ACCOUNTING 335: ACCOUNTING INFORMATION SYSTEMS

Portland State University

Spring Quarter 1995

Dr. Darrell Brown

Phone: (W) 725-3096

E-Mail: darrellb@sbamail.sba.pdx.edu

Required Texts:

(WD) Systems Understanding Aid for Auditing, 3rd Edition, Arens and Ward.

(CR) Accounting Information Systems, 6th Edition, Cushing and Romney.

Objectives

To provide the student with an understanding of :

  1. how accounting information systems function in today's business environment, with insights into how they might function in the future.
  2. some basic fundamentals relating to: accounting cycles; tools for understanding, explaining, and designing accounting systems; internal control concepts in both manual and computerized environments; and accounting system database concepts.

Level of understanding

Early in the course, knowledge (memorization) and comprehension (ability to explain the facts and make simple deductions) will be emphasized. Building upon this foundation, students will be expected to apply what they have learned in new situations. By the end of the course, students should be able to analyze a situation (recognize relationships, patterns) and apply general techniques). Note that these levels are cumulative. To perform at a given level implies that you have understood the material at all lower levels.

Attendance

As you prepare to enter the accounting (or any other) profession, it is necessary to develop a sense of professional responsibility. Faithful attendance, proper homework preparation, and active participation in the classroom reflect your acceptance of the responsibility. If you are absent from class it is your responsibility to determine the material and assignments missed. Note that a portion of your grade is based on class participation and performance.

Late Work

Written assignments and projects are due at the start of class on the days indicated. Late assignments (ANYTIME AFTER THE START OF CLASS) will be penalized 15% per day and papers will not be accepted after 3 days. A day is considered to run from the start of class to that time the next day. Assignments sent by e-mail or fax are your responsibility. If this method of delivery is acceptable for a particular assignment, the time requirements are no different from the manual delivery system.

Make-up exams will not be given. In the case of a verifiable emergency, you may do a special project, at the instructor's option, to make up the missing exam grade. It is in your best interest to be present for all exams.

This is not a computer class. However, you should be learning to use the computer as a tool. We will spend part of the course learning about computerized systems and their vagaries. Most of the class assignments will require using computers. You need to be aware of and cope with the realities of working with computers. Sometimes the system goes down, sometimes the computers are busy, almost every computer assignment will take longer than you anticipate. You need to take appropriate measures to overcome any possible problems. The computer is not an acceptable excuse for missing or late work in this class. This means you must plan ahead, not wait until the last minute to complete assignments.

Participation

A portion of your class grade will be based on participation. Attendance is a necessary but not sufficient condition for participation. Participation includes attending class (on time), being prepared (read assignments prior to class) and being involved (ask and answer questions, contribute to the learning process). Additionally, your participation as a member of a group doing a large project (described below) will be assessed by the other members of the group. This will be figured in (subjectively) to arrive at a participation score.

You will often be asked to do small group projects in class. These may require completing something to hand in or to present to the class. I expect you to be willing to do these and to keep on task in the performance of these.

Assignments

I expect and encourage you to work together. Most of your future work will involve cooperative and collaborative efforts, and an important part of your education is to learn to work easily and productively with others. However, it is also important for you to understand that all assignments to be handed in are assumed to be your own original work. Therefore, my suggestion is that you work together in the conceptual and planning phases of your assignments, and then separate and do the actual product (the work to be turned in) on your own.

Unless specifically stated, the assignments are to be done using a computer.

Unless specifically stated, you must make a copy of your assignment prior to coming to class. I will sometimes go over the homework in class and I want to be able to call on you, so you must have a copy. I will not always collect homework, however, I expect you to always be prepared to turn in your homework.

Unless specifically stated, the assignments are individual efforts and will be graded accordingly. If two or more students turn in the same work (even if it was printed separately), the work will be graded once and that grade will be divided among those submitting the work.

Grading

Your course grade will be based on the following weighted activities:

Homework 10%

Waren Distributing Packet 15%

WD Spreadsheet 5%

Midterm Examination 15%

Analysis and Design Quiz 5%

Final 20%

AIS Analysis Project 20%

Class Participation 10%

Total 100%

Final letter grade distribution is at the discretion of the instructor.

Withdrawls must be done on or before the regular deadline. I will not sign withdrawl petitions for anyone after that date, except in the case of extenuating circumstances, and only if you are carrying a passing grade at that time.

Credits

This is a four-credit course (3+1), with no formal lab times. However, the in-class hours for this class are rather fewer than for traditional four-credit courses. That means that your out-of-class hours are expected to be greater than for most courses. The Waren Distributing (WD) assignment will take 20+ hours for the vast majority of you. The various homeworks for the class will take considerable time to do well. If requested, I will schedule some times other than my normal office hours when I will be available to help with problems, particularly with homework problems. These hours can be scheduled in a computer lab, if that would be appropriate.

