Page 54 - Accounting Information Systems

C H A P TER 1 The Information System: An Accountant’s Perspective 25

accounting courses. The AIS course is often the only accounting course in which students see where data
originate, how they are collected, and how and where information is used to support day-to-day operations.
By examining information flows, key tasks, and the use of traditional accounting records in transaction
processing, the students’ bookkeeping focus is transformed into a business processes perspective.
Second, the logic of a business process is more easily understood when it is not shrouded by technology.
The information needed to trigger and support events such as selling, warehousing, and shipping is funda-
mental and independent of the technology that underlies the information system. For example, a shipping
notice informing the billing process that a product has been shipped serves this purpose whether it is pro-
duced and processed manually or digitally. Once students understand what tasks need to be performed, they
are better equipped to explore different and better ways of performing these tasks through technology.
Finally, manual procedures facilitate understanding internal control activities, including segregation of
functions, supervision, independent verification, audit trails, and access controls. Because human nature
lies at the heart of many internal control issues, we should not overlook the importance of this aspect of
the information system.

THE FLAT-FILE MODEL
The flat-file approach is most often associated with so-called legacy systems. These are large mainframe
systems that were implemented in the late 1960s through the 1980s. Organizations today still use these
systems extensively. Eventually, modern database management systems will replace them, but in the
meantime accountants must continue to deal with legacy system technologies.
The flat-file model describes an environment in which individual data files are not related to other
files. End users in this environment own their data files rather than share them with other users. Thus,
stand-alone applications rather than integrated systems perform data processing.
When multiple users need the same data for different purposes, they must obtain separate data sets
structured to their specific needs. Figure 1-12 illustrates how customer sales data might be presented to
three different users in a durable goods retailing organization. The accounting function needs customer
sales data organized by account number and structured to show outstanding balances. This is used for
customer billing, AR maintenance, and financial statement preparation. Marketing needs customer sales
history data organized by demographic keys. They use this for targeting new product promotions and for
selling product upgrades. The product services group needs customer sales data organized by products
and structured to show scheduled service dates. Such information is used for making after-sales contacts
with customers to schedule preventive maintenance and to solicit sales of service agreements.
The data redundancy demonstrated in this example contributes to three significant problems in the
flat-file environment: data storage, data updating, and currency of information. These and other prob-
lems associated with flat files are discussed in the following sections.

Data Storage
An efficient information system captures and stores data only once and makes this single source available
to all users who need it. In the flat-file environment, this is not possible. To meet the private data needs of
users, organizations must incur the costs of both multiple collection and multiple storage procedures.
Some commonly used data may be duplicated dozens, hundreds, or even thousands of times.
Data Updating

Organizations have a great deal of data stored in files that require periodic updating to reflect changes.
For example, a change to a customer’s name or address must be reflected in the appropriate master files.
When users keep separate files, all changes must be made separately for each user. This adds significantly
to the task and the cost of data management.

Currency of Information
In contrast to the problem of performing multiple updates is the problem of failing to update all the user
files affected by a change in status. If update information is not properly disseminated, the change will
not be reflected in some users’ data, resulting in decisions based on outdated information.