Chapter 8:

Accounting Information Systems and

Business Processes - Part II

Introduction
The Resource Management Process
The Production Process
The Financing Process
Business Processes In Special Industries
Business Processes Reengineering

Chapter
8-1
 Introduction

Business Processes
Sales and Purchasing
Resource Management, Production, and Financing

Information Needs
Typical AIS requirements
Specialized information

Chapter
8-2
 Human Resource
Management

Personnel function
Hire, train, and employ appropriately qualified
employees

Business Process Management Software

Packages
Automate the core processes

Payroll Processing Information Systems

Process payroll activities and reporting
Chapter
8-3
 Human Resource
Management Objectives

Hiring, training, and employing workers

Maintaining employee earnings records
Complying with regulatory reporting requirements
Reporting on payroll deductions
Making timely and accurate payments to
employees
Providing an interface for personnel and payroll
activities
Chapter
8-4
Personnel Function
Flowchart

Chapter
8-5
Payroll Function Flowchart

Chapter
8-6
 Human Resource
Management Inputs

Personnel Action Forms

Documents hiring or changes in employee status

Time Sheets
Tracks hours worked

Payroll Deduction Authorizations

Authorization to deduct certain amounts

Tax Withholding Forms

Authorization to withhold appropriate tax amounts
Chapter
8-7
 Human Resource
Management Outputs

Financial Statement Information

Employee Listings
Current employees
May contain employee-specific information
Paychecks
Final documents; subject to strict internal controls
Check Registers
Used to make journal entries for salary and payroll tax
expenses
Chapter
8-8
 Human Resource
Management Outputs

Deduction Reports
Summaries of deductions for employees as a group

Payroll Summaries
Used to analyze expenses

Tax Reports
Government required information
Income tax, social security tax, unemployment tax

Chapter
8-9
 Human Resource
Management Summary

Chapter
8-10
 Study Break #1

All of the following activities are common to the Human

Resource Management function except:

A. Hiring, training, and employing workers

B. Reporting on payroll deductions
C. Maintaining employee earnings records
D. Certified financial planning for employees

Chapter
8-11
 Study Break #1 - Answer

All of the following activities are common to the Human

Resource Management function except:

A. Hiring, training, and employing workers

B. Reporting on payroll deductions
C. Maintaining employee earnings records
D. Certified financial planning for employees

Chapter
8-12
 Fixed Asset Management

Fixed Asset Management Function

Long-term Assets
Purchase, maintenance, valuation, disposal

Enterprise Asset Management System

Automate management of assets

Chapter
8-13
 Fixed Asset Management
Objectives

Tracking purchases of fixed assets

Recording fixed asset maintenance
Valuing fixed assets
Allocating fixed asset costs (recording depreciation)
Tracking disposal of fixed assets

Chapter
8-14
Fixed Asset Management
Function Flowchart

Chapter
8-15
 Fixed Asset Management
Inputs

Purchase Requisition
Requires approval by management

Receiving Report
Identifies receipt of fixed asset

Supplier Invoice
Sent when asset is shipped

Chapter
8-16
 Fixed Asset Management
Inputs

Construction Work Order

If asset is built by company

Fixed Asset Change Form

Transfer of fixed asset
Locations, sale, trade, or retirement

Repair and Maintenance Form

Notification to update expense and asset accounts
Chapter
8-17
 Fixed Asset Management
Outputs

Financial Statement Information

Fixed Asset Register
Identification numbers
Location

Depreciation Register
Depreciation Expense
Accumulated Depreciation

Chapter
8-18
 Fixed Asset Management
Outputs

Repair and Maintenance Reports

Current period expenses
Historical expenses

Report on Retired Assets

Disposal of fixed assets

Chapter
8-19
Fixed Asset Management
Summary

Chapter
8-20
 Study Break #2

What is the objective of the fixed asset management function?

A. To track purchases of fixed assets

B. To manage the purchase, management, valuation, and
disposal of an organizations fixed assets
C. To record maintenance and depreciation of fixed assets
D. To keep a current listing of approved vendors

Chapter
8-21
 Study Break #2 - Answer

What is the objective of the fixed asset management function?

A. To track purchases of fixed assets

B. To manage the purchase, management, valuation, and
disposal of an organizations fixed assets
C. To record maintenance and depreciation of fixed assets
D. To keep a current listing of approved vendors

Chapter
8-22
 Study Break #3

Why do companies use BPM solutions for the fixed asset

management function?

A. Decrease machine downtime and maintenance costs

B. Reduce inventory
C. Integrate data and coordinate logistics
D. All of the above

Chapter
8-23
 Study Break #3 - Answer

Why do companies use BPM solutions for the fixed asset

management function?