Research

As indicated above, I have regularly scheduled office hours and will schedule some times for assisting with computer problems, and potentially other problems as they occur during the quarter. In addition, I am willing and eager to schedule appointments for meeting with you at other times as necessary. However, a part of my job as a faculty member is to perform research. Therefore, I try to keep my Mondays and Fridays free for my research. Please try to avoid the need to see me during those times, and schedule appointments if you do need to see me then. Other hours I will generally be willing to meet with you.

ACCOUNTING INFORMATION SYSTEM ANALYSIS PROJECT

This project requires you to go into a business and analyze a portion of its accounting system. This project will provide you with an opportunity to use some of the tools and knowledge that this course covers. You will not be a consultant, but merely an observer of the business, with a requirement that you relay your observations and draw some conclusions and inferences from the observations.

To complete this project you must:

  1. Form groups of four ( to be done by the end of class on April 3rd). You must hand in a list of your group at the end of class.
  2. Contact a business and get its permission to observe and report on one component of the accounting information system in the business. The most likely candidates for business are current or former employers, family or neighborhood businesses, etc. You must demonstrate that you have received permission by obtaining a letter, on the business's letterhead, indicating that the business will allow you to observe the desired component. You will be allowed to provide your final report to the business, but are not required to. It is imperative that you not represent yourselves as consultants, but as students.
  3. Prepare a simple one or two paragraph statement indicating the company you will be working with, the system that you will be studying (i.e. payroll, fixed asset acquisitions, inventory, etc.), and how you will study the system. You must attach the letter from the business to this proposal. This is due April 12th.
  4. Study the information system, using the various tools that you will be learning about in this course.
  5. Prepare and submit a report by May 31st, at the beginning of class.

Report requirements for this project include:

(These items need not be presented in the following order, nor in the following components, but they should all be presented somehow in the project report.)

  1. A narrative overview of the accounting information system, describing the component that you studied, and how it interfaced with the remainder of the system, if appropriate. Some background information such as organizational purpose, structure, employee numbers and hierarchy are often helpful in understanding the system.
  2. Description of the objectives of the system and how they fit with the overall purpose of the organization. Typical transactions, how they are handled from an accounting viewpoint. Major functions of the system.
  3. Description of the internal control environment in which the system operates.
  4. Data flow diagrams, document and/or systems flowcharts, data dictionary (if no database at the business, prepare a data dictionary that would be appropriate for the organization), sufficient to provide a reasonably knowledgeable reader with a thorough understanding of the system and its operation.
  5. Internal control procedures that are in place in the studied components of the accounting system, how they provide controls, the control objectives that they address.
  6. An analysis of the internal controls (this is your assessment of the controls in place, including recommendations and improvements, not only what you observe from the business) and how the current system either meets or fails to meet the controls you feel are necessary..
  7. Summary of the accounting information system component that you observed, with some conclusions about its efficacy and efficiency. Include possible and pending changes to the system and why they are (or are not) appropriate.

Waren Distributing Assignment

Neatly prepare the assignment - USING PENCIL. All work should be your own, but you may certainly discuss the project with others.

OBJECTIVE:

To help you learn about basic documents, accounting records, and internal controls. The assignment provides an opportunity to observe accounting cycles in action. The knowledge and understanding of the manual system will serve as a foundation for the topics to be discussed in the remainder of the course, and in future courses, especially auditing.

REQUIRED:

1. Complete all requirements for 1 and 2 under Part VI. Requirements on page 11 of the instruction booklet.

2. Complete all requirements for 1, 2, 3, and 4 under Part IV. Waren's Year-end Procedures. However, Instead of using the worksheet provided for you in the packet, you must create a worksheet, with all the appropriate columns, using a spreadsheet. The worksheet must foot and crossfoot accurately, so that a change in an account beginning balance or in an adjusting entry will carry through the worksheet correctly. The spreadsheet you use must create a datafile that will be read by Excel 5.0.

I will enter a number on the balance sheet and income statement, as an adjustment to cash and rent expense. Your spreadsheet must accomodate that adjustment in the formulas, including the formula for income taxes.

SUBMIT:

On April 12, you must turn in a copy of four journal pages. These pages must have all transactions entered, be footed and balanced. These will be graded, with the grade going toward your homework, not your WD project.

Turn in all the completed documents, journals, ledgers, computer-generated worksheet and financial statements, and a computer disk with ONLY the worksheet file (labeled WORKSHET) in the envelope. The completed package, with financial statements, is due at the beginning of class on April 19th.

