05/01/2023

Lecture 5- The Information System: An AIS General

ModelHabib Ullah Qamar

Govt. college of Commerce Gujranwala

05/01/2023

Accounting information System TRP GL/FRS MRS MIS AIS vs MIS

Review of Last Lecture

05/01/2023

We will an AIS Model Components of AIS Model End Users Data collection Data processing Data sources Feedback Objective of IS Acquisition of IS

Today’s Topic

In the Figure 1 A General Model is described for AIS which may be considered for any Information System

Key Elements are Data Sources, End Users, Data Collection,

Data Processing, Database Management, Information generation

A General Model of AIS

A General Model of AIS :Figure

Two general groups of end users External users include creditors, stockholders,

potential investors, regulatory agencies, tax authorities, suppliers, and customers.

Institutional users such as banks, and the Internal Revenue Service (IRS) receive information in the form of financial statements, tax returns

Trading partners (customers and suppliers) receive transaction-oriented information, including purchase orders, billing statements, and shipping documents.

End users: External

Internal users include management, operations personnel.

Organization has a great deal of freedom in the way it meets the needs of internal users as compared to External users

Still in well-accepted conventions and practices, internal reporting is governed primarily by what gets the job done.

System designers, including accountants

End user : Internal

important distinction between the terms data and information. Data are facts, which may or may not be processed (edited,

summarized, or refined) and have no direct effect on the user. By contrast, information causes the user to take an action Information is often defined simply as processed data. For example, a purchasing agent receives a daily report

listing raw material inventory items that are at low levels. This report causes the agent to place orders for more inventory.

The facts in this report have information content for the purchasing agent.

However, this same report in the hands of the personnel manager is a mere collection of facts, or data, causing no action and having no information content.

Data vs Information

Data sources are financial transactions that enter the information system from both internal and external sources.

External financial transactions are the most common source of data for most organizations. These are economic exchanges with other business entities and individuals outside the firm. Examples include the sale of goods and services, the purchase of inventory, the receipt of cash etc.

Internal financial transactions involve the exchange or movement of resources within the organization. Examples include the movement of raw materials into work-in-process (WIP), the application of labor and overhead to WIP, the transfer of WIP into finished goods inventory, and the depreciation of plant and equipment.

Data Sources

First Operations Stage in An AIS Data must be entered or collected

complete, correct and valid Incorrect data (erroneous data) will lead to

miss reporting and false information generation

Two Rules must be Followed Relevancy : Only capture relevant Data Efficiency: timely, no redundancy,

inconsistancy

Data Collection

Processing of data is done to produce information.

All mathematical and logical tasks ranging from simple to complex.

Examples include mathematical algorithms used for production scheduling applications.

statistical techniques for sales forecasting, and posting

summarizing procedures used for accounting applications.

Data Processing

The organization’s database is its physical repository for financial and nonfinancial data.

Database will be used. It can be a filing cabinet or a computer disk.

Regardless of the database’s physical form, we can represent its contents in a logical hierarchy.

The levels in the data hierarchy—attribute, record, and file.

Database management

process of compiling, arranging, formatting, and presenting information to users.

Information can be an operational document such as a sales order, a structured report, or a message on a computer screen.

Relevance: must contain relative data and facts for mangers to decide. Irrelevant data waste time.

Timeliness. The age of information is a critical factor in determining its usefulness. Information must be no older than the time period of the action it supports.

Accurate : information must be accurate Completeness. Must include all essential information for taking

a decision or task. Summarization. Information should be aggregated in

accordance with the user’s needs. Level with details.

Information Generation

Feedback is a form of output that is sent back to the system as a source of data.

Feedback may be internal or external and is used to initiate or alter a process.

Feedback

Acquisition means how an organization can attain an Information System.

customized systems from scratch through in-house systems development activities. off-the-self Software

purchase preprogrammed commercial systems from software vendors. on-the-shelf software

System development life cycle (SDLC)

Acquisition of Information Systems

Turnkey systems are those class of commercial software that are general-purpose, completely finished and tested systems.

It might be customized system for a specific industry.

The better turnkey systems, however, have built-in software options that allow the user to customize input, output, and processing through menu choices.

However, configuring the systems to meet user needs can be a difficult task. Enterprise resource planning (ERP) systems such as Oracle, Peachtree and SAP are examples.

Basic Types of commercial software

Backbone systems have a basic system structure. The primary processing logic is preprogrammed.

The vendor then designs the user interfaces to suit the client’s unique needs.

A backbone system is a compromise between a custom system and a turnkey system.

This approach can produce satisfactory results, but customizing the system is costly

Back bone systems

Customized systems that client organizations purchase commercially order to develop.

Software firms designs, implements, and maintains the system as per its client’s need.

Healthcare and legal services organizations that have complex systems requirements but are not of sufficient magnitude to justify retaining an in-house systems development staff.

Trends of in-house developments

Vendor-supported systems

To support the stewardship function of management. Stewardship refers to management’s responsibility to

properly manage the resources of the firm. The information system provides information about resource utilization to external users and internal users.

To support management decision making. The information system supplies managers with the information they need to carry out their decision making responsibilities.

To support the firm’s day-to-day operations by providing information to operations personnel to assist them in the efficient and effective execution of their daily tasks.

Objective of an IS

Components of AIS Model End Users Data collection Data processing Data sources Feedback Objective of AIS Acquisition of AIS

Summary of today

05/01/2023

Thank you , take careSee you again in sha ALLAH