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Prepared for: Mdm Zalila Azalilah

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System A set of two or more interrelatedcomponents that interact to achieve a goal.

Composed of smaller subsystems; eachperforming specific function.

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Goal conflictdecisions or actions that

inconsistent with the goal of other

subsystems. Goal congruencea subsystem achieves its

goal

This systems concept encourage integration.

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Informationdata that have been organizedand processed to provide meaning to a user.

Information overloadwhen the limits arepassed.

The value of informationbenefit produced

minus the cost.

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Relevant Reduces uncertainty, improves

decision makers ability

Reliable Free from error or bias

Complete Does not omit important things

Timely Provided in time to be used

Understandable Ways of presenting the info.

Verifiable If the info is the same with others

Accessible Availability to be used by user

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Information can be provided to both internal

and external users.

External users; Mandatory information

Essential information

Internal usersdiscretional information

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AISa system that collects, records, stores and

processes data to produce information for decision

makers.

There are six components of an AIS (Apr.09 Q1a);

People

Procedures and instructions

Data Software

The information technology infrastructure

Internal controls and security

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Three important business functions;

Collect and store data about org. activities,

resources, and personnel. Transform data information that is useful for

making decisions so management can plan,

execute, control, and evaluate activities,

resources, and personnel.

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Provide adequate controls to safeguard the

organizations assets, including its data, to

ensure that the assets and data are availablewhen needed and the data are accurate and

reliable.

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Fundamental to Accounting

Important to your career

Compliments other systems courses AIS topics are tested on the New CPA exam

Gives impact on corporate strategy and

culture

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Improve quality and reduce costs.

Reduce wasted materials and over-working costs yetmaintain product quality.

Improve efficiency.

In terms of time management (e.g.: just-in-time)

Share knowledge. Develop new ideas, support relevant communication with

assistance with expertise to face and grab the competitiveadvantages.

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Improve decision making.

Structure (Oct10 Q1A)

1) Structured Decision (supervisor & employees) Repetitive, routine and understooddelegate lower level employees

2) Semi Structured Decision (Top, Middle, supervisor &employees) Incomplete decision making rules, need subjective assessment and

judgement to supplement formal data analysis. 3) Unstructured Decision (Top manager)

Nonrecurring and nonroutine.

Can be supported by computer-based decision aids that facilitate

gathering information from diverse sources.

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Scope

1) Operational Control Effective and efficient performance of specefic tasks.

2) Management Control Effective and efficient use of resources for accomplishing

organizational objectives.

3) Strategic Planning To establishing organizational objectives and policies for

accomplishing those objectives.

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Two basic business strategies (by Micheal

Porter) to follow:

Product Differentiation Strategy Features/services not offered by competitors which can

be charged at premium prices.

Low-Cost Strategy Striving to be most efficient producer of goods/services

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Three basic strategic position:

Variety-based strategic position Producing/providing a subset of the industrys products

or services

Needs-based strategic position To serve most or all of the needs of a particular

customers in targeted market

Access-based strategic position Serve different customers requirement based on

relevant factors

e.g.: geographic, size

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Everything thats worth

something even INFORMATION

Best example:7-Eleven success in

Japan

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LOOK AT THIS DIAGRAM CAREFULLY!

Raw

MaterialSupplies

Manufacturer

DistributorRetailerConsumer

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This is a system of providing

consumer goods

Where does value chain takes place in

the above diagram????

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Value Chain=Chain of interrelated activities

with the primary goals of increasing VALUE

towards consumers.

Support activities Help in the efficiency

and progress of the primary activities

Primary activities Activities directly

related to increase value of consumers

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Inbound

Logistics OperationsOutbound

logistics

Marketing

/sales

Primary(helped by

support activities)Services

TechnologyHuman

Resources

Firms

Infrastructure

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Please refer to October 2009 Part A Q1

a) Two ways in which a well designed accounting information system

can increase value in an organization is by

1. Improving both the effectiveness and efficiency of the supply chainsystem. With the implementation of a more systematic control over

information and also its quality via the value chain for example, a

more higher incremental in the benefits of the end products can be

provided to the customer and this satisfaction increase product value

and also the organizational value.2. With the implementation of a more better AIS within an

organization, an information can be obtained, improved and shared

to all stakeholders and also to other firms and organization. This

definitely increases both an organization reputation and value.

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Internal users are users who is directly related or involved in the

management within an organization itself. For example, the managers or

officers of a company. Reports are being used by them mainly for

managerial purposes and these reports will allow them to make the best

decision incongruence with the organizational goals. They are beingprovided with discretionary info which should not be freely used, share or

stored by other organization.

External users refers to users who is not involve in the management of the

organization however they do have interest in the organization. For

example, shareholders and governments. Reports are being used by themmainly for knowing the prospects, performance and the direction of the

organization itself in order to invest or obtain tax information. They are

being provided with both mandatory information(requirement set of

MASB) and essential/other info.

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How AIS can add value to organization (pg

34) ( January 2012)(Q1 b) & Oct08