AIS Chapter Two Assignment
1) Some individuals argue that accountants should focus on producing financial statements and leave the design and production of managerial reports to information systems specialists. What are the advantages and disadvantages of following this advice? To what extent should accountants be involved in producing reports that include more than just financial measures of performance? Why? What are some examples of reports that assist management in decision making rather than strictly financial performance reports?
2) An audit trail enables a person to trace a source document to its ultimate effect on the financial statements or work back from financial statement amounts to source documents. For example – an audit trail could be traced from a sales invoice to its reflection on the income statement as revenue. Or an audit trail could vouch the existence of fixed assets by noting the balance sheet account, then finding records of the actual fixed asset.
Describe in detail the audit trail for the following:
a. Purchases of inventory
b. Sales of inventory
c. Employee Payroll
AIS Chapter 2 Assignment
There are various advantages and disadvantages of following the argument that the accountants should focus on producing financial statements and leave the production of the managerial reports to the information systems specialists. One of the advantages is that the workload of the accountants will reduce giving them more time to focus on the production of the reliable and effective financial statements. Another is advantage is that it would promote specialization of the personnel which is useful in improving the quality of the work of their specialists. However, there are exists disadvantages such as the advanced experience and knowledge of the accountants will not be used appropriately in the companies to design the managerial reports. In addition, the information systems specialists might lack the relevant content and information to include in the managerial reports. Therefore, it is advisable to involve the accountants in the design and production of the managerial reports in the organization.
The accountants should be largely involved in the process of producing reports, which include more than financial measures of performance. The accountants have advanced skills and techniques, which are useful in ensuring the production of effective managerial reports in the organization. The preparation of the managerial reports and statements requires individuals with the financial knowledge and information to design improved managerial reports. However, it is important to information systems experts who will be responsible for the designing of the reliable managerial reports. This is because the accountants might have the knowledge and information to prepare the reports, but not the integrity to develop useful measures of managerial reports.
In spite of all, the accountants must be heavily involved in the overall process of producing managerial reports. Apart from the financial performance reports, the reports provided by the management information systems are useful in supporting the management in decision-making. The reports offer expertise insights critical in making effective executive and strategic decisions.