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    CLASS 02[1]

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    ab.a.m.riaz

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    © All Rights Reserved
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    CLASS 02[1]

    Uploaded by

    ab.a.m.riaz
    0 views16 pages

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    0 views16 pages

    CLASS 02[1]

    Uploaded by

    ab.a.m.riaz

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 16

    The Information Environment

    Like other business resources (e.g. raw materials,


    capital, and labor), information is vital for the
    survival of a business organization. In this regard,
    we have to recognize information as a business
    resource. Every business day, vast quantities of
    information flow to decision makers and other
    users to meet a variety of internal needs. In
    addition, information flows out from the
    organization to external users, such as customers,
    suppliers, and stakeholders who have an interest in
    the firm.
    Information flows.
    Data versus Information
    Data are facts, which may or may not be processed
    (edited, summarized, or refined) and have no direct
    effect on the user. By contrast, information causes the
    user to take an action that he or she otherwise could
    not, or would not, have taken. Information is often
    defined simply as processed data. This is an
    inadequate definition. Information is determined by
    the effect it has on the user, not by its physical form.
    Thus, information is not just a set of processed facts
    arranged in a formal report. Information allows users
    to take action to resolve conflicts, reduce uncertainty,
    and make decisions.
    A General Model for AIS
    An AIS can be a paper-and-pencil manual
    system, a complex system using the latest
    in IT, or something in between. Regardless
    of the approach taken, the process is the
    same. The AIS must collect, enter, process,
    store, and report data and information. The
    paper and pencil or the computer hardware
    and software are merely the tools used to
    produce the information.
    Framework of AIS and various
    subsystems
    There are six components of an AIS:
    1) The people who use the system
    2) The procedures and instructions used to collect,
    process, and store data
    3) The data about the organization and its business
    activities
    4) The software used to process the data
    5) The information technology infrastructure, including
    the computers, peripheral devices, and network
    communications devices used in the AIS
    6) The internal controls and security measures that
    safeguard AIS data.
    Framework of AIS and various
    subsystems
    AIS subsystems
    In order to explain how accounting information
    system could achieve the goals, it is needed to
    classify organizations’ activities into five main
    cycles which are the subsystems of AIS:
    1. Expenditure cycle
    2. Production cycle
    3. Human resources cycle
    4. Revenue cycle
    5. Financing cycle
    Factors Influencing of AIS

    There are three areas that specifically influence


    AIS;

    ➢ Behavioral Analysis,
    ➢ Quantitative Methods and
    ➢ Contemporary Management Concepts.
    Factors Influencing Design of AIS
    ✓ Financial reporting standard
    ✓ Institutional accounting
    ✓ Infrastructure and technology management
    commitment
    ✓ Data and information quality
    ✓ Employee attitude and willingness
    ✓ System complexity
    ✓ Organizational culture
    Components of Accounting
    Information System
    ➢ General Ledger System
    ➢ Asset Management
    ➢ Order-entry System
    ➢ Inventory Control System
    ➢ Payroll System
    ➢ Cash Management
    How an AIS Can Add Value to an
    Organization
    A well designed AIS can add value to an
    organization by:
    ▪ Improving the quality and reducing the costs of
    products or services
    ▪ Improving efficiency
    ▪ Sharing knowledge
    ▪ Improving the efficiency and effectiveness of its
    supply chain
    ▪ Improving the internal control structure
    ▪ Improving decision making
    Goal conflict vs. Goal congruence
    Goal conflict occurs when a subsystem’s goals
    are inconsistent with the goals of another
    subsystem or with the system as a whole. Goal
    congruence occurs when a subsystem achieves
    its goals while contributing to the organization’s
    overall goal. The larger the organization and the
    more complicated the system, the more difficult
    it is to achieve goal congruence.

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