Accounting Information Systems and Firm Value

Accounting Information System (AIS)

Records, processes, and reports transactions for decisions.

Useful Information

Information must be relevant, reliable, and timely.

Data

Raw facts describing events with little meaning.

Information

Organized data that is meaningful and useful.

Information Overload

Excess information hindering decision-making processes.

Discretionary Information

Not required by law; benefits must outweigh costs.

Mandatory Information

Legally required information, like tax returns.

Roles of Accountants

Designers, implementers, evaluators, and managers in AIS.

Certified Information Systems Auditor (CISA)

Certification for performing IT audits.

Certified Information Technology Professional (CITP)

Ensures data reliability, security, and accessibility.

Certified Internal Auditor

Globally accepted certification for internal auditors.

Value Chain

Activities adding value to products and services.

Inbound Logistics

Receiving and storing raw materials for production.

Operations

Transforming inputs into finished goods.

Outbound Logistics

Distributing finished goods to customers.

Marketing and Sales

Identifying customer needs to drive sales.

Service Activities

Support provided to customers post-sale.

Firm Infrastructure

Support activities including finance and legal functions.

Human Resource Management

Recruiting, hiring, and training employees.

Technology Activities

Support value-creating activities through innovation.

Procurement Activities

Purchasing raw materials and supplies.

Enterprise Resource Planning (ERP) System

Centralized database for company-wide data access.

Supply Chain

Flow of materials and information from suppliers to customers.

Supply Chain Management Software

Optimizes processes within the supply chain.

Customer Relationship Management (CRM) Software

Manages interactions and tracks customer purchases.

Impact of AIS on Profitability

Improves profits and positively affects stock prices.

Attributes of Reliable Information

Free from bias, verifiable, and faithfully represented.

Internal Business Processes

Processes supported by AIS for efficiency.

External Business Processes

Processes involving customers and suppliers facilitated by AIS.

Financial Statements

Mandatory reports detailing a firm's financial performance.