Page 409 - Introduction to Business

CHAPTER 11 Accounting for Decision Making 383

not-for-profit organization. Most of the examples in this book are oriented toward
the AIS of a business firm; however, the concepts are applicable to any type of organ-
ization. Accountants who work in the public accounting field are licensed by the
state or states in which they work. The license is designated Certified Public Accoun-
tant (CPA). The licensing requirements include passing a rigorous exam and acquir-
ing a certain amount of work experience. Accountants in industry, government, or
public accounting may attain the CPA designation; however, public accounting is
the field most closely associated with CPAs because it is a professional requirement.
Other notable professional designations are the CMA, Certified Management
Accountant; CIA, Certified Internal Auditor; and CFE, Certified Fraud Examiner.
CPAs in public accounting, like the financial accountants who work in a firm’s
AIS, pay close attention to developments in GAAP. Public accountants are called
external or independent accountants because they are not employees of the busi-
ness firm but independent contractors hired to provide specialized services, such
as auditing, taxation, and consulting services, to the business firm. When CPAs pro-
vide audit services, they render an opinion as to whether the financial statements
prepared by a firm’s financial accountants are done according to GAAP.
reality When have you been the recipient of information from an AIS?
CH ECK

Information Role of the Accounting Information
System Within the Management Information System

LEARNING OBJECTIVE 2
Describe how the AIS fits within the management information system.

The AIS provides the financial information needed internally by management and
externally by users such as government agencies and stockholders. However, not all
information needed by management or external users is financial. For example, a
manufacturing company’s management may plan to introduce a new product, but
should first do marketing research to determine whether consumers will wish to
purchase the new product. Tastes and preferences of consumers are essential
pieces of information that the marketing system must obtain for management’s
decision-making purposes. Thus, while the AIS provides crucial information, it
does not provide all the information needed by management.
The management information system (MIS) provides all the information, management information system (MIS)
financial and nonfinancial, needed by management for its decision-making pur- A business system that provides all the
information, financial and nonfinancial,
poses. Therefore, the MIS can be thought of as a collection of all the organization’s
needed by management for decision
information sources. These information sources are based on functional areas; making
that is, the AIS is concerned with financial information, the marketing system is
concerned with marketing-related information, and so forth. An example of MIS
composition is illustrated in Exhibit 11.3 (on p. 384).
Each of the MIS components generates specific types of information. For exam-
ple, marketing provides information associated with marketing research, customer
relations, sales, product development, advertising, distribution, and public rela-
tions. Human resources provides information associated with recruiting, job
descriptions, employee retention, and training and development.
Another key role of the AIS is to provide financial services to the other functional
systems. Services of the AIS include financial record keeping and various types of
financial analysis. For example, the AIS receives sales information, typically on
sales invoices, from marketing and then records the sales amounts, maintains cus-
tomer accounts, bills customers, tracks inventory movement, and provides related
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