1. PowerPoint Presentation Materials
Accounting Information Systems:
Basic Concepts and Current Issues
3rd edition
Robert L. Hurt

2. Role and Purpose of Accounting Information Systems
Chapter 1
Role and Purpose of Accounting Information Systems
In the first chapter, we’ll take a look at some of the foundational issues of AIS, giving the course (and the book) some context.
McGraw-Hill/Irwin
© 2013 The McGraw-Hill Companies, Inc., All Rights Reserved.

3. Outline Expected outcomes Definition and importance of AIS
AIS and the rest of accounting
Generic AIS structure
Critical thinking
Information literacy
Here are the topics we’ll consider over the course of the next few minutes. You’ll also have some opportunities for interaction via “lecture breaks” and classroom assessments.

4. Expected outcomes Define “accounting information systems.”
Discuss why AIS is an important area of study for future accountants.
Compare and contrast AIS with other areas of study in accounting.
Explain the structure of most AIS.
Locate and evaluate information sources on AIS.
Describe the structure and content of the remainder of this text.
These outcomes are listed at the start of the chapter. They identify the essential knowledge and skills you should take away after carefully studying the material. While you may be accustomed to getting most of what you need to know from your instructor’s lectures, that’s definitely not the case in AIS—carefully reading the text, completing assigned activities and remaining engaged with the material is critical to your understanding in AIS.

5. Definition and importance of AIS
An accounting information system is a set of interrelated:
Activities
Documents
Technologies
Designed to:
Collect data
Process it
Report information
To a diverse group of:
Internal decision makers
External decision makers
In all kinds of organizations
Like all systems, an AIS comprises several interrelated elements, all working toward achieving a common goal. Note that technology is just one element of an AIS—the technology is not the system.

6. Definition and importance of AIS
Examples of activities
Selling goods and services
Collecting cash
Examples of documents
Invoices
Purchase orders
Examples of technologies
General ledger software
Relational database software
Here are some examples of the various elements of the AIS definition.
Activities
Documents
Technologies
Decision makers
Organizations
AIS

7. Definition and importance of AIS
Examples of decision makers
Managers
Stockholders
Examples of organizations
Microsoft Corp.
City of Los Angeles
Lecture break 1-1
Form a group of three to five students.
As a group, give one additional example of each element.
And here are some additional examples of elements of the AIS definition.
Activities
Documents
Technologies
Decision makers
Organizations
AIS

8. Definition and importance of AIS
AIS importance
Needed in all organizations
Gives a “big picture” view of accounting
Touches virtually every other area of accounting
Offers opportunity for developing critical thinking skills
AIS provides a structure for the rest of your accounting courses. And, by its very nature, AIS offers the opportunity for developing critical thinking skills—for responding to non-deterministic questions and for thinking “outside the box.”

9. AIS and the rest of accounting
Links between AIS and other accounting courses
FASB Conceptual Framework (financial)
Structure of AIS (auditing)
Transaction processing (financial)
Business processes (financial, cost, tax, audit)
Information technology (financial, cost, tax, audit)
Whether AIS is near the beginning or near the end of your accounting curriculum, it provides an important opportunity for tying together what you have learned / will learn.

10. AIS and the rest of accounting
FASB Conceptual Framework of Accounting
Objective
Elements of financial statements
Qualitative characteristics
The conceptual framework was developed by the FASB in It was designed to provide some structure and guidance for the development of future accounting principles. You’ll study it in great detail in intermediate accounting, and can expect to see questions about it on many accounting professional exams.
Principles
Constraints
Assumptions

11. AIS and the rest of accounting
Lecture break 1-2
Check out the description of the conceptual framework in Chapter 1. Which terms and ideas do you recognize from your prior study of accounting? Which are unfamiliar?
Students can complete this activity individually or in groups. For those terms that are unfamiliar, consider providing brief examples. There’s also a more detailed post on my AIS blog about the conceptual framework.

12. Generic AIS structure Internal controls Inputs Processes Outputs
Storage
AIS have five generic elements, as seen in this illustration. The next few slides will give you some examples of each element.

13. Generic AIS structure Inputs Processes Raw data that enters the AIS
Source documents
Checks
Sales invoices
Processes
Steps in the accounting cycle
Business processes
The things organizations do to create value for stakeholders
Here are some examples of AIS elements. Don’t confuse the structure of the AIS with the definition presented earlier.

