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ACCT341, Chapter 8 AIS and Business Processes: Part II

ACCT341, Chapter 8 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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ACCT341, Chapter 8 AIS and Business Processes: Part II

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  1. ACCT341, Chapter 8AIS and Business Processes: Part II • Introduction • The Resource Management Process • The Production Process • The Financing Process • Business Processes In Special Industries • Monitoring Business Processes

  2. 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.

  3. 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.

  4. 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

  5. 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

  6. 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

  7. 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 (W-4).

  8. 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

  9. 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

  10. 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.

  11. Fixed Asset Management Function.

  12. 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.

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. The Production Process

  19. Production Process - Objectives • Trackpurchases and sales of inventories • Monitorand controlmanufacturing costs • Control and coordinatethe production process • Controlinventory • Provideinput for budgets

  20. 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

  21. 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.

  22. Just-in-Time (JIT)Inventory Systems JIT depends upon AIS: • to help minimizeinventory 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.

  23. Lean Production/ Manufacturing • Concept • Eliminate waste throughout the organization • Focus on reduction of non-value-added waste • Lean Accounting • Necessary in order to have lean accounting • Data collection • Evaluate performance measures

  24. Lean Manufacturing Waste

  25. 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

  26. 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

  27. PRODUCTION PROCESSES—TECHNOLOGICAL ASSISSTANCE • ERP • Barcode scanners • Radio frequency technology (RFID) • Advanced electronic tags

  28. 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

  29. 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

  30. 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.

  31. The Financing Process

  32. 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

  33. 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.

  34. Financing Process - Inputs • Remittance Advices • accompanies a customer’s payment • Deposit Slips • banks provide to document account deposits • Checks • companies receive and issue checks

  35. 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

  36. Financing Process - Outputs • Financial Statement Information • Cash Budget • Investment Reports • Debt and Interest Reports • Financial Ratios • Financial Planning Model Reports

  37. 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.

  38. 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

  39. Professional Service Organization Bill

  40. 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)

  41. Mini-based Hospital System

  42. 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

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