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Fab, a trusted employee and a systems engineer, had access to both the computer access

Fab, a trusted employee and a

systems engineer, had access to both

the computer access list and user

passwords. The firm’s competitor recently hired him for twice his

salary. After leaving, Fab continued to browse through his old employers

data, such as price lists, customer

lists, bids on jobs, and so on. He passed this information to his new employer.

INFORMATION

SYSTEM

By: Sheila Mae Lupian-Poliran

INFORMATION ENVIRONMENT

INFORMATION

ENVIRONMENT

Benefits of information may include: • Reduction of uncertainty • Improved decisions • Improved ability

Benefits of information may include:

Reduction of uncertainty

Improved decisions

Improved ability to plan and schedule activities

Benefits of Information ̶Cost of producing information Value of information

Costs may include time and resources spent:

Collecting data

Processing data

Storing data

Distributing information to users

Characteristics of useful information: • Relevance • Reliability • Completeness • Timeliness •

Characteristics of useful information:

Relevance

Reliability

Completeness

Timeliness

Understandability

Verifiability

Accessibility

Data vs. Information Data are facts which may or may not be processed and have

Data vs. Information

Data

are facts which may or may not be

processed and have

no direct effect on the user.

Information

Processed Data

causes the user to take

action and make decision.

and have no direct effect on the user. Information Processed Data causes the user to take

Data

Sources

Internal External Sources Sources Data
Internal
External
Sources
Sources
Data

Operational Stages in the Information System

Data Collection
Data
Collection
Operational Stages in the Information System Data Collection Data Processing Feedback Database Management Information
Data Processing
Data
Processing
Feedback
Feedback
Database Management
Database
Management
Stages in the Information System Data Collection Data Processing Feedback Database Management Information Generation
Information Generation
Information
Generation

Stake

holders

Stake holders Top Internal and External Management Flows of Information Middle Management Suppliers Operations

Top

Internal and

External

Management Flows of Information Middle Management Suppliers Operations Management Customers Operations Personnel
Management
Flows of
Information
Middle
Management
Suppliers
Operations Management
Customers
Operations Personnel
Day-to-Day Operations Information
SYSTEM A group of two or more interrelated components or subsystems that serve a common

SYSTEM

A group of two or more interrelated components or subsystems that

serve a common purpose.

Car operating system

Elements of a system

Elements of a system 1. Multiple components 2. Relatedness

1. Multiple components

2. Relatedness

System versus Subsystem

Driveline Isolated Brake system
Driveline Isolated
Brake system

Suspension Isolated

Interior

System Decomposition

System Decomposition Decomposition is a process of dividing the system into smaller subsystem parts.

Decomposition is a process of dividing the system into smaller subsystem parts.

Subsystem Interdependency

Subsystem

Interdependency

Subsystem Interdependency
Information System The set of formal procedures by which data are collected, processed into information,

Information System

The set of formal procedures by which

data are collected, processed into information, and distributed to users.

System The set of formal procedures by which data are collected, processed into information, and distributed
5 Basic Resources of Information System  Personnel  Hardware  Software  Networks 

5 Basic Resources of Information System

Personnel

Hardware

Software

Networks

Data

Types of Information System

based on different levels of hierarchy in an organization

Types of Information System based on different levels of hierarchy in an organization

Information System (IS)

Management Accounting Information System (AIS) Information System (MIS) General Transaction Processing Systems
Management
Accounting Information
System (AIS)
Information System
(MIS)
General
Transaction Processing
Systems (TPS)
Ledger/Financial
Reporting System
Management Reporting
System (MRS)
Financial Management
System
(GL/FRS)
Expenditure Cycle
Conversion Cycle
Revenue Cycle
Marketing Systems
Purchase System
Cost Accounting System
Sales Processing System
Distribution Systems
Human Resource
Cash Disbursement
Production Planning
and Control system
System
Cash Receipts System
System
Payroll Processing
System
A Framework for
Information System
Fixed Asset System

Broad classes of Information System

Accounting

Information

System

Broad classes of Information System Accounting Information System Management Information System
Broad classes of Information System Accounting Information System Management Information System

Management

Information

System

A Framework for

Information System

(IS)

Information System Accounting Management Information System Information System (AIS) (MIS) General Management
Information System
Accounting
Management
Information System
Information System
(AIS)
(MIS)
General
Management
Transaction Processing
Ledger/Financial
Financial Management
Reporting System
Systems (TPS)
Reporting System
System
(MRS)
(GL/FRS)
Expenditure Cycle
Conversion Cycle
Revenue Cycle
Marketing Systems
Cost Accounting
Sales Processing
Information
Purchase System
Distribution Systems
System
System
Human Resource
Cash Disbursement
Production Planning
and Control system
System
Cash Receipts System
System
System
(IS)
Payroll Processing
System
Fixed Asset System
Accounting
Information
System (AIS)

Management

Information

System (MIS)

Information

 

System (IS)

Accounting

Information

System (AIS)

Transaction

 

Processing

Systems (TPS)

 

General

Ledger/Financial

Reporting System

 

(GL/FRS)

Management

Reporting System

 

(MRS)

Major Subsystems of AIS

1. Transaction Processing System

2. General

Ledger/Financial Reporting System (GL/FRS) 3. Management Reporting System (MRS)

Major Subsystems of AIS 1. Transaction Processing System  supports daily business operations with numerous

Major Subsystems of AIS

1. Transaction Processing System

supports daily business operations with

numerous reports, documents and

messages for users throughout the

organization.

central to the overall function of the information system by converting economic

events into financial transactions; recording financial transactions in the accounting

records (journals and ledgers); and

distributing essential financial information to operations personnel.

