INFS7004 Accounting Information Systems - PowerPoint PPT Presentation

Title: INFS7004 Accounting Information Systems


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INFS7004 Accounting Information Systems

• Lecture 1
• (1) Introduction and (2) Course Overview

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(1) Introduction Welcome

• Welcome to INF7004 Accounting Information
  Systems.
• My name is Dr. Steven (Steve) Fraser.
• I am the course coordinator. Any questions about
  the course should be addressed to me.
• I am also your lecturer and your tutor.
• I have taught AIS subjects at The University of
  Melbourne since about 1994, now at ANU teaching
  accounting and IS courses (including AIS) since
  2003.

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Course Aims

• Business systems form an integral part of the
  operation of the modern business organisations.
  This course takes a close look at the way these
  systems are structured in organisations,
  typically enterprise-wide systems such as SAP ERP
  systems, to ensure that they are able to
  successfully collect and process information
  relating to their core transactions. To this
  end, this course focuses on the main transaction
  cycles and business processes, the technologies
  required for these activities, as well as the
  internal controls required to regulate their
  operation. Students will gain a detailed
  understanding of these transaction cycles and
  business processes by focusing on theory as well
  as engaging in practice.

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Course Aims

• This course also considers some recent
  developments such as new message protocols like
  XML and XBRL used in electronic commerce that are
  particularly important to users of financial
  accounting information such as analysts and
  investors.

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Course Aims, cont

• AIS should be of interest to accounting and
  information systems students because this course
  broadens students understanding of how
  organisations operate and the information systems
  and internal controls required to support them.
  Moreover, this course provides students with an
  understanding of the business processes
  (particularly accounting processes) adopted by
  organisations to capture and process their core
  transactions.
• This course provides the following pedagogical
  benefits for students studying accounting,
  information systems and information technology

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Course Aims, cont .

• IS and IT students AIS provides an understanding
  of business processes that underpin transaction
  processing systems (TPSs) that are often integral
  to enterprise-wide systems such as ERP systems
  like SAP AG the typical database structure found
  in these systems and the internal controls used
  by organisations to ensure these TPSs are
  effective.
• Accounting students AIS provides an
  understanding of the role that information
  systems play in the evolution of accounting
  processes from the traditional Pachioli manual
  processes to the more automated processes based
  on the Resources-Events-Agents (REA) model
  designed to operate with computer-based
  information technology.
• Financial accounting students AIS provides an
  understanding of the role of information systems
  for the communication of financial accounting
  information systems using the XBRL protocol.

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Course Aims, cont .

• Management accounting students AIS provides a
  detailed understanding of the way accounting
  information is derived in organisations by
  linking students understanding of specific
  accounting information, such as manufacturing
  variances, with the approach organisations
  typically use to collect the data to calculate
  this accounting information.
• Auditing students AIS provides these students
  with an overview of accounting systems processes
  and an understanding of the threats to these
  processes which typically operate in a
  computer-based environment, and the internal
  controls needed to minimise their exposure.

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Objectives

• Students who successfully complete this subject
  should have the knowledge and skills to
• describe how and why organisations adopt
  information technology based on their
  understanding of the role of computer-based
  accounting systems, and the business processes
  that support these systems.
• design an AIS database based on an understanding
  of the concept of business exchange and how they
  map into the REA framework
• prepare and understand appropriate documentation
  that describes the business oriented processes
  underpinning the exchange process in
  organisations
• analyse the internal controls in organisations
  based on their understanding of the importance of
  organisational controls in the operation of
  enterprise systems such as SAP AG ERP systems.

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Objectives

• describe the use of XBRL in organisations based
  on their understanding of the use of XBRL in
  commerce.
• describe the accounting processes in ERP systems
  based on their understanding of how the basic
  accounting processes are implemented in the SAP
  AG system.
• show competence in giving oral presentations.

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Prerequisites or Assumed Knowledge

• This is a Masters level course.
• It is assumed that you will have some information
  systems and/or accounting experience or have/are
  taking appropriate courses.

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Textbooks

• Hall, J., (2008), Accounting Information Systems,
  6th Edition, Thomson, South-Western, NJ
• The Calvert SAP Work-Book will be available
  later in semester

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Lectures

• Each week the lecture session will include a
  two-hour lecture outlining the major issues
  pertaining to each weeks theme.
• This lecture will provide an overview only, and
  you are required to supplement this lecture with
  reading from the text and other sources.
• Lectures are held in one two hour session per
  week on Wednesdays 2pm to 4pm, ARNDT LT2
  (Building 25)

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Tutorials

• Every student is required to attend the tutorial.
• The tutorial will be held on Wednesdays 1pm to
  2pm, ARNDT LT2 (Building 25).
• Tutorials start in week 2. Please note that
  attendance at tutorials will be recorded because
  it is an important component of the assessment in
  this unit.

