mirasol wrote: [NEW REVISION]d. What information quality is most important - relevance or reliability? Discuss your answer.Answer: In designing audit procedures, the auditor considers relevance and reliability of the information to be used as audit evidence. The answer to the question whether the information is sufficiently reliable will enable the auditor to draw reasonable conclusions on which to base the audit opinion using professional judgment. Under the materiality principles of accounting, an honest and faithful reporting is very important in recording a business transaction. Thus, in view of the preparer of financial statements placing greater importance on the reliability on historical cost measures is reliable to pass audit scrutiny and legal exposure.
a. What is the relationship between AIS and IS? - Information System (IS) is the umbrella under which, the Accounting Information System (AIS) can be found. The two (2) major components of IS would be the Management Information System and the AIS. While the latter contains all the accounting information - from the special journals to the general ledger, which would eventually produce the the financial statement for the company - the former provides for all the other qualitative (or could also be quantitative) information needs of the company to be able to come up with proper decisions.b. Why is information system important to the organization? - In this age, the one who holds the information stands out as the winner. Internet has revolutionized the business world in a way that it has made all kinds of information readily available and at lightning speed. Thus managers are also expected to come up with quick decisions, at least more faster than before. This fast paced environment calls for a reliable and effective information system to aid the decision making needs of the managers. It ensures that the business would not lag behind its competitors and more importantly it will support the organization in providing excellent and efficient service to its customers.c. Describe your own organization and state the roles your accountant fill in relation to AIS. - The company where I'm working in is composed of buying stations, where the copra and cassava commodities are delivered and an admin office based in Cebu, where the daily reports are checked and posted in the respective journals and ledger.The accounting staff would do the following:- Ascertain that the report is accurate- Match the value of the inventory and price- Check the bank balances if it matches the revolving fund given and its purchases and expenses- Monitor the flow of inventory - Post transactions to their respective books/ special journals- Make summary entries and come up with a trial balance at the end of every month.An external accountant will then process the Financial Statement based on the Trial balance & inventory report given to her.d. What information quality is most important - relevance or reliability? Discuss your answer.
- Relevance is when accounting information is capable of making a difference in a decision by helping users to form predictions about the outcomes of past, present & future events or to confirm or correct expectations. (FASB Concepts Statement 2, par 47)
Reliability is the quality of information that assures that information is reasonably free from error or bias and faithfully represents what it purports to represent. The principal components of reliability are representational faithfulness and verifiability. (FASB Conceptual Framework)
There has been much speculation if one quality can trump the other. Most would differ in their definitions but in the end would say that both are required for information to be useful. They are like salt and pepper. However, theres a point made by Paul B.W. Miller & Paul R Bahnson thats worth mentioning. They observed that relevance is not a continuous quality - its either relevant or irrelevant, but there are degrees of reliability. From being less reliable to more reliable, the user can determine or achieve sufficient reliability. They cited that as soon as relevance is sacrificed, any chance for usefulness is lost, but perhaps what can be traded off is the degree of reliability.
With that being said, I am somehow akin to Miller and Bahnsons views regarding these particular qualities of information.
e. Describe the business process (briefly) of your own organization.
- ACM Commodities Co. is a trading company. We trade copra and cassava commodities, which are raw materials for cooking oil and feed mill.
We are middlemen, so we buy commodities from small farmers and small assemblers. They would deliver their corriente (with more moisture content) and resecada (dried) copras and dried cassava chips to our buying stations that will weigh and sample the deliveries.
The tester will print out the weighing ticket and deduct the moisture content from the net weight. The cashier will then summarize the purchases as well as the expenses for the day and makes a Daily Transaction Report that will be faxed to our Admin office here in Cebu.
The bookkeepers will check the report of the previous day for proper valuation and totals. They will then post the transactions to its respective journal entries. At the end of every month, month end reports will then be made and the trail balance and inventory report will be forwarded to an external accountant who will furnish for us our financial statement.
Oil Mills who buy from us makes a contract stating how many tons of copra are they going to require from us and the contract price. Upon agreement, we will then deliver to them the goods as they come in sufficient amount, at least one truck load.
