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INFS7004 Accounting Information Systems

Lecture 1

(1) Introduction; and (2) Course Overview

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(1) Introduction Welcome

Welcome to INF7004 Accounting Information Systems.

My name is Dr. Steven (Steve) Fraser.

I am the course coordinator. Any questions about the

course should be addressed to me. I am also your lecturer and your tutor.

I have taught AIS subjects at The University of

Melbourne since about 1994, now at ANU teaching

accounting and IS courses (including AIS) since 2003.

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Course Aims

Business systems form an integral part of the operationof the modern business organisations. This coursetakes a close look at the way these systems arestructured in organisations, typically enterprise-widesystems such as SAP ERP systems, to ensure that they

are able to successfully collect and process informationrelating to their core transactions. To this end, thiscourse focuses on the main transaction cycles andbusiness processes, the technologies required for theseactivities, as well as the internal controls required to

regulate their operation. Students will gain a detailedunderstanding of these transaction cycles and businessprocesses by focusing on theory as well as engaging inpractice.

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Course Aims

This course also considers some recent developmentssuch as new message protocols like XML and XBRLused in electronic commerce that are particularlyimportant to users of financial accounting informationsuch as analysts and investors.

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Course Aims, cont .

IS and IT students: AIS provides an understanding ofbusiness processes that underpin transaction processingsystems (TPSs) that are often integral to enterprise-widesystems such as ERP systems like SAP AG; the typicaldatabase structure found in these systems; and the internal

controls used by organisations to ensure these TPSs areeffective.

Accounting students: AIS provides an understanding of therole that information systems play in the evolution ofaccounting processes from the traditional Pachioli manualprocesses to the more automated processes based on the

Resources-Events-Agents (REA) model designed to operatewith computer-based information technology.

Financial accounting students: AIS provides anunderstanding of the role of information systems for thecommunication of financial accounting information systemsusing the XBRL protocol.

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Course Aims, cont .

Management accounting students: AIS provides a detailed

understanding of the way accounting information is derived in

organisations by linking students understanding of specific

accounting information, such as manufacturing variances,

with the approach organisations typically use to collect thedata to calculate this accounting information.

Auditing students: AIS provides these students with an

overview of accounting systems processes and an

understanding of the threats to these processes which

typically operate in a computer-based environment, and theinternal controls needed to minimise their exposure.

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Objectives

describe the use of XBRL in organisations based on their

understanding of the use of XBRL in commerce.

describe the accounting processes in ERP systems based

on their understanding of how the basic accounting

processes are implemented in the SAP AG system. show competence in giving oral presentations.

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Prerequisites or Assumed Knowledge

This is a Masters level course.

It is assumed that you will have some information

systems and/or accounting experience or have/are

taking appropriate courses.

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Textbooks

Hall, J., (2008),Accounting Information Systems, 6thEdition, Thomson, South-Western, NJ

The Calvert SAP Work-Book will be available later insemester

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Lectures

Each week the lecture session will include a two-hourlecture outlining the major issues pertaining to eachweeks theme.

This lecture will provide an overview only, and you arerequired to supplement this lecture with reading from thetext and other sources.

Lectures are held in one two hour session per week onWednesdays: 2pm to 4pm, ARNDT LT2 (Building 25)

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Tutorials

Every student is required to attend the tutorial.

The tutorial will be held on Wednesdays: 1pm to 2pm,ARNDT LT2 (Building 25).

Tutorials start in week 2. Please note that attendance

at tutorials will be recorded because it is an importantcomponent of the assessment in this unit.

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Assessment

Task Weighting

Tutorial participation and presentation 5%

Tutorial exercises (5 x 1marks) 5%

Assignment: Review of the basic

accounting processes in SAP AG

20%

Final Examination (Closed Book, 3 hour) 70%

TOTAL 100%

All components of the above assessment are compulsory and must

be submitted. Also, you must achieve at least 50% for the final

examination component to be eligible for an automatic pass grade in

this course.

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Assignments

The assignment is worth 20% of the marks of the

course, and should be submitted by 4pm, Friday, 16th

October, 2009.

This work is to be done in pairs. You may want to splitthe work to reduce individual work-loads.

Please note that you will be able to complete this

assignment in the computer lab in Copland G025, with

academic support at specified times, or you can

download a copy of the GUI from the course web-sitewith instructions to enable you to access the SAP

system from your home computer.

