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College aantekeningen Accounting Information Systems
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Accounting Information SystemsTuesday: online lectures
Friday: tutorial on campus
Book: AIS in focus, how to provide relevant and reliable accounting information, Jon
Bergsma and Oscar van Leeuwen
You need to write a paper for an organization in groups you will do this in the tutorials.
Lecture 1
An accounting as an information system (AIS) is a system of collecting, storing and
processing financial and accounting data that are used by decision makers. An
accounting information system is generally a computer-based method for tracking accounting
activity in conjunction with information technology resources.
→ Information can be used to make decisions and to control an organization.
Accounting information systems
1. The subject of accounting information systems covers all activities such as collecting
data, recording data in files and processing these data to these forms of information
2. Managers need relevant and reliable information to make the right decisions for the
organizations they lead and control the outcome of their choices
3. Co-workers need information to perform their daily tasks. Stakeholders need reliable
and relevant information to monitor the activities of management.
4. Effective and reliable accounting information systems are also a requirement for cost
accounting, financial accounting and auditing.
Basic pattern of information provision
,Input = data
Processing =
Procedures = sales
Output = email back: purchased a new book
Data is collected in database of bol.com
Quality of information
→ efficiency
→ effectiveness
→ reliability
- Validity
- Accuracy
- completeness
→ relevance
- precision
- timeliness
- understandability
predication of the weather of tomorrow is relevant but not reliable
Different types of information for different purposes
• information for
o taking decisions
o to do your job
o to check if the organization (or part) is in control
When are you in control?
→ Achieving the goals set
• goals can vary
o strategic, tactical and operational goals
o goals related to effectiveness and efficiency of operations
o goals related to reliability of information
o Goals related to compliance and so on
→ Therefore, not one method to be in control but depending on the nature of the goals.
, ICF = internal control framework
The term internal control was defined, among other
things, to provide a standard by which companies and
organizations can assess their internal control system
and determine how it can be improved.
The framework has three goals
1. Operations objectives: these goals relate to the efficiency and effectiveness of the
organization’s activities.
2. Reporting objectives – these objectives relate to internal and external financial and
non-financial reporting
3. Compliance objectives – these objectives relate to complying with the laws and
regulations that affect the organization
5 components
1. Control environment: the foundation of the internal control system. the totality of
standards, processes and structures within the organization that ensure the execution of
internal controls. (Tone at the top / code of conduct). Board of directors demonstrates
independence from management and exercises oversight of the development and
performance of internal control.
2. Risk assessment: every organization faces risks, both internal and external, that need
to be addresses. In this case, risk is defined as the probability that something will
happen that has a negative effect on the achievement of the organization’s objectives.
An important part of this is risk tolerance, on the basis which it is determined white or
not certain risks should be anticipated. Organization also needs to consider the
potential for fraud.
3. Control activities: Control activities are the actions established through policies and procedures
that help ensure that management’s directives to mitigate risks to the achievement of objectives are
carried out. Control activities are performed at all levels of the entity, at various stages within
business processes, and over the technology environment. They may be preventive or detective in
nature and may encompass a range of manual and automated activities such as authorizations and
approvals, verifications, reconciliations, and business performance reviews
4. Information and communication: applying internal control requires high quality
relevant information. this information must be communicated by the organization and
to external parties.
5. Monitoring activities: it is important to continue to monitor in order to ensure that the
various monitoring activities are functioning properly. Purely focused on the
functioning of the internal control system itself.
Spinning top model is an instrument used to determine (periodical) formal management
information needs.
Een methode om te bepalen welke informatie managers nodig hebben om hun organisatie
goed aan te sturen. (relevantie)
, Trade organizations value chain
Purchase → warehouse process → sales process
Accounts payable bank accounts receivable
The difference between what we get and what we pay is the margin.
With a product organization we first need to start the produce the products before warehouse.
Purchase example purchase file data
Warehouse process example inventory file.
Sales process example data in the sales file
Same for accounts payable and accounts receivable
CEO
Controlling department
Purchase Warehouse sales department
Department
CEO needs the following information compared to budget and previous periods:
Sales
Cost of goods sold –
Gross margin
Other cost –
Operating income
Information needs to be reliable. This can be realized by internal control (COSO framework)
Reconciliations
• Purchase file
Decrease in purchase file
Increase in inventory file
Increase in accounts payable file
Decrease in accounts payable file = decrease bank
Decrease inventory file + margin = increase in sales file = increase accounts receivable
FLOWCHART
a diagram that shows step-by-step progression through a procedure or system especially
using connecting lines and a set of conventional symbols
Characteristics of flow charts
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