14. Generic AIS structure Outputs Storage
Information used for making decisions
General purpose financial statements
Tax returns
Other reports
May be paper-based or electronic
Storage
Master files
Customers
Inventory
Transaction files
Sales
Purchases
Junction files
Sales / inventory
Purchases / inventory
We’ll take a closer look at input and outputs documents in the chapters on business processes. Database structure is discussed in the chapters on systems documentation.

15. Generic AIS structure Internal control purposes
Safeguard assets.
Ensure reliable financial reporting.
Promote operating efficiency.
Encourage compliance with management directives.
Internal control examples
Adequate documentation
Separation of duties
IT passwords
Physical controls
Internal control has been at the heart of AIS study since AIS emerged as a separate discipline in the accounting curriculum.

16. Generic AIS structure Lecture break 1-3
How are the AIS elements demonstrated at your university?
Form a group of three to five students to complete this exercise. Be ready to discuss your thoughts with the class.
Complete this exercise in a group of three to five students. Be prepared to present your answers to the class.

17. Critical thinking Two types of questions in AIS
Deterministic
One right answer
Example: what is the journal entry to record a cash sale of services?
Non-deterministic
Multiple right answers
Example: what internal controls are needed?
“Multiple right answers” is not the same as “all answers are correct.”
Because AIS involves so many non-deterministic questions, critical thinking is essential. One goal of this course is to help you develop critical thinking skills, which only comes with practice.

18. Critical thinking Bloom’s taxonomy Levels of Bloom’s taxonomy
One good tool for thinking about critical thinking
Six levels, each requiring more critical thinking than the one before it
Levels of Bloom’s taxonomy
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
Test bank questions for this text include questions at the first five levels of Bloom’s taxonomy. Evaluation is excluded because those skills take much longer to develop.

19. Critical thinking Knowledge Comprehension Application Analysis
Recalling memorized facts
Comprehension
Stating ideas in your own words
Application
Applying ideas in a new setting
Analysis
Breaking a “big chunk” into smaller pieces
Synthesis
Aggregating smaller pieces into a whole
Evaluation
Judging the worth of ideas
You’ll find a post in my AIS blog that gives a lot more detail about the levels of Bloom’s taxonomy and how they apply to AIS.

20. Information literacy One important component of critical thinking
Ability to:
Recognize when information is needed
Find needed information
Use it for decisions
Importance in AIS
Non-deterministic questions and issues
“Cutting edge” problems
Nuances of words and ideas
Many of the problems and issues we’ll discuss in AIS require research. And, whether that research is on the Internet or in some print source, the ability to evaluate information is very important.

21. Information literacy Three broad types of information
Sponsored / commercial
Popular / practitioner
Scholarly
Five criteria for evaluating information
Authority
Accuracy
Objectivity
Currency
Coverage
You’ll run across three main types of information in your work in AIS. Under the right circumstances, each one can be useful. The key is understanding their nature and being able to judge them appropriately.
These five criteria come from the University of Maryland University College (UMUC).

22. Information literacy Authority Accuracy Objectivity Currency Coverage
Who created the information? With what goal in mind?
Accuracy
Where did the information originate? Does it contain errors of fact?
Objectivity
Is the information primarily advertising?
Currency
When was it created?
Coverage
Does it provide sufficient depth?
Here’s a closer look at the UMUC criteria for evaluating information.

23. Information literacy Lecture break 1-4 For the article you choose:
Check out any article of your choosing in one of the following online journals:
Journal of Forensic and Investigative Accounting
Accounting Today
Journal of Accountancy
For the article you choose:
Prepare a brief summary.
Determine the kind of information presented.
Evaluate it using the UMUC criteria.
If you don’t have Internet access in your AIS class, consider bringing in paper copies of selected articles from those journals or others of your choosing.

24. Classroom assessment
We’ve considered the following topics in this lecture:
Definition & importance of AIS
Relationship of AIS to the rest of accounting
Generic AIS structure
Critical thinking
Information literacy
In a manner specified by your instructor:
Summarize the main points of one or more topics in your own words.
Raise at least one question about something that seems unclear about one or more of the topics.
Divide the students into five groups for this assessment. Assign each group one of the five areas to discuss. Then, re-form into groups of five, so that each group has one student representing each topic.