A.I.S. Class 2: Outline I Review Timetable and Syllabus I Discuss technical problems with Initial Computer Assignment I Review use of Netscape, Bulletin Board, Listserve and e-mail I Learning Objectives for Chapter 1 I Chapter 1: Introduction to A.I.S. I Organizations and Information Dr. Peter R Gillett September 11, 2000 1
Timetable I Topics I Readings I Assignments Due I Examinations I Schedule Conflicts I Group Work Instruction: September 18 I Presentation Instruction & Assistance Dr. Peter R Gillett September 11, 2000 2
Syllabus Questions ? Dr. Peter R Gillett September 11, 2000 3
Initial Computer Assignment Problems ? Dr. Peter R Gillett September 11, 2000 4
Netscape, Bulletin Board, Listserve and e-mail I If you are using your own browser, it may need to be configured I You may need to reset Netscape to read all messages on Bulletin Board I Remember you can use “threads” I Use the Bulletin Board for postings: F that will reach those who read the Board F that remain all semester F that you want to be public messages Dr. Peter R Gillett September 11, 2000 5
A Warning . . . I Use the Reload/Refresh features of your browser to avoid using old versions of Web Pages Dr. Peter R Gillett September 11, 2000 6
Learning Objectives for Chapter 1 I After studying this chapter you should be able to: N discuss the impact of the information revolution on the accounting function N explain the purpose of accounting and the role of the accounting professional in organizations N describe the information customers served by accounting N describe the traditional accounting model and the manual accounting process and the drawbacks of this traditional view Dr. Peter R Gillett September 11, 2000 7
Learning Objectives for Chapter 1 I After studying this chapter you should be able to: N indicate the process of computerized bookkeeping and its advantages and limitations N explain in general terms the database approach to satisfying accounting information and the advantages of the database approach N discuss concepts of events orientation and the enterprise repository N describe the roles that the future accounting professional can play Dr. Peter R Gillett September 11, 2000 8
Introduction to A.I.S. What are organizations, and what do they do ? Dr. Peter R Gillett September 11, 2000 9
Introduction to A.I.S. I In “Images of Organization” Gareth Morgan suggests a number of metaphors for organizations: F machines F organisms F brains F psychic prisons F cultures F political systems F flux and transformation F instruments of domination Dr. Peter R Gillett September 11, 2000 10
Introduction to A.I.S. I A working definition: Organizations are transmutative social entities forming goal-directed structured activity systems I Can you give some different examples of organizations? Dr. Peter R Gillett September 11, 2000 11
Introduction to A.I.S. I Some organizations: F Johnson & Johnson F Ernst & Young F AICPA F Institute of Management Accountants F American Accounting Association F Rutgers: the State University of New Jersey F Roman Catholic Church Dr. Peter R Gillett September 11, 2000 12
Introduction to A.I.S. I So what do organizations do? F According to Michael Porter: N everything an organization does should contribute to the creation of value for its customers N “margin” can be defined as the difference between value and costs; however, this includes ALL value and ALL costs F For-profit organizations seek to maximize margin: others seek to maximize value within the constraints of their resources Dr. Peter R Gillett September 11, 2000 13
Introduction to A.I.S. I Value Chain Analysis (Michael Porter) Primary Activities Inbound Outbound Marketing Operations Services Logistics Logistics & Sales The Value Chain Procurement Human Resource Management Technological Development Infrastructure Secondary Activities Dr. Peter R Gillett September 11, 2000 14
Introduction to A.I.S. I Organizations create value through managing their business and information processes I At the heart of managing is the decision- making involved in planning, executing and evaluating the organization’s business and information processes Dr. Peter R Gillett September 11, 2000 15
Managing Opportunities/Risks Business and Information Objectives Resources Management Process Processes Recommendations Plan Execute Evaluate Rules Trigger Measures Measures Business Information Data Processes Processes Dr. Peter R Gillett September 11, 2000 16
Introduction to A.I.S. I Organizations typically have three main types of business processes (sometimes called business cycles): F acquisition/expense/payment process F conversion process F sales/collection process I Information processes include: F recording F maintaining F reporting Dr. Peter R Gillett September 11, 2000 17
Types of Business Processes Suppliers Customers Payment for Payment for Needed goods goods and goods and and services services services ORGANIZATION Acquire, Deliver and maintain, Goods/ Goods/ collect Convert and services services payment pay for acquired for customers Dr. Peter R Gillett September 11, 2000 18
Introduction to A.I.S. I Digression: what is a process? F A process is a time-dependent sequence of steps governed by a rule called a process law. All processes have five common ingredients: N the entities participating in the process N the elements describing the steps in a process (called events in business processes) N the relationships between these elements N the links to other processes N the resource characteristics of the elements Dr. Peter R Gillett September 11, 2000 19
Business Solution Framework Culture S3 Culture S2 Culture S1 Strategy Business People and Information Processes/ Structures Technology Events Measurements Dr. Peter R Gillett September 11, 2000 20
Introduction to A.I.S. I Change - the only constant in business: F Bob Elliott: The Third Wave Breaks the Shores of Accounting: N “IT is creating a wave of change that is crashing over accounting’s shoreline. It crashed across industry in the 1970s. Then it crashed across the services in the 1980s. And it will crash across accounting in the 1990s. It is changing the way business is done and the problems faced by managers. Managers now need new types of information in order to make decisions, so internal and external accounting must be changed.” Dr. Peter R Gillett September 11, 2000 21
Introduction to A.I.S. I Change: the only constant in business: F Downsizing and rightsizing F Business process re-engineering F Information superhighway F Dissatisfaction with quality and timeliness of accounting information F Expectation gap Dr. Peter R Gillett September 11, 2000 22
Introduction to A.I.S. I The role of the accounting professional is in deciding: F which events to capture information about F what data relating to each event should be captured F how data is to be captured while preventing input errors F how data should be stored to optimize usability while maintaining integrity F how meaningful reports can be generated on demand in real time Dr. Peter R Gillett September 11, 2000 23
Introduction to A.I.S. I The purpose of accounting is to provide information used in decision making I Accounting may be viewed as a system (a process) that converts data into useful information I Double entry bookkeeping is a limited model for meeting information needs I Who are the information “customers”? Dr. Peter R Gillett September 11, 2000 24
Introduction to A.I.S. I Information customers: F internal: N employees N management F external: N investors N stockholders N creditors N customers N financial institutions N regulators N government Dr. Peter R Gillett September 11, 2000 25
Introduction to A.I.S. I Traditional accounting processes: F The Basic Accounting Equation (Kieso & Weygand p. 71): N Assets = Liabilities + Stockholders’ Equity F Double Entry Bookkeeping: N Debits = Credits F Main steps: N Capture transactions via source documents N Record transactions in journals N Post journals to ledgers N Extract a trial balance N Adjust and prepare financial statements Dr. Peter R Gillett September 11, 2000 26
Introduction to A.I.S. I Problems with the traditional view: F “transactions” versus “events” F narrow focus on financial information F periodic not real-time recording & reporting F limited accessibility of information F too high a level of aggregation F limited flexibility in answering cross-functional queries F duplicate data in non-integrated systems Dr. Peter R Gillett September 11, 2000 27
Introduction to A.I.S. I Automation of Accounting: F first wave: custom processing: N computerized bookkeeping N standard reports N COBOL F second wave: software packages: N inexpensive, relatively error free, but less flexible N data often accessed via proprietary file management software Dr. Peter R Gillett September 11, 2000 28
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