AIS & the Future of Accounting

Accounting 5410

David Plumlee

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What is AIS?

Define “accounting”

Define “information”

Define “system”

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Accounting is….

Capturing, recording, summarizing and reporting relevant information to decision makers

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A System is….

Two or more components or subsystems that are related and have a common purpose

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Information is….

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

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So AIS is ….

The set of related components or subsystems that capture, record, summarize and report relevant information to decision makers

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Why does accounting exist?

Fundamentally, accounting exists as a basis for contracting between the firm and:– customers– vendors– employees– creditors

And, between managers and owners

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Accounting's Role

Basically, accounting deals with measurement.

What do we currently measure?

In the “information age” what should we be measuring?

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Information Technology’s Impact

How is IT changing organizational structure and the nature of jobs?

Why are these changes important?

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Organizational Structure

What does “stovepipe” organizational structure mean ? What are the problems that creates?

What is a “networked” organizational structure? How does it work? (ask me about the D&T Lotus Notes experience)

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What should we be measuring?

Measures will be of the rate of change, not the rate of activity

“intangibles” rather than tangibles will be measured

The information system will extend beyond the boundaries of the organization

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Reconceiving the “exchange transaction” Relationships with customers will be

measured

What are some of the important performance measures in the customer/company relationship?

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What Are Some of IT’s Capabilities and Their Effects?

Automated data capture

Instantaneous access and capture

Geographical freedom

Fully Versatile analysis and reporting

Capacity for additional data types

Access to external data bases

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Implications for GAAP

Nonfinancial measures (e.g., human

asset info., product information. , etc.)

Forecast data

Continuous assess to financial data

Shift to change measures

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What are the implications of all of us becoming “knowledge workers?”

Information is intended to empower all workers, not just management

Functional disciplines will break down

Contribution will be measured in “value added”

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What are the implications for CPA firms?

Audits will focus on the process by which

information is produced rather than the

“statements”

CPAs will attest to a much broader set of

information

Consulting will become an increasing

source of firm revenues

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What are the implications for you as a student? Problem-solving and analytical abilities

become more important than mastering a large set of “facts”

Teamwork and interpersonal skills need to be developed

Learning-to-learn so that you can grow professionally throughout your career is essential