Lecture 4- The Information System: an Accountant’s Prospective: Accounting information System Framework

1. Habib Ullah Qamar
Govt. college of Commerce Gujranwala
1/22/2016

2.  What is System
 Elements of system
 Characteristics of a System
 An Artificial System’s Example
 Information System Framework
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3.  Accounting information System
 TRP
 GL/FRS
 MRS
 MIS
 AIS vs MIS
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4.  An accounting information system (AIS) is
a system of collecting, storing and processing
financial and accounting data that is used by
[decision maker]]s. An accounting
information system is generally a computer-
based method for tracking accounting activity
in conjunction with information technology
resources.
 It Processes Financial and non-Financial
Transactions. (Customer Information)

5.  Management often
requires information
that goes beyond the
capability of AIS.
 As organizations grow
in size and complexity,
specialized functional
areas emerge,
requiring additional
 information for
production planning
and control, sales
forecasting, inventory
warehouse

6.  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 to
support their daily operations.

7.  with business events that occur frequently.
 a firm may process thousands of transactions
 Transactions are grouped into Cycles
 TPS Consists of three Cycles
 the revenue cycle
 the expenditure cycle
 conversion cycle
 Each cycle captures and processes different
types of financial transactions.

8.  The general ledger system (GLS)
 financial reporting system (FRS) are two
closely related subsystems.
 Due to their operational interdependency,
viewed as a single integrated system
 Input comes from the transaction cycles.
 Summarize transaction cycle activity
 update the general ledger control accounts.

9.  less frequent events, such as stock
transactions, mergers, and claim settlements,
 The financial reporting system measures and
reports the status of financial resources and
the changes in those resources.
 The FRS communicates this information
primarily to external users. Much of this
information consists of traditional financial
statements, tax returns, and other legal
documents.

10.  Provides the internal financial information
needed to manage a business.
 Managers must deal immediately with many
day-to-day business problems,
 as well as plan and control their operations.
 Managers require different information for
the various kinds of decisions they must
make
 include budgets, variance reports, cost-
volume-profit analyses, and reports using
current (rather than historical) cost data

11.  The Sarbanes–Oxley Act of 2002 (Pub.L. 107–204,
116 Stat. 745, enacted July 30, 2002), also known as
the "Public Company Accounting Reform and Investor
Protection Act" (in the Senate) and "Corporate and
Auditing Accountability and Responsibility Act" (in
the House) and more commonly calledSarbanes–
Oxley, Sarbox or SOX, is a United States federal
law that set new or expanded requirements for all
U.S. public company boards, management and public
accounting firms. There are also a number of
provisions of the Act that also apply to privately held
companies, for example the willful destruction of
evidence to impede a Federal investigation.

12.  SOX legislation requires that management must
design and implement internal controls over the
entire financial reporting process.
 This includes the financial reporting system, the
general ledger system, and the transaction
processing systems that supply the data for
financial reporting. SOX further requires that
management certify these controls and that the
external auditors express an opinion on control
effectiveness.
 Without such a model, critical management and
audit responsibilities under SOX may not be met.

13.  We start with literature definition of AIS
 We discussed types of AIS Subsystems
 Summarize discussion of AIS Subsystems
 AIS and MIS are compared and discussed
from accountant’s prospective.
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14. See you again in sha ALLAH
1/22/2016