THE AIS

ACCOUNTING INFORMATION
SYSTEM

GENERAL LEDGER/
MGT. REPORTING
TPS FINANCIAL
SYSTEM
REPORTING SYSTEM
 AIS SUBSYSTEM:
TRANSACTION PROCESSING SYSTEM
• Supports daily operations with numerous reports,
documents and messages for uses throughout the
organization
• Use to keep track of the basic activities and transactions
of the organization
• Sales, Receipts, Payroll, Cash deposits, expenses…
• Purpose: answer routine questions, track flow of
transactions
• NOTE: At operational level: tasks, resources and goals are
predefined and highly structured.
A TPS FOR PAYROLL
 AIS SUBSYSTEM:
FINANCIAL REPORTING SYSTEM
• General Ledger/ Financial Reporting System
• Produces the traditional financial statements, such as
the income statement, balance sheet, statement of
cash flows, tax returns, and other reports required by
law
 AIS SUBSYSTEM:
MANAGEMENT REPORTING SYSTEM
• Management Reporting System
• provides internal management with special-purpose
financial reports and information needed for decision
making such as budgets, variance reports, and
responsibility reports
 THE MIS

• Note:
Management
requires
information
beyond the
capability of
AIS
 THE MIS

• As organization gro ws (in size and complexity),

specialized functional areas emerge, requiring additional
information in all functional areas.
• Because Organization look for additional
information such as
• Production planning & control, sales forecast, financial
performance prediction, inventory management &
warehouse planning, market research, etc.
 THE MIS

MIS is a need!
Processes nonfinancial transactions
that are not normally processed by traditional AIS.
 MANAGEMENT INFORMATION SYSTEM

• a computer-based system that provides managers with the

tools to organize, evaluate and efficiently manage departments
within an organization.
• In order to provide past, present and prediction information, MIS can
include:
• software that helps in decision making,
• data resources such as databases,
• hardware resources of a system,
• decision support systems,
• people management and project management applications, and
• any computerized processes that enable the department to run efficiently.
• (https://www.webopedia.com/TERM/M/MIS.html)
 MANAGEMENT
• Planning: goal setting, environmental scanning, forecasting…
• Organizing: staffing, coordinating, delegating, understanding,
procedures/policies
• Controling: Resources (money, man, machines, materials,
movement), information
• Measuring, evaluating, reporting, corrective action, feedback
• Leading: authority, motivating, directing, activating, supervising,
negotiation, persuading
• Communicating: informing, persuading, negotiation, corrective action,
listening
 INFORMATION
• Processed data
• Transformed form of data
• Meaningful
• Perceived value – seen, remarkable
• Has surprise value – new information
• Has new value
• Domain-based (business-based)
• data that has been processed into a form that is meaningful to the
recipient (USER) and of real or perceived value in current or
prospective actions or decisions.
 WHY INFORMATION IS NEEDED?

•very important to managers

•Use it to perform their tasks
•Decision making
•Planning & control
•Strategic directions
 INFORMATION HIERARCHY
(accdg. To Ray R. Larson, University of California)
Wisdom
• Distilled and integrated knowledge and
understanding.
Knowledge
• Information read, heard, or seen, and
understood.
Information
• Data organized and presented.
Data
• raw material of information.
 FEATURES OF QUALITY INFORMATION

• Reliability - verifiable and dependable.

• Timely - current and it must reach the users well in time
• Relevant - current and valid information; reduces uncertainties.
• Accurate - free of errors and mistakes, true, and not deceptive.
• Sufficient - adequate in quantity
• Unambiguous - expressed in clear terms; comprehensive.
• Complete - meet all the needs in the current context.
• Unbiased - impartial, free from any bias - should have integrity.
• Explicit - not need any further explanation.
• Comparable - of uniform collection, analysis, content, and format.
• Reproducible - be used by documented methods on the same
data set to achieve a consistent result.
 SYSTEM
• input-process-output an orderly arrangement of interdependent ideas
or constructs (ABSTRACT SYSTEM) •
• a set of elements which operate together to accomplish an objective
(PHYSICAL SYSTEM)
• group of components (subsystems)
• integrated through the common purpose of achieving some
objective
• Examples:
• Human body
• Organization
• Computer system
 SYSTEM…

SUBSYSTEM
• Components of a larger system
• With subgoals but contributing to the main goal
• Can receive input from, and transfer output to, other systems or subsystems
• Example: a business firm composed of different departments (subsystem)
CLOSED vs OPEN SYSTEM
• Closed system
• stands alone; no connection to another system; nothing flows in from another system;
nothing flows out to another system.
• Open system
• interfaces and interacts with other systems
• Have form and structure
• Adapt to changes in environment so as to continue to exist..
 THE ORGANIZATION

Source: James Hall, Accounting Information System

THE ORGANIZATION & INFORMATION SYSTEMS
 THE ORGANIZATION & INFORMATION SYSTEMS

• Do they influence one another?

• YES!
• The need to design IS that will serve existing organization
• Is Information System built to serve the interest
of the firm?
• YES!
• IS should serve organization’s purpose
• Organization must be ready to be restructured to take
advantage of the improvements IS can offer.
ARE THEY SIMILAR?
• Partly yes
• require inputs
• IS needs data as main ingredient, while
• Organization rely on people
• BUT both are structured method of turning raw products into a
useful one.
• have some processing
• Have outputs
• Both depend on feedback for a successful completion of the cycle
 IS INFLUENCES ORGANIZATION...

