Summary Auditing & Accounting Information Systems
Lecture 1
Accounting: the process of identifying, measuring and communicating economic information to
permit informed judgements and decisions by internal and external users of the information.
- It’s an information-providing activity, so accountants need to understand
o How the system that provides that information is designed, implemented and used
o How (non-) financial information is reported
o How information is used to make decisions
The accounting process
Accounting ≠ Auditing
Accounting > Auditing
Example of an accounting process of a bookstore
- Transaction: sales of a book
- AIS: recording transactions
- Firm management:
How many books did we sell in location X and location Y?
Do we need to close a location?
- Auditor:
Was the transaction recorded correctly?
How did the bookstore make sure that the transaction is recorded correctly?
- Stakeholders:
Does the bookstore make a profit?
What is the bookstores market share of book sales?
Information is a business resource
Purpose of information
- Information for delegation and accountability
- Information for decision-making
- Information for operating the business
Information = data presented in a form useful for decision making
A system
- Consist of interdependent (connected) elements (also called
components)
- Is set up to achieve one or more specific objectives
A sub-system can exist without the containing system, but usually has
no useful function by itself
An element or component cannot be used alone
,A business organization
Information system is a set of
interdependent components working
together to collect, process, store
and provide information
An accounting information system is an organized collection of software and hardware for
inputting, processing and storing data on business events, aimed at providing information to
internal and external stakeholders that complies with specified quality criteria and creating the right
conditions for effective and efficient delegation and accountability, decision-making and operating
the business
- AIS collects, process and reports information related to the financial (accounting) aspects of
business events
o AIS = specialized subsystem of IS
AIS adding value to the organization
- Improving quality of information and therefore better decision-making
o Internal decisions such as budgeting, product mix, marketing activities, etc.
o External decisions such as investments, financing, etc.
- Improves efficiency
o Automation helps saving resources
o Information more timely
- Shares knowledge by communicating procedures
- Improves internal control structure
o Safeguarding an organization’s assets
Quality dimensions information-based control framework
,Quality spectrum of data
Quality of IT structure
Lecture 2
Information-based control framework
- Different books/lectures can have different framework, but they all are based on the same
thing
, Quality of operations
- = balance scorecard
- 4 dimensions to capture the operation of your business
- It can be more than 4 dimensions depending on what your business wants
- Most people look at financial only, but the other dimensions are important too
Quality spectrum of information
The goal of internal control is to provide a shield that protects assets against undesirable events
(risks) that bombard the organization
- Access
- Fraud
- Errors
- Mischief
Not all undesirable events can be stopped by internal control. There will always be exposure that
can’t stop the events that damage the assets
Internal control: the process effected by an entity’s board of directors,
management and other personnel, designed to provide reasonable
assurance regarding the achievement of the objectives related to:
Lecture 1
Accounting: the process of identifying, measuring and communicating economic information to
permit informed judgements and decisions by internal and external users of the information.
- It’s an information-providing activity, so accountants need to understand
o How the system that provides that information is designed, implemented and used
o How (non-) financial information is reported
o How information is used to make decisions
The accounting process
Accounting ≠ Auditing
Accounting > Auditing
Example of an accounting process of a bookstore
- Transaction: sales of a book
- AIS: recording transactions
- Firm management:
How many books did we sell in location X and location Y?
Do we need to close a location?
- Auditor:
Was the transaction recorded correctly?
How did the bookstore make sure that the transaction is recorded correctly?
- Stakeholders:
Does the bookstore make a profit?
What is the bookstores market share of book sales?
Information is a business resource
Purpose of information
- Information for delegation and accountability
- Information for decision-making
- Information for operating the business
Information = data presented in a form useful for decision making
A system
- Consist of interdependent (connected) elements (also called
components)
- Is set up to achieve one or more specific objectives
A sub-system can exist without the containing system, but usually has
no useful function by itself
An element or component cannot be used alone
,A business organization
Information system is a set of
interdependent components working
together to collect, process, store
and provide information
An accounting information system is an organized collection of software and hardware for
inputting, processing and storing data on business events, aimed at providing information to
internal and external stakeholders that complies with specified quality criteria and creating the right
conditions for effective and efficient delegation and accountability, decision-making and operating
the business
- AIS collects, process and reports information related to the financial (accounting) aspects of
business events
o AIS = specialized subsystem of IS
AIS adding value to the organization
- Improving quality of information and therefore better decision-making
o Internal decisions such as budgeting, product mix, marketing activities, etc.
o External decisions such as investments, financing, etc.
- Improves efficiency
o Automation helps saving resources
o Information more timely
- Shares knowledge by communicating procedures
- Improves internal control structure
o Safeguarding an organization’s assets
Quality dimensions information-based control framework
,Quality spectrum of data
Quality of IT structure
Lecture 2
Information-based control framework
- Different books/lectures can have different framework, but they all are based on the same
thing
, Quality of operations
- = balance scorecard
- 4 dimensions to capture the operation of your business
- It can be more than 4 dimensions depending on what your business wants
- Most people look at financial only, but the other dimensions are important too
Quality spectrum of information
The goal of internal control is to provide a shield that protects assets against undesirable events
(risks) that bombard the organization
- Access
- Fraud
- Errors
- Mischief
Not all undesirable events can be stopped by internal control. There will always be exposure that
can’t stop the events that damage the assets
Internal control: the process effected by an entity’s board of directors,
management and other personnel, designed to provide reasonable
assurance regarding the achievement of the objectives related to:
