Accounting Information Systems:
Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo, Raval,
and Wong-On-Wing
Module 2: Decision Support
and Expert Systems
Slides Authored by Somnath Bhattacharya, Ph.D.
Florida Atlantic University
Decision Support Systems:
Improved effectiveness in making
strategic and tactical decisions
Greater timeliness in collecting
and processing the needed
data that bear on unstructured
and semi-structured decisions
Broader understanding by the decision
makers of the array of factors involved in
problems requiring complex decisions and
their relationships to each other
Key Components of a
Decision Support System
DSS data base
DSS model base
DSS user
Terminal or
Figure M2-1
A Comprehensive Data Base that
Spans a Firm’s Decision Needs
Environmental Data
Internal Planning Data
Other Model Data
Chart of Accounts
C u s to m e r
D a ta
In v e n to ry
D a ta
S u p p lie r
D a ta
E m p lo y e e
D a ta
P ro p e rty
(p la n t
a s s e ts )
D a ta
S a le s O rd e r
P ro d u c tio n
& S h ip p in g
R e c o rd s
P u rc h a s e
O rd e rs
T im e
R e c o rd s
D is b u rs e m e n t
R e c o rd s
* = Planning data base
** = Operational data base
Figure M2-2
DSS Model Base
Decision Models
Decision models
Optimization models
Firm-wide Planning Models
Corporate models
Financial planning models
Modeling Languages
Model Base Management Systems
A Variety of Models Used by
Decision Support Systems
Model Description
1) Regression
2) Exponential smoothing
4) Linear programming
5) Line-of-balance
6) Economic order quantity
7) Supplier evaluation
8) Transportation
9) Discounted cash-flow
10) Production cost-variance
11) Cash-flow
12) Budget
 13) Manpower planning
Figure M2-3
Typical Function Aided
1) Sales forecasting
2) Sales forecasting
3) Engineering design
4) Production scheduling
5) Production routing
6) Inventory control
7) Purchasing
8) Physical distribution
9) Investment planning
10) Cost analysis
11) Financing
12) Accounting control
13) Personnel planning
Model Manipulation Techniques
Used with Financial Models
Time-Based Simulation
“What-If” Analysis
Sensitivity Analysis
Goal-seeking Analysis
Figure M2-4
More on Model-Base
Management Systems
This is a modeling counterpart to a DBMS
Its functions usually consist of providing
Links between models in a DSS
A model definition language
Mechanisms for modifying decision
A user-friendly means of
executing and manipulating
User Interfaces
Query Languages
Command language approach
Menu approach
Group Decision Support
GDSSs allow for the rapid dissemination of
information and support collaboration
among group members
Electronic mail software
Lotus Notes
Expert Systems
An Expert System is a computerized
software model that simulates the
thinking process of one or more
human experts in solving a
complex problem or in making
a decision.
Components of an Expert
Knowledge Base
Task-specific Data Base
Inference Engine
Forward chaining
Backward chaining
Development Engine
Components of an Expert
Knowledge Base
Inference Engine
User Interface
Task Specific
Data Base
Figure M2-6
Decision Situations and
Expert Systems
Neural Network
Conventional Software
Structured Semi-structured
Figure M2-7
Decision Situation
Completely Random
Factors to Consider when Selecting
Accounting ES Applications - I
Problems or decisions requiring judgment are
moderately complex to very complex and welldefined
Operational and tactical problems are highly
structured to somewhat semi-structured,
recurring, and repetitive
Expertise is difficult to acquire. Human experts
are expensive and in short supply. Non-human
expertise is available in the form of authoritative
pronouncements, such as APBs, FASBs, and IRS
tax regulations
The accounting problem can be solved in a
relatively short period of time
The accounting problem is rule-intensive and
can be solved with “if-then” rules
Figure M2-8
Factors to Consider when Selecting
Accounting ES Applications - II
Common sense or intuition is not required to
solve the problems
The accounting problem cannot be solved
efficiently with traditional or conventional
computer software programs, such as COBOL or
The body of knowledge is being continually
The problem’s conversion to a computer-based
expert system must result in a high payoff
The expert system must produce clearly
identified solutions with which most experts
must agree among themselves
Figure M2-8 Continued
Areas of Accounting Expert Systems:
Auditing (Internal & External)
Deciding whether to accept a prospective
Evaluating risks and the internal control
structure in computer systems
Reviewing prior years’ working papers
Issuing audit reports and forming audit opinions
Writing audit programs
Assisting in making a going-concern judgment
Scheduling audit personnel
Analyzing the adequacy of the allowance for
doubtful accounts
Analyzing unusual transactions
Figure M2-9
Areas of Accounting Expert Systems:
Advising on potential acquisitions and
Claiming a dependent
Auditing deferred tax accruals
Determining corporate tax status
Determining if a firm qualifies for
Subchapter S tax status
Offering personal and corporate tax
planning advice
Figure M2-9 Continued
Areas of Accounting Expert Systems:
Analyzing significant variances and
explaining the variation
Assisting in monthly closings
Allocating revenue and expenses
Analyzing performance of projects
Reviewing trial balances
Figure M2-9 Continued
Areas of Accounting Expert Systems:
Financial Accounting
Accounting for non-monetary transactions
(APB No. 29)
Accounting for contingencies (FAS No. 5)
Purchasing vs. pooling (APB No. 16)
Accounting for futures contracts (FAS No.
Developing expert systems for other
professional pronouncements
Classifying financial transactions correctly
Evaluating credit worthiness
Figure M2-9 Continued
Examples of ES in
Accounting: Auditing
Figure M2-10
Nam e
P u rp o se
D e v e lo p e r
L o a n P ro b e
T o a ssist b a n k s in
KPM G Peat
a sse ssin g co m m e rcia l M a rw ick
lo a n p o rtfo lio s
A u d ito r
T o a ssist in e v a lu a tin g D u n g a n
th e a d e q u a cy o f th e
(U n iv e rsity o f
a llo w a n ce fo r b a d
S o u th F lo rid a )
d e b ts
E D P -X P E R T
T o a id a u d it
sp e cia lists in
e v a lu a tin g th e
re lia b ility o f co n tro ls
in co m p u te r sy ste m s
H a n se n a n d
M e ssie r
(U n iv e rsity o f
F lo rid a )
G C -X
T o a id in m a k in g
g o in g -co n ce rn
ju d g m e n ts
B ig g s a n d
S e lfrid g e
(U n iv e rsity o f
C o n n e c ticu t)
A u d it P la n n e r
T o a id in m a k in g
S te in b a rt
m a te ria lity ju d g m e n ts (A rizo n a S ta te
Examples of ES in
Accounting: Tax
Nam e
P u rp o se
D e v e lo p e r
T o a id ta x s p e c ia lis ts
in r e n d e r in g e s ta te
p la n n in g a d v ic e
M ic h a e ls o n
( U n iv e r s ity o f
N o r th T e x a s )
E xp e rT A X
T o a id in ta x p la n n in g
a n d c o r p o r a te ta x
a c c r u a ls
C o o p e rs a n d
L y b ra n d
T a x p a y e r S e r v ic e
A s s is ta n t
T o a id IR S a g e n ts in
a n s w e r in g ta x p a y e r
q u e s tio n s o n c o m p le x
ta x is s u e s
Figure M2-10 Continued
Emerging Developments
Intelligent Agent Software
Integrating DSSs with other support
Fuzzy Logic
Developments in Multimedia and
Accounting Information Systems:
Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo,
Raval, and Wong-On-Wing
Copyright © 2000 John Wiley & Sons, Inc. All rights reserved.
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Accounting Information Systems: Essential Concepts and