Accounting Information

Systems with SAP

Introduction
Information Technology and AIS

Lecturer:
Faraz Ahmed Quddusi
Branches of Financial Information
A Financial Accounting Audit Trail
Corporate Scandals and Accounting

Enron (2001)
 Manipulation of accounting records
 Understate liabilities and inflate earnings

Bernard Madoff (2008)

 Investment fund manager
 Ponzi scheme
 $50 billion in losses

 Volkswagon
 Worldcom
 Barklays
 Petrobras
The Sarbanes-Oxley Act of 2002 (USA)

CEOs must certify the accuracy and completeness of financial statements

Public companies must hire independent, new auditors to review internal controls

Section 404
 Implement and assess internal controls
 Auditors evaluate those assessments
Combined Code of Corporate Governance (UK)

 The company to be headed by a board of directors.

 The board should be chaired by a Non Executive Director
 The number of non-executive directors should be greater than executive
directors.
 There should be internal controls framework firmly adopted by the company
and its effectiveness should be reviewed at the board level.
Managerial Accounting

Forward Looking Accounting Information

 Provide relevant (Financial & Non Financial)
information for Key Decision Making
 Internal users (Managers)
 Non- Routine Reporting
 May Include Statistical / Qualitative Results

Components
 Cost Accounting
 Budgeting
Cost Accounting

Measure and Control Costs

 Acquisition, processing, distribution, and
selling activities

AIS Examples
 Activity-Based Costing
 Corporate Performance Measurement and
Business Intelligence
Corporate Performance Measurement

Responsibility Accounting System

 Trace unfavorable performance to responsible
department or individuals
 Immediate corrective action by managers

Balanced Scorecard
 Financial Performance
 Customer Knowledge
 Internal Business Processes
 Learning and Growth
AIS to ERP
Business Intelligence and Dashboards
Need for Financial Information
Role of Accounting Information Systems

Transparent
Financial Reporting
of Business
Operations

Accounting
Information Systems
(ERP)

Role in Role in
Corporate
Value Chain Strategy
ROLE OF THE AIS IN THE VALUE CHAIN
ROLE OF THE AIS IN THE VALUE CHAIN
ROLE OF THE AIS IN THE VALUE CHAIN

While “adding value” is a commonly used buzzword, in its

genuine sense, it means making the value of the finished
component greater than the sum of its parts.
It may mean:
Making it faster
Making it more reliable
Providing better service or advice
Providing something in limited supply (like O-negative blood or rare
gems)
Providing enhanced features
Customizing it
ROLE OF THE AIS IN THE VALUE CHAIN

Smith Supply Co. For example, the inbound logistics of

Inbound Logistics Pharmaceuticals, Inc., links to the outbound
Operations logistics of its suppliers.
Outbound Logistics
Marketing & Sales
Pharmaceuticals, Inc.
Service
Inbound Logistics

Operations Customer Pharmacy

Inbound Logistics
Outbound Logistics Operations
Outbound Logistics
Marketing & Sales Marketing & Sales
Service
Service
ROLE OF THE AIS IN THE VALUE CHAIN

Smith Supply Co. And the outbound logistics of

Inbound Logistics Pharmaceuticals, Inc., links to the inbound
Operations logistics of its customers.
Outbound Logistics
Marketing & Sales
Pharmaceuticals, Inc.
Service
Inbound Logistics

Operations Customer Pharmacy

Inbound Logistics
Outbound Logistics Operations
Outbound Logistics
Marketing & Sales Marketing & Sales
Service
Service
ROLE OF THE AIS IN THE VALUE CHAIN

Smith Supply Co. The linking of these separate value chains

Inbound Logistics creates a larger system known as a supply
Operations chain.
Outbound Logistics
Marketing & Sales
Pharmaceuticals, Inc.
Service
Inbound Logistics

Operations Customer Pharmacy

Information Inbound Logistics
technology can Outbound Logistics Operations
facilitate synergistic Outbound Logistics
linkages that improve Marketing & Sales Marketing & Sales
the performance of Service
each company’s Service
value chain.
ROLE OF THE AIS IN THE VALUE CHAIN

Smith Supply Co. The linking of these separate value chains

Inbound Logistics creates a larger system known as a supply
Operations chain.
Outbound Logistics
Marketing & Sales
Pharmaceuticals, Inc.
Service
Inbound Logistics

Operations Customer Pharmacy

Information Inbound Logistics
technology can Outbound Logistics Operations
facilitate synergistic Outbound Logistics
linkages that improve Marketing & Sales Marketing & Sales
the performance of Service
each company’s Service
value chain.