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Accounting & Financial Management
AFM 341
Jee Hae- Lim

Introduction - Information is a strategic asset and will use it to develop a competitive adv. to run their business better than competitors o Starbucks -> use information about its customers, suppliers, and competitors to predict how much coffee it will sell and how much coffee it will need to purchase Accountants as Business Analysts - Increasingly, role of accountant is to help address business opportunities -> need to gather and analyze information in order to do so Definition of Accounting Information Systems - Defined as a system that records, processes, and reports on transactions to provide financial and nonfinancial information to make decisions and have appropriate levels of internal controls o Some think it’s a financial reporting system, boarder set of data, collects, processes and reports info A Simple Information System - Explained using general systems approach o Input  Cash register (point of sale terminal) o Storage o Processing  Take form of getting input into storage, query database o Output  Report for management use Attributes of Useful Information - Relevance o Predictive value (helps with forecasting the future) o Feedback value (corrects or confirms what had been predicted in the past) o Timeliness (available when needed or in time to have an impact on decision) - Reliability o Verifiable (confirmed by independent party) o Representational faithfulness (reports what actually happened) o Neutrality (not biased) - Tradeoffs between info that is relevant and info that is reliable Data versus Information - Data are raw facts that describes the characteristics of an event and have little meaning in isolation - Information is defined as being data organized in a meaningful way (processed, aggregated, sorted) o Information overload -> difficulty in understanding problem as a result of too much info o Information value chain -> transformation from a business need and event to the collection of data and information to an ultimate decision Discretionary versus Mandatory Information - Managerial accounting information is produced for internal information purposes and considered to be discretionary information -> no law - Value of information = difference between benefits realized and costs of producing it - Financial information produced for external information purposes are considered to be mandatory information o Produced at lowest possible cost to comply with law Role of Accountants in Accounting Information Systems - Accountants have role as business analysts; they gather information to solve problems, they devise planning and performance management systems o AIS provides a systematic means for accountants to get needed information Specific Accounting Roles - Accountant as user of AIS o Inputting journal entries, calculation, anti-virus - As manager o Plan and coordinate - As designer o System analyst - As Evaluator o IT auditor, assessor of internal controls,  SOX requirement  Must be able to tailor standard evaluation approaches to an AIS and offer recommendations for improvement - AICPA and IFAC assumes that accountants are proficient in AIS user role and at least another Certifications in Accounting Information Systems - Certified Information Systems Auditor (CISA) - Certified Information Technology Professional (CITP) - Certified Internal Auditor (CIA) Value Chain and Accounting Information Systems - Business value: events and interactions that determine financial health and can come from suppliers, customers, employees or information systems - Value cha
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