Accounting information system
captures, records, & reports accounting info
business process
sequence of steps to get a desired result for the organization; initiated by an event
Examples: collect cash, hire employees, sell, produce
Interrelationships of Business Processes & the AIS
every time that a business process occurs, AIS must capture, processes, record & generate reports of financial data as it happens.
Example: Business processes among a restaurant from ordering a meal to paying the bill.
4 General Categories of Business Process
Revenue
Conversion
Expenditure
Administrative
3 types of AIS
Manual
Legacy
Modern, Integrated IT Systems
Manual Systems
source documents and paper-based recordkeeping; manual records into manual accounting system
Source Document/ 3 important Functions
recordkeeping captures info on key information of a transaction; captures date, quantity, $$ amount
- input data to record transaction
- triggers business process to begin
- Audit trail
Turnaround Document
the output of information from AIS that can be input into AIS.
Example: CC Stmt issued from CPU. Once payment is submitted, input to match your CC account number. No human error.
General Ledger
details on entire accounts used in org’s accounting systems
General journal
non routine transactions; adjusting and closing entries
Special Journals
record specific types of transactions
payroll journal, cash receipts journal, cash disbursements journal
subsidiary Ledgers
detailed information for routine transactions
AR Subsidiary ledger for each customer - should tie back to the AR General Ledger Account
What is an integral part of IT besides hardware and software?
the human capital required to capture, record and process information in AIS
What are modules in the accounting system
similar to the subsidiary ledgers of AR, AP, & payroll
Legacy Systems
existing older AIS systems within an organization; usually contracted by programming that is becoming obsolete;
Advantages of Legacy Systems
customized to organization
support unique business processes
contain historical data
well understood by staff
Disadvantages of Legacy Systems
costly lack supporting docs can't run on old hardware not user-friendly to difficult to modify difficult to integrate when acquiring new companies
screen scrapers & disadvantage of implantation
Legacy Systems-not to replace
front ware that is more user friendly;
disadvantage - may not run as smoothly on old hardware/software
enterprise application integration
Legacy systems - not replace)
software/hardware used to integrate software systems into legacy systems
Replacement of Legacy Sytems
decision to completely add a new system; benefits must outweigh the costs
3 Methods to Improve Legacy Systems
Screenscrapers
Enterprise application integration
replacement of legacy systems
Modern Integrated systems
user friendly; use the latest technology
Advantages of Purchasing AIS vs Developing AIS
lower cost - can be absorbed b all parts of the company
shorter implementation - companies do not need to design
fewer bugs - sold fully developed and tested
2 CPU Architectures that AIS runs on
client-server model
cloud computing
Client-Server Computing
two computers on the same network working together to do application processing;
Client (PC) sends request for information needed to the server. The server houses the information needed and sends that information that it is trying to extract back to the client (PC)
Example: Manager wants to know overdue accounts; sends request from PC (client) to server (information is stored) Information is sent back to PC (Client)
What are the characteristics of Client Server Systems
client/server systems on same network
systems are integrated
parts of processing is shared btw client/server
client is used in processing the data
Tasks Assigned to Client/Server
Client - edit subsets of data; present in user friendly way
server - manage large database and extracting data from data base
Cloud Computing
virtual server; data is stored by a third party where client has access to it
Example: Itunes - when you purchased a song, it was downloaded to your iPhone; Now it is stored on an Apple Server and iPhone/computer has access to the songs.
Advantages of Cloud Computing
access information from virtually anywhere no need for extra software/hardware reduced costs scalability expanded access Infrastructure is reduced
Software as a Service (SaaS)
software in the cloud-pays a fee
Database as a Service (DaaS)
database in the cloud
Platform as a Service (PasS)
database with an operating system in the cloud
Infrastructure as a Service (IaaS)
infrastructure in the cloud
Infrastructure - computer servers, data storage devices, & networking components
Service Level Agreement (SLA)
an agreement to buy cloud computing services
Difference between Cloud Computing & Client-Server Computing
where information/software is stored
4 AIS Market Segments
small company $250k or less revenue
midmarket $250k-$100 million
beginning ERP 100 million-500 million
tier 1 ERP $500 mil or more
Input Methods Used in Business Processes
Source Docs/keying - prone to human error
bar codes - printed code
Point of Sales Systems - captures sales by bar code
Electronic data interchange - intercompany transfer of docs
E-Commerce/E-business - online business transactions; customer buying and selling; EDI uses dedicated networks where as E-comm uses internet
Processing in AIS/Methods of Processing
calculations, classifications, summarization & consolidation
batch processing
online processing
real-time processing
batch processing
processing similar transactions together; for routine transactions & high volume
payroll processing is an example
Advantages of Batch Processing
efficient for large volumes
audit trail maintained
less costly software/hardware
processing can take place when system is not busy
Disadvantages of Batch Processing
master files take longer to process legacy systems take longer duplication can occur integration is difficult batch systems have time lag
Online Processing
Processing one transaction at a time individually
Real time processing
data is processed immediately thus out put is available now
Advantages of Real Time Processing
errors corrected immediately
information provided on a timely basis
files always up to date
integrated in a single database
Disadvantages of Real Time Processing
more expensive hard/software
more susceptible to unauthorized user
difficult to audit complex system
Outputs of AIS to Business Processes
trading documents (checks, invoices, statements) internal documents internal reports external reports
Methods to Document Processes & Systems
process maps system flowchart document flow chart data flow diagrams entity relationship diagrams
Process maps & Associated picitures
pictorial representation of business processes; in sequence
oval - start/finish of process rectangle - shows task/activity diamond - yes/no decision needs to be made arrow - direction of the process circle - break in process
system flowchart
do not show details, but show each step (manual, computerized, inputs)
data flow diagram
show logical design of a system; explode - more detail to describe each step in process
entity relationship diagrams
pictorial representation of logical structure of databases
entities
nouns that represent items of the accounting system (customers, vendors, inventory items)
attributes
characteristics of an entity
employee’s attributes - last name, first name
cardinality & 3 ways to describe entities
how entities relate to each instance of another entity
one to one - one employee has one personnel file
one to many - 1 supervisor has many employees
many to many - each vendor sells many items