AIS & the Future of Accounting Accounting 5410 David Plumlee

2 What is AIS? n Define “accounting” n Define “information” n Define “system”

3 Accounting is…. Capturing, recording, summarizing and reporting relevant information to decision makers

4 A System is…. Two or more components or subsystems that are related and have a common purpose

5 Information is…. Data that, if known by a decision maker, has the potential to effect their decision.

6 So AIS is …. The set of related components or subsystems that capture, record, summarize and report relevant information to decision makers

7 Why does accounting exist? n Fundamentally, accounting exists as a basis for contracting between the firm and: –customers –vendors –employees –creditors n And, between managers and owners

8 Accounting's Role n Basically, accounting deals with measurement. n What do we currently measure? n In the “information age” what should we be measuring?

9 Information Technology’s Impact n How is IT changing organizational structure and the nature of jobs? n Why are these changes important?

10 Organizational Structure n What does “stovepipe” organizational structure mean ? What are the problems that creates? n What is a “networked” organizational structure? How does it work? (ask me about the D&T Lotus Notes experience)

11 What should we be measuring? n Measures will be of the rate of change, not the rate of activity n “intangibles” rather than tangibles will be measured n The information system will extend beyond the boundaries of the organization

12 Reconceiving the “exchange transaction” n Relationships with customers will be measured n What are some of the important performance measures in the customer/company relationship?

13 What Are Some of IT’s Capabilities and Their Effects? n Automated data capture n Instantaneous access and capture n Geographical freedom n Fully Versatile analysis and reporting n Capacity for additional data types n Access to external data bases

14 Implications for GAAP n Nonfinancial measures (e.g., human asset info., product information., etc.) n Forecast data n Continuous assess to financial data n Shift to change measures

15 What are the implications of all of us becoming “knowledge workers?” n Information is intended to empower all workers, not just management n Functional disciplines will break down n Contribution will be measured in “value added”

16 What are the implications for CPA firms? n Audits will focus on the process by which information is produced rather than the “statements” n CPAs will attest to a much broader set of information n Consulting will become an increasing source of firm revenues

17 What are the implications for you as a student? n Problem-solving and analytical abilities become more important than mastering a large set of “facts” n Teamwork and interpersonal skills need to be developed n Learning-to-learn so that you can grow professionally throughout your career is essential