Accounting Process Management
The International Federation of Accountants (IFAC) identifies four roles that
accountants can play in the new digital age:
1. Users of technology and accounting information systems
2. Managers of technology and accounting information systems
3. Designers of accounting information systems
4. Evaluators of accounting information systems
Use of information systems:
1) Financial reporting (e.g., core finance system, SAP)
2) Customer relationship management (e.g., bonus card)
3) Supply chain management (e.g., food safety management system)
4) Track sustainability progress (e.g. GHG emissions) and ESG risks)
WEEK 1
Accounting information system (AIS = APM) = a system that records,
processes, summarizes, reports, and communicates on transactions to provide
financial and non-financial information to make decisions.
> To ensure appropriate levels of internal controls (security measures to
protect integrity
and privacy of sensitive data) for those transactions.
> To provide information that companies are required to have/use for
decisions
To address business opportunities (through business analytics):
- decide what information is needed
- design/use an information system to gather the necessary information
- analyse that information to offer helpful advice to management
! Accounting is an information-providing activity (how info is
provided/reported/used/attest)
- Accountants must be involved in supporting evidence-based decision-
making
Simple information system:
Input: sales data for all stores
Storage: data science department
Processing: queries of what sells best at AH to-go
Output: reports what sells best at AH to-go
Data = raw facts that describe an event and have little meaning on their own.
Serves as input.
Information = being data organized in a meaningful way to be useful to the
user.
Attributes that make information useful:
1) Relevant (information capable of making a difference in a decision)
, > Predictive value, Feedback value, Materiality
2) Faithful representation (information produced accurately reflects condition of
the business)
> Complete, Neutral, Free form Error
Information value chain:
Voorbeeld van een business risk profile:
Discretionary information = information that is not required by law.
> Managers must decide if the benefits of discretionary information
outweigh the costs
of obtaining that information.
Mandatory information = information that is required by law.
> Since it is required, information has to be produced, but the manager
may choose to
minimize the costs of producing this information.
,The effect of AIS on the Income Statement: TENTAMEN
Impact of data analytics on accounting:
- Financial reporting > accurate accounting estimate, forward-looking statements
- Management accounting > KPI’s, activity-based costing system, corporate
governance
- Auditing > automation in the audit process, continuous fraud detection
- Tax > documentation/information exchange, data support for tax planning and
tax controversy
AIS requirement per Nederlandse Beroepsorganisatie van Accountants:
Describe and analyse for an annual accounts audit, in accordance with the
applicable professional regulations, the impact of information technology on the
entity (including ERP, cloud computing, big data, networking, privacy, social
media, and reporting software), including its processes, systems and
governance, and to determine the consequences thereof for the work to be
carried out by the auditor, including the methods and techniques to be applied
for that purpose (such as audit software).
Certifications in AIS:
1. Certified Information Systems Auditor (CISA)
= Audit, control, monitor, and assess an organization’s IT and business
systems
2. Certified Information Technology Professional (CITP)
= Demonstrates that you are a trusted adviser in cybersecurity, business
intelligence,
data analytics, and more.
3. Certified Internal Auditor (CIA)
= Globally accepted certification for internal auditors
, Learning objectives WEEK 1
1. Define accounting information system and explain characteristics of
useful information.
Accounting information system (AIS = APM) = a system that records, processes,
summarizes, reports, and communicates on transactions to provide financial and
non-financial information to make decisions. Characteristics of useful information
= Relevance + Faithful representation
2. Distinguish among data, information and an information system.
Data = raw facts that describe an event and have little meaning on their own.
Serves as input.
Information = being data organized in a meaningful way to be useful to the user.
Information system = structure that processes data, stores them, and delivers
information.
3. Describe the (changing) roles of accountants in providing information
and business.
Past: focus on stewardship and reporting (financial statements, auditing)
Now: also business analysts who optimize processes, create competitive
advantage, and maximize value for stakeholders
4. Describe how business processes affect the firm’s value chain.
improving customer relationships, reducing costs, lowering inventory, and
streamlining administration. Which results in higher revenue, lower COGS,
reduced SG&A, lower interest expenses (improved profitability).
5. Explain how AIS affects firm value.
Improves decision-making and process optimization this increases operational
efficiency and customer satisfaction. Which has an impact on the financial
outcomes through higher revenue, lower costs, and more efficient capital
allocation.
6. Describe how AIS facilitates firm’s internal and external processes.
Internal: real-time KPIs, stronger internal controls, activity-based costing, process
optimization.
External: compliance (financial reporting, taxation), sustainability reporting,
communication with investors and regulators.
7. Assess the impact of AIS on firm profitability.
A well-designed AIS leads to better decision-making, cost savings (SCM),
additional revenue (CRM), and lower financing costs
8. Understand the impact of data analytics on business and accounting
- Financial reporting: improved estimates, forward-looking statements.
- Management accounting: real-time KPI’s, activity-based costing.
- Auditing: automation, continuous fraud detection.
- Tax: better documentation, information sharing, and tax planning.
The paper (Austin et al., 2021) emphasizes that data analytics is transforming
the interaction between auditors, managers, and regulators, with tensions arising
around fees, regulation, and independence.
9. Understand importance of regulations in data analytics journey
- The lack of clear regulation slows down the adoption of data analytics and leads
to duplication in audits.
