list data, sales revenue is recorded, and inventory values are updated.

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Chapter1-30

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 textillustrated an automated matching system.

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Chapter1-31

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.

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Chapter1-32

Enterprise Resource Planning Systems (ERP)



Multi-module software system designed to manage all

aspects of an enterprise.

Usually broken down into modules such as

inventory management,

manufacturing, and

human resources.

financials,

sales,

purchasing,

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Chapter1-33

c. e-payables

An IT enabled system for purchasing that is an

invoice-less system is called a(n)

Quick Review

a. automated matching system

b. evaluated receipt settlement

d. point of sale system



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Chapter1-34

The Control Environment of Organizations

SO 7 The internal control structure 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 fraudd. Computer security breaches

e. Hardware or software failure

f. Natural disasters

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Chapter1-35

Enterprise Risk Management (ERM)

ERM is defined as

. . . a process, effected by an entitys board of directors,

management and other personnel, applied in strategy setting andacross 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.



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Chapter1-36

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



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Chapter1-37

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)



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Chapter1-38

c. Corporate Governance

The COSO report written for the purpose of

assisting managers in the challenge of managing risk

in their organizations is entitled

Quick Review

a. Internal ControlsIntegrated Framework

b. Enterprise Risk ManagementIntegrated

Framework

d. IT Governance



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Chapter1-39

Accountants may be

users of the AIS,

part of the design or implementation team of an

AIS, and/or

auditors of an AIS.

The Accountants Role in AIS

SO 8 The importance of accounting information systems to accountants

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Chapter1-40

c. auditor

Accountants have some form of use of the AIS in all

but which role?

Quick Review

a. user

b. programmer

d. designer

The Accountants Role in AIS

SO 8 The importance of accounting information systems to accountants

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Chapter1-41

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

Ethics and the AIS

SO 9 The relation of ethics to accounting information systems

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Chapter1-42

Which of the following is not true of unethical behavior?

Quick Review

a. The only category of unethical behavior for

accountants is inflating revenue.

Ethics and the AIS

SO 9 The relation of ethics to accounting information systems

b. Accountants are often pressured to help commit orcover up unethical behavior.

c. Hacking is an unethical behavior that accountants

should be concerned about.

d. An accounting information system can be used tocover up unethical behavior.

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Chapter

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