Impact of Information Age

fewer workers are making products, and

a large segment of the employee
population is involved in producing,
analyzing, and distributing information.

Knowledge workers comprise much of

the labor force.

A major contributor to the information

age is the Internet.
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A group of interrelated multiple components or subsystems that

serve a common purpose/ goal

Characteristics of a system

Has parts / subsystem that related

Has goal /purpose

There will be input and output

Has an environment that it resides

Has a boundary that separate it from environment and/or other system

There is limit to what it can accomplish

A system is called a subsystem when it is viewed as a component of

a larger system. A subsystem is considered a system when it is the
focus of attention.
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Interface occurs at the connecting point

where the boundaries of two systems meet.

Interface acting as connecting point for two

systems, it eases the flow of one systems
output into another system.

The designers of a system should plan for

an interface which copes with the waiting
period between two processes
+efinition Information "ystem

An Information system is a set of interrelated

subsystems that work together to collect, process,
store, transform, and distribute information for
planning, decision making, and control.

)irms depend on information systems in order to

stay competitive.

Thus, Information is a business resource that:

needs to be appropriately managed

is vital to the survival of contemporary businesses

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"ystems have been classified in different ways.
*ommon calcification are./
01 ,hysical or abstract.
21 -pen or closed.
31'atural or man/made information
systems
!H"#ICA$ %# A&#T'ACT

,hysical systems

tangible entities that may be static or dynamic in operation.

(g, the physical parts of the computer center are the offices, des)s,
and chairs that facilitate operation of the computer *static+. A
programmed computer is a dynamic system. ,ata, programs,
output, and applications change as the users demands or the
priority of the information re-uested changes

Abstract systems

are conceptual or nonphysical entities.

A model is an easier way for the analyst to visuali.e relationships

in the system under study.

The ob/ective is to point out the significant elements and the )ey
interrelationships of a comple0 system.
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systems is based on their degree of independence.

An open system

has many interfaces with environment.

It receives inputs from and delivers outputs to the outside.

must adapt to the changing demands of the user.

A closed system

does not interface with its environment, i.e. it has no input or

output.

more relevant to scientific systems than to social systems.

Completely closed system is very rare. The nearest we can get to a

closed social system would be a completely self4contained
community that provides all its own food, materials and power,
and that does not trade, communicate or come into contact with
other communities.
*oncept of *losed and open "ystem
+ata are raw facts about events
that have no organization or
meaning.
Information is data that have
been processed and is
meaningful and useful to users.
+ata versus Information
CHA'ACT('I#TIC 15 6#(56$
I251'3ATI12

(elevance

It reduces uncertainty by helping you predict what will happen or

confirm what already has happened.

(eliability

It4s dependable, i.e., free from error or bias and faithfully portrays
events and activities.

*ompleteness

It doesn4t leave out anything that4s important.

!imeliness

#ou get it in time to make your decision.

5nderstandability

It4s presented in a manner you can comprehend and use

6erifiability

A consensus notion7 nature of the information is such that

different people would tend to produce the same result

Accessibility

#ou can get to it when you need it and in a format you can use
AI". A**-5'!I'8 A'+ I"&
Accounting
Information
#ystems
Accounting
Information
#ystems

Accounting is an information system.

It identifies, collects, processes, and communicates economic

information about a firm using a wide variety of technologies.

It captures and records the financial effects of the firms

transactions.

It distributes transaction information to operations personnel to

coordinate many )ey tas)s.
Accounting Information "ystems

An Accounting Information "ystem 9AI"1 is the

information subsystem within an organization
that accumulates information from the entity4s
various subsystems and communicates it to the
organization4s information processing subsystem.

