Kế toán, kiểm toán - Chapter 1: Accounting information systems and firm value

Chapter 1Accounting Information Systems and Firm ValueCopyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Learning ObjectivesLO#1 Define an accounting information system and explain characteristics of useful information.LO#2 Distinguish among data, information and an information system.LO#3 Distinguish the roles of accountants in providing information and explain certifications related to accounting information systems.LO#4 Describe how business processes affect the firm’s value chain.LO#5 Explain how AIS affects firm value.LO#6 Describe how AIS assists the firm’s internal business processes.LO#7 Assess how AIS facilitates the firm’s external business processes.LO#8 Assess the impact of AIS on firm profitability and stock prices.1-2Accountants as Business AnalystsIncreasingly, the role of an accountant is to help address business opportunities.To address such a business opportunity, the accountants need to decide what information is needed, then build an information system to gather the necessary information and finally analyze that information to offer helpful advice to management.1-3LO# 1Accounting Information SystemsAn accounting information system (AIS) is defined as a system that records, processes and reports on transactions to provide financial and non-financial information to make decisions and have appropriate levels of internal controls (security measures to protect sensitive data) for those transactions.An AIS is important because it provides information that companies are required to have and also information that can be used to make important decisions.1-4LO# 1Why Study AIS?It’s fundamental to accounting.Accounting is an information providing activity, so accountants need to understand:How the system that provides that information is design, implemented, and usedHow financial information is reportedHow information is used to make decisions1-5LO# 1What Can an AIS Do?Imagine Starbucks’ system, which can track a variety of things.The number of hours worked by employees all over the world.The amount of sales taxes to be paid by one store.Wal-Mart has an extensive information system.1-6LO# 1A Simple Information SystemPossible Input: Sales at StarbucksPossible Storage: Database of all Sales at StarbucksPossible Processing: Queries of What Sells Best at NightPossible Output: Reports of What Sells Best at Night1-7LO# 1Attributes of Useful InformationTo be useful information must have these attributes:Relevant – information that is capable of making a difference in a decisionPredictive ValueFeedback ValueTimelyReliable – information that is free from bias and errorVerifiableRepresentational FaithfulnessNeutrality1-8LO# 1Data vs. InformationData are simply raw facts that describe an event and have little meaning on their own.Information is defined as being data organized in a meaningful way to be useful to the user. Data serves as an input.For example, the sales prices of a particularly toy might be considered data. However, after subtracting the cost of goods sold from the sales price to compute the net profit would be considered information if it helps a retailer decide whether to carry that particular toy in its inventory.1-9LO# 2Information OverloadComputers can process and organize a large amount of data.Too much information causes information overload. Decision making is hindered.1-10LO# 2Information Value Chain1-11LO# 1Discretionary versus Mandatory InformationDiscretionary information is information that is not required by law.Using an ABC system to determine the overheads costs associated with each pound of chicken at Tyson Foods.Managers must decide if the benefits of discretionary information outweigh the costs of obtaining it.1-12LO# 2Discretionary versus Mandatory InformationMandatory information is information that is required by law.Examples include: Form 10-K (Annual Reports that include Financial Statements) and Tax ReturnsSee SEC EDGAR for examples of required annual reports for public companies.Since it is required manager usually choose to minimize the costs of producing this information.1-13LO# 2Role of Accountants in AISsDesigner System AnalystImplementerDatabase AdministratorUserRecording Journal EntriesEvaluatorAuditorManagerController or CFO1-14LO# 3Certifications in AISCertified Information Systems Auditor (CISA)Perform IT AuditsCertified Information Technology Professional (CITP)Work to effectively and efficiently manage information while ensuring the data’s reliability, security, accessibility and relevance.Certified Internal AuditorGlobally accepted certification for internal auditors 1-15LO# 3Value Chain1-16LO# 4Where do AIS add value to a Business? In the Primary Activities?Inbound logistics are the activities associated with receiving and storing raw materials and other partially completed materials, and distributing those materials to manufacturing when and where they are needed.Operations are the activities that transform inputs into finished goods and services (e.g. turning wood into furniture for a furniture manufacturer; building a house for a home builder).Outbound logistics are the activities that warehouse and distribute the finished goods to the customers.Marketing and sales activities identify the needs and wants of their customers to help attract them to the firm’s products and buy them.Service activities provide the support of customers after the products and services are sold to them (e.g. warranty repairs, parts, instruction manuals, etc.).1-17LO# 4Where do AIS add value to a Business? In the Support Activities?Firm infrastructure activities are all of the activities needed to support the firm, including the CEO, finance, accounting, and legal.Human resource management activities include recruiting, hiring, training and compensating employees.Technology activities include all of the technologies to support value-creating activities. These technologies also include research and development to develop new products or research and development to determine ways to produce products at a cheaper price. Procurement activities involve purchasing inputs such as raw materials, supplies, and equipment.1-18LO# 5AIS and Internal Business ProcessesAIS usually serve as the as the foundation for the enterprise (or ERP) system. The enterprise system is a centralized database that collects data from throughout the company including orders, customers, sales, inventory, and employees.Information is thus available to everyone within the company in a useful and timely way.1-19LO# 6Use of ERP SystemThe enterprise system can take an order from a customer, fill the order, ship it, and then create an invoice to bill the customer.Used to check customers credit.Check the inventory levels in the warehouse.Determine when it can be shipped.Everyone throughout the entire process can view and update the information.1-20LO# 6Figure 1.6 AIS and External Business Processes1-21LO# 7The Supply ChainThe supply chain refers to the flow of materials, information, payments, and services from suppliers all the way through the customer. There are many processes involved which can be made more efficient using the AIS.1-22LO# 7Supply Chain ManagementSupply Chain Management software can be used to optimize processes within the supply chain.Determine levels of inventory in stock and to be ordered.Determine timing to transferring inventory.1-23LO# 7Customer Relationship ManagementThis software is used to manage interactions with customers.Track customer purchases.Ensure customer satisfaction.Product placement1-24LO# 7Customer Relationship ManagementAs an example, Amazon.com keeps a record of their past purchases and product searches and then uses that information to recommend other similar products for the customer to consider. Loan officers at a bank learns more about the financial products currently being used by its bank’s customers through its AIS, they will be able to help identify additional bank products (upselling items such as insurance products, CD’s, mutual funds, etc.) to sell to their clients.LO# 71-25The Effect of AIS on the Income Statement1-26LO# 7AIS, Firm Profitability, and Stock PricesAs show on the previous slide, AIS can be used to improve company profits.In addition, studies show that investments in IT can positively affect a company’s stock price.1-27LO# 8SummaryAn accounting information system (AIS) is defined as being an information system that records, processes and reports on transactions to provide financial information for decision making and control.Firms invest in accounting information systems to create value. The value chain illustrates how during each primary activity, the product should gain some value. An AIS serves an important role in enabling value in each primary and supporting activity.An AIS creates value by managing internal and external business processes such as enterprise systems, supply chain management and customer relationship management software. An AIS system generally helps make business processes more efficient and effective. A well-designed and well-functioning AIS can be expected to create value by increasing revenues and reducing expenses. LO# 81-28