Impact of Information Age

fewer workers are making products, and a large segment of the employee population is involved in producing, analyzing, and distributing information. Knowledge workers comprise much of the labor force. A major contributor to the information age is the Internet.

WHAT IS A SYSTEM?
A group of interrelated multiple components or subsystems that serve a common purpose/ goal Characteristics of a system
Has parts / subsystem that related Has goal /purpose There will be input and output Has an environment that it resides Has a boundary that separate it from environment and/or other system There is limit to what it can accomplish

A system is called a subsystem when it is viewed as a component of a larger system. A subsystem is considered a system when it is the focus of attention.

SYSTEM INTERFACE
Interface occurs at the connecting point where the boundaries of two systems meet. Interface acting as connecting point for two systems, it eases the flow of one systems output into another system. The designers of a system should plan for an interface which copes with the waiting period between two processes

Definition Information System

An Information system is a set of interrelated subsystems that work together to collect, process, store, transform, and distribute information for planning, decision making, and control. Firms depend on information systems in order to stay competitive. Thus, Information is a business resource that:
needs to be appropriately managed is vital to the survival of contemporary businesses

TYPES OF SYSTEM
Systems have been classified in different ways.

Common calcification are:-

1) Physical or abstract. 2) Open or closed. 3)Natural or man-made information systems

PHYSICAL VS ABSTRACT
Physical systems
tangible entities that may be static or dynamic in operation. Eg, the physical parts of the computer center are the offices, desks, and chairs that facilitate operation of the computer (static). A programmed computer is a dynamic system. Data, programs, output, and applications change as the users demands or the priority of the information requested changes

Abstract systems
are conceptual or nonphysical entities. A model is an easier way for the analyst to visualize relationships in the system under study.

The objective is to point out the significant elements and the key interrelationships of a complex system.

OPEN OR CLOSED SYSTEMS

systems is based on their degree of independence. An open system
has many interfaces with environment. It receives inputs from and delivers outputs to the outside. must adapt to the changing demands of the user.

A closed system
does not interface with its environment, i.e. it has no input or output. more relevant to scientific systems than to social systems. Completely closed system is very rare. The nearest we can get to a closed social system would be a completely self-contained community that provides all its own food, materials and power, and that does not trade, communicate or come into contact with other communities.

Concept of Closed and open System

Data versus Information

Data are raw facts about events that have no organization or meaning. Information is data that have been processed and is meaningful and useful to users.

CHARACTERISTIC OF USEFUL INFORMATION

Relevance It reduces uncertainty by helping you predict what will happen or confirm what already has happened. Reliability Its dependable, i.e., free from error or bias and faithfully portrays events and activities. Completeness It doesnt leave out anything thats important. Timeliness You get it in time to make your decision. Understandability Its presented in a manner you can comprehend and use Verifiability A consensus notion nature of the information is such that different people would tend to produce the same result Accessibility You can get to it when you need it and in a format you can use

AIS: ACCOUNTING AND IS?

Accounting

Accounting

Information

Information Systems

Systems

Accounting is an information system.

It identifies, collects, processes, and communicates economic information about a firm using a wide variety of technologies. It captures and records the financial effects of the firms transactions. It distributes transaction information to operations personnel to coordinate many key tasks.

Accounting Information Systems

An Accounting Information System (AIS) is the information subsystem within an organization that accumulates information from the entitys various subsystems and communicates it to the organizations information processing subsystem. Functions of AIS
To Collect and store data on business activities and transactions in more efficient & effective To Provide useful information for decision making To provide adequate control, data recorded accurately Well organized business

An Accounting Information System

Inputs: Data/Information from Internal/External sources Data Repository/ Files, Databases, Etc.

Processes: Sort, Organize, Calculate

Outputs: Information for Internal/ External Decision Makers

VALUES OF AIS
provide accurate and timely information Improve products or services increase quality, reduce cost, add special features Increase efficiency deliver timely information Reliable information will improve decision making capabilities Improve sharing of knowledge and expertise

MIS versus AIS

Management Information System (MIS) Historically, provided financial and nonfinancial information to internal users. e.g., tracking customer complaints Accounting Information System Traditionally provided financial information to both external and internal users. Now, the two systems overlap and provide much of the same information focusing on business processes.

IS
AIS
GLS/ FRS
TPS MRS

MIS

Finance

Marketing

Production

HRS

Logistic

Financial Accounting System

The objective of financial accounting is to provide relevant information to individuals and groups outside an organizations boundaries. Mainly to external users include investors, tax agencies, and creditors. Not forgetting to internal users. Objectives achieved through preparation of financial statements by using GAAP.

Managerial Accounting System

Objective of Managerial Accounting is to provide relevant information to a companys managers, who are internal users. Main components of managerial accounting are Cost Accounting, Budgeting, Systems study whereby using their own guidelines.

TRANSACTION PROCESSING SYSTEM

incorporated into structure of AIS, records every economic event or transactions. 1. Revenue transactions of selling goods and services 2. Expenditure- payments for goods and services received and procurement system 3. Production- processing data of manufacturing goods. 4. Human resource management- recording personnel information of an organization such as attendance, award systems and pay calculation 5. Reporting- cores the maintenance of general ledger and subsequently, production basic report

AIS (super system)

1. Transaction processing system Record transactions carried out by an organization and provide information to personnel at various operational levels. 2. Budgeting system Uses information from the TPS and operational plans of the organization to produce control, information which will be used by the management of an organization. 3. Responsibility reporting system Summarizes historical data and provides reports comparing these data with the budget or target set for managers.

AIS HELPS ACCOUNTANTS?

As Users Accountants must be able to clearly convey their needs to the systems professionals who design the system. The accountant should actively participate in systems development projects to ensure appropriate systems design. As System Auditors External Auditors - attest to fairness of financial statements, assurance service: broader in scope than traditional attestation audit IT Auditors - evaluate IT, often as part of external audit Internal Auditors - in-house IS and IT appraisal services

AIS AND DECISION MAKING

Various activities in the decision-making 1. Strategic planning activities (Senior management) 2. Management control activities (middle management, sales manager, production managers) 3. Operational control activities (lower-level management)

Activity levels and decision types 1. Structured decisions ( are repetitive and routine for lowest management level) 2. Unstructured decision (are non recurring and non-routine for higher level management) 3. Semistructured decision (combine the characteristics of both structured and unstructured decision)

AIS and Value-added activities

5 primary business groups 1. Inbound logistics Involves receiving, storing and distributing materials. 2. Operational activities Convert the material input into a finished product or service. 3. Outbound logistics Involves distributing finished products or services to customers. 4. Marketing and sales activities Promote the organization product s or services. 5. Service Involves the provision of after sales repair and maintenance of products sold.

AIS and Value-added activities

4 support groups of business process 1. Human resources Including of hiring and training employees. 2. Procurement Including negotiating prices, and ordering and purchasing. 3. Organization infrastructure General activities such as accounting and legal and finance. 3. Technology R&D, product design, which are aimed at improving products or services.

MAJOR TYPES OF SYSTEM

TRANSACTION PROCESSING CYCLES

1. Revenue cycle - deals with the income. 2. Expenditure cycle - deals with the expenses. 3. Conversion cycle - deal with converting raw materials into finished products. 4. Payroll cycle - deal with the human resources. 5. Financial cycle - deals with the acquisition and use of capital.