Chapter 1 to Chapter 12 on accounting information systems and internal control
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Course
Accounting information systems & internal control
Institution
Accounting Information Systems & Internal Control
Provision & Controlling Functions: Information Manager
Managerial aspect of information provision
Information provision relies on information systems, which rely on information and communication technology
Expert in IT
Controller
Generalist with competences that concern the ent...
Internal Control & Accounting Information Systems – Chapter 1
Provision & Controlling Functions: Information
Manager
Managerial aspect of information provision
Information provision relies on information systems, which rely on
information and communication technology
Expert in IT
Controller
Generalist with competences that concern the entire company
Financial conscience of the firm: are certain wishes feasible?
Intermediate between white and blue collar
Auditor
Audit financial statements
Judging the quality of internal control systems
Determines the reliability of information
Complementary roles in organizations
Control:
Internal Control focuses on the governance and control of organizations and therefore
on managing people.
Mechanistic instruments
Procedures and controls are put in place
Not attention is paid to employees not knowing what to do, not being
motivated, not knowing what is expected from them…
But AIS must consider the human factor
Management Control besides formal control gives attention to formalizing informal
measures
Incentive schemes
Desirable organizational culture: right tone at the top, shared beliefs,
Balance between salaries and working conditions
Information in Organizations:
Information provision is never a goal as such – It is provided because there are users of this
information
Information for Delegation and Accountability
Delegation of power and authority creates the need for management control
Process of delegation and authority is effectuated by information provision
Vertical flow of information: the flow will differ as information is intended for
lower or higher levels
Information for Decision-making
Sales person will make decision to purchase a certain quantity of a product from
a certain vendor using information from the warehouse, product and sales
department
Vertical flow: e.g. actual decision making after power was delegated and
subsequent responsibility for this decision to upper management
Information for Operating the Business
Making the organization function as intended
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Internal Control & Accounting Information Systems – Chapter 1
Sharing Knowledge
o Realize organizational goals
o Coordinating different units
o Communicate a management decision
Horizontal flow:
o Coordinating function to control knowledge sharing between
departments
o Cannot be decoupled from vertical flow of information
Information is all the processed data that contributes to the recipients understanding of
applicable parts of reality.
Seven Dimensions of Information:
Gorry and Scott Morton (1971) derived this classification and positioned information along
seven dimensions, distinguishing between lower and higher levels:
Information and Communication Technology:
Accounting Information Systems is different from Managerial Information Provision in that it
focuses more on IT. Information and communication technology is all the media used to
collect, store and process data, to produce information and to support communication
Basic Knowledge is important for managers:
IT is used since managers send and receive information
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Internal Control & Accounting Information Systems – Chapter 1
Decision and evaluations are made on the basis of information and
communication. IT is employed to make information and communication more
efficient
IT is an enable of organizational change – a common language is needed to
communicate with change agents and IT specialists
Management is responsible for internal control that is heavily influenced by IT
developments
System is an organized way of undertaking actions in order to attain certain goals
Information System is an organized way of inputting data, processing data and providing
information aimed at the attainment of organizational goals
Accounting Information Systems studies the structuring and operation of planning and
control processes that are aimed at:
Information for decision-making and accountability to internal and external
stakeholders
Complies with specific quality criteria
Right conditions for sound-decision making
Ensuring no assets illegitimately exit the organization
AIS Definition by Romney & Seibert: An accounting information system processes data
and transaction to provide users with information they need to plan, control and
operate their business
AIS Definition by Galina’s and Dull: An accounting information system is a specialized
subsystem of the management information system whose purpose is to collect, process
and report information to financial transactions.
Management Information System: information that is non-financial and not just
focused on transactions (evolution from the early AIS systems that only processed
transaction data, however today an AIS is a separate system and not directly a part of
MIS)
Governance and Control:
Control entails a backward- and forward-looking component
Backward looking: comparing a realization with and established criteria
Forward looking: decision making aimed at enhancing future organizational
performance
Continuously realizing organizational goals
All those activities aimed at having organizational members cooperate to each
goals
Governance is the process of keeping an organization on track towards legitimized goals
Integral Control Framework
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Internal Control & Accounting Information Systems – Chapter 1
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