Accounting Information Systems and the Accountant
The acronym AIS stands for “Accounting Information Standards.”
Accounting information systems must be computerized to be effective.
It is best to view an AIS as an accounting system that must be computerized.
AISs often create information that is useful to non-accountants.
In order to be useful, raw accounting data must always be processed by a
The path that data follow in an AIS, for example from manual source document to
completed output report, is called an
The starting point for an audit trail of a payroll system might be an employee time
The starting point for an audit trail of a production department might be the
purchase of raw materials.
GIGO is an acronym that stands for “great investments are great opportunities.”
refers to providing too much “information” to
management, often resulting in confusion or ignoring it.
An advantage of computerized AISs is that they do
need to be programmed
to catch simple input errors such as entering “4.0” instead of “40.0” for hours
worked in a payroll application.
Computers tend to make audit trails easier to follow because everything is
The acronym ERP stands for “enterprise reporting system.”
The authors consider accountants to be “knowledge workers.”
AISs are only concerned with financial information.
One reason why AISs fail is because they require their users to conform to them,
instead of the other way around.
One reason why AISs fail is because they do
adequately perform the
processing tasks required of them.
Accounting systems are useful for performing accounting tasks, but
used for such security purposes as countering terrorism.
An example of a corporate scandal mentioned in this chapter was the Enron
The Sarbanes-Oxley Act includes a provision that prohibits corporations from
making personal loans to executives.
Predictive analytics use large databases to help organizations improve
The Sarbanes-Oxley Act prohibits companies from using the same auditing firms
for performing both auditing and management consulting services.
The term “wi-fi” stands for “wild financing”—an act expressly forbidden by the
Sarbanes-Oxley Act of 2002.
A major output of financial accounting is the preparation of financial statements
such as an income statement.
The series of steps leading from data recorded in transaction records to the
information reported on financial statements is called the
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