Transaction An event that affects or is of interest to the organization and is processed

Transaction

An event that affects or is of

interest to the organization

and is processed by its

information system as a

unit of work.

Financial vs. Nonfinancial Transaction

Financial Transaction

An economic event that affects the assets and equities of the

organization, is reflected

in its accounts, and is measured in monetary terms.

in its accounts, and is measured in monetary terms. Nonfinancial Transaction Events that do not meet

Nonfinancial Transaction

Events that do not meet the narrow definition of a financial

transaction.

(residual definition)

Transactions Processed by the Information System

Financial Transactions
Financial
Transactions
Nonfinancial Transactions
Nonfinancial
Transactions
Information System
Information
System

Information

Information System Financial Transactions Nonfinancial Transactions Information System Information U s e r Decisions

User

Decisions

Methods of Data Processing

Distinguishing Feature

Batch Processing

Real-time Processing

Information time frame

Lag exists between time when the economic event occur

Processing takes place when the economic event occurs.

s and when it is

recorded.

Resources

Generally, fewer resources (hardware,

More resources are required than for batch

programming, training)

processing.

are required.

Operational efficiency

Certain records are processed after the event to avoid

All records pertaining to the event are processed

operational delays.

immediately.

Major Subsystems of AIS 2. General Ledger/Financial Reporting System (GL/FRS)  Produces the traditional financial

Major Subsystems of AIS

2. General Ledger/Financial Reporting

System (GL/FRS)

Produces the traditional financial

statements, balance sheet, statement of cash flows, tax returns, and other reports required by law.

Major Subsystems of AIS

2. General Ledger/Financial Reporting System

Transaction cycles
Transaction
cycles

(GL/FRS)

GL Control Accounts
GL Control
Accounts

General Ledger

System

cycles (GL/FRS) GL Control Accounts General Ledger System Clientele External Users Financial Reports Financial
cycles (GL/FRS) GL Control Accounts General Ledger System Clientele External Users Financial Reports Financial
cycles (GL/FRS) GL Control Accounts General Ledger System Clientele External Users Financial Reports Financial

Clientele

External Users

(GL/FRS) GL Control Accounts General Ledger System Clientele External Users Financial Reports Financial Reporting System
Financial Reports
Financial
Reports

Financial

Reporting

System

Major Subsystems of AIS 3. Management Reporting System (MRS)  Provides internal management with special

Major Subsystems of AIS

3. Management Reporting System (MRS)

Provides internal management with

special purpose financial reports such as budgets, variance reports, responsibility

reports, and cost-volume-profit analysis.

Tool for PLANNING and CONTROL

Discretionary reporting because the

organization can choose what to report

and how to present it.

and CONTROL  Discretionary reporting because the organization can choose what to report and how to

General Model for Accounting Information System

The External Environment

System

Data

Collection

Database

Management

Data

System Data Collection Database Management Data Processing Information Generation

Processing

Information

Generation

The Information

Internal

Sources of

Data

Feedback

Internal End Users

The Business Organization

of Data Feedback Internal End Users The Business Organization External Sources of External Users Data Feedback
of Data Feedback Internal End Users The Business Organization External Sources of External Users Data Feedback

External

Sources of

External Users

of Data Feedback Internal End Users The Business Organization External Sources of External Users Data Feedback

Data

Feedback

Management Information System (MIS) Processes nonfinancial transactions that are not normally processed by traditional AIS.

Management Information System (MIS)

Processes

nonfinancial

transactions that are not normally processed by

traditional AIS.

Management Information System (MIS) Processes nonfinancial transactions that are not normally processed by traditional AIS.
Examples of MIS Applications in Functional Areas Function Examples of MIS Applications Finance Portfolio

Examples of MIS Applications in Functional Areas

Function

Examples of MIS Applications

Finance

Portfolio Management System

Capital Budgeting System

Marketing

Market Analysis New Product Development Product Analysis

Distribution

Warehouse Organization and Scheduling Delivery Scheduling Vehicle Loading and Allocation Models

Personnel

Human Resource Management System

Job Skill Tracking System

Employee Benefits System

Objectives of Information System • To support the stewardship function of management. • To support

Objectives of Information System

To support the stewardship function of management.

To support management decision making. To support the firm’s day-to- day operations.

Ways to acquire Information System • Develop the customized systems from scratch through in-house systems

Ways to acquire Information System

Develop the customized systems from scratch through in-house systems development activities

Purchase preprogrammed commercial

systems from software vendors

System Development Life Cycle The formal process of developing customized system from scratch to meet

System Development Life Cycle

The formal process of developing

customized system from scratch

to meet the needs of the firm.