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Assignments

The aim of this assignment is to work through the four(4) SAP accounting modules in the Calvert Workbookwhich constitute the main accounting system, and basedon your experience, to provide an analysis of this SAP

accounting system. The nature of this analysis will bemade clear in lectures.

The four SAP accounting modules are:-

module 1: Introduction to SAP

module 2: General Ledger module 3: Accounts Payable and the Procurement

process

module 4: Accounts Receivable and the Sales Orderprocess

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Assignments

Required: Work through the four SAP Accountingmodules specified above and provide a critique of theSAP system based on this work.

This critique should include documentation of the SAP

revenue and expenditure cycles you encountered, whichshould include, as a minimum, document/systemsflowcharts. (You would be well advised to use theGelinas Ch. 3 approach to ensure your documentationis of high quality.)

Your critique should also focus on the SAP controls;ease of use; and the nature of the SAP functionality andits scope. Your critique can also focus more broadly onthe SAP system but should NOT be too general (do notinclude material on ERP systems in general unless it

applies to the SAP system).

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Assignments

What outcomes should we expect from this assignment?These requirements aim to merge the revenue andexpenditure cycles that you learn early in the course,with the SAP programs you encountered as you workedthrough Cheryl Calverts workbook.

(The real learning from working through the Calvertworkbook takes place during the systemsdocumentation activity AFTER working through the 4modules, by you reflecting on how the SAP programslink together as part of the accounting cycles.)

This should provide you with a framework (your mentalmodel) for understanding the links between theseprograms.

You will be able to use this framework to give you with abetter understanding of how the SAP system handles

the Accounts Payable and the Procurement ProcessandAccounts Receivable and the Sales Order Process.

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Assignments

You will, for instance, from your work on the accountingcycles know which departments are likely to use thedifferent SAP screens and the controls that should be inplace in these cycles.

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Lecture Timetable

See course outline

http://cbe.anu.edu.au/courses/outline/INFS7004.pdf

ANY QUESTIONS?

http://cbe.anu.edu.au/courses/outline/INFS7004.pdfhttp://cbe.anu.edu.au/courses/outline/INFS7004.pdf

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(2) Course Overview - Objectives

Primary information flows within the business

environment

Accounting information systems and management

information systems

The general model for information systems

Financial transactions from non-financial transactions

The functional areas of a business

Two main stages in the evolution of information systems Three roles of accountants in an information system

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Internal & External Information Flows

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Internal Information Flows

Horizontalflows of information used primarily at the

operations level to capture transaction and

operations data

Verticalflows of information downward flows instructions, quotas, and budgets

upward flows aggregated transaction and operations data

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Information Requirements

Each user group has unique information

requirements.

The higher the level of the organization, the greater

the need for more aggregated information and lessneed for detail.

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Information in Business

Information is a business resou rcethat:

needs to be appropriately managed

is vital to the survival of contemporary businesses

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What is a System?

A group of interrelated multiple components or

subsystems that serve a common purpose

System or subsystem?

A system is called a subsystem when it is viewed as acomponent of a larger system.

A subsystem is considered a system when it is the focus of

attention.

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What is an Information System?

An information system is the set of formal

procedures by which data are collected,

processed into information, and distributed tousers.

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Transactions

A transaction is a business event.

Financialtransactions

economic events that affect the assets and equities of the

organization

e.g., purchase of an airline ticket

Nonfinancialtransactions

all otherevents processed by the organizations information

system

e.g., an airline reservation no commitment by thecustomer

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Transactions, cont

Financial

Transactions

Nonfinancial

Transactions

Information

System

User

Decision

MakingInformation

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What is an Accounting Information System?

Accounting is an information system.

It identifies, collects, processes, and communicates economic

information about a firm using a wide variety of technologies.

It captures and records the financial effects of the firms

transactions.

It distributes transaction information to operations personnel to

coordinate many key tasks.

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AIS versus MIS

Accounting Information Systems (AIS) process financial transactions; e.g., sale of goods

and nonfinancial transactions that directly affect the processing offinancial transactions; e.g., addition of newly approved vendors

Management Information Systems (MIS) process nonfinancial transactions that are not normally processed by

traditional AIS; e.g., tracking customer complaints

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AIS Subsystems

Transaction processing system (TPS)

supports daily business operations

General Ledger/ Financial Reporting System

(GL/FRS) produces financial statements and reports

Management Reporting System (MRS)

produces special-purpose reports for internal use

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The General AIS Model

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Data Sources

Data sources are financial transactions that enter theinformation system from internal and external sources. External financial transactions are the most common source of

data for most organizations.