• If Information systems are built for firm’s interest, then:

• organization must be aware of the

influences of IS to be benefited
• Interaction of IT and organization is
complex and influenced by mediating
factors such as:
• structure, business processes, politics, culture,
surrounding environment, and management
decisions
 THREE PRIMARY USES OF IS
Providing support to complete a task
faster, more cheaply, and perhaps with
greater accuracy and/or consistency

Providing support to improve day-to-

day operations by creating, acquiring,
and transferring knowledge
Providing support in a way that enables
the firm to gain or sustain competitive
advantage over rivals
2-23
WHY USE INFORMATION SYSTEMS

Business
Value
Added

Automating Informating Strategizing

AUTOMATING:
DOING THINGS FASTER

Automation
Providing support to complete a task faster, more
cheaply, and perhaps with greater accuracy and/or
consistency
Styles of Processing
• Manual Processing
• Technology Supported Processing
• Fully Automated Processing
 ORGANIZATIONAL LEARNING:
DOING THINGS BETTER
• Organizational Learning (Informating)
• Providing support to improve day-to-day operations
by creating, acquiring, and transferring knowledge

• Providing information needed for

• - decision making
• - organizational learning-
 SUPPORTING STRATEGY:
DOING THINGS SMARTER
•Supporting Strategy (Strategizing)
• Providing support in a way that enables the firm to gain or
sustain competitive advantage over rivals
• IS supports
• Decision making
• Planning
• Strategic decision making
 IMPACT OF INFORMATION SYSTEMS IN
ORGANIZATION AND BUSINESS FIRM

•Information systems are integral, online,

interactive tools involved in the minute-to-
minute operations and decision making of
most organizations.
• Gives Economic Impact
• Organizational and behavioral impacts
 IMPACT OF INFORMATION SYSTEMS IN
ORGANIZATION AND BUSINESS FIRM

Economic Impact
• IT changes both the relative costs of capital and the costs of
information.
• ISs can be viewed as a factor of production that can be substituted for
traditional capital and labor.
• As the cost of IT decreases, it is substituted for labor, which
historically has been a rising cost. Hence, IT should result in a decline
in the number of middle managers and clerical workers as IT
substitutes for their labor (Laudon, 1990).
• I.T.’s goal:
• to reduce cost in order for the organization to grow
• Thru: fast processing of data, information are easily produced,
analyze and distributed.
 IMPACT OF INFORMATION SYSTEMS IN
ORGANIZATION AND BUSINESS FIRM

• IT Flattens Organizations
• Behavioral researchers have theorized that IT facilitates
flattening of hierarchies by broadening the distribution of
information to empower lower-level employees and increase
management efficiency
• IT pushes decision making lower in the org. Because
employees receive information they need to make decision
without supervision
• Some org have downsized and reduced the number of
employees
• Reduced also the number of levels in the organizational
hierarchies (even departments are merged)
THE BUSINESS INTELLIGENCE SYSTEM

MIS Management Information System

DSS Decision Support System

ESS Executive Support System

 BUSINESS INTELLIGENCE

• a contemporary term for data and software tools

for organizing, analyzing, and providing access to
data to help managers and other enterprise users
make more informed decisions.
• addresses the decision-making needs of all levels of
management.
• BIS for middle management help with monitoring,
controlling, decision-making, and administrative
activities.
 THE MIS…
• provides the information
necessary to take decisions and
manage an organization effectively
• supportive of the institution’s
long-term strategic goals and
objectives.
• viewed and used at many
levels by management:
operational, tactical and
even strategic.
 THE MIS

• designates a specific category of information systems

serving middle management.
• provide middle managers with reports on the
organization’s current performance.
• This information is used to monitor and control the business and
predict future performance.
• summarize and report on the company’s basic operations
using data supplied by transaction processing systems
• TPS reports are compressed & presented in reports on
regular basis
THE MIS
THE MIS
 THE MIS

• MIS can be applied in different functions such as in

• Finance
• Marketing
• Human Resource (Personnel)
• Distribution
• Production
• And other areas of the organization
 MIS APPLICATION IN MARKETING

• Market analysis – determining how a market is good

both present & future using SWOT (relate opportunities &
threats over organization’s strengths & weaknesses.
• Market research – collect, analyze & interpret data
regarding market conditions. (is product/service feasible?)
• Product development – testing formulated concept of
a new product
• Sales Analysis – prepare sales analysis comparing
projected and actual sales.
 MIS APPLICATION IN HR

• Staffing
• Job placement system based on experience, expertise and
education
• Employee skill inventory
• Employee benefit system
• salary forecasting
• Incentive management & planning
• Performance and promotion evaluation system
• Payroll reporting & management
 MIS APPLICATION IN DISTRIBUTION

• Delivery Scheduling – manage, schedule and monitory

delivery
• Warehouse organization & Scheduling – schedules
and monitors warehouse activities
• Vehicle loading and allocation models –
• using GPS to track vehicle
 MIS APPLICATION IN FINANCE & ACCOUNTING

• Cash Management – control, monitor & forecast cash flow

• Funds management and Utilization
• Capital Budgeting System – projected financial statements
 serves as basis for management’s expectation on sales,
expenses & other financial transactions
• Compares budgets and plans to actual performances and figures.
• Portfolio Management System – help provide decisions
on investments, matching investments to objectives, asset
allocation, balancing risk against performance