Account information system Romney 12th edition chapter 1

8/9/2019 Account information system Romney 12th edition chapter 1

1/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 1 of 85

! HAP"# 1

Accounting InformationSystems$

An %&er&ie'


2/85


I("%)*!"I%(

Questions to be addressed in this chapterinclude: What is the meaning of system, data, and

information?

What is an accounting information system (!"#$

Why is the !" an important topic to study$

What is the role of the !" in the %alue chain$

&o' does the !" pro%ide information for decisionmaing$

What are the basic strategies and strategic positionsan organi)ation can pursue$


3/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart * of 85

S+S"#S, )A"A, A() I(-%A"I%(

system is:

set of interrelated components

+hat interact

+o achie%e a goal


4/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart of 85

S+S"#S, )A"A, A() I(-%A"I%(

-ost systems are composed of smaller

subsystems . . .

. . . and %ice %ersa/


5/85


S+S"#S, )A"A, A() I(-%A"I%(

0%ery organi)ation has goals. +he subsystems should be designed to

maimi)e achie%ement of the organi)ations

goals. 0%en to the detriment of the subsystem itself.

03-40: +he production department (asubsystem# of a company might ha%e to

forego its goal of staying 'ithin its budget inorder to meet the organi)ations goal ofdeli%ering product on time.


6/85


S+S"#S, )A"A, A() I(-%A"I%(

.oal conflictoccurs 'hen the acti%ity of asubsystem is not consistent 'ith anothersubsystem or 'ith the larger system.

.oal congruenceoccurs 'hen thesubsystems goals are in line 'ith theorgani)ations goals.

+he larger and more complicated asystem, the more difficult it is to achie%egoal congruence.


7/85


S+S"#S, )A"A, A() I(-%A"I%(

+he systems concetencourages integration(i.e., minimi)ing the duplication of recording,

storing, reporting, and processing#.

)ataare facts that are collected, recorded,stored, and processed by an information system.

rgani)ations collect data about:

#&entsthat occur esourcesthat are affected by those e%ents

Agents'ho participate in the e%ents


8/85 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 8 of 85

S+S"#S, )A"A, A() I(-%A"I%(

Informationis different from data.

!nformation is data that ha%e been

organi)ed and processed to pro%idemeaning to a user.

9sually, more information and better

information translates into better

decisions.


9/85 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart of 85

S+S"#S, )A"A, A() I(-%A"I%(

&o'e%er, 'hen you get more information

than you can effecti%ely assimilate, you

suffer frominformation o&erloa

0ample: ;inal eams 'ee/

When you%e reached the o%erload point,

the


10/85 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 1= of 85

S+S"#S, )A"A, A() I(-%A"I%(

>enefits of information

? @ost of producing information

Aalue of information

Benefits of information may inclue$ euction of uncertainty

Imro&e ecisions Imro&e ability to lan an scheule acti&ities



S+S"#S, )A"A, A() I(-%A"I%(



Aalue of information

!osts may inclue time an resources sent$ !ollecting ata

Processing ata Storing ata )istributing information to users



S+S"#S, )A"A, A() I(-%A"I%(



Aalue of information!osts an benefits of information are oftenifficult to uantify, but you nee to try 'henyou3re ma4ing ecisions about 'hether to

ro&ie information


13/85 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 1* of 85

S+S"#S, )A"A, A() I(-%A"I%(

!haracteristics that ma4e informationuseful$

ele&ance

It reuces uncertainty by heling you reict'hat 'ill haen or confirm 'hat alreay hashaene



S+S"#S, )A"A, A() I(-%A"I%(


ele&ance

eliability

It3s eenable, ie, free from error or biasan faithfully ortrays e&ents an acti&ities



S+S"#S, )A"A, A() I(-%A"I%(


ele&ance

eliability

!omleteness

It oesn3t lea&e out anything that3s imortant



S+S"#S, )A"A, A() I(-%A"I%(


ele&ance

eliability

!omleteness

"imeliness+ou get it in time to ma4e your ecision



S+S"#S, )A"A, A() I(-%A"I%(


ele&ance

eliability

!omleteness

"imeliness

*nerstanabilityIt3s resente in a manner you cancomrehen an use



S+S"#S, )A"A, A() I(-%A"I%(


ele&ance

eliability

!omleteness

"imeliness

*nerstanability

5erifiability

A consensus notion6the nature of theinformation is such that ifferent eole

'oul ten to rouce the same result



S+S"#S, )A"A, A() I(-%A"I%(

!haracteristics that ma4e informationuseful$ ele&ance

eliability !omleteness

"imeliness

*nerstanability 5erifiability

Accessibility

+ou can get to it 'hen you nee it an in aformat you can use


20/85 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 2= of 85

!nformation is pro%ided to both:

0ternal users

!nternal users

S+S"#S, )A"A, A() I(-%A"I%(




0ternal users

!nternal users

S+S"#S, )A"A, A() I(-%A"I%(



0ternal users primarily use information

that is either:

-BC+DE !B;D-+!BFre


23/85 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 2* of 85

!n pro%iding mandatory or essential

information, the focus should be on:

-inimi)ing costs.

-eeting regulatory re




0ternal users

!nternal users

S+S"#S, )A"A, A() I(-%A"I%(



!nternal users primarily use discretionary

information.

+he primary focus in producing this

information is ensuring that benefits

eceed costs, i.e., the information has

positi%e %alue.

S+S"#S, )A"A, A() I(-%A"I%(



n !" is a system that collects, records,stores, and processes data to produceinformation for decision maers.

!t can: 9se ad%anced technologyH or

>e a simple paper?and?pencil systemH or

>e something in bet'een. +echnology is simply a tool to create,

maintain, or impro%e a system.

7HA" IS A( AIS


27/85


28/85


It3s funamental to accounting

7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

Accounting is an information9ro&iingacti&ity, so accountants nee to

unerstan$ Ho' the system that ro&ies that

information is esigne, imlemente,an use

Ho' financial information is reorte

Ho' information is use to ma4eecisions


29/85



7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

%ther accounting courses focus on ho'the information is ro&ie an use

An AIS course laces greater emhasis on$ Ho' the ata is collecte an

transforme

Ho' the a&ailability, reliability, an

accuracy of the ata is ensure AIS courses are not number9crunchingcourses


30/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart *= of 85


"he s4ills are critical to career success

7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

Auitorsnee to e&aluate the accuracyan reliability of information rouce bythe AIS


31/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart *1 of 85



7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

"a: accountantsmust unerstan theclient3s AIS aeuately to be confient thatit is ro&iing comlete an accurateinformation for ta: lanning ancomliance 'or4


32/85




7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

Inri&ate inustryannot9for9rofit,systems 'or4 is consiere the mostimortant acti&ity erforme byaccountants


33/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart ** of 85



7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

Inmanagement consulting, the esign,selection, an imlementation ofaccounting systems is a rai gro'th area


34/85




"he AIS course comlements othersystems courses

7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

%ther systems courses focus on esign animlementation of information systems,atabases, e:ert systems, antelecommunications

AIS courses focus on accountability an control


35/85





AIS toics are teste on the ne' !PA

e:am

7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

a4es u about 2;< of the Business#n&ironment = !oncets section of the !PAe:am


36/85





AIS toics are teste on the ne' !PA

e:am AIS toics imact cororate strategyan culture

7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S


37/85


7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

AIS

%ccuational!ulture Strategy

Information"echnology

AIS esign isaffecte byinformationtechnology, the

organi>ation3sstrategy, an theorgani>ation3sculture


38/85


7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

AIS



Information technologyaffects the comany3schoice of businessstrategy "o erformcost9benefit analyses onI" changes, you nee tounerstan businessstrategy


39/85


7H+ S"*)+ A!!%*("I(.I(-%A"I%( S+S"#S

AIS



Although cultureaffects the esign ofthe AIS, it3s also true

that the AIS affectsculture by alteringthe isersion ana&ailability ofinformation


40/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart = of 85

+he obIecti%e of most organi)ations is to

pro%ide %alue to their customers.

What does it mean to deli%er %alue$

ets pee in on a con%ersation at Joes

pharmacy . . .