Plantation Bay offers one of the largest privately-owned waterways in the world, with the clean elegance of colonial-plantation architecture. Our accountant assist management and the BOD in planning and controlling the Hotels operation, including the maintenance of the records, producing the financial reports, preparing the budgets and controlling and allocating the cost of the Hotel.
lyncortes wrote:1. what is the relationship between AIS and IS? AIS is one of the major classes of IS, IS is the set of formal procedures by which data are gathered, processed into information and distributed to users. Because IS covers a very broad areas of infomation it was decomposed into to major classes, these are AIS and MIS. AIS provides financial and non financial information that are useful in making business decisions. 2. why is information systems important to the organization? Imagine how a particular entity operates without an information systems. They do not have accounting information system and management information system that provides financial and non financial informations that are very important for the daily operations and future growth of the company. A good information systems add value to the company,it provides a competitive environment to the entity. The competitions nowadays is based on how fast and effectively the company can generate output based on the processed information so that they could decide intellegently about how to become competitive and to excel with the current business environment now.3. Describe your own organization and state the roles your accountant fill in relation to AIS.I am interested to established an organization in my poutry business, I want to have an information systems that can provide me effective data such as:1. the list of various suppliers of chicks and feeds2. the list of customers 3. credit and collection system 4. chicks, chicken and feed inventory system5. costing6. pricing system7. financial reportsmy accountant should verify that:1. the list of various supplliers are updated, to ensure the current prices of chicks and feeds are the one indicated in the systems, so she can compare which supplier offers the least cost.2. the list of customers are updated.3. the credit and collection system is functioning well, whether it provides correct receivable balances, aging of receivables.4. the inventory system provides correct data to know whether we have negative variance of inventories.5. the costing and pricing system is always at the current amount.6. the financial reports revelas the true financial condition of the business7. the employees incharge in gathering, inputing the data into the systems are following and performing correctly to the business information systems. d. What information quality is most important - relevance or reliability? Discuss your answer. both quality of information ( relevance and reliability) are important because the information in the financial statements are not useful and with value to the users if it do not have the quality of relevance, the same way with reliability.
1. what is the relationship between AIS and IS?
Questions :A. What is the relationship between AIS and IS?Ans. Information system is a man-made system that generally consists of an integrated set of computer based components and manul components established to collect, store and manage data and to provide output information to users. Accounting information system is a specialied subsystem of the information system that collects, process and reports financial information related to the financial aspects of business.B. Why is information system important to the organization?Ans. The information systems facilitates these operational functions and supports management decision making by providing information that managers can use to plan and control the activities of the firm. The information system may have advanced elements, such as a database for storage and can use decision models to present output information for decsion making.C. Describe you own organization and state the roles your accountant fill in relation to AIS.Ans. In BDO banco de oro the custodian assigned for control and compliance are the branch accountant and accounting assistant. the branch account is for large branch and assisted by the accounting assistant as for the medium and small branches. the branch accountant supervise the accounting assistants and acts as the control and compliance officer of the branch. also responsible for the booking of entries, maintenance of books of accounts, preparation and submission of required reports.accounting assistant is responsible for ensuring accuracy of brnach transactions, including clearing operations, books of accounts and timely preparation and submission of reports.D. What information quality is most importat-relevance or reliability? discuss your answer.Ans. Relevance contents of a report or document must serve a purpose while reliability relates to the provision of appropriate information for management to operate the entity and exercise its fiduciary and governance responsibilities. relevance is the most important information quality. a primary component of appropriates.this could be to support a managers decsion or a clerks task.we have established, that only data relevant to a users action have information content. therefore, the information system should present only relevant data in its reports containing irrelevants waste resources and maybe counter productive to the user, Irrelevancies detract attention from the true message of the report and my result in incorrect decsions or actions.E. Describe the business provess (briefly) of your own organization.Ans.Branch system and applications1. International Comprehensive banking System (ICBS)-is a centralized system or banking application can provide the bank information on total business activities of clients and it has a built-in report generator for management information at all best.2. Process Server - relays accout status information from ICBS to teller workstations.. stores information in ICBS and process all branch transactions. Information from the branch is consolidated into one thru PCOMB (process combine) to update and generate reports.ICBS Related Applications.a. AS/400b. Alliant branch tellerc. Identity Captured. BDO front end application system(BFEAS/Bills payment)e. Foreign exchange dealing system f. cash cardg. Remote delivery channelh. Online check archiving and verification.
a. What is the relationship between AIS and IS?
