Accounting information systems controls and process 2nd tunnwe weickgenannt chapter 01

Prepared by
Coby Harmon
University of California, Santa Barbara
Westmont College
Chapter
1-1


Introduction to AIS
Chapter
1-2

Accounting Information Systems, 2nd Edition


Study
Study Objectives
Objectives
1.

An overview of business processes

2.

An overview of an accounting information system

3.

The business process linkage throughout the supply chain

4.

The IT enablement of business processes

5.

Basic computer and IT concepts

6.

Examples of IT enablement

7.

The internal control structure of organizations

8.

The importance of accounting information systems to
accountants

9.

The relation of ethics to accounting information systems

Chapter
1-3


Overview
Overview of

of Business
Business Processes
Processes
Accounting Information System must identify the

Chapter
1-4

►

Transactions to record,

►

Capture all details,

►

Properly process into correct accounts, and

►

Provide reports externally and internally.

SO 1 An overview of business processes


Overview
Overview of
of Business

Business Processes
Processes
Business Process - a sequence of work steps performed in
order to produce a desired result.

Examples:

Chapter
1-5

►

Completing a sale

►

Purchasing raw materials

►

Paying employees

►

Paying vendors

SO 1 An overview of business processes


Overview

Overview of
of Business
Business Processes
Processes
Four general types of business processes:
1. Revenue Processes (Chapters 8)
a. Sales
b. Sales return
c. Cash collection

Chapter
1-6

SO 1 An overview of business processes


Overview
Overview of
of Business
Business Processes
Processes
Four general types of business processes:
2. Expenditure Processes (Chapters 9 and 10)
a. Purchase
b. Purchase return
c. Cash disbursement
d. Payroll
e. Fixed asset

Chapter

1-7

SO 1 An overview of business processes


Overview
Overview of
of Business
Business Processes
Processes
Four general types of business processes:
3. Conversion Processes (Chapter 11)
a. Planning
b. Resource management
c. Logistics

4. Administrative Processes (Chapter 12)
a. Capital
b. Investment
c. General ledger
Chapter
1-8

SO 1 An overview of business processes


Overview
Overview of
of Business
Business Processes

Processes
Internal controls are the set of procedures and policies
adopted to:

Chapter
1-9

1.

safeguard assets,

2.

check accuracy and reliability of data,

3.

promote operational efficiency, and

4.

encourage adherence to prescribed managerial practices.

SO 1 An overview of business processes


Overview
Overview of
of Business
Business Processes

Processes
Review Question
When a customer returns goods that were purchased, the
business process to accept the return would most likely
be a(n)
a.

administrative process

b. conversion process
c. expenditure process
d. revenue process
Chapter
1-10

Advance slide in
presentation mode to
reveal answer.

1. Revenue Processes
a. Sales
b. Sales return
c. Cash collection
SO 1 An overview of business processes


The
The Accounting
Accounting Information
Information System

System
Various Business Processes
Exhibit 1-1
Overview of an Accounting
Information System

Chapter
1-11

SO 2 An overview of an accounting information system


The
The Accounting
Accounting Information
Information System
System
Review Question
Which of the following is least likely to be an output of the
accounting information system?

Chapter
1-12

a.

a check

b.

a report

c.

an invoice

d.

a bar code

A bar code is usually
an input to the
accounting information
system.

SO 2 An overview of an accounting information system


Process
Process Throughout
Throughout the
the Supply
Supply Chain
Chain
Supply Chain - processes and information flows that involve
the movement of materials, funds, and related information
through the full logistics process, from the acquisition of raw
materials to the delivery of finished products to the end user.
The supply chain includes all:

Chapter
1-13

►

Vendors

►

Customers

►

Service providers

►

Intermediaries

SO 3 The business process linkage throughout the supply chain


Process
Process Throughout
Throughout the
the Supply
Supply Chain
Chain
Supply Chain Management - the organization and
control of all materials, funds, and related information in the

logistics process, from the acquisition of raw materials to the
delivery of finished products to the end user (customer).