%?# %- "H# AIS I( "H# 5A?*# !HAI(


41/85


%?# %- "H# AIS I( "H# 5A?*# !HAI(

7ell, r PharmaceuticalSalesman, your roosal loo4sgoo, but your rices are about

;< higher than your cometitors


42/85


%?# %- "H# AIS I( "H# 5A?*# !HAI(

"hat3s true, but 'e3recomfortable 'ith thatbecause of the &alue9ae that 'e bring to

this arrangement


43/85


%?# %- "H# AIS I( "H# 5A?*# !HAI(

7hat is that @&alue9ae,an ho' o you con&ert it

into ollars


44/85


%?# %- "H# AIS I( "H# 5A?*# !HAI(

Blah6blah6blahcustomer ser&iceblah6blah6blah


45/85


lthough Kadding %alueL is a commonly usedbu))'ord, in its genuine sense, it means maingthe %alue of the finished component greater thanthe sum of its parts.

!t may mean: -aing it faster -aing it more reliable 4ro%iding better ser%ice or ad%ice

4ro%iding something in limited supply (lie ?negati%eblood or rare gems# 4ro%iding enhanced features @ustomi)ing it

%?# %- "H# AIS I( "H# 5A?*# !HAI(


46/85


Aalue is pro%ided by performing a series of

acti%ities referred to as the value chain.

+hese include:

4rimary acti%ities

"upport acti%ities

+hese acti%ities are sometimes referred to

as KlineL and KstaffL acti%ities respecti%ely.

%?# %- "H# AIS I( "H# 5A?*# !HAI(


47/85




+hese include:

4rimary acti%ities

"upport acti%ities



%?# %- "H# AIS I( "H# 5A?*# !HAI(


48/85


4rimary acti%ities include:

!nbound logistics

%?# %- "H# AIS I( "H# 5A?*# !HAI(

ecei&ing, storing, an istributing thematerials that are inuts to theorgani>ation3s rouct or ser&ice

-or a harmaceutical comany, this acti&ity

might in&ol&e hanling incoming chemicalsan elements that 'ill be use to ma4e theirrugs


49/85



!nbound logistics

perations

%?# %- "H# AIS I( "H# 5A?*# !HAI(

"ransforming those inuts into roucts orser&ices

-or the harmaceutical comany, this ste

in&ol&es combining the ra' chemicals anelements 'ith the 'or4 of eole an euiment torouce the finishe rug rouct that 'ill be solto customers


50/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 5= of 85


!nbound logistics

perations

utbound logistics

%?# %- "H# AIS I( "H# 5A?*# !HAI(

)istributing roucts or ser&ices to customers

-or the harmaceutical comany, this ste in&ol&esac4aging an shiing the goos to rug stores,octors, an hositals


51/85



!nbound logistics

perations

utbound logistics

-areting and sales

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Heling customers tobuy the organi>ation3s

roucts or ser&ices

A harmacy re may&isit 'ith rug stores,octors, etc to inform

them about theirroucts an ta4eorers


52/85



!nbound logistics

perations

utbound logistics

-areting and sales

"er%ice

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Post9sale suort ro&ie tocustomers such as reair anmaintenance function

A harmaceutical firm 'illtyically not be reairing it3srouct Cthough the rouct maybe erioically reformulateD

"he harmaceutical comany ismore li4ely to be ro&iinga&isory ser&ices to harmacists,etc


53/85

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e omney/Steinbart 5* of 85



+hese include:

4rimary acti%ities

"upport acti%ities



%?# %- "H# AIS I( "H# 5A?*# !HAI(


54/85


"upport acti%ities include:

;irm infrastructure

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Accountants, la'yers, an aministration

Inclues the comany3s accountinginformation system


55/85



;irm infrastructure

&uman resources

%?# %- "H# AIS I( "H# 5A?*# !HAI(

In&ol&es recruiting an hiring ne'emloyees, training emloyees, ayingemloyees, an hanling emloyee benefits


56/85



;irm infrastructure

&uman resources

+echnology

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Acti&ities to imro&e the roucts or ser&icesCeg, =), 7eb site e&elomentD

-or the harmaceutical comany, these acti&ities'oul inclue research an e&eloment tocreate ne' rugs an moify e:isting ones


57/85



;irm infrastructure

&uman resources

+echnology

4urchasing

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Buying the resources Ceg,materials, in&entory, fi:eassetsD neee to carry out theentity3s rimary acti&ities

In the harmaceutical comany,the urchasing fol4s are tryingto get the best combination of

cost an uality in buyingchemicals, sulies, an otherassets the comany nees torun its oerations


58/85


!nformation technology can significantly

impact the efficiency and effecti%eness

'ith 'hich the preceding acti%ities are

carried out. n organi)ations %alue chain can be

connected 'ith the %alue chains of its

customers, suppliers, and distributors.

