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LOGO
Accountinginformation
system
A Business process approach
FREDERICK L. JONESDASARATHA V. RAMA
Jones Rama
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INTRODUCTION TO ACCOUNTING INFORMATION SYSTEMS
King Saud University
Hanan H. Almarhabi
Contents
Business processes and (AIS)
Scope of an accounting information system (AIS)
Accounting Applications and Software
Role of Accountants in Relation to (AIS)
Business Processes and (AIS)
Two terms are central here
(1) BUSINESS PROCESS (2) INFORMATION SYSTEMS
Business Processes and (AIS)
BUSINESS PROCESS1
• business process isa sequence of activities performed by a business for acquiring, producing, and
selling goods and services.There are several models of business process have been developed, the
useful model is that which views a company’s business process in terms of its transaction cycles.
There are three main transaction cycles: (1) An acquisition cycle.
(2) A conversion cycle. (3) A revenue cycle.
Business Processes and (AIS)
• Accounting Information system (AIS) isA subsystem of an organization’s management information system (MIS).
An organization’s business process and its (MIS) are closely related. Data are captured by (MIS) from the organization’s business process
to produce information that help the organization monitor and control its business process.
2INFORMATION SYSTEMS
• Management Information System (MIS) isa set of subsystems that captures data about an organization, stores, and
maintains the data, and provides meaningful information for management.
Scope of an (AIS)
ProductionMarketing
Accounting& Finance
HumanResources
Figure demonstrates the substantial overlap in the information system requirements of these four
subsystems.
Overlap of SubsystemsOverlap of Subsystems
All subsystems of (MIS) are important and different information is needed to carry out their respective function, And substantial overlaps in the information system requirements have arose between these subsystems because they use data about the same underlying business processes.
(AIS) is a subsystem that provides accounting and financial information, as well as other information obtained in the routine processing of accounting transaction.
Scope of an (AIS)Scope of an (AIS)
Uses of (AIS)
Producing External Reports
Supporting Routine Activities
Businesses use (AIS) to produce special reports that follow a required structure established by organizations such as (FASB). These reports include financial statements, tax returns, etc
Managers need an (AIS) for handling routine operating activities during the firm’s operating cycle. Computer systems excel at handling repetitive transaction by many accounting software support these routine functions.
Producing External Reports
Decision Support
Supporting Routine Activities
Planning and ControlDecision Support
Information is needed for nonroutine decision support at all levels of an organization. Some information are critical for planning, deciding, marketing functions.
Planning and Control
An information system is required for planning and control activities as well. Historical data can be extracted from the database and used to forecast growth and cash flows. Planners can use data mining to reveal long-term trends and relationships.
Uses of (AIS)
Implementing Internal Control Internal control includes the policies, procedures, and information system used to protect a company’s assets from loss and to maintain accurate financial data. It is possible to build controls into a computerized accounting information system to help reach these goals.
Producing External Reports
Decision Support
Supporting Routine Activities
Planning and Control
Implementing Internal Control
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Accounting Applications and Software
Accounting Applications
Applications are computer programs that are used to serve particular purpose. Accounting applications provide the information needed for the five uses mentioned. Accounting applications are organized according to transaction cycles.
Interaction between (AIS) and a user consists primarily of
(1) Recording events(1) Recording events
(2) Intering Information(2) Intering Information
(4) Printing reports(4) Printing reports
(3) Printing documents(3) Printing documents
About suppliers, customers, employees, and product.
Often using on-screen forms.
(5) Conducting ad hoc inquiries(5) Conducting ad hoc inquiries
Such as purchase orders and sales invoices.
Such as financial statement and sales analyses. Conducting special inquiries
Accounting Applications and Software
Commercial software that is ready made
and available for sale to the general public.
Applications developed using database
management system software.
(2)Developed using (DBMS)(2)Developed using (DBMS)
(1) Off-the-shelf
(1) Off-the-shelf
Role of Accountants in Relation to (AIS)A
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UserUser
Role ofRole ofaccountantsaccountants
ManagerManager
ConsultantConsultant
As routine transaction processing becomes automated, accountants are spending less time on routine functions (such as producing external reports, decision support, etc). Instead, they are leveraging their understanding for strategic decision making and planning.
Accounting managers in the larger firms work closely with the chief information officer and they understand the content of the database, the information needs of many users, and techniques for internal control. This understanding make them a valuable member of executive committees.
Experience can give accounting professionals a competitive advantages in consulting about the acquisition, design, installation, and modification of accounting systems. They understand how information systems support business processes and they know about financial reporting requirement and internal control risk.
The relation to the (AIS)The relation to the (AIS)
Role of Accountants in Relation to (AIS)A
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Acc
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Role ofRole ofaccountantsaccountants
We consider the accountant as an
Accountant s use accounting software to provide financial statements for small clients and tax software to provide tax services for their clients.
The relation to the (AIS)The relation to the (AIS)
EvaluatorEvaluator
Provider of Provider of Accounting and Accounting and
Tax ServicesTax Services
• Internal Auditors They evaluate various units within an organization to determine whether those units are effectively pursuing their mission. Internal auditors must understand the business processes and the information system itself to retrieve data needed for their audits and evaluate internal control.
• External Auditors They audits financial statements to meet legal requirements. They must evaluate the reliability of the (AIS) that used to prepare these financial statement.
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