Accounting Information Systems Henri Teittinen, Ph.D Accounting

Transcription

1 Accounting Information Systems 2017 Henri Teittinen, Ph.D Accounting

2 Why to study AIS? Accounting itself is an information system. How accounting systems work? How to collect data on organization s activities and transactions? How to process the data into information (to the useful form for decision makers)? How to ensure the availability, reliability, and accuracy of that information?

3 Assistant Controller, Cargotec We expect you to have a minimum of 2 years relevant experience in financial accounting and consolidation, with a preference for global stock-listed company. Basic knowledge and understanding of the consolidation process and IFRS standards are required in this position. To succeed in this position, you should have very good command of MS Excel and other MS Office tools. Previous experience on Hyperion (HFM) reporting tools would be regarded as an advantage. You also need to have good verbal and written communication skills in Finnish and English. You should be strong team player, be development-oriented, and have an analytical mindset and capability to work well under pressure within tight reporting deadlines.

4 Business Controller, Fortum As a business controller your main areas of responsibility: Business control for some Finnish Distribution functions with your own area of responsibility. You would be a member of those management teams also Support the transition from Hyperion Enterprise to Oracle Hyperion Financial Management (HFM As Business Controller you are supporting our managers in all finance related tasks, including: Management reporting (closing, forecasting and business planning) Project and project portfolio follow-up and steering Business measurements (KPIs/PIs) development and follow-up Ad hoc analysis and reporting We expect You hold a master degree majoring in accounting, finance or industrial management and have at least four years of relevant experience working as Business Controller. You have good experience about current HFM or earlier Hyperion Enterprise. It would be a great advantage is you also have experience of IBM Cognos reporting family..

5 SAP konsultti, IBM Job description SAP Finance and Controlling Consultants will be responsible for successful delivery of Finance and Controlling solutions leveraging deep SAP FI, CO and/or PS knowledge. The consultants will leverage their subject matter expertise towards solution design, build, customization, test and deployment during various client engagements. The consultants will be involved in process design and process improvement activities. The consultants will conduct workshops, lead an international team of consultants and subcontractors, coordinate with other teams for successful delivery of integrated solutions as well as develop functional specifications. The consultants will leverage project management skills to develop detailed task plan towards timely completion of project milestones. The consultants will manage client relationships and drive consensus on complex business solutions. The candidate should have demonstrated the capability to analyze business processes and both functional & technical requirements in his/her area. The candidate should demonstrate deep understanding of SAP package solution implementation tools and methodologies (such as ASAP and Solution Manager). In addition to strong knowledge of standard SAP FICO functionality, the consultants must possess subject matter expertise in at least one of the following specific areas: - New General Ledger (New GL) - Product Costing (CO-PC) - Profit Analysis (CO-PA) - Project System (PS) Preferred skills: Familiarity with other finance and/or reporting tools such as - Cognos Solutions - SAP BI Solutions - Oracle Financial Management Solutions.

6 What is AIS? What does AIS do? Why to study AIS?

7 What does accounting information systems do? Collects and stores data about activities and transactions. Buying and paying Raw materials and labor Human resources and payroll Selling goods or services and collecting payment of sales Financing necessary funds for operations Processes data for decision making Provides adequate controls

8 Example on transaction processes

9 Definitions Kay & Ovlia (2012), Accounting Information Systems, Crossroads of Accounting & IT, Prentice Hall, USA. Three main functions of accounting systems are: 1) store accounting data; 2) analyze accounting data to use in decision making; and 3) safeguard the accounting data. Decision models: As an accounting professional you may be responsible for collecting, organizing, and presenting information to directors and executives so they can make decisions. Basically three types of business decisions: 1) Routine operational decisions (structured decisions); 2) Tactical decisions (semi-structured decisions); and 3) Strategic decisions (unstructured decisions). Decisions in seven steps: 1) define the opportunity or issue; 2) identify options to address the opportunity or issue; 3) analyze quantitative (financial) factors; 4) analyze qualitative (nonfinancial) factors; 5) make recommendations and/or decisions; 6) implement decision; and 7) evaluate performance.

10 Definitions Bodnar & Hopwood (2012), Accounting Information Systems, Pearson Education, USA. Accounting Information System is a collection of resources, such as people and equipment, designed to transform financial and other data into information. The information is communicated to a wide variety of decision makers. An organization is a collection of decision-making units that exist to pursue objectives. As a system, every organization accepts inputs and transforms them into outputs that take the form of products and services.

11 Information in Business Processes Business Process Decision Information needs Acquire capital How much? Cash flow protections Acquire building and equipments Acquire inventory Find investors or borrow funds. If borrowing, obtaining best terms Size of building, Amount of equipment Rent or buy What models to carry, how much to purchase How to manage inventory, which vendors Pro forma financial statements Loan amortization schedule Capacity needs Building and equipment prices Inventory status reports Vendor performance

12 Information in Business Processes Business Process Decision Information needs Selling products and services Collect payments Pay vendors Markup percentage If offering credit, what terms Whom to pay, when to pay, how much to pay? Pro forma statements Customer account status Vendor invoices, Accounts payable, payment trems.

