Prepared by Coby Harmon University of California, Santa Barbara Westmont College Chapter 2-1 Foundational Concepts of the AIS Chapter 2-2 Accounting Information Systems, 2nd Edition Study Study Objectives Objectives The interrelationships of business processes and the AIS Types of accounting information systems Client-server computing Cloud computing Accounting software market segments Input methods used in business processes The processing of accounting data Outputs from the AIS related to business processes Documenting processes and systems 10 Ethical considerations at the foundation of accounting information systems Chapter 2-3 Business Business Processes Processes and and the the AIS AIS Accounting Information System - a system that captures, records, processes, and reports accounting information Business Process - a prescribed sequence of work steps completed in order to produce a desired result Chapter 2-4 SO The interrelationships of business processes and the AIS Business Business Processes Processes and and the the AIS AIS Exhibit 2-1 Overall View of Transactions, Processes, and Resulting Reports Chapter 2-5 SO The interrelationships of business processes and the AIS Business Business Processes Processes and and the the AIS AIS Question Which of the following statements is not true? a Accounting information systems must maintain both detail and summary information b Business processes may vary from company to company c Regardless of the extent of computerization, all accounting information systems must capture data from the transactions within business processes d Business processes categorized as expenditure processes are not intended to be processes that serve customers Chapter 2-6 SO The interrelationships of business processes and the AIS Types Types of of Accounting Accounting Information Information Systems Systems Three categories of AIS: Manual systems Legacy systems Modern, integrated IT systems Chapter 2-7 SO Types of accounting information systems Types Types of of Accounting Accounting Information Information Systems Systems Manual Systems Generally used by small organizations Entirely manual system would require: Chapter 2-8 Source document General journal Turnaround document Special journals General ledger Subsidiary ledgers SO Types of accounting information systems Types Types of of Accounting Accounting Information Information Systems Systems Legacy Systems Existing system, often based on old technology Advantages are that legacy systems: Customized to specific needs Support unique business processes not inherent in generic accounting software Contain invaluable historical data that may be difficult to integrate into a new system Well supported and understood by existing personnel Chapter 2-9 SO Types of accounting information systems Types Types of of Accounting Accounting Information Information Systems Systems Legacy Systems Disadvantages are that legacy systems: Costly to maintain Often lack adequate supporting documentation Hardware needed to maintain may become obsolete Not usually based on user-friendly interfaces Tends to use software written in older computer languages Often difficult to modify to make user friendly Difficult to integrate when companies merge Chapter 2-10 SO Types of accounting information systems Documenting Documenting Processes Processes and and Systems Systems Pictorial Representations of processes and systems include: Process maps System flowcharts Document flowcharts Data flow diagrams Entity relationship diagrams (ER diagrams) Chapter 2-33 SO Documenting processes and systems Documenting Documenting Processes Processes and and Systems Systems Process Maps Pictorial representations of business processes in which the actual flow and sequence of events in the process are presented in diagram form Start or Finish Task or Activity Exhibit 2-6 Process Map Symbols Connector Decision Direction of Flow Chapter 2-34 SO Documenting processes and systems Documenting Documenting Systems Systems Exhibit 2-8 Common System Flowchart Symbols System Flowcharts Intended to depict the entire system, including inputs, manual and computerized processes, and outputs Chapter 2-35 SO Documenting processes and systems Documenting Documenting Systems Systems Document Flowcharts Flow of documents and information among departments or units within an organization Chapter 2-36 Exhibit 2-9 Payroll System Flowchart Documenting Documenting Systems Systems Chapter 2-37 Exhibit 2-10 Restaurant Process Map Exhibit 2-11 Restaurant Document Flowchart Chapter 2-38 Exhibit 2-11 Restaurant Document Flowchart Chapter 2-39 Documenting Documenting Systems Systems Exhibit 2-12 Restaurant Data Flow Diagram Data Flow Diagrams Used to show the logical design of a system Chapter 2-40 Documenting Documenting Processes Processes and and Systems Systems Entity Relationship Diagrams Pictorial representations of the logical structure of databases Chapter 2-41 ► Entities - items in the accounting system, such as employees, customers, vendors, and inventory items ► Each entity has attributes, such as last name, first name, pay rate, and number of withholdings SO Documenting processes and systems Documenting Documenting Processes Processes and and Systems Systems Entity Relationship Diagrams Cardinality refers to how many instances of an entity relate to each instance of another entity Chapter 2-42 One to one: Each employee has one personnel file One to many: One supervisor has many employees Many to many: Each vendor can sell many items SO Documenting processes and systems Documenting Documenting Systems Systems Exhibit 2-15 ERD of Internet Sales Entity Relationship Entity Relationship Diagrams Diagrams Chapter 2-43 SO Documenting processes and systems Documenting Documenting Processes Processes and and Systems Systems Question In documenting systems, which pictorial method is described as a method that diagrams the actual flow and sequence of events? a System flowchart b Process map c Data flow diagram d Entity relationship diagram Chapter 2-44 SO Documenting processes and systems Ethical Ethical Considerations Considerations of of AIS AIS ► Accountants should be aware of opportunities for unethical behaviors within the various business processes ► As a company chooses features and options for its accounting information systems, the importance of monitoring those systems should not be overlooked as a factor in decision making Chapter 2-45 SO 10 Ethical considerations at the foundation of accounting information systems APPENDIX: APPENDIX: Resources Resources Events Events Agents Agents The REA model views accounting data collection as a system to collect data about the resources, events, and agents within business processes Exhibit 2-16 An REA Pattern for Sales Chapter 2-46 Copyright Copyright Copyright © 2013 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her own use only and not for distribution or resale The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein Chapter 2-47 ... foundation of accounting information systems Chapter 2-3 Business Business Processes Processes and and the the AIS AIS Accounting Information System - a system that captures, records, processes, and reports... of of Accounting Accounting Information Information Systems Systems Three categories of AIS: Manual systems Legacy systems Modern, integrated IT systems Chapter 2-7 SO Types of accounting information. .. supported and understood by existing personnel Chapter 2-9 SO Types of accounting information systems Types Types of of Accounting Accounting Information Information Systems Systems Legacy Systems