Week 1

1
Week 1
2
What we will cover in this course

• General place of AIS in accounting
• Conceptual place of AIS
• Values and assumptions
• Documentation techniques
• Accounting controls
• ConceptsCOSO/COBIT and ERM based
• SOX, in general and as related to controls
• Database
• Concepts of data modeling
• What do accountants need to know
• Business cycles and accounting systems
• Special topics in accounting systems
• Intangibles, formatting, impacts and implications

3
Announcements

• Send me an email. Put ACTG335 in the subject
  line.
• Send it from all the email addresses you may rely
  on for class info
• Send it by Friday, September 28th
• You will be held responsible for materials I send
  out by email
• Many readings will be put on my website.

4
How does an AIS fit in an organization?
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AIS objectives

• Collect and store data
• Support efficiency and effectiveness
• Provide adequate controls
• Provide information for decision making

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Factors influencing AIS design

• Strategy
• Information technology
• Organizational culture
• Societal demands
• what do we need to account FOR

7
Measurement issues

• What to measure
• Measurement attributes
• What to report
• Abstractions
• What basis for measuring? For whom? To meet
  what objective(s)?
• Accountants are professionals, with a
  responsibility to serve the public interest.
• Accounting Abstraction Modelwhat does accounting
  DO?

8
AIS as a filter
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Valuation theory v. Events theoryintro to DB in
AIS
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Characteristics of information

• Useful
• Relevant
• Reliable
• Complete
• Usable
• Understandable
• Verifiable
• Credible
• Timely
• Accessible

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UsefulRelevant

• Connected to business objectives
• Logical, supportable thread from metrics to
  objectives
• Meaningful for the purpose intended, valid
• Predictive value (leading)
• Training, investment in IT, advertising
• Feedback value (lagging)
• ROI, net income, productivity

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Lagging Indicators

• Measures of output, end-process measures, record
  effects
• Reflect past performance
• Generally quantitative
• Example Quantity of toxic emission last years
  percentage of on-time deliveries
• Strength Easy to quantify and understand,
  preferred by regulators and publicdeterministic
  rather than probabilistic
• Weakness Time lag in feedback, ignore present
  activities

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Leading Indicators

• In-process metrics of performance, proactive
• Reflect current status/activitiesfor future
  performance
• Quantitative or qualitative
• Example percent of facilities conducting
  self-audit training of logistics managers
• Strength Represent current actions and future
  trends
• Weakness Harder to build support for use, harder
  to track to performanceprobabilistic rather than
  deterministic

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UsefulReliable

• Accurate for the purpose intended
• Representational faithfulness
• Verifiable
• Neutral
• meaning objective, but not purposeless
• relieves us of the need to assess values of the
  data/information
• Acknowledge inherent bias in any metric/measure

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Usable

• Credible
• What users value and trust
• Assess and report on the accuracy of key sources
• Institute a data-quality program for key data
• Timeliness
• Accessibility
• Physically
• Cognitively

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Information attributes? Information context

• Information attributes relate to the specific
  characteristics of individual units of
  information (data, really)
• Information context relates to understanding how
  information, as defined, relates to the world in
  which we live and work.
• Definition of context, from Merriam-Webster
  online dictionary
• 1 the parts of a discourse that surround a word
  or passage and can throw light on its meaning
• 2 the interrelated conditions in which
  something exists or occurs

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Abstractions
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Abstraction modelhow do we (society/stakeholders)
know what happens in an organization?
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Values and assumptions

• Public interest
• Stakeholderswhat does this mean?
• Center for Professional Integrity and
  AccountabilitySee Values and Assumptions from
  the syllabus
• What to measure, how to report influences the
  interests that are privileged

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Chapter 2AIS processes

• Transaction processing system
• Database

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Business cycles

• Real business activities for the AIS to capture,
  process, report
• Revenue
• Expenditure
• HR
• Production
• Financing

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Basic Business Processes
A set of Give-Get exchanges
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Collect data

• Transactions agreement between two parties to
  exchange economically measurable goods
• Capture the data
• Implement control procedures
• Record in journals
• General for rare or EOP
• Specialized for standardized
• Post to ledgers
• Prepare reports

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Computer processing

• Master/transaction files
• Batch/real-time/on-line
• Queries/reports
• I am going to spend little time on this, but
  expect you to use the terms and concepts pretty
  readilyask questions if you need to.

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Waren Distributing

• Get started.
• Quiz on October 15th.