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Management Consultancy

Principles and Engagements


E.B. Cabrera 2011 Edition

Chapter 28
Fundamentals of Management
Information Systems
Reporter: Jaybee Lucito Bantang

Basic Concepts
Data- plural form of datum which means a raw fact or
figure from which conclusion can be drawn.
Information-data that have been processed and is
meaningful and useful to users.
System-entity consisting of interacting parts that are
coordinated to achieve one or more common objectives
or output or information.
Information System-is a framework in which the data are
collected, processed, controlled and managed through
stages in order to provide information to users.

What is Management
Information System?
A Management Information System(MIS)the means by which information is
provided for decision makers to allow them
to make and implement the necessary
decisions to optimize the interrelationships
of the available resources to most
effectively reach the organizations goals.

SYSTEM
INPUT

PROCESS

FEEDBACK

OUTPUT

INFORMATION SYSTEM

INFORMATION

DATA
INPUT

PROCESS

FEEDBACK

OUTPUT

FUNCTIONS OF AN INFORMATION SYSTEM


ENVIRONMENT
Customers

Suppliers

ORGANIZATION
INFORMATION SYSTEM
INPUT

PROCESS

OUTPUT

FEEDBACK
Regulatory
Agencies

Stockholders

Competitors

Objective of MIS
To provide accurate, timely and
meaningful data for management
planning, analysis, control and
decision making to optimize
performance of the organization.
In short, it must enhance the
management of the organization.

Value Added through Improved


MIS

1. Better integration of information-producing activities leads to information


that is more complete and relevant.
2. Managers are freed from lower-level decisions and moved to higher-level
problems.
3. Decisions are made more timely due to prompt availability of information.
4. Decisions are made with increased confidence derived from improved
integrity of underlying data.
5. Information technology and resources are focused where it will do the most
good.

Properties of an Effective
and Efficient MIS

1.
2.
3.
4.
5.
6.
7.

Relevance
Accuracy
Completeness
Timeliness
Conciseness
Flexibility
Economy

Guidelines in Designing an Efficient


Management Information System
1. Apply resources to only those problems that
have been identified.
2. Work with facts, not opinion.
3. Work on causes, not effects.
4. Activities should be as simple as possible.
5. Capture data as close to the source as
possible.

Guidelines in Designing an Efficient


Management Information System
6. Keep the user in mind.
7. Involve people who will be affected by any changes.
8. Select equipment compatible to job requirements
and design the system to maximize the use of this
equipment.
9. Always follow up, evaluate and take corrective
measures, if necessary.

MIS Development
1. Define the main secondary goals and their
priorities.
2. Identify those factors that are critical to the
success of each goal
3. Design a systems structure to achieved the
desired goals and priorities.
4. Implement the system.
5. Monitor and control the system.

Decision Elements of a Typical


Business Organization

Top executives- strategic planning, overall policy making


Personnel managers- recruiting, selection, compensation policies
Marketing managers- market research, advertising, distribution
logistics, pricing policies
Manufacturing managerspurchasing, product
transformation logistics,
production policies

Business Information
System
Primary Management Information Subsystems
1.Logistics Information System
2.Financial Information System
3.Personnel Information System

Business Information
System
Secondary Management Information Subsystems
A.Logistics Information System
1.Purchasing Subsystems
a)Vendor selection
b)Ordering
c)Transportation
d)Receiving
e)Inspection
f) Control

Business Information
System
2. Production Subsystems
a) Scheduling
b) Dispatching
c) Operation
d) Inspection
e) Packaging
f) Shipping
g) Control

Business Information
System
2. Marketing Subsystems
a) Product Statistics
b) Customer Histories
c) Product planning
d) Customer Service
e) Product delivery
f) Pricing
g) Forecasting
h) Control

Business Information
System
2. Order-processing Subsystem
a) Originating
b) Editing
c) Pricing
d) Billing
e) Credit and collection
f) Control

Business Information
System
Secondary Management Information Subsystems
B. Financial Information System
Financial Subsystems
1.Treasury
2.Financial accounting
3.Managerial/Cost accounting
4.Tax accounting
5.Payroll
6.Planning
7.Control

Business Information
System
Secondary Management Information Subsystems
B. Personnel Information System
Personnel Subsystems
1. Candidate selection
2. Employee histories
3. Manpower distribution
4. Regulatory compliance
5. Training
6. Welfare and safety
7. Compensation
8. Control

Other important secondary


subsystems:
1. Research and development
information subsystem
2. Strategic planning and policy making
subsystem.