The International Federation of Accountants (IFAC) identifies four roles that
accountants can play in the new digital age:
1. Users of technology and accounting information systems
2. Managers of technology and accounting information systems
3. Designers of accounting information systems
4. Evaluators of accounting information systems
Use of information systems:
1) Financial reporting (e.g., core finance system, SAP)
2) Customer relationship management (e.g., bonus card)
3) Supply chain management (e.g., food safety management system)
4) Track sustainability progress (e.g. GHG emissions) and ESG risks)
WEEK 1
Accounting information system (AIS = APM) = a system that records,
processes, summarizes, reports, and communicates on transactions to provide
financial and non-financial information to make decisions.
> To ensure appropriate levels of internal controls (security measures to
protect integrity
and privacy of sensitive data) for those transactions.
> To provide information that companies are required to have/use for
decisions
To address business opportunities (through business analytics):
- decide what information is needed
- design/use an information system to gather the necessary information
- analyse that information to offer helpful advice to management
! Accounting is an information-providing activity (how info is
provided/reported/used/attest)
- Accountants must be involved in supporting evidence-based decision-
making
Simple information system:
Input: sales data for all stores
Storage: data science department
Processing: queries of what sells best at AH to-go
Output: reports what sells best at AH to-go
Data = raw facts that describe an event and have little meaning on their own.
Serves as input.
Information = being data organized in a meaningful way to be useful to the
user.
Attributes that make information useful:
1) Relevant (information capable of making a difference in a decision)
, > Predictive value, Feedback value, Materiality
2) Faithful representation (information produced accurately reflects condition of
the business)
> Complete, Neutral, Free form Error
Information value chain:
Voorbeeld van een business risk profile:
Discretionary information = information that is not required by law.
> Managers must decide if the benefits of discretionary information
outweigh the costs
of obtaining that information.
Mandatory information = information that is required by law.
> Since it is required, information has to be produced, but the manager
may choose to
minimize the costs of producing this information.
,The effect of AIS on the Income Statement: TENTAMEN
Impact of data analytics on accounting:
- Financial reporting > accurate accounting estimate, forward-looking statements
- Management accounting > KPI’s, activity-based costing system, corporate
governance
- Auditing > automation in the audit process, continuous fraud detection
- Tax > documentation/information exchange, data support for tax planning and
tax controversy
AIS requirement per Nederlandse Beroepsorganisatie van Accountants:
Describe and analyse for an annual accounts audit, in accordance with the
applicable professional regulations, the impact of information technology on the
entity (including ERP, cloud computing, big data, networking, privacy, social
media, and reporting software), including its processes, systems and
governance, and to determine the consequences thereof for the work to be
carried out by the auditor, including the methods and techniques to be applied
for that purpose (such as audit software).
Certifications in AIS:
1. Certified Information Systems Auditor (CISA)
= Audit, control, monitor, and assess an organization’s IT and business
systems
2. Certified Information Technology Professional (CITP)
= Demonstrates that you are a trusted adviser in cybersecurity, business
intelligence,
data analytics, and more.
3. Certified Internal Auditor (CIA)
= Globally accepted certification for internal auditors
, Learning objectives WEEK 1
1. Define accounting information system and explain characteristics of
useful information.
Accounting information system (AIS = APM) = a system that records, processes,
summarizes, reports, and communicates on transactions to provide financial and
non-financial information to make decisions. Characteristics of useful information
= Relevance + Faithful representation
2. Distinguish among data, information and an information system.
Data = raw facts that describe an event and have little meaning on their own.
Serves as input.
Information = being data organized in a meaningful way to be useful to the user.
Information system = structure that processes data, stores them, and delivers
information.
3. Describe the (changing) roles of accountants in providing information
and business.
Past: focus on stewardship and reporting (financial statements, auditing)
Now: also business analysts who optimize processes, create competitive
advantage, and maximize value for stakeholders
4. Describe how business processes affect the firm’s value chain.
improving customer relationships, reducing costs, lowering inventory, and
streamlining administration. Which results in higher revenue, lower COGS,
reduced SG&A, lower interest expenses (improved profitability).
5. Explain how AIS affects firm value.
Improves decision-making and process optimization this increases operational
efficiency and customer satisfaction. Which has an impact on the financial
outcomes through higher revenue, lower costs, and more efficient capital
allocation.
6. Describe how AIS facilitates firm’s internal and external processes.
Internal: real-time KPIs, stronger internal controls, activity-based costing, process
optimization.
External: compliance (financial reporting, taxation), sustainability reporting,
communication with investors and regulators.
7. Assess the impact of AIS on firm profitability.
A well-designed AIS leads to better decision-making, cost savings (SCM),
additional revenue (CRM), and lower financing costs
8. Understand the impact of data analytics on business and accounting
- Financial reporting: improved estimates, forward-looking statements.
- Management accounting: real-time KPI’s, activity-based costing.
- Auditing: automation, continuous fraud detection.
- Tax: better documentation, information sharing, and tax planning.
The paper (Austin et al., 2021) emphasizes that data analytics is transforming
the interaction between auditors, managers, and regulators, with tensions arising
around fees, regulation, and independence.
9. Understand importance of regulations in data analytics journey
- The lack of clear regulation slows down the adoption of data analytics and leads
to duplication in audits.
