WESTMEAD INTERNATIONAL SCHOOL

SCHOOL OF ECONOMICS, BUSINESS AND ACCOUNTANCY

BASIC ACCOUNTING
INSTRUCTOR: BRYAN BLAIR FALLARME, CPA, MBA

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Westmead International School
School of Economics, Business and Accountancy
First Semester, SY 2020-2021
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Course Title: Accounting Information System
Course Code: AE 15
Number of Units: 3 units
Time Allocation: 18 weeks/3 hours per week
Instructor: Bryan Blair Fallarme
E-mail: [email protected]
Period Online: Sun 8-11AM via Google Meet
Meeting ID: TBA
LMS: Google Classroom (7sh5dbu)
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Course Overview:

This course is designed to provide Accountancy students with basic knowledge of the
design, operations, risks, and controls of accounting information systems (AIS). Emphasis is
placed on financial transaction cycles and core business processes vis-à-vis risks and controls
involved in the processing of accounting information in a computerized environment. This
course also covers analysis of the current issues in accounting information systems that have
business implications and ethical considerations.

Course Learning Outcomes

 Describe in detail the purpose of accounting information systems and the links between
business structure, processes, performance, and information systems.
 Analyze information flows in an organization and develop conceptual models of
organizational relationships.
 Identify organizational risk and control issues, incorporate those issues into conceptual
models, and explain how information technology changes control techniques.
 Develop support for business decisions based on a systematic and objective
consideration of the problems, issues, and relative merits of feasible alternatives using
appropriate decision-modelling techniques:
 Identify problems, potential solution approaches, and related uncertainties. Organize
and evaluate information, alternatives, cost/benefits, risks and rewards of alternative
scenarios.
  Describe risks and related issues about privacy, intellectual property rights, and security
considerations related to electronic commerce and communications.
 Develop and communicate reasonable recommendations for technology use in
organizations

STUDY TIPS: For you to successfully finish this course, you are required to :

❏ Read the lecture notes and explanations regarding the micro-topic in each unit module.
❏ Additional readings and references online must be downloaded and/or printed depending
on your preference.
❏ Lecture videos and audio files must be downloaded for offline learning or access them
through the links given in your learning packet and watch them online.
❏ Answer formative assessment and discussion points may be embedded in the videos to
check if you have finished watching and evaluating the materials.
❏ Each unit of the course contains self-assessment exercises and activities. The self-
assessment exercises are given to enhance your understanding of the course and will be
considered as formative exercises. These must be submitted but will not be graded.
❏ It is strongly recommended that you try to find a little time each week to engage in the
online conversations (at times that are convenient to you) as the forums are an integral,
and very rewarding, part of the course and the online learning experience.

In this course you are therefore expected to :

❏ 1. Complete four major exams online

❏ 2. Participate in the discussion threads using proper net etiquette.
❏ 3. Access and utilize the additional online component included with the textbook.
❏ 4. You will complete all quizzes and assignments by the due date.
❏ 5. View all recorded lectures on a timely basis. Check-up questions and major exam
tips are sometimes embedded in the videos.
❏ 6. Expected to logon to the online course at twice a month.
❏ 7. Complete and send assignments by due date and other activities as posted.

Course Outline and Schedule

Part I Overview of Accounting Information Systems

Chapter 1 The Information System: An Accountant’s Perspective
THE INFORMATION ENVIRONMENT
What Is a System?
An Information Systems Framework
AIS Subsystems
A General Model for AIS
Acquisition of Information Systems
 ORGANIZATIONAL STRUCTURE
Business Segments
Functional Segmentation
The Accounting Function
The Information Technology Function
THE EVOLUTION OF INFORMATION SYSTEM MODELS
The Manual Process Model
The Flat-File Model
The Database Model
The REA Model
Enterprise Resource Planning Systems
THEROLEOFTHEACCOUNTANT
Accountants as Users
Accountants as System Designers
Accountants as System Auditors
SUMMARY

Chapter 2 Introduction to Transaction Processing

AN OVERVIEW OF TRANSACTION PROCESSING
Transaction Cycles
ACCOUNTING RECORDS
Manual Systems
The Audit Trail
Computer-Based Systems
DOCUMENTATION TECHNIQUES
Data Flow Diagrams and Entity Relationship Diagrams
System Flowcharts
Program Flowcharts
Record Layout Diagrams
COMPUTER-BASED ACCOUNTING SYSTEMS
Differences between Batch and Real-Time Systems
Alternative Data Processing Approaches
Batch Processing Using Real-Time Data Collection
Real-Time Processing
DATA CODING SCHEMES
A System without Codes
A System with Codes
Numeric and Alphabetic Coding Schemes
SUMMARY
APPENDIX

