1. Accounting Information Systems: Essential Concepts and Applications Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-Wing Module 2: Decision Support and Expert Systems Slides Authored by Somnath Bhattacharya, Ph.D. Florida Atlantic University

2. Decision Support Systems: Advantages zImproved effectiveness in making strategic and tactical decisions zGreater timeliness in collecting and processing the needed data that bear on unstructured and semi-structured decisions zBroader understanding by the decision makers of the array of factors involved in problems requiring complex decisions and their relationships to each other

3. Key Components of a Decision Support System DSS data baseDSS model base DSS user interface Terminal or microcomputer User Figure M2-1

4. A Comprehensive Data Base that Spans a Firm’s Decision Needs Environmental DataInternal Planning Data Other Model DataSummaries Chart of Accounts } } * ** * = Planning data base ** = Operational data base Figure M2-2

5. DSS Model Base zDecision Models yDecision models yOptimization models zFirm-wide Planning Models yCorporate models yFinancial planning models zModeling Languages zModel Base Management Systems

6. A Variety of Models Used by Decision Support Systems zModel Description z1) Regression z2) Exponential smoothing z3) PERT z4) Linear programming z5) Line-of-balance z6) Economic order quantity z7) Supplier evaluation z8) Transportation z9) Discounted cash-flow z10) Production cost-variance z11) Cash-flow z12) Budget z13) Manpower planning z Typical Function Aided z 1) Sales forecasting z 2) Sales forecasting z 3) Engineering design z 4) Production scheduling z 5) Production routing z 6) Inventory control z 7) Purchasing z 8) Physical distribution z 9) Investment planning z 10) Cost analysis z 11) Financing z 12) Accounting control z 13) Personnel planning Figure M2-3

7. Model Manipulation Techniques Used with Financial Models zTime-Based Simulation z“What-If” Analysis zSensitivity Analysis zGoal-seeking Analysis Figure M2-4

8. More on Model-Base Management Systems zThis is a modeling counterpart to a DBMS zIts functions usually consist of providing yLinks between models in a DSS yA model definition language yMechanisms for modifying decision models yA user-friendly means of executing and manipulating models

9. User Interfaces zQuery Languages yCommand language approach yMenu approach xGUI

10. Group Decision Support Systems zGDSSs allow for the rapid dissemination of information and support collaboration among group members yElectronic mail software yLotus Notes

11. Expert Systems zAn Expert System is a computerized software model that simulates the thinking process of one or more human experts in solving a complex problem or in making a decision.

12. Components of an Expert System zKnowledge Base zTask-specific Data Base zInference Engine yForward chaining yBackward chaining zDevelopment Engine

13. Components of an Expert System Inference Engine Knowledge Base User Interface Task Specific Data Base Users Figure M2-6

14. Decision Situations and DSSs Complex Simple Expert Systems Conventional SoftwareStatistics Neural Network Technology Problem Complexity Structured Semi-structuredUnstructuredCompletely Random Decision SituationFigure M2-7

15. Factors to Consider when Selecting Accounting ES Applications - I zProblems or decisions requiring judgment are moderately complex to very complex and well- defined zOperational and tactical problems are highly structured to somewhat semi-structured, recurring, and repetitive zExpertise is difficult to acquire. Human experts are expensive and in short supply. Non-human expertise is available in the form of authoritative pronouncements, such as APBs, FASBs, and IRS tax regulations zThe accounting problem can be solved in a relatively short period of time zThe accounting problem is rule-intensive and can be solved with “if-then” rules Figure M2-8

16. Factors to Consider when Selecting Accounting ES Applications - II zCommon sense or intuition is not required to solve the problems zThe accounting problem cannot be solved efficiently with traditional or conventional computer software programs, such as COBOL or FORTRAN zThe body of knowledge is being continually updated zThe problem’s conversion to a computer-based expert system must result in a high payoff zThe expert system must produce clearly identified solutions with which most experts must agree among themselves Figure M2-8 Continued

17. Areas of Accounting Expert Systems: Auditing (Internal & External) zDeciding whether to accept a prospective auditee zEvaluating risks and the internal control structure in computer systems zReviewing prior years’ working papers zIssuing audit reports and forming audit opinions zWriting audit programs zAssisting in making a going-concern judgment zScheduling audit personnel zAnalyzing the adequacy of the allowance for doubtful accounts zAnalyzing unusual transactions Figure M2-9

18. Areas of Accounting Expert Systems: Taxation zAdvising on potential acquisitions and mergers zClaiming a dependent zAuditing deferred tax accruals zDetermining corporate tax status zDetermining if a firm qualifies for Subchapter S tax status zOffering personal and corporate tax planning advice Figure M2-9 Continued

19. Areas of Accounting Expert Systems: Cost/Managerial zAnalyzing significant variances and explaining the variation zAssisting in monthly closings zAllocating revenue and expenses zAnalyzing performance of projects zReviewing trial balances Figure M2-9 Continued

20. Areas of Accounting Expert Systems: Financial Accounting zAccounting for non-monetary transactions (APB No. 29) zAccounting for contingencies (FAS No. 5) zPurchasing vs. pooling (APB No. 16) zAccounting for futures contracts (FAS No. 80) zDeveloping expert systems for other professional pronouncements zClassifying financial transactions correctly zEvaluating credit worthiness Figure M2-9 Continued

21. Examples of ES in Accounting: Auditing Figure M2-10

22. Examples of ES in Accounting: Tax Figure M2-10 Continued

23. Emerging Developments zIntelligent Agent Software zIntegrating DSSs with other support systems zFuzzy Logic zDevelopments in Multimedia and Hypertext

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