An accounting information system (AIS) is a system used to collect, store, and process accounting data about an organization's transactions and other financial events. An AIS consists of six main components: people, procedures, data, software, hardware, and internal controls. It serves three key functions: collecting and storing financial data, transforming that data into useful information for decision making, and providing controls to safeguard assets and ensure accurate and reliable data. Factors like organizational culture, strategy, and information technology influence an AIS's design.

1. ACCOUNTING INFORMATION SYSTEM
Accounting Information System :
An Overview

2. Accounting Information System : An Overview
A System : a set of two or more interrelated
components that interact to achieve a goal.

3. Accounting Information System : An Overview
Accounting :
an information identification, development,
measurement, and communication process.

4. Accounting Information System : An Overview
Accounting Information System (AIS) : a
a system to collecting, and storing data about events,
resources, and agents, transforming data into
information that management can use to make
decisions about events, resources, and agents.

5. Accounting Information System : An Overview
An AIS consists of six components :
1. The people who operate the system and perform
various functions.
2. The procedures both manual and automated,
involved in collecting, processing, and storing data
about the organization’s processes.
3. The data about the organization’s business
processes.
4. The software used to process the organization’s
data.

6. Accounting Information System : An Overview
5. The information teknology infrastructure,
including computers, peripheral devices, and
network communications devices.
6. Internal control and Security Measurement
which storing AIS data.

7. Accounting Information System : An Overview
Six components enable an AIS to fulfill three
important functions in any organization :
1. Collecting and storing data about activities
performed by the organization, the resources
affected by those events, and the agents who
participate in the various activities.
2. Transforming data into information that is useful
for making decisions that enable management to
plan, execute, and control activities

8. Accounting Information System : An Overview
3. Providing adequate controls to safeguard the
organization’s assets, including its data to
ensure that the data are available when
needed and are accurate and reliable.

9. Accounting Information System : An Overview
How an AIS can add value to an organization :
1. Improving the quality and reducing the costs of
products or service.
2. Sharing of knowledge.
3. Improving efficiency
4. Improved decision making
5. Improving internal control structure

10. Accounting Information System : An Overview
Factors Influencing design of the AIS :
Organizational
Culture
Strategy
Information
Technology
AIS

11. Accounting Information System : An Overview
Study of the AIS is Fundamental to Accounting
1. The use of information in decision making.
2. The nature, design, use, and implementation of an AIS.
3. Financial information reporting

12. Accounting Information System : An Overview
How to transform that data into information that
management can use to run the organization ?
Data Information
Decision Making

13. Accounting Information System : An Overview
The Value Chain Framework of Michael Porter :

14. Accounting Information System : An Overview
The value chain framework of Michael Porter is a model that helps to
analyze specific activities through which firms can create value and
competitive advantage.
Primary activities :
1. Inbound logistics
2. Operations
3. Outbound logistics
4. Marketing and sales
5. Service
Support activities :
1. Firm Infrastructure
2. Human Resources Management
3. Technology Development
4. Procurement

15. Accounting Information System : An Overview
1. Inbound logistics
Receiving, storing, and distributing the materials that
are inputs used by the organization to create the services
and products that it sells. For example: The activities of
receiving, handling, and storing the steel, glass, and rubber
2. Operations
Activities transform inputs into final products or services.
For example: the assembly line activities, machining.
3. Outbound logistics
The activities involved in distributing finished
products or services to customers. For example:
shipping automobiles to car dealers, warehousing.

16. Accounting Information System : An Overview
4. Marketing and sales
Refers to the activities involved in helping
customers to buy the organization’s products or
services. For example: Advertising, promotion,
selling.
5. Service
Activities provide post-sale support to
customers. For example: repair and
maintenance services.

17. Accounting Information System : An Overview
1. Firm Infrastructure
Refers to the accounting, finance, legal
support, and general administration.
2. Human Resources Management
Activities include recruiting, hiring, training,
and providing employee benefits and
compensation.
3. Technology Development
Activities improve a product or service.
4. Procurement
All the activities involved in procuring raw materials,
supplies, machinery, and the buildings used to carry out the
primary activities.

18. Accounting Information System : An Overview
A Supply Chain :
a system organizations, people, activities,
information, and resources involved in moving a
product or service from supplier to customer.

19. Accounting Information System : An Overview
The Supply Chain :
Raw
Materials
Supplier
Manufacturer Distributor Retailer
Consumer

20. Accounting Information System : An Overview
Data :
Refers to any and all of the facts that are collected, stored, and
processed by an information system.
Information :
Data that have been organized and processed to provide meaning.

21. Accounting Information System : An Overview
Characteristics of useful information :
1. Relevant
Information is relevant if it reduces uncertainty, improves decision
makers ability to make predictions, or confirms or corrects their
prior expectations.
2. Reliable
Information is reliable if it is free from error or bias and accurately
represents the events or activities of the organization.
3. Complete
Information is complete if it does not omit important aspects of the
underlying events or activities that it measures.
4. Timely
Information is timely if it is provided in time to enable decision
makers to use it to make decisions.

22. Accounting Information System : An Overview
5. Understandable
Information is understandable if it is presented in a useful and
intelligible format.
6. Verifiable
Information is verifiable if two knowledgeable people acting
independently would each produce the same information.
7. Accessibility
You can get to it when you need it and in a format you can
use.

23. Accounting Information System : An Overview
Business Processes or Transaction Cycle :
The business activities any organization performs can be
described as pairs of events that involve a give-get exchange.
Transaction Cycle :
1. The Revenue Cycle
2. The Expenditure Cycle
3. The Human Resources (Payroll) Cycle
4. The Production Cycle
5. The Financing Cycle

24. Accounting Information System : An Overview
1. The Revenue Cycle
Includes the sales and cash receipts events.
2. The Expenditure Cycle
Includes the purchases and cash disbursements events
3. The Human Resources (Payroll) Cycle
Includes the events of hiring and paying employees.
4. The Production Cycle
Includes the events of transforming raw materials and labor
into finished products.
5. The Financing cycle
Includes the events of obtaining funds from investors and creditors
and repaying them

25. Accounting Information System : An Overview
Enterprise Resource Planning (ERP) systems are designed to
overcome these problems as they integrate all aspects of a
company’s operations with its tradisional AIS. A key feature of
ERP systems is the integration of financial with other
nonfinancial operating data.

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