ACCOUNTING

AND IT
P R E S E N T E D BY: J O A N N E B I L L O N E S

MANAGERIAL
ACCOUNTING

OBJECTIVE:
To
provide
relevant
information to a companys
managers, who are internal
parties (or users).

COMPONENTS:
Cost Accounting
Budgeting
Systems study

WHY USE AIS?

To aid the need for
sophisticated
accounting systems
to maintain critical
data, as well as the
need for up-to-date
reports for decision
making

COST ACCOUNTING
Assists
management
in
measuring and controlling
the costs associated with an
organizations
various
acquisition,
processing,
distribution, and selling activities
Focuses on the value added
by an organization to its goods
or services

AIS APPLIED IN
COST ACCOUNTING
Activity-Based Costing
Corporate Performance
Measurement
and
Business Intelligence

ACTIVITY-BASED COSTING
Allocates overhead (indirect production costs) to
specific performance of activities by assigning
overhead costs based on the resources directly
consumed by each activity (cost drivers)
Chrysler, an American car manufacturer, claims that it has
saved hundreds of millions of dollars since introducing activitybased costing in the early 1990s. ABC showed that the true
cost of certain parts that Chrysler made was 30 times what
had originally been estimated, a discovery that persuaded the
company to outsource the manufacture of many of those
parts.

CORPORATE PERFORMANCE MEASUREMENT

AND BUSINESS INTELLIGENCE
Responsibility Accounting System
Helps managers trace unfavorable performance
to the department or individual that caused the
inefficiencies.
Each subsystem within an organization is only
accountable for those items over which it has control,
for immediate corrective actions in case of variation
from standard costs

CORPORATE PERFORMANCE MEASUREMENT

AND BUSINESS INTELLIGENCE
Balanced Scorecard
measures business performance in four categories:
1. financial performance
2. customer knowledge
3. internal business processes, and
4. learning and growth
Key performance indicators (KPIs) to measure and
evaluate activities in each quadrant of the balanced
scorecard (ex. Financial KPI: ROI; Customer KPI: number of
customers per month)

CORPORATE PERFORMANCE MEASUREMENT

AND BUSINESS INTELLIGENCE
Dashboard
monitors
key
performance metrics
Useful
tools
that
presents
important
performance data in
easy-to-understand
graphic formats
An IBM Cognos dashboard. Dashboards may use
indicators such as colored interface and up and

BUDGETING
A budget is a financial
projection for the future and
thus is a valuable managerial
planning aid.
Budgets
are
used
for
managerial control. Actual
results
are
compared
to
budgeted results.

The
budgetary
function in the AIS
affects
all
the
subsystems within an
organization because it
encompasses
shortterm and long-term
financial plans.

SYSTEMS STUDY
Managerial accountants usually
perform systems studies.
Many systems studies use the
team approach.
The
team
may
include
marketing specialists, computer
experts, production managers,
engineers
and
industrial
psychologists.

STEPS IN SYSTEMS
STUDY
PLANNING:
strategic plans

Develop

ANALYSIS:
current system

Review

DESIGN:
system

Design

new

IMPLEMENTATION
AND
FOLLOW-UP: Put the new
system in place and
continue to monitor it

AUDITING

AUDITING
Auditing has become a mature industry.
Accountants are focusing on additional assurance services in
arenas other than financial reporting.
Assurance business provides third-party testimony that a
client complies with a given statute, law, or similar
requirement

The growth of Auditing in the field of assurance services can

be traced to a conference of the AICPA in 1993, which
created a Special Committee on Assurance Services to
identify and formalize some other areas (besides financial
audits) in which accountants could provide assurance
services.

AUDITING
Assurance Services identified by the AICPA Special Committee:
1.
2.
3.
4.
5.
6.

Risk Assessment
Business Performance Measurement
Information Systems Reliability
Electronic Commerce
Health Care Performance Measurement
Eldercare Plus

Automated data processing also creates a need for auditors to

evaluate the risks associated with such automation.
Sarbanes-Oxley Act of 2002 (SOX) expressly forbids potential conicts
of interest by disallowing CPA firms from simultaneously acting as a
management consultant and the independent auditor for the
same firm.

TAX ATION

TAXATION
Information technology enables the automation of
income tax returns.
Tax preparation software like TurboTax is an
example of an AIS that enables its users to create
and store copies of trial tax returns, examine the
consequences of alternative tax strategies, print
specific portions of a return, and electronically
transmit complete copies of a state or federal tax
return to the appropriate government agency.
Electronic tax libraries and on-line tax services make it
easier for accountants to perform tax research.

END OF REPORT