1. ACCT341, Chapter 8 AIS and Business Processes: Part II
Introduction
The Resource Management Process
The Production Process
The Financing Process
Business Processes In Special Industries
Monitoring Business Processes

2. Introduction Many organizations need Focus of AISs
typical AIS requirements and
some specialized information also
Focus of AISs
formerly transaction processing
presently capturing data around business processes
Two important transaction processing cycles are
the production and
financing cycles.

3. The Resource Management Process
Organizations use resources
to produce goods,
to provide services, and
to generate revenues.
An AIS must pay attention to
the inventory,
human resources, and
fixed assets.

4. Human Resource Management
An organization’s human resource management activity includes
the personnel function
hires employees,
trains employees, and
maintains personnel records
maintains payroll records for employees

5. Human Resource Management
the payroll function
pays employees for their work
maintains records of employees’ paychecks,
complies with employee tax,
reports on various deduction categories, and
interacting with the personnel function

6. Human Resource Management Objectives
Hiring, training, and employing workers
Maintaining employee earnings records
Complying with regulatory reporting requirements
Reporting on payroll deductions
Making timely and accurate payments to employees
Providing an interface for personnel and payroll activities

7. Human Resource Management Inputs
Personnel Action Forms
document the hiring of new employees or changes in employee status
Time Sheets
used to track hours worked
Payroll Deduction Authorizations
authorize the payroll system to deduct certain amounts
Tax Withholding Forms
authorize payroll to reduce gross pay by the appropriate withholding tax (W-4).

8. Human Resource Management Outputs
Financial Statement Information
Employee Listings
shows current employees and may contain address and other demographic information
Paychecks
the final documents in the process; subject to strict internal controls
Check Registers
used to make journal entries for salary and payroll tax expenses

9. Human Resource Management Outputs
Deduction Reports
contain summaries of deductions for employees as a group
Tax (Regulatory) Reports
reports the government requires for income tax, social security tax, and unemployment tax information
Payroll Summaries
used by management in analyzing expenses

10. Fixed Asset Management
Fixed assets
assets with usable lives of more than one year.
A fixed-asset management system has to manage the assets in terms of their
purchase,
maintenance,
valuation, and
disposal.

11. Fixed Asset Management Function.

12. Fixed Asset Management Objectives
Tracking the purchase, maintenance, valuation, and disposal of the fixed assets
Calculating the depreciation for a company’s financial statements
Tracking repair costs, distinguishing between revenue and capital expenditures
Calculating the gain or loss upon disposal of individual fixed assets.

13. Fixed Asset Management Inputs
Purchase Requisition
requiring approval by one or more managers
Receiving Report
upon receipt of a fixed asset
Supplier Invoice
when it ships the asset

14. Fixed Asset Management Inputs
Construction Work Orders
if the company builds the asset
Repairs and Maintenance Reports
update of expense accounts for repairs and maintenance
Fixed Asset Change Forms
basis for transferring fixed assets from one location to another, retiring, selling or trading-in fixed assets

15. Fixed Asset Management Outputs
Financial Statement Information
gives the details of the valuation of the fixed assets
Fixed Asset Register
lists identification numbers and location for each fixed asset
Depreciation Register
shows depreciation expense and accumulated depreciation

16. Fixed Asset Management Outputs
Repair and Maintenance Reports
show the repair and maintenance expenses and history
Retired Assets Report
shows all assets disposed of during the accounting period

17. The Production Process
begins with a request for raw material and
ends with the transfer of finished goods to warehouses
This cycle, associated with producing goods
concerns the capture of data and
the reporting of information

18. The Production Process

19. Production Process - Objectives
Track purchases and sales of inventories
Monitor and control manufacturing costs
Control and coordinate the production process
Control inventory
Provide input for budgets

20. Cost Accounting Subsystem
The cost accounting subsystem
is an important part of the production process
provides important control information for the budget
can vary depending upon the type of business
manufacturing can have a
job costing system
process costing system
activity-based costing system

21. Just-in-Time (JIT) Inventory Systems
A Just-in-Time (JIT) Inventory System
is a make-to-order inventory system
ensures that the production cycle processes inventory transactions appropriately
attempts to minimize inventory carrying costs.

