Accounting Information Systems

ACCOUNTING INFORMATION SYSTEMS

Mr. Jugkrit Mahoran

Lecturer Accounting Department

Course Description:

Study of the composition and method of
accounting information systems (AISs), analysis
and design of AISs, basic business circle, types of
documents and information in each cycle of AISs,
and internal control to trace the documents and
accounting information.

Course Objective:

Having completed this course, student will be able to:

Identify the basic concept of AISs.

Understand the techniques and methods of AISs,
and analyze AISs for decision making in work systems.

Recognize the importance self-performance according
to value, morals and professional ethics.

Instructional Methods:

Lecture Case study • project work,
with analysis, • report and
practice
student presentation
interaction

Measurement and Evaluation:

Midterm and Paper group 20%,
Final exam Individual paper

25% : 25% 10% and
Presentation10%

Performance 10%

Pre-Test
For students — Enter a Quizizz Code

Chapter 1

Accounting Information Systems and the Accountant

 Introduction
 Accounting Information Systems (AIS)
 New Features in AIS
 Accounting and IT

The Information Age

Information in this age is
produced very quickly,
analyzed efficiently, and
distributed effectively.

Knowledge workers
constitute the labor force in this age.

The Internet
is a major contributor in the information age.

Information Systems(IS)

 A System
 consists of interacting parts or components,
 is set up to achieve one or more goals.

 An Information System
 is a set of interrelated subsystems,
 works to collect, process, store, transform, and
distribute information,
 helps to plan, make decisions, and control processes.

 A Firm/Company
 depends on information systems to stay competitive.

Accounting Accounting Information Systems
collect, process, store,
financial accounting, Information transform, and
managerial accounting, distribute

and taxation Systems

Accounting Information Systems

An Accounting Information System (AIS)
Collection of data and processing procedures
Creates needed information for users.

The AIS today should be
an enterprise-wide information system,
focused on business processes.

Data Inputs: Collection of Data/Information from
Repository/ Internal/External sources

Files, Processes: Sorting, Organizing,
Databases, Calculating

etc. Outputs: Distribution of Information for Internal/
External Decision Makers

Data versus Information

Data
raw facts about events that have no
organization or meaning

Information
data that have been processed and
made meaningful to users

MIS versus AIS

MIS Financial To internal
Nonfinancial users
MIS
systems to provide the same information
overlap to focus on business processes

AIS Financial To internal
& external users
AIS

ACCOUNTING AND IT

Financial Accounting

 The objective of financial accounting is
 to provide relevant information to individuals and groups
outside an organization’s boundaries.

 The users include
 investors,
 tax agencies, and
 Creditors, etc.

 The objectives are achieved through
 preparation of financial statements.

A Financial Accounting Audit Trail

Managerial Accounting

Objective:

➢ to provide relevant information to internal
parties (or users).

Components:

➢ Cost Accounting
➢ Budgeting

Cost Accounting

THE BALANCE SCORECARD APPROACH USES PERFORMANCE
MEASUREMENTS IN:

 FINANCIAL PERFORMANCE

 CUSTOMER KNOWLEDGE
 INTERNAL BUSINESS PROCESSES
 LEARNING AND GROWTH






Planning for Disaster

 Planning assures that operations
continue after disaster

 IT particularly vulnerable to man-
made attacks, such as viruses and
worms

 Plan needs to be tested regularly.

Summarize
by

mind
mapping

Home work

•1. Summarize chapter 1 (mind mapping)
•2. Searching new technology for Accountants and choose

1 technology with explaining to benefits

Chapter 2

Documenting Accounting
Information Systems

Introduction
Why Documentation Is Important
Document and Systems Flowcharts
Process Maps and Data Flow diagrams

Documentation of Systems

Documentation is a vital part of any AIS.
Accountants use many different types of
diagrams to trace the flow of accounting
data through an AIS.
A wide variety of software is
available for documenting AISs.

Why Documentation Is
Important

Depicting how the system works
Training users
Designing new systems
Controlling system development
and maintenance costs
Standardizing communications
with others

Why Documentation Is
Important

Auditing AISs
Documenting business processes
Complying with internal control
Establishing accountability
Standard working in the organization

Types of Flowcharts

Document Flowcharts
Document flowchart traces the physical
flow of documents through an
organization.