A. Decrease machine downtime and maintenance costs

B. Reduce inventory
C. Integrate data and coordinate logistics
D. All of the above

Chapter
8-24
 The Production Process

Process
Begins with request for raw materials
Ends with transfer of finished goods to warehouses

Primary Objectives
Converting raw materials to finished goods efficiently
Collecting and reporting of information

Chapter
8-25
Production Process
Flowchart

Chapter
8-26
 Production Process
Objectives

Track purchases and sales of inventories

Monitor and control manufacturing costs
Control inventory
Control and coordinate the production
process
Provide input for budgets

Chapter
8-27
 Cost Accounting
Subsystem

Job Costing Information System

Tracks costs for specific jobs
Raw materials, labor, and overhead
Process Costing Information System
Used for manufacturers of homogeneous products
Produced on a regular and continuous basis
Activity-based Costing Systems
Emphasis on cost drivers of business processes
Chapter
8-28
 Just-in-Time Inventory
Systems

A make-to-order inventory system

Attempts to minimize inventory at all levels

Dependent upon AIS

Timely and accurate processing of information
Ensure continuous work flow by providing
adequate raw materials

Chapter
8-29
 Lean Production/
Manufacturing

Concept
Eliminate waste throughout the organization
Focus on reduction of non-value-added waste

Lean Accounting
Necessary in order to have lean manufacturing
Data collection
Evaluate performance measures

Chapter
8-30
Non-Value-Added Waste

Chapter
8-31
Production Process Inputs

Material Requisition Form

Request to acquire materials from storeroom or
warehouse

Bill of Materials
Identifies types and quantities of parts needed

Master Production Schedule

Displays quantities of goods needed to meet sales
demands
Chapter
8-32
Production Process Inputs

Production Order
Authorizes the manufacture of goods
Incorporates data from sales projections and inventory
levels
Dictates the production schedule

Job Time Card

Identifies the distribution of labor costs to specific jobs
or production orders

Chapter
8-33
Production Process Outputs

Financial Statement Information

Details of the costs and pricing
Materials Price List
Prices charged for raw materials
Periodic Usage Report
Provides information on use of raw materials
Inventory Reconciliation Report
Reconciles physical inventory with book balances

Chapter
8-34
Production Process Outputs

Inventory Status Report

Allows managers to monitor inventory levels

Production Cost Report

Details the actual costs for production items
Production operation, cost element, and/or separate jobs

Manufacturing Status Report

Provides information about the status of various jobs

Chapter
8-35
Production Process
Summary

Chapter
8-36
 Study Break #4

Which of the following automated systems help minimize

inventory costs?

A. JIT systems
B. ABC systems
C. Job order costing systems
D. Process costing systems

Chapter
8-37
 Study Break #4 - Answer

Which of the following automated systems help minimize

inventory costs?

A. JIT systems
B. ABC systems
C. Job order costing systems
D. Process costing systems

Chapter
8-38
 Study Break #5

Lean accounting is:

A. An AIS that is generally considered low cost (i.e., an entry-

level system)
B. Designed to support traditional financial performance
measures
C. New performance measures that support decision-making
by managers and operational improvement leaders
D. None of these

Chapter
8-39
 Study Break #5 - Answer

Lean accounting is:

A. An AIS that is generally considered low cost (i.e., an entry-

level system)
B. Designed to support traditional financial performance
measures
C. New performance measures that support decision-making
by managers and operational improvement leaders
D. None of these

Chapter
8-40
 The Financing Process

Process
How a company acquires and uses financial resources
Cash, other liquid assets, investments

Acquisition
Sales of goods and services
Borrowing cash or selling ownership shares

Chapter
8-41
The Financing Process

Chapter
8-42
 Financing Process
Objectives

Effective cash management

Lockbox systems and electronic funds transfer

Cost of capital optimization

Earn maximum return on investments
Project cash flows

Chapter
8-43
Benefits of a Lockbox
System

Chapter
8-44
 Financing Process Inputs

Remittance Advices
Accompanies a customers payment on account

Deposit Slips
Documents account deposits

Bank Statements
Used to reconcile company balance with bank
balance
Chapter
8-45
Financing Process Outputs

Financial Statement Information

Cash Budget
Investment Reports
Debt and Interest Reports
Financial Ratios
Financial Planning Model Reports
Chapter
8-46
Financing Process Summary

Chapter
8-47
 Business Processes in
Special Industries

Professional Service Organizations

Accounting, Law, Engineering, Consulting
Utilize time and billing information systems
Tracks billable hours and creates client bill

Not-for-Profit Organizations
Provide services for the betterment of society
Emphasize fund accounting systems
Utilize budgetary AIS for evaluation measures

Chapter
8-48
Professional Service
Organization Bill

Chapter
8-49
 Business Processes in
Special Industries

Health Care Organizations

Provide health care to patients
Emphasize third-party billing
Standardized codes provide efficiency in billing
Rely on AIS to maintain patient information

Chapter
8-50
Mini-based Hospital
System

Chapter
8-51
 Business Process
Reengineering

Purpose
Inefficient or ineffective processes exist
Redesign to improve efficiency and effectiveness

Potential Failure of Reengineering

Unrealistic expectations
Employee resistance to change
Lack of top management support

Chapter
8-52
 Copyright

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Chapter
8-53
Chapter 8

Chapter
8-54