role and purpose of ais Flashcards
define accounting information system
AIS is a set of interrelated activities, documents and technologies designed to collect data, process it and report information to a diverse group of internal and external decision makers in organisations
why ais is an important area of study
- a well designed ais helps fulfill many of the ideas of the FASB conceptual framework of accounting
- studying ais helps you develop some of the competencies for CA/CPA
- provides insight into business processes
how ais is different to other areas of accounting
has more open ended problems that do not have deterministic answers and incorporates material from outside accounting
structure of ais
Inputs: e.g. sales invoices, GST receipts, purchase orders. What source documents are needed? Should they be paper or electronic? How many copies and what information?
Processes: e.g. steps in the accounting cycle, processing tools can include things like computers and satellites (but not always electronic). Which software? Should they be manual and/or electronic?
Outputs: financial statements and variance analysis. What other reports will be used? How can AIS facilitate?
Storage: e.g. customer database. Data can be electronic or paper form. Master file, transaction file and junction file. How should data be stored? Where should data be stored?
Internal controls: e.g. a daily back up of data, separation pf duties (custody, recording, authority) to maintain assets. What controls are necessary to promote the integrity of the information?
The five criteria for information sources
- Authority - who created it? what is its purpose?
- Accuracy - how accurate is it? where is the information from? are there errors or misleading graphs?
- Objectivity - Does it contain advertising? Does it promote the product - were they paid to make the claims?
- Currency - When was the source created? Was it ever updated?
- Coverage - Does it cover the information in sufficient depth?