Management Consultancy
Principles and Engagements
E.B. Cabrera 2011 Edition

Chapter 29
Accounting Information System
Reporter: Jaybee Lucito Bantang

Basic Concepts
Accounting Information System
-subsystem of the Financial Information system, refers to
the orderly arrangement of procedures , personnel,
records, equipment, and devices utilized for a logical and
orderly gathering, processing and reporting of financial
and other information essential to the efficient conduct
and evaluation of the activities of a business enterprise.

Basic Concepts
Accounting Information System
-is the information subsystem within an organization
that accumulates information from the entitys various
subsystems and communicates it to the organizations
information processing subsystem.

Objective of AIS:
-To collect, process and provide financial information needed by management and
other interested parties in conducting and evaluating the business activities.
Essential Elements of an AIS
1.Procedures
2.Statement of accounting policies and standards
3.Records and reports
4.Bookkeeping system
5.Personnel
6.Equipment and devices

Characteristics of an Effective AIS


1.
2.
3.
4.
5.
6.

Identify properly and record all valid transactions.


Describe the transactions on a timely basis and in sufficient detail to permit
proper classification of transactions for financing reporting.
Determine the time period in which the transaction occurred so as to permit
recording in the proper accounting period.
Measure the value of the transaction in manner that permits their recording in
their proper monetary value in the financial statement.
Permit proper presentation of the transactions and related required disclosures
in the financial statement.
Assist management in planning, controlling and decision making.

The AIS should possess the following


Characteristics:
1.
2.
3.
4.
5.
6.

Compatibility to the companys organization.


Provision of necessary reports.
Provision for controls.
Adequacy of provision for audit trail.
Presence of qualified and competent personnel.
Simplicity, flexibility, and favorable cost/benefit
relationship.

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Relationship of AIS & MIS


MIS
Finance

Sales/Marketing

Production

AIS

Personnel

Order entry/Sales
Billing/A.Rec./Cash receipts
Purchasing/A. Pay./Cash disb.
Inventory
Payroll
General ledger
Production

Examples of AIS Subsystems


(Merchandising)
Order entry
Sales
System

Revenue
Cycle
Billing/
A. Receivable
Cash Receipts
System

Shipping

Inventory
System

Receiving

General
Ledger
System
Ext/Fin. reporting
Tax & req. reporting
Internal reporting

Purchasing/
A. Payable/
Cash Disb.
System

Expenditure
Cycle
Human
Resource
Management
(Payroll)
System

No Planning/Control, Investment, or Production Cycles reflected here

The Operational System of a


Manufacturing
Firm
Manufacturing Firm
Facilities
Supporting
Operations

Labor
(human
services)
Material
from
Supplier

Acquiring
Materials

Producing
Finished
Goods

Storing
Finished
Goods

Data

Shipping
Finished
Goods

Goods
to
Customer
Information

AIS
Funds

Data and information flow


Physical flows

Funds

Examples of AIS Subsystems:


Production Cycle
Inventory
System

Production
System
Production Cycle

General
Ledger
System

Purchasing/
A. Payable/
Cash Disb.
System

Human
Resource
Management
(Payroll
System

No Revenue, and Investment Cycles reflected here

Objectives and Users of AIS


Support day-to-day operations
Transaction processing

Support Internal Decision-Making


Trend Analyses
Quantitative & Qualitative Data
Non-transactional sources

Help fulfill Stewardship Role

Resources Required for an AIS


Processor(s): Manual or Computerized
Data Base(s): Data Repositories
Procedures: Manual or

Computerized
Input/Output Devices
Miscellaneous Resources

Roles of Accountants With


Respect to an AIS
Financial accountants prepare
financial information for external
decision-making in accordance
with GAAP
Managerial accountants
prepare financial information for
internal decision-making

Roles of Accountants With


Respect to an AIS
Auditors - evaluate controls and
attest to the fairness of the
financial statements.
Accounting managers - control
all accounting activities of a firm.
Tax specialists - develop
information that reflects tax
obligations of the firm.
Consultants - devise
specifications for the AIS.