22. Just-in-Time (JIT) Inventory Systems
JIT depends upon AIS:
to help minimize inventory costs
to ensure that the manufacturing processes have the raw materials to keep a continuous work flow.
or, to be proactive and reengineer the process.

23. Lean Production/ Manufacturing
Concept
Eliminate waste throughout the organization
Focus on reduction of non-value-added waste
Lean Accounting
Necessary in order to have lean accounting
Data collection
Evaluate performance measures

24. Lean Manufacturing Waste

25. Production Process - Inputs
Material Requisition Form
directs stores to issue materials or parts to designated work centers or authorized persons
Bill of Materials
shows the types and quantities of parts needed to make a single unit of product
Master Production Schedule
shows the quantities of goods needed to meet sales demands

26. Production Process - Inputs
Production order
shows prices charged for raw materials.
incorporates data from sales orders or forecasts,
operates lists and bills of materials in order to authorize the production of an order or batch
Job Time Card
shows the distribution of labor costs to specific jobs or production orders

27. PRODUCTION PROCESSES—TECHNOLOGICAL ASSISSTANCE
ERP
Barcode scanners
Radio frequency technology (RFID)
Advanced electronic tags

28. Production Process - Outputs
Financial Statement Information
gives details of the costs and pricing
Materials Price List
shows prices charged for raw materials
Periodic Usage Report
provides managerial information on use of raw materials
Inventory Reconciliation Report
reconciles physical inventory with perpetual records

29. Production Process - Outputs
Inventory Status Report
allows purchasing and production managers to monitor inventory levels
Production Cost Report
details the actual costs for each production operation, each cost element, and/or each separate job
Manufacturing Status Report
provides managers with information about the status of various jobs

30. The Financing Process The financing process
is where a company acquires and uses financial resources
cash
other liquid assets
investments
includes the activities of;
borrowing cash
selling ownership shares.

31. The Financing Process

32. Financing Process - Objectives
Effective cash management
making use of lockbox systems and electronic funds transfer (EFT).
Minimizing cost of capital
reducing the cost of obtaining financial resources

33. Financing Process - Objectives
Maximizing return on investments
using financial planning models
Project cash flows
Consists of a cash receipts forecast and a
cash disbursements forecast.

34. Financing Process - Inputs
Remittance Advices
accompanies a customer’s payment
Deposit Slips
banks provide to document account deposits
Checks
companies receive and issue checks

35. Financing Process - Inputs
Bank Statements
used to reconcile the cash balance in the company’s ledger against the cash balance in the bank account
Stock Market Data
Interest Data
Financial Institution Profiles

36. Financing Process - Outputs
Financial Statement Information
Cash Budget
Investment Reports
Debt and Interest Reports
Financial Ratios
Financial Planning Model Reports

37. Business Processes in Special Industries
Vertical market
refers to markets or industries
services they provide or
the goods they produce.
These organizations
may require more information than is typically output from a traditional AIS.
Examples of specialized information needs include
time and billing systems,
activity based costing systems, and
point-of-sale systems.

38. Industries with Specialized AISs
Professional service organizations have several unique operating characteristics:
No merchandise inventory
Professional employees
Difficulty in measuring output
Small size
Not-for-profit
Professional employees and volunteers
Usually not affected by the market
Sometimes have a political environment

39. Professional Service Organization Bill

40. INDUSTRIES WITH SPECIALIZED AISs
Health care
Share many of the professional and not-for-profit organizations’ special AIS needs
Special accounting needs because of third-party billing (private and government)

41. Mini-based Hospital System

42. Business Process Reengineering
AISs
were concerned with accounting transactions earlier
are more concerned with business events now
Business events
include important activities that affect the business
are not captured by the financial accounting system
Business process reengineering (BPR)
concerns redesigning business processes from scratch