Introduction to FIS 318/618: Financial Systems

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Introduction to FIS 318/618Financial Systems
Databases

• Oakland University
• School of Business Administration
• Accounting and Finance
• Joe Callaghan

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Introduction

• Review Syllabus
• Course Website
• Review Curricula
• Review Course
• Review and Critique Traditional AIS

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Curriculum Financial

• Why Call it FIS and not AIS?
• AIS has baggage (associated with stovepipe and
  use of accounting packages)
• Output of system emphasizes GAAP measures
• Meaning of Financial
• Inputs are Event/Transaction-based
• Reporting Emphasis, especially managerial
• Audit and Control Emphasis
• Using Financial Databases
• Not Financial versus Managerial

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Curriculum Information

• Output of Information System
• Includes, but not limited to, GAAP financials
• Emphasize Information for managers
• Emphasize functional integration
• Enterprise-wide information
• Audit and Control Emphasis
• Relevance versus Reliability
• Historical versus Future orientation
• Using Financial Databases

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Curriculum Systems

• Generic Life-cycle of
• IPSO framework
• For Business
• For AIS
• For FIS
• Not narrowly defined
• Isomorphism between Business and Information
  systems

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Model-Oriented Tool-Enhanced(MOTE)

• Models as abstractions
• Technologically independent
• Tools (software) to implement
• This course emphasizes tools, laying foundation
  for downstream courses
• Tools needed by information-age accountants
• Database skills
• Spreadsheet skills

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Generic Stages of the Systems Development Life
Cycle
Planning
Analysis
Design
Construction
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Curriculum

• General Education, Precore and Core
• Major Courses
• A total of 18-19 credit hours, in the following
  two categories
• 1. Required
• FIS 318 Introduction to Financial Systems
  Databases 3
• FIS 431 Analysis of Financial Systems
  3
• FIS 432 Design of Financial Systems
  3
• FIS 433 Information Systems Audit Control
  (p.26) 3
• Total 12

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Curriculum (cont.)

• 2. Two Electives from
• FIS 435 Financial Systems Applications 3
• Any ACC course at the 300 or 400 level 3
• Any MIS course at the 400 level 3
• Any Finance course at the 400 level 3
• Manufacturing Planning Control at the 400
  level 4
• Subtotal 18-19
• Free Electives 4-7
• Total credit hours (minimum) 128

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Course Review

• Modeling Business Systems
• IPSO framework
• Element Business ACC FIS
• Input materials transact. event
• Process value-add posting info-add
• Storage know-how Ledger RDBMS
• Output products financials info.

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Course Review (cont.)

• Models
• Type Abstract Implemented
• Data ERD Access DB
• Process CRUD Access/Excel
• Interaction REA Running App.

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Modeling A Business
Cash Disbursements
Cash Receipts


Suppliers
Enterprise
Customers
AMP Raw Materials, Supplies, Labor,
Finance, Fixed assets
MSC Marketing Sales Collection
Convert Operations Job Costing
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Activity ModelsTemplate for Decomposition of
Business Processes (IPSO template)
Source Hollander, Denna Cherrington, 2000
(adapted)
Add value
Data Storage and Retrieval Relational Database
Management System
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Relationship between Business Processes,
Information Processes and Management Activities
Information System
RDMS Data
Source Hollander, Denna Cherrington, 2000
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Managing Business and Information Processes
(PEACE)
Should Do
Do
Feedback
Control Evaluate
Plan
Execute And
Trigger
Measures
Business Rules
Business Processes
Information System
Data
Record Data Convert to Information
How to Value Add
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Review and Criticisms of the Traditional
Accounting System Architecture
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Traditional AIS

• Transactions as subset of Business events
• Analyze in terms of Accounting Equation, usually
  in terms if Drs and Crs.
• Journal as limited set of attributes
• Posting to General Ledger (aggregated at time
  lag)
• Trial Balance, Adjustments, ATB, Adjust, Close
• Produce GAAP Financials

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Criticisms of Traditional Accounting Systems

• They are non-integrated systems in an
  organization
• The architecture captures data about a subset of
  an organization's business events (the accounting
  transactions) - FILTERED
• The architecture stores and processes only a
  limited number of characteristics about these
  accounting transactions FILTERED EVEN MORE
• The architecture captures and stores duplicate
  data in a highly summarized form - AGGREGATED
• The architecture stores financial data to satisfy
  one primary view - ACCOUNTANTS PERSPECTIVE
• Data are not recorded and processed in real-time

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Accounting Data A Subset of Business Data
(Limited view limited data)
Data that describes Business Events
Accounting Data
Business Events
Accountants filter data
General Ledger
Limited Output Views Formats
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Traditional Accounting Stovepipe Systems
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Evolution Of AIS
Stage 1
Stage 2
Stage 3
Manual Systems
Automated Systems
Resources Information Technology Process
Accounting Cycle Data Stores (Flat-Files)
Journals Ledgers
Resources Manual Process Accounting
Cycle Data Stores (Files) Journals Ledgers
?
Objective Generate financial statements
Objective Generate financial statements
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The solution

• An event-driven, enterprise-wide information
  system, sitting on top of a relational database
  management system

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Evolution Of AIS
Stage 1
Stage 2
Stage 3
Manual Systems
Automated Systems
Event-Driven, Enterprise- Wide IT Applications
Resources Information Technology Process
Accounting Cycle Data Stores (Flat-Files)
Journals Ledgers
Resources Information Technology Process
Record, Maintain, Report All Business Event Data
of Interest Data Stores (Tables) RBMS
Resources Manual Process Accounting
Cycle Data Stores (Files) Journals Ledgers
Objective Generate financial statements
Objective Generate financial statements
Objective Support Planning, Executing,
Control And Evaluation Activities (PEACE)
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Creating Business Value

• Organizations add value by converting resources
  to develop and provide the goods and services
  that customers desire.

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Creating Information Value

• Information Systems add value by converting data
  to develop and provide the information that
  information customers desire.

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How Can Accountants Add Value In The Information
Age?

• Provide useful information for decision makers
  who are responsible for planning, executing,
  controlling or evaluating activities of an
  organization
• Help embed information processes in the business
  processes (to capture and store data about the
  processes in real time)
• Help embed controls in the business processes
• Help management define business rules or policies
  that shape the nature of its business processes

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Managing OrganizationsBusiness Information
Processes

• PEACE (Management)
• Plan
• Execute, And
• Control
• Evaluate
• Business Processes
• AMP Acquire, Maintain, Pay for Business
  Resources
• Convert Add value, particularly unique to
  organization
• MSC Market, Sell goods/services, Collect payment
• Information Processes
• Record, Maintain, Report