2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 1

Accounting InformationAccounting InformationSystems: An OverviewSystems: An Overview

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Learning ObjectiveLearning Objective

Understand the related conceptsUnderstand the related concepts

of transaction cycles andof transaction cycles and

internal control structure.internal control structure.

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 3

OverviewOverview

An An accounting information systemaccounting information system (AIS) (AIS)is a collection of resources designed tois a collection of resources designed to

transform data into information.transform data into information.

Accounting information systemsAccounting information systemsperform this transformation.perform this transformation.

ManualManual

ComputerizedComputerized

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 4

Information and DecisionsInformation and Decisions

Who are the two main usersWho are the two main usersof accounting information?of accounting information?

External usersExternal users

Internal usersInternal users

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 5

Information and DecisionsInformation and Decisions

Who are the external usersWho are the external usersof accounting information?of accounting information?

StockholdersStockholders

InvestorsInvestors

CreditorsCreditors

Government agenciesGovernment agencies

Customers and vendorsCustomers and vendors

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 6

Information and DecisionsInformation and Decisions

StrategicStrategic

TacticalTactical

OperationalOperational

Transaction orientedTransaction oriented

Lower-LevelLower-LevelManagementManagement

MiddleMiddleManagementManagement

Top-LevelTop-LevelManagementManagement

SummarizationSummarizationand Filtrationand Filtration

Hierarchy of Internal UsersHierarchy of Internal Users

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 7

Information SystemsInformation Systems

The term The term information systeminformation system suggests the use suggests the useof computer technology in an organization.of computer technology in an organization.

HardwareHardware

SoftwareSoftware

DataData InformationInformation

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 8

Information SystemsInformation Systems

Electronic Data Processing System (EDP)Electronic Data Processing System (EDP)

Data Processing System (DP)Data Processing System (DP)

Management Information System (MIS)Management Information System (MIS)

Decision Support System (DSS)Decision Support System (DSS)

Expert System (ES)Expert System (ES)

Executive Information System (EIS)Executive Information System (EIS)

Accounting Information System (AIS)Accounting Information System (AIS)

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Business ProcessesBusiness Processes

DataDataOrganizationalOrganizational

unitsunitsLogical timeLogical time

sequencesequence

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Business ProcessesBusiness Processes

InboundInbound salessales

logisticslogistics

OutboundOutbound salessales

logisticslogistics OperationsOperations

MarketingMarketing ServiceService

Primary Business ProcessesPrimary Business Processes

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Business ProcessesBusiness Processes

ProcurementProcurement TechnologyTechnologydevelopmentdevelopment

HumanHumanresourcesresources

FirmFirminfrastructureinfrastructure

Supporting Business ProcessesSupporting Business Processes

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Transaction Processing CyclesTransaction Processing Cycles

1. Revenue cycle1. Revenue cycle

2. Expenditure cycle2. Expenditure cycle

3. Production cycle3. Production cycle

4. Finance cycle4. Finance cycle

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Internal Control ProcessInternal Control Process

Reliability of financial reportingReliability of financial reporting

Effectiveness and efficiencyEffectiveness and efficiency

ComplianceCompliance

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 14

Internal Control ProcessInternal Control Process

What are the elements of internal control?What are the elements of internal control?

Control environmentControl environment

Risk assessmentRisk assessment

Control activitiesControl activities

Information and communicationInformation and communication

MonitoringMonitoring

2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 1 – 15

Internal Control ProcessInternal Control Process

Segregation of Duties:Segregation of Duties:

No individual or department shouldNo individual or department shouldcontrol the accounting recordscontrol the accounting recordsrelating to its own operation.relating to its own operation.

Internal Auditing:Internal Auditing:

It is an independent appraisalIt is an independent appraisalactivity within the organization.activity within the organization.

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QUESTIONS ??QUESTIONS ????