Accounting Information Systems: Accounting Information Systems: Essential Concepts and ApplicationsEssential Concepts and Applications Fourth Edition by Wilkinson, Cerullo, Raval, and Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-WingWong-On-Wing
Module 2: Decision Support and Expert Systems
Slides Authored by Somnath Bhattacharya, Ph.D.Florida Atlantic University
Decision Support Systems: Advantages
Improved effectiveness in making strategic and tactical decisions
Greater timeliness in collecting and processing the needed data that bear on unstructured and semi-structured decisions
Broader understanding by the decision makers of the array of factors involved in problems requiring complex decisions and their relationships to each other
Key Components of a Decision Support System
DSS data base DSS model base
DSS userinterface
Terminal ormicrocomputer
User
Figure M2-1
A Comprehensive Data Base that Spans a Firm’s Decision Needs
Environmental Data Internal Planning Data
Other Model Data Summaries
Chart of Accounts
CustomerData
InventoryData
SupplierData
EmployeeData
Property(plantassets)Data
Sales Order Production& ShippingRecords
PurchaseOrders
TimeRecords
DisbursementRecords
}
}*
**
* = Planning data base** = Operational data base
Figure M2-2
DSS Model Base
Decision Models Decision models Optimization models
Firm-wide Planning Models Corporate models Financial planning models
Modeling LanguagesModel Base Management Systems
A Variety of Models Used by Decision Support SystemsModel Description 1) Regression 2) Exponential smoothing 3) PERT 4) Linear programming 5) Line-of-balance 6) Economic order quantity 7) Supplier evaluation 8) Transportation 9) Discounted cash-flow 10) Production cost-variance 11) Cash-flow 12) Budget
13) Manpower planning
Typical Function Aided 1) Sales forecasting 2) Sales forecasting 3) Engineering design 4) Production scheduling 5) Production routing 6) Inventory control 7) Purchasing 8) Physical distribution 9) Investment planning 10) Cost analysis 11) Financing 12) Accounting control 13) Personnel planning
Figure M2-3
Model Manipulation Techniques Used with Financial Models
Time-Based Simulation
“What-If” Analysis
Sensitivity Analysis
Goal-seeking Analysis
Figure M2-4
More on Model-Base Management Systems
This is a modeling counterpart to a DBMSIts functions usually consist of providing
Links between models in a DSS A model definition language Mechanisms for modifying decision
models A user-friendly means of
executing and manipulating models
User Interfaces
Query Languages
Command language approach
Menu approach
GUI
Group Decision Support Systems
GDSSs allow for the rapid dissemination of information and support collaboration among group members Electronic mail software Lotus Notes
Expert Systems
An Expert System is a computerized software model that simulates the thinking process of one or more human experts in solving a complex problem or in making a decision.
Components of an Expert System
Knowledge BaseTask-specific Data BaseInference Engine
Forward chaining Backward chaining
Development Engine
Components of an Expert System
Inference Engine Knowledge Base
User Interface
Task Specific Data Base
Users
Figure M2-6
Decision Situations and DSSs
Complex
Simple
Expert Systems
Conventional Software Statistics
Neural Network Technology
Pro
ble
m C
omp
lexi
ty
Structured Semi-structured Unstructured Completely Random
Decision SituationFigure M2-7
Factors to Consider when Selecting Accounting ES Applications - I
Problems or decisions requiring judgment are moderately complex to very complex and well-defined
Operational and tactical problems are highly structured to somewhat semi-structured, recurring, and repetitive
Expertise is difficult to acquire. Human experts are expensive and in short supply. Non-human expertise is available in the form of authoritative pronouncements, such as APBs, FASBs, and IRS tax regulations
The accounting problem can be solved in a relatively short period of time
The accounting problem is rule-intensive and can be solved with “if-then” rules
Figure M2-8
Factors to Consider when Selecting Accounting ES Applications - II
Common sense or intuition is not required to solve the problems
The accounting problem cannot be solved efficiently with traditional or conventional computer software programs, such as COBOL or FORTRAN
The body of knowledge is being continually updated
The problem’s conversion to a computer-based expert system must result in a high payoff
The expert system must produce clearly identified solutions with which most experts must agree among themselves
Figure M2-8 Continued
Areas of Accounting Expert Systems: Auditing (Internal & External)
Deciding whether to accept a prospective auditeeEvaluating risks and the internal control structure
in computer systemsReviewing prior years’ working papersIssuing audit reports and forming audit opinionsWriting audit programsAssisting in making a going-concern judgmentScheduling audit personnelAnalyzing the adequacy of the allowance for
doubtful accountsAnalyzing unusual transactions
Figure M2-9
Areas of Accounting Expert Systems: Taxation
Advising on potential acquisitions and mergers
Claiming a dependentAuditing deferred tax accrualsDetermining corporate tax statusDetermining if a firm qualifies for
Subchapter S tax statusOffering personal and corporate tax
planning advice
Figure M2-9 Continued
Areas of Accounting Expert Systems: Cost/Managerial
Analyzing significant variances and explaining the variation
Assisting in monthly closingsAllocating revenue and expensesAnalyzing performance of projectsReviewing trial balances
Figure M2-9 Continued
Areas of Accounting Expert Systems: Financial Accounting
Accounting for non-monetary transactions (APB No. 29)
Accounting for contingencies (FAS No. 5)Purchasing vs. pooling (APB No. 16)Accounting for futures contracts (FAS No.
80)Developing expert systems for other
professional pronouncementsClassifying financial transactions correctlyEvaluating credit worthiness
Figure M2-9 Continued
Examples of ES in Accounting: Auditing
Name Purpose Developer
Loan Probe To assist banks inassessing commercialloan portfolios
KPMG PeatMarwick
Auditor To assist in evaluatingthe adequacy of theallowance for baddebts
Dungan(University ofSouth Florida)
EDP-XPERT To aid auditspecialists inevaluating thereliability of controlsin computer systems
Hansen andMessier(University ofFlorida)
GC-X To aid in makinggoing-concernjudgments
Biggs andSelfridge(University ofConnecticut)
Audit Planner To aid in makingmateriality judgments
Steinbart(Arizona State
Figure M2-10
Examples of ES in Accounting: Tax
Name Purpose Developer
TAXADVISOR To aid tax specialistsin rendering estateplanning advice
Michaelson(University ofNorth Texas)
ExperTAX To aid in tax planningand corporate taxaccruals
Coopers andLybrand
Taxpayer ServiceAssistant
To aid IRS agents inanswering taxpayerquestions on complextax issues
IRS
Figure M2-10 Continued
Emerging Developments
Intelligent Agent SoftwareIntegrating DSSs with other support
systemsFuzzy LogicDevelopments in Multimedia and
Hypertext
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Accounting Information Systems: Accounting Information Systems: Essential Concepts and ApplicationsEssential Concepts and Applications Fourth Edition by Wilkinson, Cerullo,Fourth Edition by Wilkinson, Cerullo,Raval, and Wong-On-WingRaval, and Wong-On-Wing