Page 61 - Accounting Information Systems

32 PART I Overview of Accounting Information Systems

ACCOUNTANTS AS USERS
In most organizations, the accounting function is the single largest user of IT. All systems that process fi-
nancial transactions impact the accounting function in some way. As end users, accountants must provide
a clear picture of their needs to the professionals who design their systems. For example, the accountant
must specify accounting rules and techniques to be used, internal control requirements, and special algo-
rithms such as depreciation models. The accountant’s participation in systems development should be
active rather than passive. The principal cause of design errors that result in system failure is the absence
of user involvement.

ACCOUNTANTS AS SYSTEM DESIGNERS
An appreciation of the accountant’s responsibility for system design requires a historic perspective that
predates the computer as a business information tool. Traditionally, accountants have been responsible for
key aspects of the information system, including assessing the information needs of users, defining the
content and format of output reports, specifying sources of data, selecting the appropriate accounting rules,
and determining the controls necessary to preserve the integrity and efficiency of the information system.
These traditional systems were physical, observable, and unambiguous. The procedures for processing
information were manual, and the medium for transmitting and storing data was paper. With the arrival of
the computer, computer programs replaced manual procedures, and paper records were stored digitally.
The role accountants would play in this new era became the subject of much controversy. Lacking com-
puter skills, accountants were generally uncertain about their status and unwilling to explore this emerg-
ing technology.
Many accountants relinquished their traditional responsibilities to the new generation of computer pro-
fessionals who were emerging in their organizations. Computer programmers, often with no accounting or
business training, assumed full responsibility for the design of AIS. As a result, many systems violated
accounting principles and lacked necessary controls. Large system failures and computer frauds marked
this period in accounting history. By the mid-1970s, in response to these problems, the accounting profes-
sion began to reassess the accountant’s professional and legal responsibilities for computer-based systems.
Today, we recognize that the responsibility for systems design is divided between accountants and IT
professionals as follows: the accounting function is responsible for the conceptual system, and the IT
function is responsible for the physical system. To illustrate the distinction between conceptual and physi-
cal systems, consider the following example:

The credit department of a retail business requires information about delinquent accounts from the
AR department. This information supports decisions made by the credit manager regarding the credit-
worthiness of customers.

The design of the conceptual system involves specifying the criteria for identifying delinquent custom-
ers and the information that needs to be reported. The accountant determines the nature of the information
required, its sources, its destination, and the accounting rules that need to be applied. The physical system
is the medium and method for capturing and presenting the information. The computer professionals deter-
mine the most economical and effective technology for accomplishing the task. Hence, systems design
should be a collaborative effort. Because of the uniqueness of each system and the susceptibility of sys-
tems to serious error and even fraud, the accountant’s involvement in systems design should be pervasive.
In later chapters, we shall see that the active participation of accountants is critical to the system’s success.

ACCOUNTANTS AS SYSTEM AUDITORS
Auditing is a form of independent attestation performed by an expert—the auditor—who expresses an
opinion about the fairness of a company’s financial statements. Public confidence in the reliability of
internally produced financial statements rests directly on their being validated by an independent expert
auditor. This service is often referred to as the attest function. Auditors form their opinions based on a
systematic process that will be explained in Chapter 15.