1 ais an overview

Learning ObjectivesDistinguish between data and information.

Discuss the characteristics of useful information.Explain how to determine the value of information.Explain the decisions an organization makes and the information needed to make them.Identify the information that passes between internal and external parties and an AIS. Describe the major business processes present in most companies.Explain what an accounting information system (AIS) is and describe its basic functions.Discuss how an AIS can add value to an organization. Explain how an AIS and corporate strategy affect each other. Explain the role an AIS plays in a companys value chain. Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


What Is a System?SystemA set of two or more interrelated components interacting to achieve a goalGoal ConflictOccurs when components act in their own interest without regard for overall goalGoal CongruenceOccurs when components acting in their own interest contribute toward overall goal

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


Data vs. InformationData are facts that are recorded and stored.Insufficient for decision making.Information is processed data used in decision making.Too much information however, will make it more, not less, difficult to make decisions. This is known as Information Overload.Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


Value of InformationBenefitsReduce UncertaintyImprove DecisionsImprove PlanningImprove SchedulingCostsTime & Resources

Produce InformationDistribute Information1-*Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall


What Makes Information Useful?Necessary characteristics:RelevantThe capacity of information to make a difference in a decision by helping users to form predictions about the outcomes of past, present, and future events or to confirm or correct prior expectations.ReliableThe quality of information that assures that information is reasonably free from error and bias and faithfully represents what it purports to represent.CompleteThe inclusion in reported information of everything material that is necessary for faithful representation of the relevant phenomena.Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


What Makes Information Useful?TimelyHaving information available to a decision maker before it loses its capacity to influence decisions.UnderstandableThe quality of information that enables users to perceive its significance.VerifiableThe ability through consensus among measurers to ensure that information represents what it purports to represent or that the chosen method of measurement has been used without error or bias.AccessibleAvailable when needed (see Timely) and in a useful format (see Understandable).Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


Accounting Information SystemsCollect, process, store, and report data and informationIf Accounting = language of businessAIS = information providing vehicleAccounting = AISCopyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


Components of an AISPeople using the systemProcedures and InstructionsFor collecting, processing, and storing dataDataSoftwareInformation Technology (IT) InfrastructureComputers, peripherals, networks, and so onInternal Control and SecuritySafeguard the system and its dataCopyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


AIS and Business FunctionsCollect and store data about organizational:Activities, resources, and personnelTransform data into information enablingManagement to:Plan, execute, control, and evaluateActivities, resources, and personnelProvide adequate control to safeguardAssets and dataCopyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


AIS Value AddImprove Quality and Reduce CostsImprove EfficiencyImprove Sharing KnowledgeImprove Supply ChainImprove Internal ControlImprove Decision Making

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


Improve Decision MakingIdentify situations that require action.Provide alternative choices.Reduce uncertainty.Provide feedback on previous decisions.Provide accurate and timely information.Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


Value ChainThe set of activities a product or service moves along before as output it is sold to a customerAt each activity the product or service gains valueCopyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


AIS and Corporate StrategyOrganizations have limited resources, thus investments to AIS should have greatest impact on ROI.Organizations need to understand:IT developmentsBusiness strategy Organizational cultureWill effect and be effected by new AISCopyright 2012 Pearson Education, Inc. publishing as Prentice Hall1-*


Point out to students that these characteristics are from the SFAC #2 Quality of Accounting Information (maybe have them read it). http://www.fasb.org/pdf/aop_CON2.pdf*Point out to students that these characteristics are from the SFAC #2 Quality of Accounting Information (maybe have them read it). *

1 ais an overview

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