Chapter 3 Ethics, Fraud, and Internal Control

ETHICAL ISSUES IN BUSINESS
Business Ethics
Computer Ethics
Sarbanes-Oxley Act and Ethical Issues
FRAUD AND ACCOUNTANTS
Definitions of Fraud
 The Fraud Triangle
Financial Losses from Fraud
The Perpetrators of Frauds
Fraud Schemes
INTERNAL CONTROL CONCEPTS AND TECHNIQUES
SAS 78/COSO Internal Control Framework
SUMMARY

Part II Transaction Cycles and Business Processes

Chapter 4 The Revenue Cycle
THE CONCEPTUAL SYSTEM
Overview of Revenue Cycle Activities
Sales Return Procedures
Cash Receipts Procedures
Revenue Cycle Controls
PHYSICAL SYSTEMS
MANUAL SYSTEMS
Sales Order Processing
Sales Return Procedures
Cash Receipts Procedures
COMPUTER-BASED ACCOUNTING SYSTEMS
Automating Sales Order Processing with Batch Technology
Keystroke
Edit Run
Update Procedures
Reengineering Sales Order Processing with Real-Time Technology
Transaction Processing Procedures
General Ledger Update Procedures
Advantages of Real-Time Processing
Automated Cash Receipts Procedures
Reengineered Cash Receipts Procedures
Point-of-Sale (POS) Systems
Daily Procedures
End-of-Day Procedures
Reengineering Using EDI
Reengineering Using the Internet
Control Considerations for Computer-Based Systems
PC-BASED ACCOUNTING SYSTEMS
PC Control Issues
SUMMARY
APPENDIX

Chapter 5 The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures
THE CONCEPTUAL SYSTEM
Overview of Purchases and Cash Disbursements Activities
The Cash Disbursements Systems
Expenditure Cycle Controls
PHYSICAL SYSTEMS
 A Manual System
The Cash Disbursements Systems
COMPUTER-BASED PURCHASES AND CASH
DISBURSEMENTS APPLICATIONS
Automating Purchases Procedures Using Batch Processing Technology
Cash Disbursements Procedures
Reengineering the Purchases/Cash Disbursements System
Control Implications
SUMMARY

Chapter 6 The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures
THE CONCEPTUAL PAYROLL SYSTEM
Payroll Controls
THE PHYSICAL PAYROLL SYSTEM
Manual Payroll System
COMPUTER-BASED PAYROLL SYSTEMS
Automating the Payroll System Using Batch Processing
Reengineering the Payroll System
THE CONCEPTUAL FIXED ASSET SYSTEM
The Logic of a Fixed Asset System
THE PHYSICAL FIXED ASSET SYSTEM
Computer-Based Fixed Asset System
Controlling the Fixed Asset System
SUMMARY

Chapter 7 The Conversion Cycle

THE TRADITIONAL MANUFACTURING ENVIRONMENT
Batch Processing System
Controls in the Traditional Environment
WORLD-CLASS COMPANIES AND LEAN MANUFACTURING
What Is a World-Class Company?
Principles of Lean Manufacturing
TECHNIQUES AND TECHNOLOGIES THAT PROMOTE LEAN MANUFACTURING
Physical Reorganization of the Production Facilities
Automation of the Manufacturing Process
ACCOUNTING IN A LEAN MANUFACTURING
ENVIRONMENT
What’s Wrong with Traditional Accounting Information?
Activity-Based Costing (ABC)
Value Stream Accounting
INFORMATION SYSTEMS THAT SUPPORT LEAN
MANUFACTURING
Materials Requirement Planning (MRP)
Manufacturing Resource Planning (MRP II)
Enterprise Resource Planning (ERP) Systems
SUMMARY

Chapter 8 Financial Reporting and Management Reporting Systems

 THE GENERAL LEDGER SYSTEM
The Journal Voucher
The GLS Database
GLS Procedures
THE FINANCIAL REPORTING SYSTEM
Sophisticated Users with Homogeneous Information Needs
Financial Reporting Procedures
XBRL—REENGINEERING FINANCIAL REPORTING
XML
XBRL
The Current State of XBRL Reporting
CONTROLLING THE FRS
SAS 78/COSO Control Issues
Internal Control Implications of XBRL
THE MANAGEMENT REPORTING SYSTEM
FACTORS THAT INFLUENCE THE MRS
Management Principles
Management Function, Level, and Decision Type
Problem Structure
Types of Management Reports
Responsibility Accounting
Behavioral Considerations
SUMMARY

