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Management Reporting

SystemProvides internal management withProvides internal management with

specialspecial--purpose financial reports andpurpose financial reports andinformation needed for decision makinginformation needed for decision making

such as budgets, variance reports, costsuch as budgets, variance reports, cost--

volumevolume--profit analysis and responsibilityprofit analysis and responsibilityreports.reports.

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A General Model for AIS

The elements of the general model are:The elements of the general model are:

End UsersEnd Users

Data SourcesData SourcesData CollectionData Collection

Data processingData processing

Database managementDatabase managementInformation generation andInformation generation and

FeedbackFeedback

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The General AIS Model

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End UsersEndEndusersusers fallfall intointo twotwo generalgeneral groupsgroups:: externalexternal andand internalinternal..ExternalExternal usersusers includeinclude::CreditorsCreditors

StockholdersStockholdersPotentialPotential investorsinvestorsRegulatoryRegulatory agenciesagencies

TaxTax authorizesauthorizesSuppliersSuppliersCustomersCustomers

InternalInternal usersusers includeinclude::ManagementManagement atat everyevery levellevel of of thethe organization,organization, asas wellwell asas operationsoperations personnelpersonnel

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Data SourcesDataData sourcessources areare financialfinancial transactionstransactions thatthat enterenter thethe informationinformation systemsystem fromfrom internalinternal andandexternalexternal sourcessources..

ExternalExternal financialfinancial transactionstransactions areare thethe mostmost commoncommon sourcesource of of datadata forfor mostmost organizationsorganizations..EE..gg..,, salesale of of goodsgoods andand services,services, purchasepurchase of of inventory,inventory, receiptreceipt of of cash,cash, andand disbursementdisbursement of of cashcash (including(includingpayroll)payroll)..

InternalInternal financialfinancial transactionstransactions involveinvolve thethe exchangeexchange oror movementmovement of of resourcesresources withinwithin thethe organizationorganization..EE..gg..,, movementmovement of of rawraw materialsmaterials intointo workwork--inin--processprocess (WIP),(WIP), applicationapplication of of laborlabor andand overheadoverhead toto WIP,WIP,transfertransfer of of WIPWIP intointo finishedfinished goodsgoods inventory,inventory, andand depreciationdepreciation of of equipmentequipment..

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Tr ansforming the Data 

into InformationFunctionsFunctions forfor transformingtransforming datadata intointo informationinformation accordingaccording toto thethegeneralgeneral AISAIS modelmodel::11.. DataData CollectionCollection22.. DataData ProcessingProcessing33.. DataData ManagementManagement44.. InformationInformation GenerationGeneration

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1. Data CollectionIsIs thethe firstfirst operationaloperational stagestage inin thethe informationinformation systemsystem..

TheThe objectiveobjective isis toto ensureensure thatthat eventevent datadata enteringentering thethe systemsystem areare valid,valid,completecomplete andand freefree fromfrom materialmaterial errorserrors..

TheThe mostmost importantimportant stagestage

TwoTwo rulesrules governgovern thethe designdesign of of datadata collectioncollection proceduresprocedures:: relevancerelevanceandand efficiencyefficiency..

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2. Data Processing

ClassifyingClassifying

TranscribingTranscribing

SortingSorting

BatchingBatching

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MergingMerging

CalculatingCalculating

SummarizingSummarizing

ComparingComparing

OnceOnce collected,collected, datadata usuallyusually requirerequire

processingprocessing toto produceproduce informationinformation..

ExampleExample

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3.  Data Management

StoringStoring

RetrievingRetrieving

DeletingDeleting 9

TheThe organizationsorganizations databasedatabase isis itsits

physicalphysical repositoryrepository forfor financialfinancial andand

nonfinancialnonfinancial datadata..ItIt cancan bebe aa filingfiling cabinetcabinet oror aa computercomputer

diskdisk..

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3.  Data Management

StoringStoring

RetrievingRetrieving

DeletingDeleting10

TheThe organizationsorganizations databasedatabase isis itsits

physicalphysical repositoryrepository forfor financialfinancial andand

nonfinancialnonfinancial datadata..ItIt cancan bebe aa filingfiling cabinetcabinet oror aa computercomputer

diskdisk..

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Char acteristics of Useful

Informat

ionRegardlessRegardless of of physicalphysical formform oror technology,technology, usefuluseful informationinformation hashas thethe followingfollowingcharacteristicscharacteristics::RelevanceRelevance:: servesserves aa purposepurposeTimelinessTimeliness:: nono olderolder thanthan thethe timetime periodperiod of of thethe actionaction itit supportssupportsAccuracyAccuracy:: freefree fromfrom materialmaterial errorserrorsCompletenessCompleteness:: allall informationinformation essentialessential toto aa decisiondecision oror tasktask isis presentpresentSummarizationSummarization:: aggregatedaggregated inin accordanceaccordance withwith thethe usersusers needsneeds

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5.  Feedback

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IsIs aa formform of of outputoutput thatthat isis sentsent backback toto thethe systemsystem asas aa

sourcesource datadata..

ItIt maymay bebe internalinternal oror externalexternal andand isis usedused toto initiateinitiate oror

alteralter aa processprocess..

ExampleExample::AnAn inventoryinventory statusstatus reportreport signalssignals thethe inventoryinventory controlcontrol

clerkclerk thatthat itemsitems of of inventoryinventory havehave fallenfallen to,to, oror below,below,

theirtheir minimumminimum allowableallowable levelslevels..

InternalInternal feedbackfeedback fromfrom thisthis informationinformation willwill initiateinitiate thetheinventoryinventory orderingordering processprocess toto replenishreplenish thethe inventoriesinventories..

ExternalExternal feedbackfeedback aboutabout thethe levellevel of of uncollecteduncollected

customerscustomers accountsaccounts cancan bebe usedused toto adjustadjust thethe

organizationsorganizations creditcredit--grantinggranting loanloan policiespolicies

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Information System Objectives

in a Business ContextTheThe goalgoal of of anan informationinformation systemsystem isis toto supportsupport1.1. thethe stewardshipstewardship functionfunction of of managementmanagement

StewardshipStewardship refersrefers toto managementsmanagements responsibilityresponsibility toto properlyproperly

managemanage thethe resourcesresources of of thethe firmfirm2.2. managementmanagement decisiondecision makingmaking3.3. thethe firmsfirms dayday--toto--dayday operationsoperations

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