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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 entrylevel 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 entrylevel 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
Copyright 2012 John Wiley & Sons, Inc. All rights reserved.
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use of the information contained herein.

Chapter
8-53

Chapter 8

Chapter
8-54

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