PowerPoint Presentation Materials

Accounting Information Systems:

Basic Concepts and Current Issues
2nd edition

Robert L. Hurt

McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
 Chapter 1

Role and Purpose of Accounting

Information Systems
 Outline
Objectives
Definition of accounting information
systems
FASB Conceptual Framework
Typical AIS structure
Information competence
Textbook structure

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 Objectives
When you finish this chapter, you should be able to:
Define accounting information systems
Discuss why AIS is an important area of study for future
accountants
Compare and contrast AIS with other areas of study in
accounting
Explain the structure of most accounting information systems
Locate and evaluate information sources on accounting
information systems
Describe the structure and content of the remainder of this text

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 Definition of AIS
Interrelated activities, documents and
technologies
Collect data and process it
Report information
Diverse group of internal and external
decision makers

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FASB Conceptual Framework
Developed in 1977
Well-designed AIS can respond to many
elements
Components
Objectives of financial reporting
Elements of financial statements and
qualitative characteristics
Assumptions, principles and constraints

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FASB Conceptual Framework
Objectives of financial Elements of financial
reporting statements
Framework lists Balance sheet:
multiple objectives assets, liabilities,
For AIS study, the equity
most important may be Income statement:
the most basic: to revenues, expenses,
provide information for gains, losses
decision making Other: comprehensive
income

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FASB Conceptual Framework
Qualitative characteristics
Primary
Relevance: information makes a difference in
decisions
Reliability: information can be relied upon for
decisions
Secondary
Comparability: between organizations
Consistency: across time

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FASB Conceptual Framework
Assumptions
Economic entity: a business is separate from
its owners
Going concern: a business will survive long
enough to meet its current obligations
Periodicity: the life of a business is divided
into time periods for financial reporting
Monetary unit: the value of a dollar is stable

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FASB Conceptual Framework
Principles Matching: expenses
Historical cost: in should appear on the
general, items in the income statement with
AIS are recorded at the revenue they
their historical cost helped generate
Realization: revenue Full disclosure: give
can be recorded in the decision makers all the
AIS when the earnings information they need
process is essentially
complete

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FASB Conceptual Framework
Constraints Conservatism: when
Cost effectiveness: choosing between
the benefit of having accounting practices,
information must make the choice that
exceed the cost of presents the worst
obtaining it case scenario
Materiality: dollar Industry practices:
amounts must be large follow the conventions
enough to make a of the industry in
difference in decisions financial reporting

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 Typical AIS structure
Inputs Storage
Such as source documents Paper-based or electronic
Processes Internal controls
Journals, ledgers, information Designed to
technology Safeguard assets
Outputs Promote operating
General purpose financial efficiency
statements and other Encourage adherence to
reports management rules
Ensure reliable financial
reports

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 Information competence
Problems in accounting information
systems often have more than one
correct answer
In other words, they are non-deterministic
But, some answers are clearly incorrect
Research is often required to address
problems in AIS
Therefore, accountants must be able to
evaluate information
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 Information competence
Definition

Information competence is the ability to find,

evaluate, use, and communicate information

in all of its various formats (Curzon, 1995)

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 Information competence
Types of information
Sponsored / commercial
Someone has paid a fee or given other
consideration
Popular / practitioner
Has been reviewed. May be descriptive in nature.
Scholarly
Has been reviewed. Typically intended for
academic audiences.

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 Information competence
Criteria for evaluating information (UMUC)
Authority

Accuracy

Objectivity

Currency

Coverage

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 Information competence
Authority
Who created the
information?
For what purpose?
Objectivity
Does the information
contain advertising?
Is it available freely?
Accuracy
Where did the information
come from?
Any obvious factual errors?
Currency
When was the information
created / written?
When was it last updated?
Coverage
Is the information
continually under
construction?
Does it provide sufficient
depth?
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 Textbook structure
Part One: Part Two:
Introduction and Documentation
Basic Concepts Techniques
Nature and purpose of Flowcharting
AIS Data flow
Transaction diagramming and
processing database design
Professionalism and REAL modeling
ethics
Internal control

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 Textbook structure
Part Three: Part Four: Business
Systems Analysis Processes
and Information Sales / collection
Acquisition / payment
Technology
Other business
Information technology processes
basics
Business process
Information systems management
models
XBRL
E-business and ERP
systems

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 Textbook structure
Part Five: Other Topics
in AIS
Computer crime and IT
security
Decision-making models
and knowledge
management
Professional certifications
and career planning
Auditing and evaluating the
AIS

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