%?# %- "H# AIS I( "H# 5A?*# !HAI(

.oo AIS &alue chain$

*PS sens o&er E1 billion a year on

information systems resulting in greatercustomer control o&er eli&ery, higherri&er roucti&ity, an lo'er costs

Ba AIS &alue chain$ ?imite Brans tangle integration of o&er F0

incomatible information systems resulte inG00 trailers trying to am into a 1;0 trailer lot


59/85


Pharmaceuticals, Inc

!nbound ogistics

perations

utbound ogistics

-areting M "ales

"er%ice

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Smith Suly !o

!nbound ogistics

perations

utbound ogistics

-areting M "ales"er%ice

!ustomer Pharmacy

!nbound ogistics

perationsutbound ogistics

-areting M "ales

"er%ice

-or e:amle, the inboun logistics ofPharmaceuticals, Inc, lin4s to theoutboun logistics of its suliers


60/85



!nbound ogistics

perations

utbound ogistics

-areting M "ales

"er%ice

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Smith Suly !o

!nbound ogistics

perations

utbound ogistics


!ustomer Pharmacy

!nbound ogistics


-areting M "ales

"er%ice

An the outboun logistics ofPharmaceuticals, Inc, lin4s to the inbounlogistics of its customers


61/85



!nbound ogistics

perations

utbound ogistics

-areting M "ales

"er%ice

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Smith Suly !o

!nbound ogistics

perations

utbound ogistics


!ustomer Pharmacy

!nbound ogistics


-areting M "ales

"er%ice

"he lin4ing of these searate &alue chainscreates a larger system 4no'n as a sulychain


62/85



!nbound ogistics

perations

utbound ogistics

-areting M "ales

"er%ice

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Smith Suly !o

!nbound ogistics

perations

utbound ogistics


!ustomer Pharmacy

!nbound ogistics


-areting M "ales

"er%ice

"he lin4ing of these searate &alue chainscreates a larger system 4no'n as a sulychain

Informationtechnology can

facilitate synergisticlin4ages that imro&ethe erformance ofeach comany3s &aluechain


63/85


+here is %ariation in the degree of

structure used to mae decisions:

"tructured decisions

%?# %- "H# AIS I( "H# 5A?*# !HAI(

eetiti&e an routine

!an be elegate to lo'er9le&el emloyees

#AP?#$ )eciing 'hether to 'rite an autoinsurance olicy for a customer 'ith a cleanri&ing history


64/85





"emistructured decisions

%?# %- "H# AIS I( "H# 5A?*# !HAI(

Incomlete rules

euire subecti&e assessments

#AP?#$ )eciing 'hether to sell autoinsurance to a customer 'ith a tainteri&ing history


65/85





"emistructured decisions


%?# %- "H# AIS I( "H# 5A?*# !HAI(

(on9recurring an non9routine

euire a great eal of subecti&eassessment

#AP?#$ )eciing 'hether to beginselling a ne' tye of insurance olicy


66/85


+here is also %ariation in the scope of a

decisions effect:

ccupational control decisions

%?# %- "H# AIS I( "H# 5A?*# !HAI(

elate to erformance of secific tas4s

%ften of a ay9to9ay nature

#AP?#$ )eciing 'hether to orerin&entory


67/85



decisions effect:


-anagement control decisions

%?# %- "H# AIS I( "H# 5A?*# !HAI(

elate to utili>ing resources to accomlishorgani>ational obecti&es

#AP?#$ Bugeting


68/85



decisions effect:


-anagement control decisions

"trategic planning decisions

%?# %- "H# AIS I( "H# 5A?*# !HAI(

"he @'hat o 'e 'ant to be 'hen 'e gro'u tyes of uestions

In&ol&es establishing$ %rgani>ational obecti&es

Policies to achie&e those obecti&es

#AP?#$ )eciing 'hether to i&ersify thecomany into other rouct lines


69/85


!n general, the higher a manager is in the

organi)ation, the more liely heNshe is to

be engaging in:

ess structured decisions

>roader scope (i.e., strategic planning#

decisions

%?# %- "H# AIS I( "H# 5A?*# !HAI(


70/85


@orporations ha%e: 9nlimited opportunities to in%est in

technology.