Chapter
1-14

SO 3 The business process linkage throughout the supply chain


Process
Process Throughout
Throughout the
the Supply
Supply Chain
Chain
A simplified Supply Chain for McDonald’s

Chapter
1-15

Exhibit 1-2
A Simplified Supply
Chain for McDonald’s

SO 3 The business process linkage throughout the supply chain


The
The Real
Real World

World
An organization such as McDonald’s must have many different suppliers of the
same product because of the need for fresh ingredients. For example, the regional
bakery in the next exhibit provides buns for McDonald’s in a five-state area.
As you have traveled, you may have noticed that your Big Mac is always the same,
no matter where you go. Even the buns are exactly the same in each town and city.
McDonald’s plans for this uniformity in buns and must have many suppliers
throughout the world that can make and deliver a consistent quality bun.
East Balt Inc. is one of the large bakeries that supplies McDonald’s with buns. East
Balt bakeries make these buns according to strict standards of size, shape, color,
height, and seed coverage. To maintain freshness, the buns have to be baked in
regional locations. It would be much too difficult to have one central location bake all
buns for McDonald’s. Therefore, McDonald’s must have many different suppliers of
buns throughout the world.
Chapter
1-16

SO 3 The business process linkage throughout the supply chain


Process
Process Throughout
Throughout the
the Supply
Supply Chain
Chain
Review Question
Which of the following is not true of the supply chain?
a. The supply chain includes vendors.
b. The supply chain excludes customers.

c. The supply chain includes information flows.
d. The supply chain includes secondary suppliers.

Chapter
1-17

SO 3 The business process linkage throughout the supply chain


IT
IT Enablement
Enablement of
of Business
Business Processes
Processes
Information Technology - Computers, ancillary
equipment, software, services, and related resources as
applied to support business processes.

IT Enablement - Using IT systems to enhance efficiency
and effectiveness of internal or supply chain processes.

Chapter
1-18

SO 4 The IT enablement of business processes


IT
IT Enablement

Enablement of
of Processes
Processes and
and the
the AIS
AIS
IT usage accomplishes one or more of the following
objectives:
1.

Increased efficiency of business processes

2.

Reduced cost of business processes

3.

Increased accuracy of the data related to business
processes

Business Process Reengineering (BPR) is the
purposeful and organized changing of business processes to
make them more efficient.
Chapter
1-19

SO 4 The IT enablement of business processes

Process
Process Throughout
Throughout the
the Supply
Supply Chain
Chain
Review Question
Which of the following is not an objective of IT
enablement?

Chapter
1-20

a.

increased accuracy of data

b.

reduced cost

c.

reduced security problems

d.

increased efficiency

SO 4 The IT enablement of business processes

Basic
Basic Computer
Computer and
and IT
IT Concepts
Concepts
Basic Computer
Data Structures
Data hierarchy:
1. Bit, or binary digit
2. Byte
3. Field
4. Record
5. File
6. Database

► Smallest unit
► Values = zero or one
► One character
► Eight bits
► One item within record
► Example - last name
► Set of related fields
► Example – employee #,

name, pay rate, etc.
► Set of related records
► Entire collection of files

Chapter
1-21

SO 5 Basic computer and IT concepts


Process
Process Throughout
Throughout the
the Supply
Supply Chain
Chain
Review Question
The correct order of the computer data hierarchy is

Chapter
1-22

a.

byte, bit, record, field, file, database

b.

bit, byte, record, field, file, database

c.

bit, byte, field, record, file, database

d.

bit, byte, field, record, database, file

SO 5 Basic computer and IT concepts


Basic
Basic Computer
Computer and
and IT
IT Concepts
Concepts
Relational
Database

Chapter
1-23

Example - relationship in data of a
customer having more than one order.

Master File

Example - payroll master file maintains
the relatively permanent data to process
payroll transactions.

Transaction

File

Example - transaction file is processed
against the master file, and year-to-date
balances are updated in the master file.
SO 5 Basic computer and IT concepts


Basic
Basic Computer
Computer and
and IT
IT Concepts
Concepts
File Access and Processing Modes
► Sequential access
► Random access
► Indexed Sequential Access Method (ISAM)
► Batch processing
► Online processing
► Real-time processing

Chapter
1-24

SO 5 Basic computer and IT concepts


Basic
Basic Computer

Computer and
and IT
IT Concepts
Concepts
Data Warehouse and Data Mining
► Data warehouse
► Operational database
► Data mining

Chapter
1-25

SO 5 Basic computer and IT concepts