13 Chacteristics of useful information Relevant Reduces uncertainty, improves decision making, confirms or correct prior expectations Reliable Free from errors or bias, accurately presents, activities and transactions Complete Does not omit important aspects of activities it measures. Timely Provided in time for decision making Understandable Presented in useful form Verifiable Two independent produce the same information Accessible Accessible to users they need it and in format they can use.

14 What accounting information system (AIS) consists of: People (who use the system) Stakeholders, shareholders, internal, external Procedures (collecting and processing data) Inter-organizational, intra-organizational, strategic, operational, Data Software (for data processing) Information technology (computer, devices, network)

15 Fundamentals for AIS Efficient and effective transaction data processing Capture transaction data (source documents). Record transaction data (in journals, chronologically). Post data (from journals to ledgers, accounts). Providing useful information for decision making Financial statements and reports Managerial reports Adequate controls: Ensuring Information reliability. Business processes align with objectives. Safeguard organizational assets.

16 AIS in planning and controlling Planning: Financial forecasting Budgeting Capital budgeting Controlling: Budgetary control Auditing Financial analysis Profitability analysis Cost controlling Product pricing etc.

17 AIS and Management Control How AIS can support management control? How we understand accounting information systems? How we understand management control?

18 Management control Planning what the organization should do. Coordinating the activities of several parts of the organization. Communicating information. Evaluating information. Deciding what, if any, action should be taken. Influencing people to change their behavior. 18

19 Management control - definitions The process by which managers ensure that resources are obtained and used effectively and efficiently in the accomplishment of the organization s objectives. Anthony (1965) Management control is the process of guiding organizations into viable patterns of activity in a changing environment. (Berry et al. 2005) 19

20 Management control - definitions Formal and informal controls Financial and non-financial controls Integration between the needs of corporate managers to monitor the financial consequences of decentralized activities to keep in touch with the emerging longer term strategic issues that are related to managing successful change Organising Planning Evaluating Rewarding 20

21 Management control - definitions Decentralisation Structuring of activities diagnostic control systems monitor and reward achievement of specified goals through the review of critical performance variables or key success factors interactive control systems opportunity-seeking and learning 21

22 Management control - definitions Personnel control mechanisms that influence organizational actors by aligning their personal objectives with those of the organization Action control mechanisms that influence organizational actors by prescribing the actions they should take Results control mechanisms that influence organizational actors by measuring the result of their actions Merchant (1985) 22

23 Management control - definitions Management control as practice Bundle of practices and material arrangements. Situated in offices and workshops, using configurations of machines and computers, organizational members negotiate strategies, budgets, and performance targets, they discuss ways of realising them, alert others to contingencies, give orders, follow, dispute, or circumvent instructions, generate reports and make comparisons, give and receive advice, find excuses, take corrective action, etc. Rules, procedures, standards A management control system is a bundle management control practices plus material and technical arrangements Ahrens T. & Chapman C. (2007) 23

24 Management control Management control is the process by which managers influence other members of the organization to implement the organization s strategies. Management control systems help managers move an organization toward its strategic objectives. Thus management control focuses primarily on strategy execution. Anthony & Govindarajan (2001) 24

25 Management control Activity Nature of Goals Strategy formulation Goals, strategies, and policies Management control Implementation of strategies Task control Efficient and effective performance of individual tasks 25

26 Management control process Management control process is the process by which managers at all levels ensure that the people they supervise implement their intended strategies. Standard is not preset. Management decides what the organization should be doing. The control process includes planning. Management control is not automatic. Some detectors may be mechanical but often managers detect important information with own eyes, ears, and other senses. Organization s behavior involve human beings, thus managers must interact with other person to effect change. Management control requires coordination among individuals. Management control must ensure that each part works in harmony with the others. 26

27 Strategy formulation is the least systematic of the three: task control is the most systematic and management control lies there between. Strategy formulation focuses on the long run, task control focuses short run activities and management control is there between. Strategy formulation uses rough approximations of the future, task control uses current accurate data and management control is in between. Each activity involves planning and control: but the emphasis varies with the type of activity. The planning process is much more important in strategy formulation, the control process is much more important in task control and in management control those have approximately equal importance. 27

28 Management control (system) and Tools for Implementing strategy Implementation Mechanisms Management controls Strategy Organization structure Human resource management Performance Culture 28

29 Management control areas Behavior in organizations Responsibility centers Profit centers Transfer pricing Measuring and controlling assets employed Strategic planning Budget preparation Performance measurement Management compensation Controls for differentiated strategies 29

30 Management control frameworks Malmi & Brown 2008

31 Management control frameworks Tessier & Otley 2012

32 Decision making in organizations Burns, Quinn, Warren & Oliveira (2013), Management Accounting, McGraw-Hill Education, UK Typical decisions made by managers and accountants within an organization: 1) short-term decision making; 2) pricing decisions; 3) product-mix decisions; 4) equipment replacement decisions; 5) outsourcing decisions; 6) factors to be considered in discontinuity decisions; 7) sell or process further decisions.