Accounting

Information
System
WEEK 01
Ika Nurlaili Isnainiyah, S.Kom., M.Sc.
 Summary of Week 01
Overview of Accounting Information System
The Role of Accounting Information System
Accountant and AIS
AIS and value chain
 Business Process
A sequence of activities:
for acquiring goods and services

for producing goods and services

for selling goods and services

 Business Process (Contd)
Three main transaction cycles:
An acquisition (purchasing) cycle is the process of
purchasing and paying for goods/services.
A conversion cycle is the process of transforming
resources acquired into goods/services.
A revenue cycle is the process of providing goods or
services to customers and collecting cash.
 Information Objectives
The goal of an information system:
To support the stewardship function of management,
To support management decision making, and
To support the firms business processes and day-to-day
operations
 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
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
 Management Information
System (MIS)
A management information system (MIS) is a system that :
captures data about an organization
stores and maintains the data
provides meaningful information for management.
 Accounting Information System
(AIS)
An AIS is a subset of an organizations MIS that provides:
accounting and financial information
other information obtained in the routine processing of
accounting transactions
 Transaction
A transaction is a event that affects or is of interest to the
organization and is processed by its information system as a
unit of work.
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
Transaction (Contd)
Factors Influencing AIS Design
 AIS vs MIS
Accounting Information Systems (AIS) process financial
transactions;
e.g., sale of goods 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
 AIS Subsystem
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
 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
 Accounting Independence
To produce useful information, organization 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.
 Role of Accountants in Relation to
AIS
User
Manager
Consultant
Evaluator
Provider of accounting and tax services
Accountants as System Designer
Accountants are the domain experts and responsible for
the conceptual design of the AIS.
Conceptual system design involves specifying the criteria
for identifying delinquent customers and the information
that needs to be reported.
As the domain expert, the accountant determines the
nature of the information required, its sources, its
destination, and the accounting rules that need to be
applied.
 Uses of Accounting Information
Systems
Producing external reports
Supporting routine activities
Decision support
Planning and control
Implementing internal control
 How an AIS can add value?
An AIS adds value by providing accurate and timely
information so that five primary value chain activities can
be performed more effectively and efficiently.
This is done by: improving the quality and reducing
the costs of products or services.
 How an AIS can add value?
(Contd)
An AIS can
improve efficiency
improve decision making capabilities
increase the sharing of knowledge
A well-designed AIS can also help an organization profit by
improving the efficiency and effectiveness of its supply
chain.
 End of Week 01

Any questions?
 REFERENCE
Hall, Accounting Information Systems, 8e 2013
Cengage Learning