E.g., sale of goods and services, purchase of inventory, receipt ofcash, and disbursement of cash (including payroll).

Internal financial transactions involve the exchange or movementof resources within the organization.

E.g., movement of raw materials into work-in-process (WIP),

application of labor and overhead to WIP, transfer of WIP intofinished goods inventory, and depreciation of equipment.

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Transforming the Data into Information

Functions for transforming data into information

according to the general AIS model:

1. Data Collection

2. Data Processing

3. Data Management

4. Information Generation

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1. Data Collection

Capturing transaction data

Recording data onto forms

Validating and editing the data

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2. Data Processing

Classifying

Transcribing

Sorting Batching

Merging

Calculating

Summarizing Comparing

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3. Data Management

Storing

Retrieving

Deleting

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4. Information Generation

Compiling

Arranging

Formatting Presenting

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Characteristics of Useful Information

Regardless of physical form or technology, usefulinformation has the following characteristics: Relevance:serves a purpose

Timel iness:no older than the time period of the action it

supports Accuracy:free from material errors

Completeness:all information essential to a decision or task ispresent

Summarizat ion:aggregated in accordance with the users

needs

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Information System Objectives in a Business

Context

The goal of an information system is to support the stewardship function of management

management decision making

the firms day-to-day operations

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Organizational Structure

The structure of an organization helps to allocate

responsibility

authority

accountability

Segmenting by business function is a very common

method of organizing.

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Functional Areas

Inventory/Materials Management purchasing, receiving and stores

Production production planning, quality control, and maintenance

Marketing

Distribution

Personnel

Finance

Accounting

Computer Services

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Accounting Independence

Information reliability requires accounting

independence.

Accounting activities must be separate and independent of

the functional areas maintaining resources.

Accounting supports these functions with information but

does not actively participate.

Decisions makers in these functions require that such vital

information be supplied by an independent source to

ensure its integrity.

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The Computer Services Function

Centralized Data

Processing

Distributed Data

Processing Most companies fall in between.

All data processing

is performed by

one or more large

computers housed

at a central site

that serves users

throughout the

organization.

Primary areas:

database administration

data processing

systems development

systems maintenance

Reorganizing the

computer services

function into smallinformation processing

units that are distributed

to end users and

placed under their control

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Organization of Computer Services Function in

a Centralized System

Organizational Structure for a Distributed

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gProcessing

System

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Potential Advantages of DDP

Cost reductions in hardware and data entry tasks

Improved cost control responsibility

Improved user satisfaction since control is closer to the

user level

Backup of data can be improved through the use of

multiple data storage sites

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Potential Disadvantages of DDP

Loss of control

Mismanagement of company resources

Hardware and software incompatibility

Redundant tasks and data Consolidating tasks usually segregated

Difficulty attracting qualified personnel

Lack of standards

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Manual Process Model

Transaction processing, information processing, and

accounting are physically performed by people, usually

using paper documents.

Useful to study because: helps link AIS courses to other accounting courses

often easier to understand business processes when not

shrouded in technology

facilitates understanding internal controls

Th E l ti f IS M d l Th Fl t Fil M d l

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The Evolution of IS Models: The Flat-File Model

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The Evolution of IS Models: The Database Model

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Inventory Line items Sales Party to Salesperson

Pays for

Cash

CollectionsIncreasesCash

Made toCustomer

Cashier

Received

from

Received

by

M

1

M

M

M

M

M

M

M

M

1

1

1

1

R E A

An REA Data Model Example

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REA Model

The REA model is an accounting framework for

modeling an organizations

economic resources; e.g., assets

economic events; i.e., affect changes in resources economic agents; i.e., individuals and departments that

participate in an economic event

Interrelationships among resources, events and agents

Entity-relationship diagrams (ERD) are often used to

model these relationships.

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Accountants as Information System Users

Accountants must be able to clearly convey their needs

to the systems professionals who design the system.

The accountant should actively participate

in systems development projects to ensureappropriate systems design.

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Accountants as System Designers

The accounting function is responsible for the

conceptual system, while the computer function is

responsible for the physical system.

The conceptual system determines the nature of theinformation required, its sources, its destination, and the

accounting rules that must be applied.

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Accountants as System Auditors

External Auditors

attest to fairness of financial statements

assurance service: broader in scope than traditional

attestation audit

IT Auditors

evaluate IT, often as part of external audit

Internal Auditors

in-house IS and IT appraisal services