AIS Chapter 1 17feb24 Class

Chapter 1:
Accounting
Information
System and the
Accountant
Introduction
The study of accounting information systems (AISS) is,

in large part, the study of the application of
information technology (IT) to accounting systems.
The AISs affects the following:
✓ Financial Accounting
✓ Managerial Accounting
✓ Auditing
2✓ Taxation
Introduction
We begin by answering the question "what are

accounting information systems" and then look at
some new developments in the field. Following this,
we will examine some traditional roles of AISS in
organizations.
Why should you study AISS? There are many reasons,

which we will review briefly in this chapter.
3
Introduction
✓ In today's job market, accounting employers expect

new hires to be computer literate.
✓ A large number of specialized and highly
compensated employment opportunities are only
available to those students who possess an
integrated understanding of accounting and IT and
can bring that understanding to bear on
complicated business decisions.
4
What to expect?
✓ The last part of this chapter describes a number of

special career opportunities for those with an
interest in AISs.
5
- A shoebox filled with a lawyer's
expense receipts,
AIS NON-AIS
- The monthly payroll
spreadsheet in the computer of
an auto-repair shop,
- The Peachtree accounting

system for a small chain of dry-
cleaning stores, and
- The enterprise resource

planning (ERP) system of a
large manufacturer
6
Accounting Information Systems (AISS)
Accounting information systems (AISS) stand at the

crossroads of two disciplines: accounting and
information systems.
The study AISS is often viewed as the study of

computerized accounting systems. But because we
cannot define an AIS by its size, it is better to define it
by what it does. This latter approach leads us to the
7
following definition that we will use as a model:
Definition: An accounting information system is a

collection of data and processing procedures that
creates needed information for its users.
8
Accounting field includes financial accounting,

managerial accounting, and taxation.
9
AISS are used in all these areas-for example, to

perform tasks in such areas as:
✓ Payroll;
✓ accounts receivable;
✓ accounts payable;
✓ Inventory; and
✓ budgeting.
10
AISS help accountants to maintain general ledger

information, create spreadsheets for strategic
planning, and distribute financial reports. Indeed, it is
difficult to think of an accounting task that is not
integrated, in some way, with an AIS.
11
Information Vs. Data
Information (versus Data). Although the terms data

and information are often used interchangeably, it is
useful to distinguish between them.
Data (the plural of datum) are raw facts about events

that have little organization or meaning-for example,
a set of raw scores on a class examination.
12
Information vs.
Data
13
Information vs. Data
Data - To be useful or meaningful, most data must be

processed into useful information.
Example:
By sorting, manipulating, aggregating, or classifying
them. An example might be computing of the class
average from the raw scores of a class examination.
14
Do raw data have to be

processed in order to be
meaningful?
15
Raw data are also important because they mark the

starting point of an audit trail that is, the path that
data follow as they flow through an AIS.
Despite the potential usefulness of some unprocessed

data, most end users need financial totals, summary
statistics, or exception values that is, processed data
for decision-making purposes.
16
Computers are wonderfully efficient and useful tools,
they also create problems. Their ability to output vast
amounts of information quickly.
It can overwhelm its users with:
✓ Too much information
✓ Too much trivial information
These can possibly cause relevant information to be

lost or overlooked.
17
This situation is known as information overload. It is
up to the accounting profession to determine the
nature and timing of the outputs created and
distributed by an AIS to its end users.
18
Inputs Processes Outputs
Data/Information from Sort, Organize, Calculate Information for

Internal/External Internal/External
Sources Decision Sources
19
Systems
Systems within the accounting profession, the term
"systems" usually refers to "computer systems."
IT advances are changing the way we do just about

everything. Just a few years ago, the authors never
imagined that people could someday purchase a
book from a "virtual bookstore" on the Internet using
a wireless laptop, while sipping on a latte in a
Starbucks.
20
Systems
The explosion in electronic connectivity and
commerce is just one of the many ways that IT
influences how people now access information or how
firms conduct business.
IT is a vital part of what accountants must know to be

employable.
21
Accounting and IT
IT is pervasive and impacts every area of accounting.
Instantaneous access is available to the Internet via

mobile communication (cell phones, iPads, smart
phones, and so on) which enable activities to take
place anytime and anywhere.
22
Accounting and IT
Taxation
Overview of the major

areas of accounting
IT that are impacted by
Financial
Accounting Auditing
information
technology
Managerial
Accounting
23
Financial Accounting
Financial Accounting. The major objective of

financial accounting information systems is to
provide relevant information to individuals and groups
outside an organization's boundaries.
24
Nonfinancial Data. The basic inputs to, and outputs
from, traditional financial accounting systems are
usually expressed in monetary units. This can be a
problem if the AIS ignores nonmonetary information
that is also important to users.
25
26
Use of AIS in other aspect of
accounting
▪ Managerial Accounting
▪ Cost Accounting
▪ Budgeting
▪ Taxation
▪ Auditing
27
Auditing
Risk Assessment
Provide assurance that an organization's set of
business risks is comprehensive and manageable.
Business Performance Measurement
Provide assurance that an organization's performance
measures beyond the traditional measures in financial
statements are relevant and reasonable for helping
the organization to achieve its goals and objectives.
28
Auditing
Information Systems Reliability
Provide assurance that an organization's information
system has been designed to provide reliable
information for decision making.
Electronic Commerce
Provide assurance that organizations doing business
on the Internet can be trusted to provide the goods
and services they promise, and that there is a
measure of security provided to customers.
29
Auditing
Health Care Performance Measurement
Provide assurance to health care recipients about the
effectiveness of health care offered by a variety of
health care providers.
Eldercare Plus
Provide assurance that various caregivers offering
services to the elderly are offering appropriate and
high-quality services.
30
GROUP ACTIVITY
Let’s challenge our minds…
Can you think of other assurance services that
CPAS could offer which would take advantage
of their AIS expertise?
32
1
We discussed the importance of IT for
understanding how AISs operate. But this is the
only skill valued by employers? How important
do you think analytical thinking skills or writing
skills are? Discuss.
33
2
“
Your positive action combined
with positive thinking results
in success
-Shiv Khera
34
35

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Chapter 1:

The study of accounting information systems (AISS) is,

We begin by answering the question "what are

Why should you study AISS? There are many reasons,

✓ In today's job market, accounting employers expect

✓ The last part of this chapter describes a number of

- The Peachtree accounting

- The enterprise resource

Accounting information systems (AISS) stand at the

The study AISS is often viewed as the study of

Definition: An accounting information system is a

Accounting field includes financial accounting,

AISS are used in all these areas-for example, to

AISS help accountants to maintain general ledger

Information (versus Data). Although the terms data

Data (the plural of datum) are raw facts about events

Data - To be useful or meaningful, most data must be

Do raw data have to be

Raw data are also important because they mark the

Despite the potential usefulness of some unprocessed

These can possibly cause relevant information to be

Data/Information from Sort, Organize, Calculate Information for

IT advances are changing the way we do just about

IT is a vital part of what accountants must know to be

Instantaneous access is available to the Internet via

Overview of the major

Financial Accounting. The major objective of

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