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Chapter 5 AIS and Business Processes: Part II. Introduction The Resource Management Process The Production Process The Financing Process Business Processes In Special Industries Monitoring Business Processes. Introduction. Many organizations need typical AIS requirements and

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chapter 5 ais and business processes part ii
Chapter 5AIS and Business Processes: Part II
  • Introduction
  • The Resource Management Process
  • The Production Process
  • The Financing Process
  • Business Processes In Special Industries
  • Monitoring Business Processes
introduction
Introduction
  • Many organizations need
    • typical AIS requirements and
    • some specialized information also
  • Focus of AISs
    • formerly transaction processing
    • presently capturing data around business processes
  • Two important transaction processing cycles are
    • the production and
    • financing cycles.
slide4

The Resource

Management Process

  • Organizations use resources
    • to produce goods,
    • to provide services, and
    • to generate revenues.
  • An AIS must pay attention to
    • the inventory,
    • human resources, and
    • fixed assets.
human resource management
Human Resource Management

An organization’s human resource management activity includes

  • the personnel function
    • hires employees,
    • trains employees, and
    • maintains personnel records
    • maintains payroll records for employees
human resource management6
Human Resource Management
  • the payroll function
    • pays employees for their work
    • maintains records of employees’ paychecks,
    • complies with employee tax,
    • reports on various deduction categories, and
    • interacting with the personnel function
human resource management objectives
Human ResourceManagement Objectives
  • Hiring, training, and employing workers
  • Maintaining employee earnings records
  • Complying with regulatory reporting requirements
  • Reporting on payroll deductions
  • Making timely and accurate paymentsto employees
  • Providing an interface for personnel and payroll activities
human resource management inputs
Human ResourceManagement Inputs
  • Personnel Action Forms
    • document the hiring of new employees or changes in employee status
  • Time Sheets
    • used to track hours worked
  • Payroll Deduction Authorizations
    • authorize the payroll system to deduct certain amounts
  • Tax Withholding Forms
    • authorize payroll to reduce gross pay by the appropriate withholding tax.
human resource management outputs
Human ResourceManagement Outputs
  • Financial Statement Information
  • Employee Listings
    • shows current employees and may contain address andother demographic information
  • Paychecks
    • the final documents in the process; subject to strict internal controls
  • Check Registers
    • used to make journal entries for salary and payroll tax expenses
human resource management outputs10
Human ResourceManagement Outputs
  • Deduction Reports
    • contain summaries of deductions for employees as a group
  • Tax (Regulatory) Reports
    • reports the government requires for income tax, social security tax, and unemployment tax information
  • Payroll Summaries
    • used by management in analyzing expenses
human resource management function
HUMAN RESOURCE MANAGEMENT FUNCTION

All of the following activities are common to the human resource management function except:

  • Hiring, training and employing workers
  • Reporting on payroll deductions
  • Maintaining employee earnings records
  • Certified financial planning for employees
fixed asset management
Fixed Asset Management
  • Fixed assets
    • assets with usable lives of more than one year.
  • A fixed-asset management systemhas to manage the assets in terms of their
    • purchase,
    • maintenance,
    • valuation, and
    • disposal.
fixed asset management objectives
Fixed Asset Management Objectives
  • Trackingthe purchase, maintenance, valuation, and disposal of the fixed assets
  • Calculatingthe depreciation for a company’sfinancial statements
  • Tracking repair costs, distinguishing between revenue and capital expenditures
  • Calculating the gain or loss upon disposal of individual fixed assets.
fixed asset management inputs
Fixed Asset Management Inputs
  • Purchase Requisition
    • requiring approval by one or more managers
  • Receiving Report
    • upon receipt of a fixed asset
  • Supplier Invoice
    • when it ships the asset
fixed asset management inputs16
Fixed Asset Management Inputs
  • Construction Work Orders
    • if the company builds the asset
  • Repairs and Maintenance Reports
    • update of expense accounts for repairs and maintenance
  • Fixed Asset Change Forms
    • basis for transferring fixed assets from one location to another, retiring, selling or trading-in fixed assets
fixed asset management outputs
Fixed Asset Management Outputs
  • Financial Statement Information
    • gives the details of the valuation of the fixed assets
  • Fixed Asset Register
    • lists identification numbers and location foreach fixed asset
  • Depreciation Register
    • shows depreciation expense andaccumulated depreciation
fixed asset management outputs18
Fixed Asset Management Outputs
  • Repair and Maintenance Reports
    • show the repair and maintenance expenses and history
  • Retired Assets Report
    • shows all assets disposed ofduring the accounting period
fixed asset management19
FIXED ASSET MANAGEMENT

What is the objective of the fixed asset management function?

