Accounting Information System: An Overview
The Study of Accounting Information Systems
ACCOUNTING INFORMATION SYSTEM
•Accounting: The system of Recording, Processing and
Communicating
economic information to the interested users.
•Information is data that have been organized and processed
to provide
meaning to a user.
•A system is a set of two or more interrelated components
that interact
to achieve a goal.
An AIS is a system that collects, records, stores, and
processes data to produce
information for decision makers.
An accounting information system (AIS) consists of:
– People
– Procedures
– Data
– Software
– Information technology infrastructure
SYSTEMS, DATA, AND INFORMATION
• Data are facts that are collected, recorded, stored, and
processed by an information system.
• Information is different from data.
• Information is data that have been organized and processed
to provide meaning to a user.
• Usually, more information and better information translates
into better decisions.
• However, when you get more information than you can
effectively assimilate, you suffer from information overload.
• When you’ve reached the overload point, the quality of
decisions declines while the costs of producing the information increases.
• Characteristics that make information useful:
– Relevance
– Reliability
– Completeness
– Timeliness
– Understandability
– Verifiability
– Accessibility
Value of information=
Benefits of information
- Cost of producing information
Costs and benefits of information are often difficult to
quantify, but you need to try when you’re making decisions about whether to provide
information.
WHAT IS AN AIS?
The functions of an AIS are to:
– Collect and store data about events, resources, and
agents.
– Transform that data into information that management can
use to make decisions about events, resources, and agents.
– Provide adequate controls to ensure that the entity’s
resources (including data) are:
• Available when needed
• Accurate and reliable
WHY STUDY ACCOUNTING INFORMATION SYSTEMS?
• It’s fundamental to accounting.
• Other accounting courses focus on how the information is provided
and used.
• An AIS course places greater emphasis on:
– How the data is collected and transformed.
– How the availability, reliability, and accuracy of the
data is ensured.
• AIS courses are not number-crunching courses.
• It’s fundamental to accounting.
• The skills are critical to career success.
• Auditors need to evaluate the accuracy and reliability of
information produced by the AIS.
• Tax accountants must understand the client’s AIS
adequately to be confident that it is providing complete and accurate information
for tax planning and compliance work.
• It’s fundamental to accounting.
• The skills are critical to career success.
• In private industry and not-for-profit, systems work is
considered the most important activity performed by accountants.
• In management consulting, the design, selection, and
implementation of accounting systems is a rapid growth area.
• It’s fundamental to accounting.
• The skills are critical to career success.
• The AIS course complements other systems courses.
• Other systems courses focus on design and implementation
of information systems, databases, expert systems, and telecommunications.
• AIS courses focus on accountability and control
• It’s fundamental to accounting.
• The skills are critical to career success.
• The AIS course complements other systems courses.
• AIS topics are tested on the new CPA exam.
• Makes up about 25% of the Business Environment &
Concepts section of the CPA exam.
• It’s fundamental to accounting.
• The skills are critical to career success.
• The AIS course complements other systems courses.
• AIS topics are tested on the new CPA exam.
• AIS topics impact corporate strategy and culture.
ROLE OF THE AIS IN THE VALUE CHAIN
• The objective of most organizations is to provide value to
their customers.
• What does it mean to deliver value?
• It may mean:
– Making it faster
– Making it more reliable
– Providing better service or advice
– Providing something in limited supply (like O-negative blood
or rare gems)
– Providing enhanced features
– Customizing it
• Value is provided by performing a series of activities
referred to as the value chain.
These include:
– Primary activities
– Support activities
• These activities are sometimes referred to as “line” and
“staff” activities respectively
ROLE OF THE AIS IN THE VALUE CHAIN
ROLE OF THE AIS IN THE VALUE CHAIN
