AF121

Week 1 – Lecture#2
Intro to AIS and AIS
Foundational Concepts

Chapter
1-1
 Study Objectives

1. An overview of an accounting information system

2. An overview of business processes
3. The IT enablement of business processes
4. Flowcharting

Chapter
1-2
 Basic Components of Information Systems

 Hardware

 Software

 Procedures

 Data

 People
Chapter
1-3
 Overview of Accounting Information Systems

AIS comprises the processes, procedures and

systems that capture accounting data from
business processes; record, process, classify,
summarise, consolidate, and report the detailed
accounting data to internal & external users.

Chapter
1-4 SO 1 An overview of business processes
 The Accounting Information System
5 components of AIS
Exhibit 1-1

Chapter
1-5 SO 2 An overview of an accounting information system
 Development of an Accounting Information System
 Important considerations
 Cost vs. benefits
 Compatibility
 Flexibility/adaptability
 Internal control

 Internal control comprises the plan of an organisation and all

the methods and measures adopted within a business to
safeguard its assets, check the accuracy and reliability of its
accounting data, promote operational efficiency, and
encourage adherence to prescribed managerial policies .

 Procedures that management has devised to provide some

degree of assurance that the objectives of the AIS will be
achieved

 Effective internal controls may reduce material

Chapter
1-6 misstatements in the financial information
 Accounting Information Systems

Chapter
1-7
 An Introduction To Business Processes

Business Process - a sequence of work steps

performed in order to produce a desired result.

Examples:
Completing a sale
Purchasing raw materials
Paying employees
Paying vendors

Chapter
1-8 SO 1 An overview of business processes
 IT Enablement of Processes and the AIS

IT usage accomplishes one or more of the following

objectives:
1. Increased efficiency of business processes
2. Reduced cost of business processes
3. Increased accuracy of the data related to business
processes

Business Process Reengineering (BPR) is the purposeful

and organized changing of business processes to make
them more efficient.
Chapter
1-9 SO 4 The IT enablement of business processes
 Types of Accounting Information Systems

Three categories of AIS:

1. Manual systems
2. Legacy systems
3. Modern, integrated IT systems

Chapter
1-10 SO 2 Types of accounting information systems
 Documenting Systems

Pictorial Representations of processes and systems

include:
1. Process maps
2. Document flowcharts
3. Data flow diagrams

Chapter
1-11 SO 7 Documenting processes and systems
 Steps for drawing a process map

 Identify the actors (this could be

departments)
 Identify the starting point – represented by a
circle
 These actors will be the headers
 Identify the processes involved
 Identify the order of processes (which comes
first, second, ….)
 Identify who is performing the process
 List the processes under the respective

Chapter
actors in order of sequence
1-12
 Connect processes with solid lines
 Restaurant Process Map

Chapter
1-13
 Document flowchart

 Shows the flow of documents and information

within dept. or sections in an organisation.
Systems flowchart depicts the whole system. This
makes the document flowchart a special kind of a
systems flowchart.

 Documents move from a section to another as

processes are completed and filed at their final
destination.

Chapter
1-14
 Document Flowchart

 Similar to process map in that the actors

become the headers
 However it is more detailed
 Focuses on the documents generated
 Has more symbols

Chapter
1-15
 Restaurant Document Flowchart

Chapter
1-16
 Data Flow Diagrams

 Data flow diagrams are graphical

representations of the data flows that occur
within a system. It shows the logical design
of a system. The DFD can display the system
at conceptual (brief) level and then exploded
into detailed levels. DFDs uses only 4
symbols.
 Useful when designing computer based
system.

Chapter
1-17
 Data Flow Diagram Symbols

External entity

System of interest for a context

diagram
Internal entity for a physical data
flow diagram
Process for a logical data flow
diagram

Data Store

Chapter

Data Flow
1-18
 Restaurant Data Flow Diagram

Used to show the logical

design of a system.

Chapter
1-19
 Lecture Illustration
Mele Moana is a university student. Each Monday through Thursday, she
catches a bus to her classes at Laucala campus. Each semester Mele
pays for parking privileges. Before Wednesday of the week prior to each
new semester, Mele writes a cheque to USP Parking Services for $150.
She writes her Student ID Number on the cheque’s memo line and then
mails the cheque to USP Parking Services Office.
Upon receipt of student cheques, USP parking services office clerk
issues a current semester parking decal and a receipt for payment
received. These items are mailed to each student at the address noted on
the cheque. A daily listing of cheques received is prepared and filed by
date. A photocopy of the check is made and placed in a file organized by
the student’s last name. Accordingly, each student has a parking file
maintained in the USP parking services office. The cheques are endorsed
and deposited in the bank on a daily basis. Once each month, the USP
Parking Services office manager reconciles the bank statement.
 Prepare a process map for USP’s parking services:

Chapter
1-20
 Solution

Student Office Clerks Office Manager

Receive Checks &

Check Issue Receipts

Issue Parking Prepare Copy of Prepare Daily

No Schedule of Reconcile Bank
Decal Check
Receipts Account

Receive Decal & Mail Receipt & File Check Copies Endorse Checks &
Receipt Decal to Student Deposit

Bank

Chapter
1-21