Accounting Information Systems: Theoretical foundation and overview
Drivers for business & I.S change
o Force behind globalisation is technology. o Changed the way we communicate, transport goods and services, and travel. o Enabled organisations to interact with partners, suppliers and customers in virtual environment.
Deregulation o Removal of constraints on competitive market forces through free trade agreements. E.g. Australia-China, Australia-New Zealand, Australia-USA. o Controls over commercial and financial systems have relaxed and business competition has increased.
Advances in technology o Metcalfe’s Law – Description of the rapid growth of the World Wide Web. Also explains the rising wave of IT that we are riding through the 21st Century o Moore’s Law – Rate at which computer power is accelerating. o Companies need to use information systems to be more efficient and reduce cost of transactions with customers, such as Enterprise Resource Planning (ERP) system which integrate all aspects of an organisation’s activities into one system.
Outsourcing & Downsizing o Companies are outsourcing and downsizing programming functions and activity to cheaper labour countries, such as India.
o A set of two or more interrelated components interacting to achieve a goal. E.g. A business has multiple departments.
Goal Conflict o Occurs when components act in their own interest without regard for the overall goal.
Goal Congruence o Occurs when components acting in their own interest contribute toward the overall goal.
Data v’s information Value of information
As long as the benefits outweigh the costs
Characteristics of useful information
Relevance o Reduces uncertainty, improves decision-making
o Free from bias or error
o The transactions, assets, liabilities and equity generated in the system exist.
o Only the transactions and reports that are