Accounting information systems
Lecture 1 – Introduction to AIS
A system is a group of 2 or more components that are interrelated and serve a common
purpose.
- Natural system
- Artificial system
Information system: a set of formal procedures by which data are collected, processed into
information and distributed to users. It helps to plan, make decisions and control processes.
- Financial transactions
- Non-financial transaction (do not influence the financial statement)
Financial transactions lead to an accounting information system (AIS).
Primary objectives of AIS
- Supporting the stewardship of management
- Supporting management decision making
- Supporting the day-to-day operations
AIS consists of 3 subsystems
Transaction processing General ledger/Financial Management reporting
system Reporting system system
Processing day-to-day Processing journal entries Provides business
reports and create journal and creates financial information in the form of
entries. statements. reports and statements.
- Revenue cycle
- Expenditure cycle
- Production cycle
- HR/payroll cycle
- Financing cycle
AIS adds value to an organization:
- Improves quality and reduces costs of products and services
- Improves efficiency
- Shares knowledge
- Improves efficiency and effectiveness of the supply chain of the organization
- Improves internal control structure
- Improves decision making (identifying the problem, collect/interpret info/evaluate
alternatives/etc.)
Lecture 2 – Data Flow Diagram
Data Flow Diagram (DFD): represents a flow of data of a process or a system. And provides
information about the inputs and outputs of each entity and the process itself.
, Basic DFD symbols Common DFD mistakes
Note: between every “location” in the process,
there’s an activity to represent this flow.
Common DFD mistakes
1. When an activity or process
doesn’t have an output, we
call this a black hole.
2. When an activity or process
doesn’t have an input, but
creates output, we call this a
miracle.
3. When an activity or process
have outputs that are
greater than the sum of
inputs, and the output is not
reasonable, we call this a grey hole.
Two kinds of DFD
Physical DFD Logical DFD
- Showing the system’s internal and - Showing the system’s processes
external entities, and the data flow data stores, and the flows of data
in and out of these entities. into and out of the processes and
- Specifies where, how, and by whom data stores.
processes are accomplished. - Specifies what tasks the system is
- Does not tell us what is doing.
accomplished. - Does not specify this task.
Depicts a system’s infrastructure Portrays a system’s activities, so we can
concentrate on the functions that a system
performs.
, Two types of flowcharts
Document flowcharts System flowcharts
Illustrate the flow of data and documents Depict the relationships among system
among areas of responsibility in the input, processing, storage, and output.
organization.
Basic flowcharts symbols
General ledger: account that sort and store all the information from business transactions.
Subsidiary ledger: a more detailed ledger (mostly per customer), support of the
General Ledger.
Primarily objective is processing and communicating information. With a few
operational functions, but mainly informational functions:
Information function General Ledger Information function of the Financial
process Reporting process
- Accumulating data, classifying data - Preparing financial statements
by GL accounts, and recording data - Ensuring FS is conform to GAAP
in these accounts. -
- Providing information needed to
prepare external and internal
reports.
Special journal: records transactions that are common and identical (sales journal).
General journal: records transactions that are not often made (depreciation, dividends).
General ledger:
Objectives Risks Control
- Completeness - Subsidiary ledger not - Transaction
- Validity equal to G/L authorization
- Accuracy accounts. - Segregation of duties
- Timeliness - Inappropriate access - Access controls
- Resource security to the G/L - Accounting records
- Poor audit trail (the - Independent
way an auditor can verification
trace back
transactions)
- Lost or damaged
data
Lecture 1 – Introduction to AIS
A system is a group of 2 or more components that are interrelated and serve a common
purpose.
- Natural system
- Artificial system
Information system: a set of formal procedures by which data are collected, processed into
information and distributed to users. It helps to plan, make decisions and control processes.
- Financial transactions
- Non-financial transaction (do not influence the financial statement)
Financial transactions lead to an accounting information system (AIS).
Primary objectives of AIS
- Supporting the stewardship of management
- Supporting management decision making
- Supporting the day-to-day operations
AIS consists of 3 subsystems
Transaction processing General ledger/Financial Management reporting
system Reporting system system
Processing day-to-day Processing journal entries Provides business
reports and create journal and creates financial information in the form of
entries. statements. reports and statements.
- Revenue cycle
- Expenditure cycle
- Production cycle
- HR/payroll cycle
- Financing cycle
AIS adds value to an organization:
- Improves quality and reduces costs of products and services
- Improves efficiency
- Shares knowledge
- Improves efficiency and effectiveness of the supply chain of the organization
- Improves internal control structure
- Improves decision making (identifying the problem, collect/interpret info/evaluate
alternatives/etc.)
Lecture 2 – Data Flow Diagram
Data Flow Diagram (DFD): represents a flow of data of a process or a system. And provides
information about the inputs and outputs of each entity and the process itself.
, Basic DFD symbols Common DFD mistakes
Note: between every “location” in the process,
there’s an activity to represent this flow.
Common DFD mistakes
1. When an activity or process
doesn’t have an output, we
call this a black hole.
2. When an activity or process
doesn’t have an input, but
creates output, we call this a
miracle.
3. When an activity or process
have outputs that are
greater than the sum of
inputs, and the output is not
reasonable, we call this a grey hole.
Two kinds of DFD
Physical DFD Logical DFD
- Showing the system’s internal and - Showing the system’s processes
external entities, and the data flow data stores, and the flows of data
in and out of these entities. into and out of the processes and
- Specifies where, how, and by whom data stores.
processes are accomplished. - Specifies what tasks the system is
- Does not tell us what is doing.
accomplished. - Does not specify this task.
Depicts a system’s infrastructure Portrays a system’s activities, so we can
concentrate on the functions that a system
performs.
, Two types of flowcharts
Document flowcharts System flowcharts
Illustrate the flow of data and documents Depict the relationships among system
among areas of responsibility in the input, processing, storage, and output.
organization.
Basic flowcharts symbols
General ledger: account that sort and store all the information from business transactions.
Subsidiary ledger: a more detailed ledger (mostly per customer), support of the
General Ledger.
Primarily objective is processing and communicating information. With a few
operational functions, but mainly informational functions:
Information function General Ledger Information function of the Financial
process Reporting process
- Accumulating data, classifying data - Preparing financial statements
by GL accounts, and recording data - Ensuring FS is conform to GAAP
in these accounts. -
- Providing information needed to
prepare external and internal
reports.
Special journal: records transactions that are common and identical (sales journal).
General journal: records transactions that are not often made (depreciation, dividends).
General ledger:
Objectives Risks Control
- Completeness - Subsidiary ledger not - Transaction
- Validity equal to G/L authorization
- Accuracy accounts. - Segregation of duties
- Timeliness - Inappropriate access - Access controls
- Resource security to the G/L - Accounting records
- Poor audit trail (the - Independent
way an auditor can verification
trace back
transactions)
- Lost or damaged
data