Systems Flowcharts
System flowcharts depict the

electronic flow
of data and processing steps in an AIS.

Document Flowcharts

Constructing a document flowchart begins
by identifying the different departments or groups
that handle the documents of a particular system.
Auditors and accountants may use
document flowcharts when
analyzing a current system for
weaknesses in controls and reports.

Common Document
Flowcharting Symbols

Keying operation Manual Operation

Document Connector between
two points on a
Multiple copies of flowchart
a specific document Journal or ledger

Common Document
Flowcharting Symbols

Permanent file of Envelope
manual documents for mailing
or distributing
Information flow bills or checks,
etc.
Document flow
Adding machine
Annotation for tape used for
additional batch control
explanation

A Sample Document Flowchart

Requesting Department Central Supplies Department

12 A

PRF 1

A PRF
File

System Flowcharts

They use symbols that are industry
conventions standardized by the National
Bureau of Standards.
Each processing phase of a system flowchart
usually involves preparing one or more
control reports.
These flowcharts depict an electronic job
stream of data through processing phases of
an AIS, and therefore illustrate audit trails.

Common System Flowchart
Symbols

Computer Processing Input/Output
On-line keying
Screen Display Document
On-line Storage
Communication
Link
Magnetic
Disk

System Flowchart
Registering to Payment

Process Maps and Data
Flow Diagrams

Process maps document business processes in
easy-to-follow diagrams.
Data flow diagrams (DFDs) are primarily used in
the systems development process as a tool for
analyzing an existing system.

Process Map for the Order
Fulfillment process

A Second-level Process Map

Data Flow Diagrams
Symbols used

A square represents an external data
source or data destination.
A circle indicates a internal entity that
changes or transforms data.
Two horizontal lines represent the
storage of data. This is usually a file.
A line with an arrow indicates the
direction of the flow of data.

Parts of the DFD

Context diagram an overview
of the system
Data Flow Diagrams

Context diagram

DFD Diagram

CHAPTER 3

ACCOUNTING INFORMATION SYSTEMS
AND BUSINESS PROCESSES: PART I

• Introduction
• Business Process Fundamentals
• Collecting and Reporting Accounting Information
• Two Core Business Processes
• Business Processes and Businesses-Without-

Boundaries

BUSINESS PROCESS

FUNDAMENTALS

• The accounting cycle
–Analysis of a transaction from a source
document.

• A source document
–records a business activity such as the
purchase or sale of goods,
–can be a piece of paper, or
–can be in electronic form.

JOURNALS

The journal
• is a chronological record of business events by account. Account

structure of an organization is its chart of accounts.
• may be a general journal or a special journal

–a general journal allows any type of accounting transaction
to be recorded,

–a special journal captures specific types of transactions.

SPECIAL JOURNALS FOR AISS

• Sales Journal

– Record of credit sales transactions

• Purchases Journal

– Record of credit purchase transactions

• Cash Receipts Journal

– Record of transactions involving receipts of cash

• Cash Disbursements Journal

– Record of transactions involving disbursements of cash

Ledgers

Ledger

 general ledger

 contains detailed monetary information about an
organization’s

assets,
liabilities, Capital or Stock holder’s equity
revenues, and
expenses.

 subsidiary ledger

 contains detailed records pertaining to a
particular account in the general ledger.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

• ARE THE PRIMARY OUTPUT OF A FINANCIAL ACCOUNTING
SYSTEM

• INCLUDE THE FOLLOWING STATEMENTS:

• INCOME STATEMENT,
STATEMENT OF COMPREHENSIVE INCOME

• STATEMENT OF OWNERS’ EQUITY
• BALANCE SHEET,

STATEMENT OF FINANCIAL
POSITION
• CASH FLOW STATEMENT
• NOTE

Types of Codes

Mnemonic Codes

give visible clues concerning the objects they
represent.

Sequence Codes

assign numbers or letters in consecutive order.

Block Codes

are sequential codes in which specific blocks
of numbers are reserved for particular uses.

Group Codes

combining of two or more subcodes.

Collecting and Reporting
Accounting Information

 The design of an AIS should

 be effective
 consider outputs from the system.

 Outputs of an AIS include:

 reports to management
 reports to investors and creditors
 files that retain transaction data
 files that retain current

data about accounts