Basic types of commercial software: • Turnkey systems • Backbone systems • Vendor-supported systems •

Basic types of commercial

software:

Turnkey systems

Backbone systems

Vendor-supported systems

ERP systems

The Role of Accountants  Users  System Designers  System Auditors  External Auditing

The Role of Accountants

Users System Designers

System Auditors

External Auditing

Assurance Services

IT Auditing

Internal Auditing

Organizational Structure Business Segments – functional units of business organizations Common approaches of

Organizational Structure

Business Segments functional units of business organizations

Common approaches of segmentation:

1. Geographical Location

2. Product Line

3. Business Function

Accounting vs IT functions ACCOUNTING FUNCTION (END USER) • Manages financial information resource of the

Accounting vs IT functions

ACCOUNTING FUNCTION

(END USER)

Manages financial

information resource of

the firm

Distributes transaction

information to

operations personnel to coordinate many of

their tasks

IT FUNCTION

(TECHNICAL SUPPORT)

Database administration

Data processing

Systems development

and maintenance

Data Processing Models

Centralized Data Processing

MARKETING FINANCE IT SERVICES DISTRIBUTION ACCOUNTING
MARKETING
FINANCE
IT SERVICES
DISTRIBUTION
ACCOUNTING

PRODUCTION

Distributed Data Processing

ACCOUNTING PRODUCTION IT SERVICES IT SERVICES

ACCOUNTING

ACCOUNTING PRODUCTION IT SERVICES IT SERVICES

PRODUCTION ACCOUNTING IT SERVICES IT SERVICES
PRODUCTION

ACCOUNTING PRODUCTION IT SERVICES IT SERVICES
IT SERVICES
IT SERVICES
ACCOUNTING PRODUCTION IT SERVICES IT SERVICES
IT SERVICES
IT SERVICES
Distributed Data Processing ACCOUNTING PRODUCTION IT SERVICES IT SERVICES DATA INFORMATION COST CHARGEBACK

DATA

INFORMATION

COST CHARGEBACK

Disadvantages of DDP  Mismanagement of organization-wide resources  Hardware and software incompatibility 

Disadvantages of DDP

Mismanagement of

organization-wide resources

Hardware and software incompatibility

Redundant tasks Consolidating incompatible activities

Redundant tasks  Consolidating incompatible activities  Problems in hiring qualified professionals  Lack of
Redundant tasks  Consolidating incompatible activities  Problems in hiring qualified professionals  Lack of

Problems in hiring qualified professionals

Lack of standards

Advantages of DDP  Cost reductions  Improved cost control responsibility  Improved user satisfaction

Advantages of DDP

Cost reductions

Improved cost control responsibility

Advantages of DDP  Cost reductions  Improved cost control responsibility  Improved user satisfaction 
Advantages of DDP  Cost reductions  Improved cost control responsibility  Improved user satisfaction 

Improved user satisfaction

Backup

Evolution of Information Systems Models The Manual Process Model The Flat-File Model The Database Model

Evolution of Information Systems Models

The Manual Process Model

The Flat-File Model

The Database Model

The REA Model

Resources

Events

Agents

Enterprise Resource Planning Systems (ERP)

Evolution of Information Systems Relative to Computing Technology Mainframe and minicomputer computing Personal computers

Evolution of Information Systems

Relative to Computing Technology

Mainframe and minicomputer computing

Personal computers

Client/server networks

Enterprise computing

Cloud computing

Mainframe and minicomputer

Mainframe and minicomputer
Mainframe and minicomputer
Personal computers

Personal computers

Personal computers
Client/server networks

Client/server networks

The Role of Accountants  Users  System Designers  System Auditors  External Auditing

The Role of Accountants

Users System Designers

System Auditors

External Auditing

Assurance Services

IT Auditing

Internal Auditing

Designer/ Auditor Duality

Designer/ Auditor

Duality

Reading Articles  The CPA and the Computer: Auditing in the Cloud: Challenges and Opportunities

Reading Articles

The CPA and the Computer: Auditing in the Cloud:

Challenges and Opportunities (CPA Journal January 2012

by) Christina A. Nicolaou, Andreas I. Nicolaou and George D. Nicolaou

The CPA and the Computer: A Better Spreadsheet for Internal Controls (CPA Journal April 2011 by Bruce Wampler

and Michelle McEacharn)

The CPA and the Computer: Cloud Computing, Accounting , Auditing, and Beyond (CPA Journal October 2010 by Hui Du and Yu Cong)

Accounting Software Selection and Satisfaction: A Survey of

Accounting Professionals (CPA Journal January 2010 by Susan H. Ivancevich, Daniel M. Ivancevich, and Fara Elikai)

What the Enterprise Needs to know About Cloud Computing (Accenture Technology Labs)

Accounting Information Systems, 9 th Edition by James A. Hall

T H A N K Y O U !

T H A N K

Y O U !