Directory UMM :Slide_Kuliah:PPT:SIM_McLeod_8:
MANAGEMENT INFORMATION SYSTEMS 8/E
Raymond McLeod, Jr. and George Schell
Appendix D
Financial Information Systems
Copyright 2001 Prentice-Hall, Inc.
D-1
Users of Financial
Information
Internal users
– Managers
– Nonmanagers
Environmental users
– Those with direct business relationships
– Those with no direct relationships
D-2
Financial Information
Systems
CBIS subsystem that provides information to
persons and groups both inside and outside the
firm concerning the firm’s financial matters
Information type
–
–
–
–
Periodic and special reports
Results of mathematical simulations
Electronic communications
Advice of expert systems
D-3
Model of a Financial Information System
Output
subsystems
Input
subsystems
Data Information
Forecasting
subsystem
Accounting
information
system
Internal sources
Internal
audit
subsystem
Environmental
sources
Financial
intelligence
subsystem
Database
Funds
management
subsystem
Users
Control
subsystem
D-4
Prewritten Financial Software
More prewritten software exists for the
financial area than any other
Most is accounting in nature
Both general business and personal
productivity software
D-5
Accounting Information
Subsystem
The foundation upon which all informationoriented CBIS are built
–
–
–
–
Who did what?
When?
Where?
How much?
D-6
Internal Audit Subsystem
Internal
– Audit committee
» Probably includes the CFO
» Director of internal auditing
External auditors
Importance of objectivity
D-7
Board of Directors
Audit Committee
Position of
Internal Auditing
in a Firm
Chief
Executive
Officer
Director of
Internal
Auditing
Internal
Auditing
Department
D-8
Types of Auditing Activity
Financial auditing
Operational auditing
–
–
–
Adequacy of controls
Efficiency
Compliance with company policy
Concurrent auditing
Internal control systems design
D-9
Internal Auditor as a
Member of the CBIS Team
Required knowledge and skills of auditors
– Not always accounting-related
Senior management attitude makes a
difference
D-10
scalating Cost of Correcting Design Errors
Error
as the SDLC Progresses
Operation/maintenance
Relative Cost of
Fixing a Defect
4000%
Implementation
1200%
Integrated testing
500%
Module testing
100%
40%
10%
Development
Conceptualization
Design
Requirements
1%
D-11
Financial Intelligence
Subsystem
Represents the firm in establishing two-way
links with:
Stockholders or owners
Stockholder relations department
–
–
–
Annual meetings
Annual reports
Quarterly reports
D-12
Financial Intelligence
Subsystem [cont.]
Financial communityIndirect influence from the
government
Sources of financial intelligence:
–
–
–
Word of mouth
Periodicals
Computer databases
Environmental influence on the money flow
D-13
Forecasting Subsystem
One of the oldest mathematical activities in business
– Rely on past data
– Make semistructured decisions
– Cannot be perfect
Short-term forecasts
– One to three years
– May be done by marketing
Long-term forecasts
– Usually done by finance, or special planning group
D-14
Forecasting Methods
Nonquantitative (qualitative)
– Panel consensus
– Delphi method
Electronic meeting system (EMS) help
combine nonquantitative and quantitative
methods
D-15
Forecasting Methods
[cont.]
Quantitative forecasting methods
–
–
–
Regression analysis is dominant
Related methods are available
Many software packages used
» Minitab
» IDA
» SAS
» SPSS
D-16
Sales Forecast Using SAS
D-17
Sales in thousands of units
Using the Number of
Salespersons to Project
Sales
4
3
2
1
0
Sales prediction
.
.
.
5 10
15
re.
g
Re
20
n
o
i
ss
e
n
i
l
25
Number of salespersons
30
35
D-18
Sales Forecast Produced by SAS
D-19
Sales Forecast Data
Historical Data
Year
1
2
3
4
5
6
7
8
9
10
Sales
(Y)
24
27
31
29
33
38
37
40
45
49
Advertising
(X2)
4
4
5
5
6
7
8
8
9
10
Price Ratio
(X3)
80
80
90
100
100
110
120
100
90
100
D-20
Funds Management
Subsystem
Manage to achieve
–
–
Revenue flow inflow exceeds expense outflow
Maintain stability
Cash flow models
– Performs cash flow analysis
D-21
Unbalanced Cash Flow
Example
1.2
1.1
Dollars (millions)
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Jan
Sales
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Months Marketing and administration
Manufacturing expenses
expenses
Dec
D-22
Delaying Supplier Payments
Eliminates Months of Negative Sales
1.2
Revenue
1.1
Dollars (millions)
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Months
Sales
Manufacturing expenses
Marketing and administration
D-23
expenses
Control Subsystem
Operating budget for the fiscal year
Three approaches
1. Top-down
2. Bottom-up
3. Participative
D-24
1.