  • To track purchases of fixed assets
  • To manage the purchase, management valuation, and disposal of an organization’s fixed assets
  • To record maintenance and depreciation of fixed assets
  • To keep a current list of approved vendors
the production process
The Production Process
  • The production process
    • begins with a request for raw material and
    • ends with the transfer of finished goods to warehouses
  • This cycle,associated with producing goods
    • concerns the capture of data and
    • the reporting of information
production process objectives
Production Process - Objectives
  • Trackpurchases and sales of inventories
  • Monitorand controlmanufacturing costs
  • Control and coordinatethe production process
  • Controlinventory
  • Provideinput for budgets
cost accounting subsystem
Cost Accounting Subsystem

The cost accounting subsystem

  • is an important part of the production process
  • provides important control information for the budget
  • can vary depending upon the type of business
  • manufacturing can have a
    • job costing system
    • process costing system
    • activity-based costing system
just in time jit inventory systems
Just-in-Time (JIT)Inventory Systems

A Just-in-Time (JIT) Inventory System

  • is a make-to-order inventory system
  • ensures that the production cycle processes inventory transactions appropriately
  • attempts to minimize inventory carrying costs.
just in time jit inventory systems25
Just-in-Time (JIT)Inventory Systems

JIT depends upon AIS:

  • to help minimize inventory costs
  • to ensure that the manufacturing processes have the raw materials to keep a continuous work flow.
  • or, to be proactive and reengineer the process.
production process inputs
Production Process - Inputs
  • Material Requisition Form
    • directs stores to issue materials or parts todesignated work centers or authorized persons
  • Bill of Materials
    • shows the types and quantities of parts needed tomake a single unit of product
  • Master Production Schedule
    • shows the quantities of goods needed to meet sales demands
production process inputs27
Production Process - Inputs
  • Production order
    • shows prices charged for raw materials.
    • incorporates data from sales orders or forecasts,
    • operates lists and bills of materials in order to authorize the production of an order or batch
  • Job Time Card
    • shows the distribution of labor costs to specific jobs or production orders
production processes technological assisstance
PRODUCTION PROCESSES—TECHNOLOGICAL ASSISSTANCE
  • ERP
  • Barcode scanners
  • Radio frequency technology (RFID)
  • Advanced electronic tags
production process outputs
Production Process - Outputs
  • Financial Statement Information
    • gives details of the costs and pricing
  • Materials Price List
    • shows prices charged for raw materials
  • Periodic Usage Report
    • provides managerial information on use of raw materials
  • Inventory Reconciliation Report
    • reconciles physical inventory with perpetual records
production process outputs30
Production Process - Outputs
  • Inventory Status Report
    • allows purchasing and production managersto monitor inventory levels
  • Production Cost Report
    • details the actual costs for each production operation, each cost element, and/or each separate job
  • Manufacturing Status Report
    • provides managers with information about the statusof various jobs
the financing process
The Financing Process
  • The financing process
    • is where a company acquires and usesfinancial resources
      • cash
      • other liquid assets
      • investments
  • The financing process
    • includes the activities of;
      • borrowing cash
      • selling ownership shares.
financing process objectives
Financing Process - Objectives
  • Effective cash management
    • making use of lockbox systems and electronic funds transfer (EFT).
  • Minimizing cost of capital
    • reducing the cost of obtainingfinancial resources
financing process objectives34
Financing Process - Objectives
  • Maximizing return on investments
    • using financial planning models
  • Project cash flows
    • Consists of a cash receipts forecast and a

cash disbursements forecast.

financing process inputs
Financing Process - Inputs
  • Remittance Advices
    • accompanies a customer’s payment
  • Deposit Slips
    • banks provide to document account deposits
  • Checks
    • companies receive and issue checks
financing process inputs36
Financing Process - Inputs
  • Bank Statements
    • used to reconcile the cash balancein the company’s ledger against thecash balance in the bank account
  • Stock Market Data
  • Interest Data
  • Financial Institution Profiles
financing process outputs
Financing Process - Outputs
  • Financial Statement Information
  • Cash Budget
  • Investment Reports
  • Debt and Interest Reports
  • Financial Ratios
  • Financial Planning Model Reports
business processes in special industries
Business Processes inSpecial Industries
  • Vertical market
    • refers to markets or industries
      • services they provide or
      • the goods they produce.
  • These organizations
    • may require more information than is typically output from a traditional AIS.
  • Examples of specialized information needs include
    • time and billing systems,
    • activity based costing systems, and
    • point-of-sale systems.
industries with specialized aiss
Industries with Specialized AISs
  • Professional service organizations have several unique operating characteristics:
    • No merchandise inventory
    • Professional employees
    • Difficulty in measuring output
    • Small size
  • Not-for-profit
    • Professional employees and volunteers
    • Usually not affected by the market
    • Sometimes have a political environment
industries with specialized aiss40
INDUSTRIES WITH SPECIALIZED AISs
  • Health care
    • Share many of the professional and not-for-profit organizations’ special AIS needs
    • Special accounting needs because of third-party billing (private and government)
business process reengineering
Business Process Reengineering
  • AISs
    • were concerned with accounting transactions earlier
    • are more concerned with business events now
  • Business events
    • include important activities that affect the business
    • are not captured by the financial accounting system
  • Business process reengineering (BPR)
    • concerns redesigning business processes from scratch
business process reengineering42
Business Process Reengineering

Business process reengineering

  • Is an incremental approach to redesigning business processes.
  • Involves redesigning business processes from scratch.
  • Is rarely successful in cutting an organization’s costs.
  • Is usually welcomed by an organization’s employees.
copyright
Copyright

Copyright 2008 John Wiley & Sons, Inc. All rights reserved.

Reproduction or translation of this work beyond that permitted in

Section 117 of the 1976 United States Copyright Act without the

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Permissions Department, John Wiley & Sons, Inc. The purchasermay make backup copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.