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Not just a load of old numbers..
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What is Accounting?
identifying, collecting, processing, Communicating
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Information
yWhat is information?
yWhat are its characteristics?
yWhere does it come from?
yHow is it produced?
yWhat is it used for?
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TechnologyyA platform and underpinning for
Accounting Information & Communication
yTransforms what information can be
collected & how it can be communicated,
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AICT
yAnnual report: text (narrative), graphs, photos
y Some have videos on their websites
y BPs annual report and accounts total 208 pages,
only 70 pages are primarily numbersy But narrative, graphs etc often based on the
numbers, derived from the underlying accountinginformation
yMany different ways of being communicated andmany different media
y Changes to large extent due to the advances intechnology
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Course OverviewyAccounting as a process of collecting, presenting
and interpreting information
y Social and political factors which influence whatdata is collected and how it is presented
y Impact different presentation styles & media can
have on users of accounting information
y Concepts, developments, practices and use ofcomputerised information systems and other IT
applications relevant for accounting and business
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Learning & Teaching
y Theoretical aspects lectures & reading
y Practical aspects computer-based
activities
y Case studies
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Analytical SkillsPractical /Technical
Skills
Problem-Solving Syllabus Topics
What willyou learn?
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My Role
Introduce
Initiate
EncourageChallenge
Signpost
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Information
yData organised in some meaningfulway
yData can be words, images, numbers,sounds etc
y Information is a business resource
(intangible asset) th
at:yneeds to be appropriately managed
y is vital to the survival ofcontemporary businesses
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Internal & External
Information Flows
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Information Systems
The set of formal procedures bywhich data are collected, processed
into information, and distributed to
users.May be manual or computerised.
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Transactions
Financial
Transactions
Non-financial
Transactions
Information
System
User
Decision
MakingInformation
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TransactionsyAtransaction is a business event.
y Financial transactions
y economic events that affect the assets and
equities of the organizationy e.g., purchase of an airline ticket
y Non financial transactions
y all other events processed by the organizations
information systemy e.g., an airline reservation no commitment by
the customer
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AIS compared wit
hMISAccounting Information
Systems (AIS)Management Information
Systems (MIS)
process
y financial transactions;e.g., sale of goods
y non financialtransactions that
directly affect th
eprocessing of financialtransactions; e.g.,addition of newlyapproved vendors
process
y non financialtransactions that are
not normally processed
by traditional AIS;
e.g., tracking customercomplaints
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AIS versus MIS?
IS
AIS
GLS/FRS TPS MRS
MIS
Finance Marketing Production HRS Distribution
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The General AIS Model
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AIS Subsystemsy Transaction processing system (TPS)
y supports daily business operations
yGeneral Ledger/Financial ReportingSystem (GL/FRS)
y produces financial statements and reports
y Management Reporting System (MRS)
y produces special-purpose reports for internal use
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Data SourcesyData sources are financial transactions that
enter the information system from internaland external sources.y External financial transactions are the most
common source of data for most organizations.y E.g., sale of goods and services, purchase of inventory,
receipt of cash, and disbursement of cash (including payroll).
y Internal financial transactions involve the exchange
or movement of resources with
in th
e organization.y E.g., movement of raw materials into work-in-process (WIP),
application of labor and overhead toWIP, transfer ofWIPinto finished goods inventory, and depreciation ofequipment.
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Transforming the Data into
Information
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Data Collection
2 Data Processing
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Data Management
4 Information Generation
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1. Data Collection
y Capturing transaction data
y Recording data onto forms
yValidating and editing the data
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2. Data Processing
y Classifying
y Transcribingy Sorting
y Batching
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Merging
Calculating Summarizing
Comparing
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3. Data Managementy Storing database
y Retrieving key field
y Updating / Deleting
y Example Student Recordsy Record for each student made up of several
different bits of data attributes or fields e.g. name, address, degree code etc
y Unique identifier matriculation number
y Records for all students = file
y Database = collection of different files
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4. Information Generation
y Compiling
yArrangingy Formatting
y Presenting
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Characteristics of Useful Information
y Regardless of physical form ortechnology, useful information has the
following characteristics:y Relevance: serves a purpose
y Timeliness: no older than the time period of theaction it supports
y Accuracy: free from material errorsy Completeness: all information essential to a
decision or task is present
y Summarization: aggregated in accordance withthe users needs
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Information System Objectives ina Business Context
yThe goal of an information system is
to support
yManagements stewardship function
y
Management decision-makingyThe firms day-to-day operations
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Accountants and Info Systems
y IS User
y IS Designer
y IS auditor
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Accountants asInformationSystem Users
Accountants should:
y be able to clearly convey their needs to the
systems professionals who design the system.
y actively participate in systems development
projects to ensure appropriate systems design.
y understand the potential power and the potential
limitations / weaknesses of the system
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Accountants as SystemDesignersy The accounting function is responsible for the
conceptual system, wh
ile th
e computer functionis responsible for the physical system.
y The conceptual system determines the nature of
the information required, its sources, its
destination, and the accounting rules that must be
applied.
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Accountants as System
Auditors
y External Auditors
y attest to fairness of financial statements
y assurance service: broader in scope than
traditional attestation audit
y IT Auditors
y evaluate IT, often as part of external audity Internal Auditors
y in-house IS and IT appraisal services
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Summaryy Information vital
y Understand
y Where it comes from
y Basis / Bias of selection
y
Impact of technology on process of capturing &communicating
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