IMPORTANT POINTS:

1. File documents after the file index tab cards. DO NOT STAPLE THE FILE FOLDERS TOGETHER.

2. Do not worry about the order of the documents within the appropriate file.

3. Staple together documents relating to specific transactions. For example, for a sale, you may end up stapling the Bill of Lading, the Customer Order, and the Sales Invoice.

4. Make sure all general journal entries are correct. Look back to your accounting texts or the reference book with your packet if you are having trouble.

5. Make sure you carefully follow the flowcharts and put proper signatures/initials on the documents. If there is no designated space for the signatures/initials, just be consistent and visible.

6. Make sure all documents are completely filled out.

7. The Mailed to Outsiders file contains all the documents that are not in the possession of the company.

8. Write checks only when explicitly directed to do so.

9. Some check figures for WD:

Cash 60,246.89

Purchases Journal (debit to acct 501) 49,009.00

Net Income 37,589.62

Cash Dis. Jour. (credit to acct 101) 55,784.61

TENTATIVE COURSE OUTLINE: This outline is subject to change in class, however, changes will be kept to a moderate level. Absence from class is not an acceptable reason for being unaware of a syllabus change or an assignment. It is the student's responsibility to determine the material missed.



 DATE     TOPIC                          READING                  DUE             



Mar 29   Introduction, Definition of                             In class         

         AIS; Introduction of AIM;                               assignment       

         Information Concepts; Review                                             

         of TPSs. Brief review of some                                            

         ISQA 335 material, from an                                               

         accounting context.  Intro.                                              

         to DFDs and Flowcharts.                                                  



Apr 5    System development and         CR 1,2, and 3            AISP: List of    

         documentation - Data Flow                               members in your  

         Diagrams, Document and System                           group            

         Flowcharts.  Tools for future                                            

         use in understanding and                                Problem 3.5,     

         explaining systems.                                     DFD for Case     

3.2              

                 



12       Internal control concepts and  CR 12                    Problem 3-11,    

         their general application to                            part b; Problem  

         any accounting information                              12-4             

         system.                                                                  

                                                                 Copy of P, S,    

                                                                 CR, and CD       

                                                                 Journal pages    

                                                                                  

                                                                 AISP: Statement  

                                                                 of the work you  

                                                                 will do, with    

                                                                 letter from      

                                                                 your company     



19       Cost benefit concepts for      CR 13                    Problem 12-13;   

         internal controls.  Internal                            Question 13-6;   

         control as it relates to                                Problem 13-9     

         computer based accounting                               Completed WD     

         information systems.                                                     





26       Test 1                                                  AISP: Role of    

                                                                 each member,     

                                                                 signed by all.   



May 3    System Development Processes.  CR 8, CR 11, 490-510,    Question 8-6;    

         Brief review of ISQA 335                                Problem 8-11     

         material relating to                                                     

         traditional methodology for                                              

         developing new information                                               

         systems, then an emphasis on                                             

         accounting systems and                                                   

         accountants roles.                                      Question 11-8;   

         Other Development Issues.                               Problem 11-7     

         What is the accountants role                                             

         in developing information                                                

         systems? What alternative                                                

         methods are available for                                                

         developing systems?                                                      

         Prototyping, Outsourcing,                                                

         BPR.                                                                     



10       Some specific development      CR 9, 386-408; CR 10,    AISP: Data flow  

         problems and how accountants   429-440                  diagram for AIS  

         participate in solving the                              project due      

         problems.  System analysis                                               

         and physical design of output                                            

         and input.                                                               



17       Data base systems in           CR 7, Library readings   Normalization    

         accounting.  Storage of                                 problem-to be    

         accounting information for     Analysis and Design      provided         

         future use.  Past, present,    Quiz                                      

         and future of holding data                                               

         for information users.                                                   



Normalization of data (some                                              

basics of how to minimize                                                

data storage problems)                                                   



24       Events-Based Information       Library Readings         Events-Based     

         Systems.  Some basics on the                            problem-to be    

         components of a potential                               provided         

         future accounting information                                            

         system.                                                                  

         Internal control issues in                                               

         general, including issues                                                

         presented by any changes in                                              

         accounting systems, such as                                              

         events based accounting,                                                 

         computer-based information                                               

         systems, BPR, etc.                                                       



31       Revenue cycle.  Business and   CR 16                    AISP: Final due  

         information system operations  CR 17, 806-821 and       date             

         in the revenue cycle.          841-851                                   

         Documentation, controls,                                Problem 16-12    

         procedures. Specific                                    Problem 17-5     

         examples, audit trails,                                                  

         issues of events-based data                                              

         collection.                                                              



         Introduction to purchasing                                               

         cycle.                                                                   



June 7   Final  (7:30 p.m.)