Infotech - Module 2

• Accounting Information System (AIS)

  A structure that a business uses to collect, store, manage, process, retrieve and report its financial data so that it can be used by accountants, consultants, business analysts, managers, CFOs, auditors and regulatory and tax agencies
• System


  A regularly interacting or interdependent group of elements forming a unified whole
• Business System


  A collection of policies, procedures, methods or techniques, people, machines, and other elements that interact and enable the organization to reach its goals
• Information System


  A business system that processes data and makes it available to users for decision making
• Accounting Information Systems collect and process accounting transaction data into financial information
• Accounting Information Systems


  • Can be either manual or computerized
• Components of Accounting Information Systems

  • Data and all the information that goes into the AIS
  • Software: computer programs used for processing data
  • Information technology infrastructure including communication facilities
  • Internal controls
• Reliable Accounting Information System


  • Security - limited access
  • Confidentiality - protection of sensitive information
  • Privacy - non-disclosure of personal information
  • Processing integrity - accuracy, completeness, timeliness of processing with proper authorization
  • Availability - meeting of operational and contractual obligations
• Business Firms as Systems

  • Objectives: Maximizing profits, Optimum use of resources, Reduction of human effort, Uncover duplication or redundancy, Effective and efficient AIS is a competitive advantage
  • Environment: The surroundings that lies beyond the firm's boundary
  • Constraints: Internal or external restrictions, e.g. company policies, external rules, government regulations / state laws, systems boundary / restriction in market area, funds and trained personnel
  • Controls: To monitor operations and processes, so as to identify and correct deviations from plans
  • Input-Process-Outputs: Resources needed to conduct operations and produce outputs
  • Feedback: Needed to increase the degree of control and a tool for continuous improvements
  • Interfaces: Subsystems are linked to each other through couplings or shared boundaries in order to exchange inputs and outputs
  • Subsystems: Parts of a system which perform a specified task that is consonant with the goals of a larger system of which it is a part
• Organizational Structure


  The means by which the managers of the firm direct and coordinate the set of activities and operations
• Organizational Structures


  • Hierarchical or Networked
• Operational System


  A collection of primary physical processes (business processes, operations, or activities) that a firm provides
• Operational Processes


  • Acquiring materials, producing finished goods, storing finished good, shipping finished goods, selling
• Information Systems and Valued Information Output

  • Value of information is related to the effectiveness of decision making
  • Information qualities: relevance, accuracy, timeliness, conciseness, clarity, quantifiability, consistency
• Key Functions Related to Information

  • Planning: Strategic (high level) and Tactical or operational
  • Control: Operational control and Management control
• Communication of Information


  • Technical level: to convey accurate and complete information
  • Semantic level: to convey information that the user can clearly understand
  • Effectiveness level: to stimulate desired results such as sound decisions
• Effects of IT on AIS

  • Faster processing of transactions
  • Greater accuracy; lower cost of processing
  • More timely presentation
  • More concise storage with greater accessibility when needed
  • Larger range of choices for entering data and providing outputs
  • Higher productivity for employees and managers
• Information System Architectures


  Structural arrangement of hardware and data communications components of an information system, including software, concepts, or capabilities
• Information System Architectures


  • Mainframes, minicomputers, microcomputers
  • Multiple processors: coupled, parallel, distributed (network)
  • Internal computer networks: WAN (centralized or distributed), LAN
• Wide-area network


  Links together geographically dispersed computer systems, i.e., decentralized computer systems
• Local area network


  Functions within a single limited geographical area
• Types of Networks


  • External computer networks: open systems architecture; closed system architecture
• Trends in IT


  • Hardware: size, speed, storage capacity, reliability, cost, options
  • Software: voice activated software
• Database


  Collected data sets that are organized and stored as integral part of a computer-based information system
• Database Management


  • File storage, file maintenance (update), retrieval of data (file access)
• Characteristics of the Database Approach

  • Data independence: separation of data from the various application programs and other accesses of the users
  • Data standardization: data elements have standard definitions, stored data are compatible with all every application program that access the data
  • One-time data entry and storage: consequently, redundancy is eliminated
  • Data integration: enables all affected data sets to be updated simultaneously
  • Shared data ownership: users from different functions may draw from the same data base
  • Centralized data management: a database administrator is in charge of managing the database centrally, providing security and integrity to the data
• Benefits of the Database Approach

  • Data redundancies are reduced through the "one time entry" and processing of data
  • Inconsistencies are eliminated since all data sets affected by a transaction data are updated simultaneously
  • Improved security because of centralized data management