Chapter 1 – Introduction to AIS
Instructor Manual
➢ Introduction To Business Processes. A business process is a prescribed
sequence of work steps performed in order to produce a desired result for the
organization. In accounting information system, business processes can be
categorized into four types: revenue (or sales) processes; expenditure processes;
➢ The Accounting Information System. The accounting information system is the
set of processes, procedures, and systems that capture, record, process,
summarize, and report accounting information. There are five important
components to an accounting information system.
1. Work steps to capture accounting data as transactions occur
2. Recording of accounting data in manual or computerized records
accounting data
➢ Business Processes Throughout The Supply Chain. A business has many
linkages with external suppliers, distributors, and customers. These linkages are
called the supply chain. A business should monitor and control the entire set of
processes throughout the supply chain to improve efficiency. IT enablement of
these processes can lead to improved efficiency.
➢ IT Enablement Of Business Processes And The AIS. IT Enablement is the
application of information technology to accomplish any or all of the following three:
➢ Basic Computer And IT Concepts
o Basic Computer Data Structures. A computer data hierarchy is bit, byte,
field, record, file, database. A relational database stores data in tables joined
in ways that can represent many different relationships among the data. A
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o File Access And Processing Modes. Files may be stored in sequential
access, random access, or index sequential access method. How files are
stored ad processed is inter-related. Processing can be accomplished via
batch processing, online processing, or online, real-time processing.
o Data Warehouse And Data Mining. A data warehouse is an integrated
➢ Examples Of IT Enablement. The following are examples of using IT systems to
improve business processes.
o E-Business. E-business encompasses all forms of online electronic trading
– consumer-based e-commerce and business-to-business electronic trading –
and business-to-business process integration, as well as the internal use of IT
and related technologies for process integration inside organizations. IT
systems, Internet, and websites, as well as wireless networks, are the
common means of enabling e-business to occur.
o Automated Matching. Automated matching is a computer hardware and
software system in which the software matches an invoice to its related
purchase order and receiving report. The system can access the online
purchase order and receiving files and verify that the items, quantities, and
prices match. The system will not approve an invoice for payment unless the
items and quantities match with the packing slip and the prices match the
purchase order prices.
o Evaluated Receipt Settlement. Evaluated receipt settlement (ERS) is an
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o E-Payables And Electronic Invoice Presentment And Payment. E-
payables and electronic invoice presentment and payment (EIPP) are both
o Enterprise Resource Planning Systems. Enterprise resource planning
(ERP) is a multi-module software system designed to manage all aspects of
an enterprise. ERP systems are usually broken down into modules such as
➢ The Control Environment Of Organizations. Managers can undertake steps to
lessen the risks faced by the organization. This ability to lessen risks or risk impacts
is true of nearly all risks that organizations face. Management can undertake steps
to lessen the risk or reduce the impact of the risk. These processes are called
controls. Accountants have a long history of being the professionals within the
organization who help design and implement controls to lessen risks that have an
impact on the financial standing of the organization.
o Enterprise Risk Management. Enterprise Risk Management (ERM) is
defined as a process, effected by an entity’s board of directors, management
and other personnel, applied in strategy setting and across the enterprise,
designed to identify potential events that may affect the entity, and manage
risk to be within its risk appetite, to provide reasonable assurance regarding
the achievement of entity objectives.
o A Code Of Ethics. A company should develop and adhere to a code of
o COSO Accounting Internal Control Structure. COSO identifies five
interrelated components of internal control: the control environment, risk
assessment, control activities, information and communication, and
monitoring.
o IT Controls. IT controls can be divided into two categories, general controls
and application controls. General controls apply overall to the IT accounting
o IT Governance. IT governance is a structure of relationships and processes
to direct and control the enterprise in order to achieve the enterprise’s goals
by adding value while balancing risk versus return over IT and its processes.
IT governance provides the structure that links IT processes, IT resources
and information to enterprise strategies and objectives.
➢ The Accountant’s Role In AIS. All career paths within accounting will in some
manner involve the use of an accounting information system. Accountants have
several possible roles related to accounting information systems: They may be users
of the AIS, part of the design or implementation team of an AIS, and/or auditors of
an AIS.
o Users Of The AIS. Accountants within any organization must use the
accounting information system to accomplish the functions of accounting,
generating accounting reports, and using accounting reports. Accountants
must therefore understand AIS concepts in order to perform these accounting
jobs.
o Design And Implementation Teams. Accountants are usually part of a
➢ Ethics And The AIS. Accounting information systems can be misused to assist in
committing unethical acts or helping to hide unethical acts. That is, the AIS is often
the tool used to commit or cover up unethical behavior. Examples of some potential
unethical behaviors are: fraudulent financial reporting; revenue inflation; expense
account fraud; inflating hours worked for payroll purposes; computer fraud; hacking;
browsing confidential data.