Forecasting model
Sales forecast
2.
Top
management
Approved sales
forecast
3.
Finance
requirements
4.
Finance
manager
Requested
finance
budget
Resource planning
model
Human resource Information services
requirements
requirements
Human
resource
manager
Information
services
manager
Requested
information
services budget
Requested
human
resources
budget
5.
The
Budgeting
Process
Manufacturing
requirements
Manufacturing
manager
Requested
manufacturing
budget
Marketing
requirements
Marketing
manager
Requested
marketing
budget
Top
management
Final organizational
budget
D-25
Example Budget Report
BUDGET REPORT
AS OF JANUARY 31
MIDWEST REGION
CURRENT MONTH
ITEM
BUDGET
ACTUAL
SALARIES
TRAVEL
ENTERTAINMENT
TELEPHONE
RENT
FURNITURE
SUPPLIES
MISC.
$23,500
8,250
1,400
200
535
0
625
400
$22,000
9,000
1,635
85
535
0
410
620
TOTAL
$34,910
$34,285
DOLLARS
$1,500750+
235+
115+
0
0
215220+
625-
YEAR-TO-DATE
BUDGET
ACTUAL
DOLLARS
$59,000
23,500
4,200
600
1,605
420
1,875
1,200
$54,250
28,100
5,100
225
1,605
505
1,320
1,963
$4,7504,600+
900+
375+
0
85+
555765+
$92,400
$93,070
670+
D-26
Performance Ratios
current assets
Current ratio =
current liabilities
cost of goods sold
Inventory turnover ratio =
average inventory val
D-27
Users of Financial Information System
Subsystem
User
Funds
Management
Forecasting
Vice-president of finance
X
Other executives
X
Controller
X
Manager of accounting
Manager of financial planning
Director of budgets
Other functional managers X
X
X
X
Control
X
X
X
X
X
X
X
X
X
D-28
Summary
Financial information systems provide a wide range of
information for both managers and interested external people
Uses include:
–
–
–
–
–
Auditing
Financial intelligence
Forecasting
Funds management
Budgeting
Financial modeling is one of the oldest uses of mathematical
simulations in business
D-29
Raymond McLeod, Jr. and George Schell
Appendix D
Financial Information Systems
Copyright 2001 Prentice-Hall, Inc.
D-1
Users of Financial
Information
Internal users
– Managers
– Nonmanagers
Environmental users
– Those with direct business relationships
– Those with no direct relationships
D-2
Financial Information
Systems
CBIS subsystem that provides information to
persons and groups both inside and outside the
firm concerning the firm’s financial matters
Information type
–
–
–
–
Periodic and special reports
Results of mathematical simulations
Electronic communications
Advice of expert systems
D-3
Model of a Financial Information System
Output
subsystems
Input
subsystems
Data Information
Forecasting
subsystem
Accounting
information
system
Internal sources
Internal
audit
subsystem
Environmental
sources
Financial
intelligence
subsystem
Database
Funds
management
subsystem
Users
Control
subsystem
D-4
Prewritten Financial Software
More prewritten software exists for the
financial area than any other
Most is accounting in nature
Both general business and personal
productivity software
D-5
Accounting Information
Subsystem
The foundation upon which all informationoriented CBIS are built
–
–
–
–
Who did what?
When?
Where?
How much?
D-6
Internal Audit Subsystem
Internal
– Audit committee
» Probably includes the CFO
» Director of internal auditing
External auditors
Importance of objectivity
D-7
Board of Directors
Audit Committee
Position of
Internal Auditing
in a Firm
Chief
Executive
Officer
Director of
Internal
Auditing
Internal
Auditing
Department
D-8
Types of Auditing Activity
Financial auditing
Operational auditing
–
–
–
Adequacy of controls
Efficiency
Compliance with company policy
Concurrent auditing
Internal control systems design
D-9
Internal Auditor as a
Member of the CBIS Team
Required knowledge and skills of auditors
– Not always accounting-related
Senior management attitude makes a
difference
D-10
scalating Cost of Correcting Design Errors
Error
as the SDLC Progresses
Operation/maintenance
Relative Cost of
Fixing a Defect
4000%
Implementation
1200%
Integrated testing
500%
Module testing
100%
40%
10%
Development
Conceptualization
Design
Requirements
1%
D-11
Financial Intelligence
Subsystem
Represents the firm in establishing two-way
links with:
Stockholders or owners
Stockholder relations department
–
–
–
Annual meetings
Annual reports
Quarterly reports
D-12
Financial Intelligence
Subsystem [cont.]