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Assessment
All components of the above assessment are
compulsory and must be submitted. Also, you must
achieve at least 50 for the final examination
component to be eligible for an automatic pass
grade in this course.
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Assignments

• The assignment is worth 20 of the marks of the
  course, and should be submitted by 4pm, Friday,
  16th October, 2009.
• This work is to be done in pairs. You may want
  to split the work to reduce individual
  work-loads.
• Please note that you will be able to complete
  this assignment in the computer lab in Copland
  G025, with academic support at specified times,
  or you can download a copy of the GUI from the
  course web-site with instructions to enable you
  to access the SAP system from your home computer.

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Assignments

• The aim of this assignment is to work through the
  four (4) SAP accounting modules in the Calvert
  Workbook which constitute the main accounting
  system, and based on your experience, to provide
  an analysis of this SAP accounting system. The
  nature of this analysis will be made clear in
  lectures.
• The four SAP accounting modules are-
• module 1 Introduction to SAP
• module 2 General Ledger
• module 3 Accounts Payable and the Procurement
  process
• module 4 Accounts Receivable and the Sales Order
  process

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Assignments

• Required Work through the four SAP Accounting
  modules specified above and provide a critique of
  the SAP system based on this work.
• This critique should include documentation of the
  SAP revenue and expenditure cycles you
  encountered, which should include, as a minimum,
  document/systems flowcharts. (You would be well
  advised to use the Gelinas Ch. 3 approach to
  ensure your documentation is of high quality.)
• Your critique should also focus on the SAP
  controls ease of use and the nature of the SAP
  functionality and its scope. Your critique can
  also focus more broadly on the SAP system but
  should NOT be too general (do not include
  material on ERP systems in general unless it
  applies to the SAP system).

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Assignments

• What outcomes should we expect from this
  assignment? These requirements aim to merge the
  revenue and expenditure cycles that you learn
  early in the course, with the SAP programs you
  encountered as you worked through Cheryl
  Calverts workbook.
• (The real learning from working through the
  Calvert workbook takes place during the systems
  documentation activity AFTER working through the
  4 modules, by you reflecting on how the SAP
  programs link together as part of the accounting
  cycles.)
• This should provide you with a framework (your
  mental model) for understanding the links between
  these programs.
• You will be able to use this framework to give
  you with a better understanding of how the SAP
  system handles the Accounts Payable and the
  Procurement Process and Accounts Receivable and
  the Sales Order Process.

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Assignments

• You will, for instance, from your work on the
  accounting cycles know which departments are
  likely to use the different SAP screens and the
  controls that should be in place in these cycles.

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Lecture Timetable

• See course outline http//cbe.anu.edu.au/courses/o
  utline/INFS7004.pdf
• ANY QUESTIONS?

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(2) Course Overview - Objectives

• Primary information flows within the business
  environment
• Accounting information systems and management
  information systems
• The general model for information systems
• Financial transactions from non-financial
  transactions
• The functional areas of a business
• Two main stages in the evolution of information
  systems
• Three roles of accountants in an information
  system

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Internal External Information Flows
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Internal Information Flows

• Horizontal flows of information used primarily at
  the operations level to capture transaction and
  operations data
• Vertical flows of information
• downward flows instructions, quotas, and
  budgets
• upward flows aggregated transaction and
  operations data

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Information Requirements

• Each user group has unique information
  requirements.
• The higher the level of the organization, the
  greater the need for more aggregated information
  and less need for detail.

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Information in Business

• Information is a business resource that
• needs to be appropriately managed
• is vital to the survival of contemporary
  businesses

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What is a System?

• A group of interrelated multiple components or
  subsystems that serve a common purpose
• System or subsystem?
• 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 Decomposition versus System Interdependency

• System Decomposition
• the process of dividing the system into smaller
  subsystem parts
• System Interdependency
• distinct parts are not self-contained
• they are reliant upon the functioning of the
  other parts of the system
• all distinct parts must be functioning or the
  system will fail

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What is an Information System?

• An information system is the set of formal
  procedures by which data are collected, processed
  into information, and distributed to users.

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Transactions

• A transaction is a business event.
• Financial transactions
• economic events that affect the assets and
  equities of the organization
• e.g., purchase of an airline ticket
• Nonfinancial transactions
• all other events processed by the organizations
  information system
• e.g., an airline reservation no commitment by
  the customer

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Transactions, cont
Financial Transactions
Information System
User Decision Making
Information
Nonfinancial Transactions
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What is an Accounting Information System?

• 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 firms transactions.
• It distributes transaction information to
  operations personnel to coordinate many key tasks.