)unctions of AI"

!o *ollect and store data on business activities and

transactions in more efficient : effective

!o ,rovide useful information for decision making

!o provide ade;uate control, data recorded accurately

Well organized business

An Accounting Information "ystem
Inputs7 ,ata/Information from
Internal/(0ternal sources
!rocesses7 #ort, 1rgani.e,
Calculate
1utputs7 Information for Internal/
(0ternal ,ecision 3a)ers
,ata
'epository/
5iles,
,atabases,
(tc.
6A<5$" -) AI"

provide accurate and timely information

Improve products or services 8 increase

-uality, reduce cost, add special features

Increase efficiency 8 deliver timely

information

'eliable information will improve decision

ma)ing capabilities

Improve sharing of )nowledge and

e0pertise
%I" versus AI"

%anagement Information "ystem 9%I"1

Historically, provided financial and nonfinancial

information to internal users.

e.g., trac)ing customer complaints

Accounting Information "ystem

Traditionally provided financial information to

both e0ternal and internal users.

'ow, the two systems overlap and provide much

of the same information focusing on
business processes.
IS
AIS MIS
GLS/
FRS
TPS MRS
Finance Marketing Production HRS Logistic
)inancial Accounting "ystem

!he objective of financial accounting is to provide

relevant information to individuals and groups
outside an organization4s boundaries.

%ainly to e=ternal users include investors, ta=

agencies, and creditors. 'ot forgetting to internal
users.

-bjectives achieved through preparation of

financial statements by using 8AA,.
%anagerial Accounting "ystem

-bjective of %anagerial Accounting is to

provide relevant information to a company4s
managers, who are internal users.

%ain components of managerial accounting

are *ost Accounting, >udgeting, "ystems study
whereby using their own guidelines.
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incorporated into structure of AI#, records every economic event or
transactions.
0.(evenue 8transactions of selling goods and services
2.$=penditure/ payments for goods and services received and
procurement system
3.,roduction4 processing data of manufacturing goods.
?.uman resource management/ recording personnel information
of an organi.ation such as attendance, award systems and pay
calculation
@. (eporting4 cores the maintenance of general ledger and
subse-uently, production basic report
AI# *super system+
0. !ransaction processing system
'ecord transactions carried out by an organi.ation and provide
information to personnel at various operational levels.
2. >udgeting system
6ses information from the T!# and operational plans of the
organi.ation to produce control, information which will be used
by the management of an organi.ation.
3. (esponsibility reporting system
#ummari.es historical data and provides reports comparing
these data with the budget or target set for managers.
AI# H($!# ACC162TA2T#9

As 5sers

Accountants must be able to clearly convey their needs to

the systems professionals who design the system.

The accountant should actively participate in systems

development pro/ects to ensure appropriate systems
design.

As "ystem Auditors

(0ternal Auditors 4 attest to fairness of financial

statements, assurance service7 broader in scope than
traditional attestation audit

IT Auditors 4 evaluate IT, often as part of e0ternal audit

Internal Auditors 4 in4house I# and IT appraisal services

%arious activities in the decision4ma)ing
0. "trategic planning activities *#enior management+
2. %anagement control activities *middle management, sales
manager, production managers+
3. -perational control activities *lower4level management+
Activity levels and decision types
0. "tructured decisions * are repetitive and routine for lowest
management level+
2. 5nstructured decision *are non recurring and non4routine for
higher level management+
3. "emistructured decision *combine the characteristics of both
structured and unstructured decision+
AIS and Value-added activities
@ primary business groups
0. Inbound logistics
Involves receiving, storing and distributing materials.
2. -perational activities
Convert the material input into a finished product or service.
3. -utbound logistics
Involves distributing finished products or services to customers.
?. %arketing and sales activities
!romote the organi.ation product s or services.
@. "ervice
Involves the provision of after sales repair and maintenance of
products sold.
AIS and Value-added activities
? support groups of business process
0. uman resources
Including of hiring and training employees.
2. ,rocurement
Including negotiating prices, and ordering and purchasing.
3. -rganization infrastructure
:eneral activities such as accounting and legal and finance.
3. !echnology
';,, product design, which are aimed at improving products
or services.
3A<1' T"!(# 15 #"#T(3
0. (evenue cycle 4 deals with the income.
2. $=penditure cycle 4 deals with the e0penses.
3. *onversion cycle / deal with converting raw
materials into finished products.
?. ,ayroll cycle 4 deal with the human resources.
@. )inancial cycle / deals with the ac-uisition and
use of capital.