<p>CHAPTER 1 C AN INTRODUCTION TO ACCOUNTING, INFORMATION TECHNOLOGY (IT), AND BUSINESS SOLUTIONS</p><p>CHAPTER OBJECTIVES:</p><p>1. DESCRIBE HOW ORGANIZATIONS CREATE VALUE</p><p>2. DESCRIBE THE HISTORICAL RELATIONSHIP BETWEEN ACCOUNTING AND IT PROFESSIONALS</p><p>3. DESCRIBE 3 WAYS THAT ACCOUNTING PROFESSIONALS CAN INCREASE THEIR VALUE</p><p>4. IDENTIFY THE JUSTIFICATIONS/REASONS FOR CHANGING THE NATURE OF ACCOUNTING AND HOW THE USE OF INFORMATION TECHNOLOGY (IT) CAN ENABLE SUCH CHANGE</p><p>INFORMATION TECHNOLOGY=S THIRD WAVE--BOB ELLIOT</p><p>AMANAGERS NOW NEED NEW TYPES OF INFORMATION.... SO INTERNAL AND EXTERNAL ACCOUNTING MUST BE CHANGED@</p><p>ATHE CONTROLLER=S STAFF WILL ADD VALUE TO THE BUSINESS OR IT WON=T EXIST@...... AL PIPKIN</p><p>THE QUESTION OF HOW TO EFFECTIVELY USE IT TO BRING </p><p>1 ABOUT THESE CHANGES IS AS OF YET UNDEFINED....</p><p>1. DESCRIBE HOW ORGANIZATIONS CREATE VALUE</p><p>ALL ORGANIZATIONS--FOR PROFIT AND NOT-FOR-PROFIT SEEK TO CREATE VALUE BY PROVIDING GOODS AND SERVICES</p><p>IN THE LONG RUN ORGANIZATIONS THAT PROVIDE GOODS AND SERVICES THAT ARE VALUED WILL SURVIVE AND GROW</p><p>ALTHOUGH THEY MAY DELAY THEIR DEMISE ALL ORGANIZATIONS WILL ULTIMATELY BE ACCOUNTABLE TO THE CUSTOMER</p><p>EXHIBIT 1-1 ORGANIZATIONS CREATE VALUE THROUGH MANAGING, MAKING DECISIONS, ABOUT BUSINESS AND INFORMATION PROCESSES--MANAGEMENT PROCESSES</p><p>BUSINESS PROCESSES--DEFINE HOW THE ORGANIZATION CREATES VALUE 3 MAIN TYPES: 1. ACQUISITION/PAYMENT PROCESS 2. CONVERSION PROCESS 3. SALES/COLLECTION PROCESS</p><p>INFORMATION PROCESSES--INCLUDE RECORDING DATA, KEEPING DATA CURRENT, REPORTING USEFUL INFORMATION</p><p>AS BUSINESS AND MANAGEMENT PROCESSES CHANGE, SO MUST INFORMATION PROCESSES</p><p>TO ACHIEVE VALUE THEY MUST WORK TOGETHER AND BE INTEGRATED</p><p>2 2. DESCRIBE THE HISTORICAL RELATIONSHIP BETWEEN ACCOUNTING AND IT PROFESSIONALS</p><p>LOVE--HATE RELATIONSHIP</p><p>EACH ORGANIZATION CAN FIND THE RELATIONSHIP BETWEEN ACCOUNTING AND IT AT SOME POINT ALONG A TIME LINE WITH 3 MAJOR PHASES:</p><p>1. THE FIRST KISS --automating primarily clerical aspects of accounting</p><p>2. THE SEPARATION --other functional areas of the business (outside of accounting) spin off their own info systems due to unique information needs--poorly coordinated, conflicting information, battleground, data rich but information poor...... </p><p>3. THE COURTSHIP AND MARRIAGE --growth of new technologies that allow new synergistic information, real time information, bringing together separate application architectures into one enterprisewide architecture </p><p>3 3. DESCRIBE 3 WAYS THAT ACCOUNTING PROFESSIONALS CAN INCREASE THEIR VALUE</p><p>AOur financial reporting system must be as dynamic as the financial markets themselves@</p><p>AIn times of change, learners inherit the earth...... @ Hoffer the business solution framework--fig. 1--5 all factors are important they are aligned to business processes they change or learn over time</p><p>ACCOUNTING CAN ENHANCE ITS VALUE BY IMPROVING ITS ABILITY TO: ( 3 FACTORS )</p><p>1. PROVIDE USEFUL INFORMATION FOR DECISION MAKERS OF THE ORGANIZATION</p><p>2. HELP EMBED INFORMATION PROCESSES INTO BUSINESS PROCESSES</p><p>3. HELP MANAGEMENT DEFINE BUSINESS RULES OR POLICIES THAT SHAPE THE NATURE OF BUSINESS PROCESSES</p><p>4. IDENTIFY THE JUSTIFICATIONS/REASONS FOR CHANGING THE </p><p>4 NATURE OF ACCOUNTING AND HOW THE USE OF INFORMATION TECHNOLOGY (IT) CAN ENABLE SUCH CHANGE</p><p>REENGINEERING--USE THE POWER OF MODERN IT TO RADICALLY REDESIGN OUR BUSINESS PROCESSES IN ORDER TO ACHIEVE DRAMATIC IMPROVEMENTS IN PERFORMANCE</p><p>1. MUCH OF CURRENT ACCOUNTING IS BASED ON >PRE- COMPUTER THINKING=--ACCOUNTANTS COULD BE REPLACED BY A NEW TYPE OF PROFESSIONAL</p><p>2. AUDIT AND TAX --THE TRADITIONAL SOURCES OF REVENUE ARE IN THE LATTER STAGES OF THEIR PRODUCT LIFE CYCLE</p><p>3. MANY INFORMATION CUSTOMERS-DISSATISFIED WITH TRADITIONAL ACCOUNTING SYSTEMS HAVE BEGUN COLLECTING THEIR >OWN= INFORMATION.....MANAGEMENT CONSIDERS THESE OTHER INFORMATION SOURCES TO BE ESSENTIAL!</p><p>4. TRADITIONAL FINANCIAL STATEMENTS ARE EXTREMELY COMPRESSED AND NOT TIMELY--USERS MAY ULTIMATELY BE ABLE TO GET MORE TIMELY INFO OFF THE WEB--STOP RELYING ON FINANCIALS</p><p>5. THE EXPECTATION GAP OF THE GENERAL PUBLIC--MOST DO NOT READ THE AUDITOR=S OPINION</p><p>5</p>