ASSESSMENT STRATEGY

You will be evaluated based on the following areas. Note that timely submission of the
assignments and problem sets determine whether you get points for them or not. Failure to take
the online exams on the date specified including inability to submit due to poor internet
connection would mean a grade of Fail. Special exams will only be given ONCE to students
who were able to take at least 2 major exams successfully and with complete compilation of
assignments and problem sets submitted on time.

❏ 3 major exams online - 60%

❏ Series of assignments and problem sets - 20%
❏ Participation in the discussion boards - 20%

ADDITIONAL INFORMATION FOR STUDENTS ON THE CONDUCT OF REMOTE CLASSES

1. I WILL BE ONLINE DURING THE REGULAR 3-HOUR SCHEDULE OF THE CLASS

EVERY WEEK. ACTIVITIES CAN RUN FROM ONLINE LECTURES (RECORDED),
POSTING OF DISCUSSION BOARD TOPICS, CLARIFICATIONS OF THE CONCEPTS
AND ISSUES IN CLASS, GRADED RECITATIONS, GROUP ACTIVITIES AND GROUP
 DISCUSSIONS. YOU ARE EXPECTED TO PARTICIPATE IN THESE ACTIVITIES AT
LEAST TWICE EVERY MONTH.
2. I WILL BE POSTING IN OUR GOOGLE CLASSROOM ON A REGULAR BASIS AND
GIVE FEEDBACK ON STUDENTS WHO ARE NOT SUBMITTING MATERIALS ON
TIME. THREE (3) CONSECUTIVE LATE SUBMISSION OF ANY
ACTIVITY/ASSESSMENT/PROBLEM SET WOULD MEAN A GRADE OF 5.0.
3. FAILURE TO SUCCESSFULLY FINISH 3 MAJOR EXAMS WOULD MEAN A GRADE
OF 5.0. REMOVAL EXAMS WILL ONLY BE GIVEN TO STUDENTS WITH A GOOD
RECORD OF SUBMITTING REQUIREMENTS AND HAS FAILED TO SUCCESSFULLY
FINISH 2 MAJOR EXAMS.
4. THERE WOULD BE NO FACE TO FACE INTERACTION DURING THE SEMESTER
AND NO FACE TO FACE MAJOR EXAMS AS WELL.
5. ALL WORKS MUST BE POSTED IN THE GOOGLE CLASSROOM. SUBMISSION
DATES WILL ONLY BE OPEN FOR ONE DAY. NO WORKS WILL BE ACCEPTED
AFTER DEADLINE.
6. DROPPING OF SUBJECT WILL BE PRIOR TO MIDTERM EXAMS TO AVOID
GETTING A GRADE OF 5.
7. INQUIRIES AND CLARIFICATIONS OR ANY ATTEMPT TO COMMUNICATE MUST
BE DONE DURING OFFICE HOURS FROM MONDAY TO FRIDAY. QUESTIONS
POSTED AFTER HOURS WOULD BE ANSWERED ON THE NEXT WORKING DAY.
8. PLAGIARISM IS A BIG MISTAKE. MAKE SURE TO PASS YOUR WORK ONLY AFTER
RUNNING IT IN AN ONLINE PLAGIARISM CHECKER. ANY WORK PROVEN TO BE
PLAGIARIZED WOULD BE CONSIDERED.
9. GUIDELINES FOR ONLINE ETIQUETTE AND BEHAVIOR MUST BE STRICTLY
FOLLOWED.
10. PRESENCE IN ONLINE CLASSES WILL ONLY BE CONSIDERED IF YOU ARE
ONLINE FOR MORE THAN 60% OF THE MEETING HOURS. YOUR PRESENCE WILL
BE CHECKED VIA THE CHAT BOX DURING CLASSROOM CHECKS DONE IN
RANDOM DURING THE DURATION OF THE CLASS.
11. CLASS RECORDINGS WILL BE DONE BY THE INSTRUCTOR AND WILL BE MADE
AVAILABLE TO THE CLASS VIA GOOGLE CLASSROOM.

THANK YOU AND LET US ALL HAVE A PRODUCTIVE SEMESTER!