IS or Management Information System is a set of interrelated elements that work together to capture, process, maintain and disseminate information, while Accounting Information System is a subsystem of IS that specifically process financial transactions including: inter reporting for management planning and decision making; and external reporting to interested outside entities such as creditors, stockholders, and government agencies.
b. Why is information system important to the organization?
Information systems like the AIS covers almost all business functions from basic accounting transaction processing systems to sophisticated financial management planning and processing systems. Having a sound Information System could add value to the organization's bottom line
c. Describe your own organization and state the roles your accountant fill in relation to AIS.
Computer House of Cebu provides handicapping computation services to four major Golf courses in Cebu. The company maintains and manages thousands of golfers playing records that are updated in a day to day basis. The accountant sends billing to each Golf Clubs in a form of printed Statement of Account with attached list of names of Golfers generated from the Golf Regional Handicapping System. Other major accounting transactions such as generation of payment vouchers, payroll reports, and financial statements are done through the company's customized Accounting System.
d. What information quality is most important - relevance or reliability? discuss your answer.
The primary qualities of accounting information are relevance and reliability, and that to be useful, information must possess both of those qualities. A relevant information that is not reasonably free from error or bias is useless, while the audited financial statements that is highly reliable but largely irrelevant is still useless information.
e. Describe the business process (briefly) of your own organization.
(1)Receive scorecards from different Golf courses daily;(2) enter scorecard's data into the handicapping system; (3) send handicap computation report every 1st and 16th of the month;(4) print list of Golfers on a per club basis; (5) attached list to the billing statement send to each club, received paycheck from Clients;(6) Process disbursement Vouchers and make financial statements every end of the month which is automatically generated from the company's customized Accounting system.
For those students who do not yet answer the question above, kindly cite the similarities and differences in business processes being cited above. You may use a framework to properly classify and discuss why each business is unique.
Type of Company: Trading IndustryNature of business: Engaged in buying and selling of commoditiesActivity: Buy commodities to small farmers and assemblers and sells inventories to big manufacturing industriesClients: Oil MillsRequired ERP System: SME Management Information SystemRecommended Software:QuickBooks, Peachtree, SAP Business SuiteRequired Automation: Financial Management Operational Management Supplier/Partner Management Customer relationship management Inventory Management Accounting Estimating Procurement Reporting and Productivity Tools
Type of Company: Supply Change Management FirmNature of business: Engaged in moving a product or service from supplier to supplier's customer.Activity: Manages suppliers product warehousing, logistic,courier, and freight Clients: Suppliers, Manufacturing CompanyRequired ERP System: Supply Chain Management Info System Recommended Software: SAP Business Suite (eg. SAP SCMS) Required Automation: Financial Management Operational Management Supplier/Partner Management customer relationship management Inventory/ Warehouse Management Accounting Estimating Procurement Reporting and Productivity Tools Service ManagementType of Company: Poultry IndustryNature of business: Engaged in Poultry farming, raising, sellingActivity: Buy chicks to raise from poultry farmers, process poultry products and sells poultry products to consumers Clients: Households, Food manufacturing firmsRequired ERP System: Poultry Management Info System Recommended Software: Poultry Express Program by SotwareareusRequired Automation: Financial Management Operational Management Supplier/Partner Management customer relationship management Poultry Product Management Accounting Estimating Procurement Reporting and Productivity Tools
Type of Company: Real Estate IndustryNature of business: Engaged in real estate development and sales of commercial buildings Activity: Buy and develop land into residential subdivisions and commercial buildingClients: Households, Public and Private FirmsRequired ERP System: Real Estate Information SystemRecommended Software: Sage Timberline OfficeRequired Automation: Financial Management Operational Management Supplier/Partner Management customer relationship management Materials Management Accounting Estimating Procurement Production Management Project Management Real Estate Management Reporting and Productivity Tools Service Management
Accounting information system is focus on transforming business transaction or what we call business data majority financial transaction into useful information. Information like cash balance and retained earnings balance.
Information systems refers to the wider systems of people, data and activities, both computer-based and manual, that effectively gather, process, store and disseminate organisations information.
AIS together with MIS is a subsystem of informtion system.