Financial communityIndirect influence from the
government
Sources of financial intelligence:
–
–
–
Word of mouth
Periodicals
Computer databases
Environmental influence on the money flow
D-13
Forecasting Subsystem
One of the oldest mathematical activities in business
– Rely on past data
– Make semistructured decisions
– Cannot be perfect
Short-term forecasts
– One to three years
– May be done by marketing
Long-term forecasts
– Usually done by finance, or special planning group
D-14
Forecasting Methods
Nonquantitative (qualitative)
– Panel consensus
– Delphi method
Electronic meeting system (EMS) help
combine nonquantitative and quantitative
methods
D-15
Forecasting Methods
[cont.]
Quantitative forecasting methods
–
–
–
Regression analysis is dominant
Related methods are available
Many software packages used
» Minitab
» IDA
» SAS
» SPSS
D-16
Sales Forecast Using SAS
D-17
Sales in thousands of units
Using the Number of
Salespersons to Project
Sales
4
3
2
1
0
Sales prediction
.
.
.
5 10
15
re.
g
Re
20
n
o
i
ss
e
n
i
l
25
Number of salespersons
30
35
D-18
Sales Forecast Produced by SAS
D-19
Sales Forecast Data
Historical Data
Year
1
2
3
4
5
6
7
8
9
10
Sales
(Y)
24
27
31
29
33
38
37
40
45
49
Advertising
(X2)
4
4
5
5
6
7
8
8
9
10
Price Ratio
(X3)
80
80
90
100
100
110
120
100
90
100
D-20
Funds Management
Subsystem
Manage to achieve
–
–
Revenue flow inflow exceeds expense outflow
Maintain stability
Cash flow models
– Performs cash flow analysis
D-21
Unbalanced Cash Flow
Example
1.2
1.1
Dollars (millions)
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Jan
Sales
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Months Marketing and administration
Manufacturing expenses
expenses
Dec
D-22
Delaying Supplier Payments
Eliminates Months of Negative Sales
1.2
Revenue
1.1
Dollars (millions)
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Months
Sales
Manufacturing expenses
Marketing and administration
D-23
expenses
Control Subsystem
Operating budget for the fiscal year
Three approaches
1. Top-down
2. Bottom-up
3. Participative
D-24
1.
Forecasting model
Sales forecast
2.
Top
management
Approved sales
forecast
3.
Finance
requirements
4.
Finance
manager
Requested
finance
budget
Resource planning
model
Human resource Information services
requirements
requirements
Human
resource
manager
Information
services
manager
Requested
information
services budget
Requested
human
resources
budget
5.
The
Budgeting
Process
Manufacturing
requirements
Manufacturing
manager
Requested
manufacturing
budget
Marketing
requirements
Marketing
manager
Requested
marketing
budget
Top
management
Final organizational
budget
D-25
Example Budget Report
BUDGET REPORT
AS OF JANUARY 31
MIDWEST REGION
CURRENT MONTH
ITEM
BUDGET
ACTUAL
SALARIES
TRAVEL
ENTERTAINMENT
TELEPHONE
RENT
FURNITURE
SUPPLIES
MISC.
$23,500
8,250
1,400
200
535
0
625
400
$22,000
9,000
1,635
85
535
0
410
620
TOTAL
$34,910
$34,285
DOLLARS
$1,500750+
235+
115+
0
0
215220+
625-
YEAR-TO-DATE
BUDGET
ACTUAL
DOLLARS
$59,000
23,500
4,200
600
1,605
420
1,875
1,200
$54,250
28,100
5,100
225
1,605
505
1,320
1,963
$4,7504,600+
900+
375+
0
85+
555765+
$92,400
$93,070
670+
D-26
Performance Ratios
current assets
Current ratio =
current liabilities
cost of goods sold
Inventory turnover ratio =
average inventory val
D-27
Users of Financial Information System
Subsystem
User
Funds
Management
Forecasting
Vice-president of finance
X
Other executives
X
Controller
X
Manager of accounting
Manager of financial planning
Director of budgets
Other functional managers X
X
X
X
Control
X
X
X
X
X
X
X
X
X
D-28
Summary
Financial information systems provide a wide range of
information for both managers and interested external people
Uses include:
–
–
–
–
–
Auditing
Financial intelligence
Forecasting
Funds management
Budgeting
Financial modeling is one of the oldest uses of mathematical
simulations in business
D-29