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AIS versus MIS

• Accounting Information Systems (AIS) process
• financial transactions e.g., sale of goods
• and nonfinancial transactions that directly
  affect the processing of financial transactions
  e.g., addition of newly approved vendors
• Management Information Systems (MIS) process
• nonfinancial transactions that are not normally
  processed by traditional AIS e.g., tracking
  customer complaints

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AIS versus MIS?
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AIS Subsystems

• Transaction processing system (TPS)
• supports daily business operations
• General Ledger/ Financial Reporting System
  (GL/FRS)
• produces financial statements and reports
• Management Reporting System (MRS)
• produces special-purpose reports for internal use

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The General AIS Model
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Data Sources

• Data sources are financial transactions that
  enter the information system from internal and
  external sources.
• External financial transactions are the most
  common source of data for most organizations.
• E.g., sale of goods and services, purchase of
  inventory, receipt of cash, and disbursement of
  cash (including payroll).
• Internal financial transactions involve the
  exchange or movement of resources within the
  organization.
• E.g., movement of raw materials into
  work-in-process (WIP), application of labor and
  overhead to WIP, transfer of WIP into finished
  goods inventory, and depreciation of equipment.

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Transforming the Data into Information

• Functions for transforming data into information
  according to the general AIS model
• 1. Data Collection
• 2. Data Processing
• 3. Data Management
• 4. Information Generation

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1. Data Collection

• Capturing transaction data
• Recording data onto forms
• Validating and editing the data

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2. Data Processing

• Classifying
• Transcribing
• Sorting
• Batching

• Merging
• Calculating
• Summarizing
• Comparing

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3. Data Management

• Storing
• Retrieving
• Deleting

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4. Information Generation

• Compiling
• Arranging
• Formatting
• Presenting

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Characteristics of Useful Information

• Regardless of physical form or technology, useful
  information has the following characteristics
• Relevance serves a purpose
• Timeliness no older than the time period of the
  action it supports
• Accuracy free from material errors
• Completeness all information essential to a
  decision or task is present
• Summarization aggregated in accordance with the
  users needs

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Information System Objectives in a Business
Context

• The goal of an information system is to support
• the stewardship function of management
• management decision making
• the firms day-to-day operations

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Organizational Structure

• The structure of an organization helps to
  allocate
• responsibility
• authority
• accountability
• Segmenting by business function is a very common
  method of organizing.

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Functional Areas

• Inventory/Materials Management
• purchasing, receiving and stores
• Production
• production planning, quality control, and
  maintenance
• Marketing
• Distribution
• Personnel
• Finance
• Accounting
• Computer Services

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Accounting Independence

• Information reliability requires accounting
  independence.
• Accounting activities must be separate and
  independent of the functional areas maintaining
  resources.
• Accounting supports these functions with
  information but does not actively participate.
• Decisions makers in these functions require that
  such vital information be supplied by an
  independent source to ensure its integrity.

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The Computer Services Function
Distributed Data Processing
Centralized Data Processing
Most companies fall in between.
Reorganizing the computer services function into
small information processing units that are
distributed to end users and placed under their
control
All data processing is performed by one or more
large computers housed at a central site that
serves users throughout the organization. Primar
y areas database administration data
processing systems development systems maintenance
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Organization of Computer Services Function in a
Centralized System
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Organizational Structure for a Distributed
ProcessingSystem
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Potential Advantages of DDP

• Cost reductions in hardware and data entry tasks
• Improved cost control responsibility
• Improved user satisfaction since control is
  closer to the user level
• Backup of data can be improved through the use of
  multiple data storage sites

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Potential Disadvantages of DDP

• Loss of control
• Mismanagement of company resources
• Hardware and software incompatibility
• Redundant tasks and data
• Consolidating tasks usually segregated
• Difficulty attracting qualified personnel
• Lack of standards

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Manual Process Model

• Transaction processing, information processing,
  and accounting are physically performed by
  people, usually using paper documents.
• Useful to study because
• helps link AIS courses to other accounting
  courses
• often easier to understand business processes
  when not shrouded in technology
• facilitates understanding internal controls

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The Evolution of IS Models The Flat-File Model
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Data Redundancy Problems

• Data Storage - excessive storage costs of paper
  documents and/or magnetic form
• Data Updating - changes or additions must be
  performed multiple times
• Currency of Information - potential problem of
  failing to update all affected files
• Task-Data Dependency - users inability to obtain
  additional information as needs change
• Data Integration - separate files are difficult
  to integrate across multiple users

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The Evolution of IS Models The Database Model
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An REA Data Model Example
R
E
A
M
Inventory
M
Sales
M
1
Sales person
M
M
1
Customer
1
M
M
Cash Collections
Cash
1
M
Cashier
M
1
34
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REA Model

• The REA model is an accounting framework for
  modeling an organizations
• economic resources e.g., assets
• economic events i.e., affect changes in
  resources
• economic agents i.e., individuals and
  departments that participate in an economic event
  
• Interrelationships among resources, events and
  agents
• Entity-relationship diagrams (ERD) are often used
  to model these relationships.

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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
  appropriate systems design.

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Accountants as System Designers

• The accounting function is responsible for the
  conceptual system, while the computer function is
  responsible for the physical system.
• The conceptual system determines the nature of
  the information required, its sources, its
  destination, and the accounting rules that must
  be applied.

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Accountants as System Auditors

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