imited resources to in%est in technology. @onse


71/85


-ichael 4orter suggests that there are t'o

basic business strategies companies can

follo':

4roduct?differentiation strategy

o'?cost strategy

"H# AIS A() !%P%A"# S"A"#.+


72/85




follo':

Prouct9ifferentiation strategy o'?cost strategy

"H# AIS A() !%P%A"# S"A"#.+


73/85


product?differentiation strategy in%ol%es

setting your product apart from those of

your competitors, i.e., building a KbetterL

mousetrap by offering one thats faster,has enhanced features, etc.

"H# AIS A() !%P%A"# S"A"#.+


74/85




follo':

4roduct?differentiation strategy

?o'9cost strategy

"H# AIS A() !%P%A"# S"A"#.+


75/85


lo'?cost strategy in%ol%es offering a

cheaper mousetrap than your competitors.

+he lo' cost is made possible by

operating more efficiently.

"H# AIS A() !%P%A"# S"A"#.+


76/85


"ometimes a company can do both, but

they normally ha%e to choose.

"H# AIS A() !%P%A"# S"A"#.+


77/85


4orter also argues that companies must

choose a strategic position among three

choices:

Aariety?based strategic position

"H# AIS A() !%P%A"# S"A"#.+

%ffer a subset of the inustry3sroucts or ser&ices

#AP?#$ An insurance comanythat only offers life insurance asoose to life, health, roerty9casualty, etc


78/85




choices:


(ees9base strategic osition

"H# AIS A() !%P%A"# S"A"#.+

Ser&e most or all of the nees of a articulargrou of customers in a target mar4et

#AP?#$ "he original -arm Bureau9baseinsurance comanies ro&ie a ortfolio ofinsurance an financial ser&ices tailore to thesecific nees of farmers


79/85




choices:


Beeds?based strategic position

Access9base strategic osition

"H# AIS A() !%P%A"# S"A"#.+

Ser&e a subset of customers 'ho iffer fromothers in terms of factors such as geograhiclocation or si>e

#AP?#$ Satellite Internet ser&ices areintene rimarily for customers in rural areas'ho cannot get )S? or cable ser&ices


80/85




choices:


Beeds?based strategic position

ccess?based strategic position

"hese strategic ositions are notmutually e:clusi&e an can o&erla

"H# AIS A() !%P%A"# S"A"#.+


81/85


@hoosing a strategic position is importantbecause it helps a company focus its efforts as

opposed to trying to be e%erything to e%erybody.

03-40: radio station that tries to play all typesof music 'ill probably fail.

!ts critical to design the organi)ations acti%ities

so they reinforce one another in achie%ing the

selected strategic position. +he result is synergy,'hich is difficult for competitors to imitate.

"H# AIS A() !%P%A"# S"A"#.+


82/85


+he gro'th of the !nternet has profoundlyaffected the 'ay %alue chain acti%ities areperformed: !nbound and outbound logistics can be streamlined

for products that can be digiti)ed, lie boos andmusic. +he !nternet allo's companies to cut costs, 'hich

impacts strategy and strategic position. >ecause the !nternet is a%ailable to e%eryone, intense

price competition can result. +he outcome may bethat many companies shift from lo'?cost to product?differentiation strategies.

+he !nternet may impede access?based strategicpositions.

"H# AIS A() !%P%A"# S"A"#.+


83/85


+he !" should help a company adopt and

maintain its strategic position.

De


84/85


+he authors belie%e:

ccounting and information systems should

be closely integrated.

+he !" should be the primary informationsystem to pro%ide users 'ith information they

need to perform their Iobs.

"H# AIS A() !%P%A"# S"A"#.+

S*A+


85/85

S*A+

What 'e%e learned so far: +he meaning of system, data, and information.

What an !" is.

Why its an important topic to study. What its role is in the %alue chain.

&o' it pro%ides information for decision maing.

What are the basic strategies and strategic positions

an organi)ation can pursue. &o' these interact 'ith the !".

Account information system Romney 12th edition chapter 1

Documents

Transcript of Account information system Romney 12th edition chapter 1