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Accounting
information
system
A Business process approach

FREDERICK L. JONES
DASARATHA V. RAMA

Jones Rama
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INTRODUCTION TO
ACCOUNTING
INFORMATION SYSTEMS

King Saud University

Hanan H. Almarhabi
Contents

Business processes and (AIS)

Scope of an accounting information system (AIS)

Accounting Applications and Software

Role of Accountants in Relation to (AIS)

Business Processes and (AIS)

Two terms are

central here

(1) BUSINESS PROCESS (2) INFORMATION SYSTEMS

 Business Processes and (AIS)

1
BUSINESS PROCESS

• business process is
a sequence of activities performed by a business for acquiring,
producing, and selling goods and services.
There are several models of business process have been
developed, the useful model is that which views a company’s business
process in terms of its transaction cycles.
There are three main transaction
cycles:
(1) An acquisition cycle.
(2) A conversion cycle.
(3) A revenue cycle.
 Business Processes and (AIS)

2
INFORMATION SYSTEMS

• Management Information
System (MIS)
a set is
of subsystems that captures data about an organization,
stores, and maintains the data, and provides meaningful information for
management.
• Accounting Information
system (AIS) is of an organization’s management information
A subsystem
system (MIS).

An organization’s business process and its (MIS)

are closely related. Data are captured by (MIS)
from the organization’s business process to
produce information that help the organization
monitor and control its business process.
 Scope of an (AIS)

Overlap of
Subsystems Marketing Production
All subsystems of (MIS) are
important and different information is
needed to carry out their respective
function, And substantial overlaps in
the information system requirements
have arose between these
subsystems because they use data
about the same underlying business Human Accounting
processes. Resources & Finance

Scope of an (AIS)
Figure demonstrates the substantial
(AIS) is a subsystem that overlap in the information system
provides accounting and financial requirements of these four subsystems.
information, as well as other
information obtained in the routine
processing of accounting transaction.
Uses of (AIS)
Producing External Reports
Businesses use (AIS) to produce special
reports that follow a required structure established
Producing External Reports by organizations such as (FASB). These reports
include financial statements, tax returns, etc

Supporting Routine Supporting Routine Activities

Activities Managers need an (AIS) for handling routine
operating activities during the firm’s operating
cycle. Computer systems excel at handling
Decision Support repetitive transaction by many accounting software
support these routine functions.

Decision Support
Planning and Control Information is needed for nonroutine decision
support at all levels of an organization. Some
information are critical for planning, deciding,
marketing functions.
Planning and Control
An information system is required for planning
and control activities as well. Historical data can be
extracted from the database and used to forecast
growth and cash flows. Planners can use data
mining to reveal long-term trends and relationships.
 Uses of (AIS)

Producing External Reports

Supporting Routine Implementing Internal Control

Activities Internal control includes the policies,
procedures, and information system used to protect
a company’s assets from loss and to maintain
Decision Support accurate financial data. It is possible to build
controls into a computerized accounting information
system to help reach these goals.

Planning and Control

Implementing Internal
Control

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 Accounting Applications and Software

Accounting Applications
Applications are computer programs that are used to serve particular
purpose. Accounting applications provide the information needed for the five
uses mentioned. Accounting applications are organized according to
transaction cycles.

About suppliers, customers,

employees, and product.
Such as purchase orders and
Often using on-screen forms.
sales invoices.
(2) Intering Information
(1) Recording events (3) Printing documents

Interaction between (AIS) and a user

consists primarily of

(4) Printing reports (5) Conducting ad hoc inquiries

Such as financial statement and

sales analyses. Conducting special inquiries
 Accounting Applications and Software

Commercial software Applications developed

that is ready made (1) Off- (2)Develo using database
and available for sale the-shelf ped using management system
to the general public. (DBMS) software.
 Role of Accountants in Relation to (AIS)

Role of The relation to the (AIS)

accountants
As routine transaction processing becomes automated,
accountants are spending less time on routine functions (such
User as producing external reports, decision support, etc). Instead,
Accountant as

they are leveraging their understanding for strategic decision

making and planning.
Accounting managers in the larger firms work closely with
the chief information officer and they understand the content of
Manager the database, the information needs of many users, and
techniques for internal control. This understanding make them a
valuable member of executive committees.

Experience can give accounting professionals a competitive

advantages in consulting about the acquisition, design,
installation, and modification of accounting systems. They
Consultant understand how information systems support business
processes and they know about financial reporting requirement
and internal control risk.
 Role of Accountants in Relation to (AIS)

Role of
The relation to the (AIS)
accountants

We consider the accountant as an

• Internal Auditors
Accountant as

They evaluate various units within an organization to

determine whether those units are effectively pursuing their mission.
Internal auditors must understand the business processes and the
Evaluator information system itself to retrieve data needed for their audits and
evaluate internal control.
• External Auditors
They audits financial statements to meet legal
requirements. They must evaluate the reliability of the
(AIS) that used to prepare these financial statement.

Accountant s use accounting software to provide financial

Provider of
statements for small clients and tax software to provide tax
Accounting and
services for their clients.
Tax Services
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