© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Chapter 1:Introduction to Accounting

Information Systems

Accounting Information Systems 9e

Gelinas ►Dull ► Wheeler

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Textbook Themes1. Enterprise Systems — integrates business

process functionality and information from all of an organization’s functional areas (marketing and sales, cash receipts, purchasing, cash disbursements, human resources, production and logistics, and business and financial reporting).

2. E-business — use of electronic networks (including the Internet) to undertake business processes between individuals and organizations.

3. Internal Control — a process to provide reasonable assurance that organizational objectives will be achieved.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives Appreciate the complex, dynamic environment in which

accounting is practiced. Know the relationship between the AIS and the

organization’s business processes. Know the attributes of information. Recognize how information is used for different types of

decisions and at various levels in the organization. Recognize how the information system supports the

management function. Recognize the accountant’s role in relation to the current

environment for the AIS.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Sarbanes-Oxley Act of 2002Implications for both public and private

accountants:

Section 404 (as modified by PCAOB Auditing Standard No. 5)

Management must identify, document, and evaluate significant internal controls.

Auditors must report on the effectiveness of the organization’s system of internal controls.

Section 409 Requires disclosure to the public on a

“rapid and current” basis of material changes in an organization’s financial condition.

Challenges & Opportunities of Accountants

Will you be able to adapt to advances in technology and its improvements?

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Could you consult with management to help them comply with SOX?

Could you help assess the risks and benefits related to an organization?

Do you have technology abilities that would help you develop controls necessary to ensure a secure and reliable web presence?

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Elements in the Study of AIS

2012 Top Technology Initiatives1. Securing the IT environment2. Managing and retaining data3. Managing risk and compliance4. Ensuring privacy 5. Leveraging emerging technologies6. Managing system implementation7. Enabling decision support and managing

performance8. Governing and managing IT investment/spending9. Preventing and responding to fraud10.Managing vendors and service providers

2012 AICPA IT Initiatives

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Systems and Subsystems

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Systems and Subsystems (cont’d)

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Systems and Subsystems System: a set of interdependent elements

that together accomplish specific objectives. A system must have organization, interrelationships, integration, and central objectives.

Subsystem: a part of a system. Within limits, any system or subsystem can be divided into its component parts.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Information System (IS)An information system (IS) or

management information system (MIS) is a man-made system that consists of an integrated set of computer-based and manual components established to collect, store, and manage data and to provide output information to users.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Functional Model of an Information System

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Accounting Information System (AIS)Accounting information system (AIS) is a

specialized subsystem of the IS.Collect, process and report information

related to the financial aspects of business events.

Often integrated and indistinguishable from the overall information system.

Like the IS, the AIS may be divided into components based on the operational functions supported. Components are called business processes or AIS subsystems.

Three Business Process Components Information process: portion of the overall IS

related to a particular business process. Operations process: man-made system

consisting of the people, equipment, organization, policies, and procedures whose objective is to accomplish the work of the organization.

Management process: man-made system consisting of the people, authority, organization, policies, and procedures whose objective is to plan and control the operations of the organization.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Logical Components of a Business Process

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Transforming Data into Information

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Transforming Data into Information (cont’d)

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Information Qualities

Key Information QualitiesEffectiveness – relevant, timely, correct, consistent

and usable manner

Efficiency – productive and economical use of resources

Confidentiality – protection of sensitive information

Integrity – accuracy, completeness, and validity

Availability - available now and in the future

Compliance - complying with laws, regulations and contractual arrangements

Reliability – appropriate, accurate, and verifiable© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Management Decision Making1. Intelligence: Searching the environment

for conditions calling for a decision.2. Design: Inventing, developing, and

analyzing possible courses of action.3. Choice: Selecting a course of action.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Steps in Decision Making

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Management Problem Structure and Information Requirements

Structure of DecisionsStructured decisions: those for which all

three decision phases (intelligence, design, and choice) are relatively routine or repetitive.

Unstructured decisions: those for which none of the decision phases (intelligence, design, or choice) are routine or repetitive.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Horizontal and Vertical Information FlowsHorizontal information flows relate to specific

business events, such as one shipment, or to individual inventory items. The information moves through operational units such as sales, the warehouse, and accounting.

Vertical information flows service a multi-level management function from operations and transaction processing through tactical, operations, and strategic management.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Accountant’s Role in Current Business EnvironmentDesigner — application of accounting

principles, auditing principles, IS techniques, and systems development methods to design an AIS.

User — participate in the AIS design process.

Auditor — provide audit and assurance services.

-E N D-

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.