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20 views

1 AIS Lecture 1

Uploaded by

mumawanki.1234
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 27

ACCT 406: Accounting Information Systems

Lecture 1

Dr. F. Kwaku Aboagye-Otchere, Dr. E. Nartey &


Dr. Nicholas Asare

College of Humanities
School of Business
UNIVERSITY OF GHANA BUSINESS SCHOOL
2016/2017
2019/2020
Learning Objectives

Introduction to AIS
• After engaging in this presentation, you should be able to:
1. Critically evaluate accounting practices, reflecting how
accounting information systems enrich and extend the role of
the accountant
2. Compare and contrast data and information
3. Critique and synthesize system concepts
4. Justify and communicate the role of accounting information in
supporting decision makers
What is an accounting information system?

• The definition of an accounting information system


(AIS) has been an ongoing issue.
• Constant challenges are:
– the need for the field of accounting information systems to
carve out its own area distinct from other disciplines.
– being a part of a constantly evolving and changing
landscape.
• The search for the definition of accounting
information systems goes back to first principles.
Accounting First Principles

• Accounting information systems can assist


with the accounting cycle and related
processes
Accounting First Principles
• The accounting cycle is routinely handled by
accounting information systems (AISs).
• AISs allow journalising and posting transactions for
financial reports to be performed more efficiently.
• AISs range in scope and complexity: Enterprise
Resource Planning Solutions
Accounting First Principles
• AIS has changed the role of accountants to one of
ensuring …
– Data quality
– Designing and validating usable financial reports
– Solving problems
– Advising senior corporate decision makers
• AISs still rely on a knowledge of accounting.
Learning Objective No. 2
– Compare and contrast data and information
Data and Information Explained
• The traditional accounting process is focused on
capturing financial data.
• Data are the raw facts relating to or describing an
event.
• The ability to record appropriate data forms an
important part of the quality of an AIS.
• Data is still captured in the journals and ledgers
– How it is done will vary from organisation to organisation
Data and Information Explained
• Data needs to become useful
– This happens when the application of rules or knowledge
enable a conversion into information.
• Information is used in decision making.
– For example sales data can be made useful by
summarising the details in weekly sales summaries.
• One key issue with information is the potential to provide
too much - this is referred to as information overload.
• Organisations need to be sure that the information they
produce is relevant and necessary.
• Needs to facilitate decision making.
Useful Information Characteristics

o Relevance
o Reliability
o Completeness
o Timeliness
o Understandability
o Verifiability
o Accessibility

10
Value of Information

Benefits Costs
o Reduce uncertainty o Time
o Improve decisions o Resources
o Improve planning o Production
o Improve scheduling o Distribution

11
Users of Accounting Information

Internal Users External Users


o Managers at different o Stockholders
levels in an organization o Creditors
- Operations o Investors
management o Government agencies
- Middle management o Customers
- Top/strategic
management
o Employees

12
Internal and External Flow of Information
Learning Objective No. 3
– Critique and synthesize system concepts
• What is a system?
What is a system?
• A system is an organised set of principles or
procedures created and used to carry out a specific
activity
• Dependent on the input-processing-output (IPG)
model used in accounting
What is a System? Data Input
• Inputting into an AIS
– Manual keying
– Scanning via bar coder readers or the like
– Image scanners
– Magnetic ink character recognition (MICR)
– Voice recognition
– Optical mark readers
What is a System? Processing.
• Processing refers to the activities that are performed
on the data inputs
– Validity checking
– Manipulation of inputs
• Calculations
What is a System? Outputs
• Outputs refers to what is obtained from a system or
the result of what a system does
• Focus on decision making
– Receipts
– Invoices
– Reports
– Financials
What is a System? Outputs
• Outputs are the starting point for systems design
– Focus is on capturing and processing data to obtained the
desired outputs, information needs
What is a System? Summary

Inputs [Data]

Processing

Outputs [Information]
What is a System? Control
• Controls are an important part of an AIS
• Control system is the set of checks and balances to
ensure:
– The system is running as expected
– There are no data errors or exceptional circumstances
• Control systems interact with inputs, process and
outputs
What is a System? Scope
• Any system needs to have a defined task or domain
to which it is applied
• Concept of system scope: the domain that a system
addresses
• Systems also operate within an external
environment
– E.g., taxation system
– Australian Accounting Standards
– Company Law
What is an Accounting Information System?

The application of technology to the capturing,


verifying, storing, sorting and reporting of data relating
to an organisation’s activities.
Learning Objective No. 4
• Justify and communicate the role of accounting
information in supporting decision makers
The role of accounting and accounting
information
• Accounting information is central to many activities
within and beyond an organisation.
• Some of the purposes of accounting information,
mentioned in Statement of Accounting Concepts 2
(SAC 2) are assessing:
– profitability and cash flows
– the ability of a supplier to operating into the future and
provide goods or services
– whether the business is achieving its aims and objectives.
The role of accounting and accounting
information
• But, traditional financial statements are not the only
source of information available through the AIS.
• An AIS can generate diverse financial information.
• Uses of this information include:
– decision-making by external and internal stakeholders e.g.
investment decisions
– evaluating company performance.
The role of accounting and accounting
information
• Data management is the processing of attaining,
storing and controlling of data (in an AIS).
• Organisations need to carefully decide what
information is gathered – this can be done by data
classification:
– ‘a fundamental process that drives…the alignment of
information to best address business needs’.
• Data classification involves understanding the
organisation, its processes and the data necessary to
support those processes.

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