AIS-internal control_revenue_expenditure cycles.pptx

Accounting Information System

1. ACQUIRING AIS, AND CONTROLS OF AIS ISSUES Presentation outline: Approaches for acquiring information systems (AIS) The Role of the Accountant in AIS I ssues facing individuals and organizations as a result of AIS Information Systems Control for Reliability 27/10/2024 Dr Fauz M. Khamis 1

2. APPROACHES FOR ACQUIRING INFORMATION SYSTEMS (IS) O rganizations obtain information systems in two ways: T hey develop customized systems from scratch through in-house systems development activities, and T hey purchase preprogrammed commercial systems from software vendors. Larger organizations with unique and frequently changing needs engage in in-house development. Three basic types of commercial software are: turnkey systems, backbone systems, and vendor-supported systems. 27/10/2024 Dr Fauz M. Khamis 2

3. Approaches for acquiring I S…. Turnkey systems Completely finished and tested systems that are ready for implementation. They are general-purpose systems or systems customized to a specific industry Have built-in software options that allow the user to customize input, output, and processing through menu choices Backbone systems The primary processing logic is preprogrammed, and the vendor then designs the user interfaces to suit the client’s unique needs. A backbone system is a compromise between a custom system and a turnkey system. This approach can produce satisfactory results, but customizing the system is costly. Vendor-supported systems Vendor-supported systems are custom (or customized) systems that client organizations purchase commercially rather than develop in-house. The software vendor designs, implements, and maintains the system for its client. This is a popular option with organizations that have complex systems requirements but are not of sufficient magnitude to justify retaining an in-house systems development staff. 27/10/2024 Dr Fauz M. Khamis 3

4. The Role of the Accountant in AIS 27/10/2024 Dr Fauz M. Khamis 4

5. I ssues facing individuals and organizations as a result of AIS. The implementation of accounting information systems (AIS) presents a range of cultural, security, privacy, and ethical issues for both individuals and organizations. 27/10/2024 Dr Fauz M. Khamis 5

6. Cultural Issues Adoption Resistance: Different cultures may have varying levels of comfort with technology, leading to resistance among employees when new systems are implemented. Training and Literacy: Varying levels of technological literacy across cultures can create challenges in training staff effectively, impacting overall system utilization. Workplace Norms: The introduction of AIS may clash with existing workplace norms and practices, requiring a shift in culture that could face pushback 27/10/2024 Dr Fauz M. Khamis 6

7. Security Issues Cybersecurity Threats: AIS are vulnerable to hacking, phishing, and other cyber threats, which can lead to data breaches and financial loss. Access Control: Managing who has access to sensitive financial information is critical; inadequate access controls can expose the organization to insider threats. Data Integrity: Ensuring that the data processed by AIS remains accurate and unaltered is essential, as any discrepancies can have significant consequences. 27/10/2024 Dr Fauz M. Khamis 7

8. Privacy Issues Data Protection Regulations: Organizations must navigate complex legal frameworks regarding data privacy, which can vary significantly by region. Personal Data Handling: The collection and processing of personal data (e.g., employee financial records) raise concerns about consent and the ethical use of such information. Data Retention Policies: Balancing the need for data retention with privacy rights can be challenging, leading to potential conflicts. 27/10/2024 Dr Fauz M. Khamis 8

9. Ethical Issues Transparency and Accountability: There may be ethical dilemmas related to the transparency of financial reporting and the accountability of those who manage the AIS. Misuse of Information: Employees may have access to sensitive information, leading to potential misuse, such as insider trading or fraud. Bias in Data Handling: Ethical concerns can arise if the algorithms used within AIS inadvertently introduce bias, affecting decision-making processes. 27/10/2024 Dr Fauz M. Khamis 9

10. The general model of AIS 27/10/2024 Dr Fauz M. Khamis 10

11. Information Systems Control for Reliability Purpose of Controls : Ensure the integrity, availability, and confidentiality of data. Protect against data loss, corruption, or unauthorized access. Types of Controls : Preventive Controls : Aim to prevent incidents (e.g. Access controls). Detective Controls : Identify and detect incidents (e.g., intrusion detection systems). Corrective Controls : Mitigate damage and restore systems (e.g., backup and recovery processes). 27/10/2024 Dr Fauz M. Khamis 11

12. Information Security Fundamentals Confidentiality : Ensuring that information is accessible only to those authorized to have access. Techniques include encryption and access controls. Integrity : Protecting data from being altered by unauthorized users. Use hashing and checksums to verify data integrity. Availability : Ensuring that authorized users have access to information and resources when needed. Implement redundancy, load balancing, and disaster recovery plans. 27/10/2024 Dr Fauz M. Khamis 12

13. Information Systems Control- Best Practices Regular Audits : Conduct periodic assessments of controls to ensure compliance and effectiveness. User Training : Educate employees about security policies, and safe data handling practices. Patch Management : Keep systems updated with the latest security patches to protect against vulnerabilities. Data Backup : Regularly back up data to prevent loss and facilitate recovery in case of incidents. 27/10/2024 Dr Fauz M. Khamis 13

14. REVENUE AND EXPENDITURE CYCLE Presentation Outline: Revenue cycle: sales and cash collection Expenditure cycle: purchasing ,cash disbursement 27/10/2024 Dr Fauz M. Khamis 14

15. Revenue cycle: sales and cash collection The revenue cycle in an accounting information system involves several key processes, primarily focusing on sales and cash collection. Here, we discuss an overview of revenue cycle components. 27/10/2024 Dr Fauz M. Khamis 15

16. Revenue cycle: Sales process 27/10/2024 Dr Fauz M. Khamis 16

17. Revenue cycle: cash collection process 27/10/2024 Dr Fauz M. Khamis 17

18. Revenue cycle: Integration with Accounting System 27/10/2024 Dr Fauz M. Khamis 18

19. Revenue cycle: Key considerations Efficiency : Streamlining the sales and cash collection processes can reduce costs and improve cash flow. Customer Experience : A smooth order and payment process enhances customer satisfaction and can lead to repeat business. Risk Management : Implement measures to mitigate risks associated with credit sales and collections. 27/10/2024 Dr Fauz M. Khamis 19

20. E xpenditure cycle The expenditure cycle in an accounting information system involves the processes related to purchasing goods and services, as well as managing cash disbursements. Expenditure cycle includes the following key processes: 27/10/2024 Dr Fauz M. Khamis 20

21. Expenditure cycle: Purchasing process 27/10/2024 Dr Fauz M. Khamis 21

22. Expenditure cycle: Cash Disbursement Process 27/10/2024 Dr Fauz M. Khamis 22

23. Expenditure cycle: Integration with Accounting System 27/10/2024 Dr Fauz M. Khamis 23

24. Key Considerations Should consider the following Efficiency : Streamlining purchasing and cash disbursement processes can reduce costs and improve supplier relationships. Risk Management : Establish controls to prevent fraud and unauthorized expenditures, including segregation of duties. Cash Flow Management : Monitor cash outflows to ensure that payments align with cash availability, optimizing working capital. E ffective management of the expenditure cycle can enhance operational efficiency, improve supplier relationships, and maintain better control over their financial resources. 27/10/2024 Dr Fauz M. Khamis 24

25. THANKS FOR LISTENING 27/10/2024 Dr Fauz M. Khamis 25