McGraw-Hill/Irwin
Accounting Information Systems
© 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 13
Event-driven accounting
information systems
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
Outline
• Objectives
• REAL modeling
• Types of AIS
• Cardinalities
• Criticisms of viewdriven systems
• Database creation
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Objectives
When you finish studying this chapter, you
should be able to:
•
•
•
Compare and contrast view-driven and eventdriven accounting information systems
Use REAL modeling to represent an event-driven
AIS
Use a REAL model to design a relational
database for an event-driven AIS
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Types of accounting information systems
• View-driven systems
• Event-driven systems
• Traditional systems
• Support a single way of
viewing the data: the
general purpose financial
statements
• May or may not
incorporate information
technology
• More modern systems
• Support multiple views
of the data; based on
events and business
processes
• Nearly always supported
by information
technology
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Criticisms of view-driven AIS
• Focus on a very small, well-defined group of
important business events
• Often process data in batches, frequently at the
end of the month
• Capture a very limited set of data—dates,
accounts and amounts
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Criticisms of view-driven AIS
• Data are highly aggregated
• Data stored in multiple places
• Internal control process is often protective and
expensive
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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REAL modeling
• Types of events
• Operating: activities involved with providing
goods and services to customers
• Information: recording and maintaining data, as
well as reporting information
• Decision / management: human decision making
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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REAL modeling
• Resources: what agents need to complete
events
• Events: strategically significant operating
events
• Agents: people involved in the system
• Locations: where things happen
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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REAL modeling
• Events appear in the middle column
• Resources are on the left
• Agents are on the right
• Locations, when included, are shown wherever
they fit logically
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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REAL modeling
Purchasing
agent
Inventory
Buy inventory.
Vendor
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BASIC CONCEPTS & CURRENT ISSUES
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REAL modeling
Six-step development process includes:
1. Understand the organization’s environment
and objectives
2. Review the business process and identify the
strategically significant operating events
3. Analyze each strategically significant
operating event to identify the event
resources, agents and locations
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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REAL modeling
4. Identify the relevant behaviors,
characteristics and attributes of the REAL
model elements
5. Identify and document the direct
relationships among elements of the REAL
model
6. Validate the REAL model with business
people
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Cardinalities
• Method for documenting direct relationships between
elements of a REAL model
• Four-step process
• For each “x”, what is the minimum number of “y”
involved?
• For each “x,” what is the maximum number of “y”
involved?
• For each “y,” what is the minimum number of “x”
involved?
• For each “y,” what is the maximum number of “x”
involved?
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Cardinalities
• For each purchasing agent (“x”), what is the
minimum number of buy inventory
transactions (“y”)? Zero.
• For each purchasing agent, what is the
maximum number of buy inventory
transactions? Many.
Buy
inventory
(0,*)
Purchasing
agent
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Cardinalities
• For each buy inventory transaction, what is the
minimum number of purchasing agents? One.
• For each buy inventory transaction, what is the
maximum number of purchasing agents? One.
Buy
inventory
(1,1)
Purchasing
agent
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Cardinalities
(0,*)
Buy
inventory
(1,1)
Purchasing
agent
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Database creation
• Follow the rules of data normalization
• 1st normal form (1NF): eliminate repeating groups
• 2nd normal form (2NF): eliminate repeating
groups AND eliminate redundant data
• 3rd normal form (3NF); eliminate repeating
groups, redundant data AND columns not
dependent on primary key
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Database creation
• When the maximum cardinalities between two
elements of a REAL model are one and many,
include the primary key from the “one side” in
the table on the “many side.”
Buy
inventory
(0,*) (1,1)
Purchasing
agent
The primary key from
the purchasing agent
table will be a foreign
key in the buy
inventory table.
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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Database creation
• When the maximum cardinalities between two
elements of a REAL model are many and
many, create a separate junction table to reflect
the combined relationship.
Inventory
(1,*)
(1,*)
Buy
inventory
Three tables
needed: inventory,
buy inventory, and
buy inventory /
inventory
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES
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