The success of such knowledge-based organisations lies in their information systems. Also, forced by technological change and globalisation of markets, many manufacturing industries are also placing increasing emphasis upon information systems. Information systems are more than just computer programs. Though information and communications technologies are playing an increasing role in meeting organisations information needs, an information system is a much more general concept.
What Does Accounting Information System - AIS Mean?
The collection, storage and processing of financial and accounting data that is used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting statistical reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities.
An accounting information systems that combines traditional accounting practices such as the Generally Accepted Accounting Principles (GAAP) with modern information technology resources. Six elements compose the typical accounting information system:
People - the system users.
Procedure and Instructions - methods for retrieving and processing data.
Data - information pertinent to the organization's business practices.
Software - computer programs used to process data.
Information Technology Infrastructure - hardware used to operate the system.
Internal Controls - security measures to protect sensitive data.
Accounting Information Systems (AISs) combine the study and practice of accounting with the design, implementation, and monitoring of information systems. Such systems use modern information technology resources together with traditional accounting controls and methods to provide users the financial information necessary to manage their organizations.
Input The input devices commonly associated with AIS include: standard personal computers or workstations running applications; scanning devices for standardized data entry; electronic communication devices for electronic data interchange (EDI) and e-commerce. In addition, many financial systems come "Web-enabled" to allow devices to connect to the World Wide Web.
Process Basic processing is achieved through computer systems ranging from individual personal computers to large-scale enterprise servers. However, conceptually, the underlying processing model is still the "double-entry" accounting system initially introduced in the fifteenth century.
Output Output devices used include computer displays, impact and nonimpact printers, and electronic communication devices for EDI and e-commerce. The output content may encompass almost any type of financial reports from budgets and tax reports to multinational financial statements.
AISINFORMATION SYSTEMS IN CONTEXT
AISs cover all business functions from backbone accounting transaction processing systems to sophisticated financial management planning and processing systems.
Financial reporting starts at the operational levels of the organization, where the transaction processing systems capture important business events such as normal production, purchasing, and selling activities. These events (transactions) are classified and summarized for internal decision making and for external financial reporting.
Cost accounting systems are used in manufacturing and service environments. These allow organizations to track the costs associated with the production of goods and/or performance of services. In addition, the AIS can provide advanced analyses for improved resource allocation and performance tracking.
Management accounting systems are used to allow organizational planning, monitoring, and control for a variety of activities. This allows managerial-level employees to have access to advanced reporting and statistical analysis. The systems can be used to gather information, to develop various scenarios, and to choose an optimal answer among alternative scenarios.
The development of an AIS includes five basic phases: planning, analysis, design, implementation, and support. The time period associated with each of these phases can be as short as a few weeks or as long as several years.
Planningproject management objectives and techniques The first phase of systems development is the planning of the project. This entails determination of the scope and objectives of the project, the definition of project responsibilities, control requirements, project phases, project budgets, and project deliverables.
Analysis The analysis phase is used to both determine and document the accounting and business processes used by the organization. Such processes are redesigned to take advantage of best practices or of the operating characteristics of modern system solutions.
Data analysis is a thorough review of the accounting information that is currently being collected by an organization. Current data are then compared to the data that the organization should be using for managerial purposes. This method is used primarily when designing accounting transaction processing systems.
Decision analysis is a thorough review of the decisions a manager is responsible for making. The primary decisions that managers are responsible for are identified on an individual basis. Then models are created to support the manager in gathering financial and related information to develop and design alternatives, and to make actionable choices. This method is valuable when decision support is the system's primary objective.
Process analysis is a thorough review of the organization's business processes. Organizational processes are identified and segmented into a series of events that either add or change data. These processes can then be modified or reengineered to improve the organization's operations in terms of lowering cost, improving service, improving quality, or improving management information. This method is appropriate when automation or reengineering is the system's primary objective.
Design The design phase takes the conceptual results of the analysis phase and develops detailed, specific designs that can be implemented in subsequent phases. It involves the detailed design of all inputs, processing, storage, and outputs of the proposed accounting system. Inputs may be defined using screen layout tools and application generators. Processing can be shown through the use of flowcharts or business process maps that define the system logic, operations, and work flow. Logical data storage designs are identified by modeling the relationships among the organization's resources, events, and agents through diagrams. Also, entity relationship diagram (ERD) modeling is used to document large-scale database relationships. Output designs are documented through the use of a variety of reporting tools such as report writers, data extraction tools, query tools, and on-line analytical processing tools. In addition, all aspects of the design phase can be performed with software tool sets provided by specific software manufacturers.
