Professional Documents
Culture Documents
Lecture 8
Adapted from:
Simkin, Rose, & Norman (2012) Core Concepts of Accounting Information Systems (12th ed.) and
Gelinas & Dull (2008) Accounting Information Systems (7th ed.)
Learning Objectives
Understand the steps in the financial accounting process
used by AISs
Recognise the objectives, inputs, and outputs of a range of
business processes, including: sales, purchasing, human
resource management, fixed asset management,
production, and financing
Appreciate ways in which technology can support those
business processes
Appreciate that some industries require specialised AISs
Understand the concepts of outsourcing and business
process reengineering
Link to textbook
Topic 5 & 6, 2nd edition, Page 139-203
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Important
International student attendance
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Business Processes
A business process is a collections of activities or flow of
work that creates value
AISs collect and report data related to business processes
An economic event
is an economic activity
impacts financial statements (accounting transactions)
A business event
is important to the business
does not impact financial statements
e.g. hiring an employee; customer enquiry that doesnt
result in a sale
Business Processes
To simplify information processing (i.e. the recording,
maintaining, and reporting of business and economic
activities) we group similar activities into business
processes.
Business processes you will read about include:
Sales
Core process
Purchasing
Core process
Human resource management
Fixed asset management
Production
Financing
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Example 1:
Steps in the
Financial
Accounting
Process Cycle
Journals
are a chronological record of economic events by
account. The account structure of an organisation is its
chart of accounts.
2 types of journals: a special journal captures specific types
types of transactions (usually ones
that occur frequently)
a general journal allows any type of
accounting transaction to be recorded
General Journal
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Ledgers
General ledger
contains detailed monetary information about an
organisations
assets and liabilities
revenues and expenses
owners equity
The Chart of Accounts provides the organisational
structure for the general ledger
Subsidiary ledger
contains detailed records pertaining to a particular
account in the general ledger
Ledgers
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Subsidiary
ledger
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Trial Balances
A listing of all accounts with their debit and credit balances
Three end-of-period trial balances:
A pre-adjusting trial balance after all entries have been
posted
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Financial Statements
are the primary output of a financial accounting system
include the following Statements of :
Comprehensive Income (Income Statement)
Changes in Equity (Owners Equity)
Financial Position (Balance Sheet)
Cash Flows
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Purchasing Process
Human Resource
Management Summary
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A source document
records a business activity such as the purchase or sale of
goods, can be a piece of paper, or in electronic form.
evidence of transactions
Source documents help establish the authenticity of accounting
data in (more details see following slides) :
establishing an audit trail
testing for authorisation of cash disbursement cheques or
inventory movements
establishing accountability for the collection or distribution of
money
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Very important
Note these following source documents are important for
internal controls also.
More on this in the internal controls lecture
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Debit/Credit Memoranda
debits or credits accounts payable. Vendor will advice us
Since the data and info required are different, these would
affect the requirements and the types of AIS used.
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Not-for-profit
professional employees and volunteers
usually not affected by the market
sometimes have a political environment
extra focus on funds and (nonmonetary) process
measures
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Eg GST introduction
Changes in technology
Eg introduced ERP in company (see slides in
lecture on AIS, used cloud for accounting s/w)
Changes in business strategy
Ans 1: Oursourcing?
What is outsourcing?
Instead of doing the business process in-house, the
organization transfers their business process outside
the organization. Outsourcing is hiring an outside
company to handle all or part of an organisations
business process activities.
Outsourcing Disadvantages
Other possible disadvantages include:
Increased risk
Further Reading
Davenport, Thomas (1998) Putting the enterprise
into the enterprise system.
http://www.jpsdir.com/forum/uploads/12967/Davenport_1998.pdf
Note: An interesting paper that shows how important
business process is to any AIS (in this case ERP).
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Conclusion
Recognise the importance of source documents
used as internal controls
Appreciate ways in which technology can support
those business processes
Appreciate that some industries require specialised
AISs
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