Reporting is the driving force behind an AIS development. If the system analysis and design are successful, the reporting process provides the information that helps drive management decision making. Accounting systems make use of a variety of scheduled and on-demand reports. The reports can be tabular, showing data in a table or tables; graphic, using images to convey information in a picture format; or matrices, to show complex relationships in multiple dimensions.
There are numerous characteristics to consider when defining reporting requirements. The reports must be accessible through the system's interface. They should convey information in a proactive manner. They must be relevant. Accuracy must be maintained. Lastly, reports must meet the information processing (cognitive) style of the audience they are to inform.
Reports are of three basic types: A filter report that separates select data from a database, such as a monthly check register; a responsibility report to meet the needs of a specific user, such as a weekly sales report for a regional sales manager; a comparative report to show period differences, percentage breakdowns and variances between actual and budgeted expenditures. An example would be the financial statement analytics showing the expenses from the current year and prior year as a percentage of sales.
Screen designs and system interfaces are the primary data capture devices of AISs and are developed through a variety of tools. Storage is achieved through the use of normalized databases that assure functionality and flexibility.
Business process maps and flowcharts are used to document the operations of the systems. Modern AISs use specialized databases and processing designed specifically for accounting operations. This means that much of the base processing capabilities come delivered with the accounting or enterprise software.
Implementation The implementation phase consists of two primary parts: construction and delivery. Construction includes the selection of hardware, software and vendors for the implementation; building and testing the network communication systems; building and testing the databases; writing and testing the new program modifications; and installing and testing the total system from a technical standpoint. Delivery is the process of conducting final system and user acceptance testing; preparing the conversion plan; installing the production database; training the users; and converting all operations to the new system.
Tool sets are a variety of application development aids that are vendor-specific and used for customization of delivered systems. They allow the addition of fields and tables to the database, along with ability to create screen and other interfaces for data capture. In addition, they help set accessibility and security levels for adequate internal control within the accounting applications.
Security exists in several forms. Physical security of the system must be addressed. In typical AISs the equipment is located in a locked room with access granted only to technicians. Software access controls are set at several levels, depending on the size of the AIS. The first level of security occurs at the network level, which protects the organization's communication systems. Next is the operating system level security, which protects the computing environment. Then, database security is enabled to protect organizational data from theft, corruption, or other forms of damage. Lastly, application security is used to keep unauthorized persons from performing operations within the AIS.
Testing is performed at four levels. Stub or unit testing is used to insure the proper operation of individual modifications. Program testing involves the interaction between the individual modification and the program it enhances. System testing is used to determine that the program modifications work within the AIS as a whole. Acceptance testing ensures that the modifications meet user expectations and that the entire AIS performs as designed.
Conversion entails the method used to change from an old AIS to a new AIS. There are several methods for achieving this goal. One is to run the new and old systems in parallel for a specified period. A second method is to directly cut over to the new system at a specified point. A third is to phase in the system, either by location or system function. A fourth is to pilot the new system at a specific site before converting the rest of the organization.
Support The support phase has two objectives. The first is to update and maintain the AIS. This includes fixing problems and updating the system for business and environmental changes. For example, changes in generally accepted accounting principles (GAAP) or tax laws might necessitate changes to conversion or reference tables used for financial reporting. The second objective of support is to continue development by continuously improving the business through adjustments to the AIS caused by business and environmental changes. These changes might result in future problems, new opportunities, or management or governmental directives requiring additional system modifications.
and IS: combination of hardware, software, infrastructure and trained personnel organized to facilitate planning, control, coordination, and decision making in an organization.
business firms, other organizations, and individuals in contemporary society rely on information systems to manage their operations, compete in the marketplace, supply services, and augment personal lives. For instance, modern corporations rely on computerized information systems to process financial accounts and manage human resources; municipal governments rely on information systems to provide basic services to its cirizens; and individuals use information systems to study, shop, bank, and invest.