Accounting Information Systems
| Author | Theodore Mock |
| Pages | 10-13 |
Page 10
An accounting information system (AIS) combines the study and practice of accounting with the design, implementation, and monitoring of an information system. Such a system involves applying modern information technology resources to traditional accounting controls and methods to provide users the financial information necessary to manage their organizations. This system is often a component of an entity's management information system.
Contemporary technological capabilities permit a range of possible designs for an AIS. Yet, the basic structure of a system continues to include essentially the same three components: input, processing, and output.
The input devices commonly associated with an AIS include standard personal computers (PCs) or workstations running applications, scanning devices for standardized data entry, and electronic communication devices for electronic data interchange (EDI) and electronic commerce (e-commerce). In addition, many financial systems come "Web enabled" to allow devices that connect to the World Wide Web AIS access.
Basic processing is achieved through computer systems ranging from individual PCs to large-scale enterprise servers. Conceptually, however, the underlying processing model is still the double-entry accounting system invented many centuries ago.
The output devices used include computer displays, impact and nonimpact printers, and electronic communication devices for EDI and e-commerce. The output content may encompass almost any type of financial report, from budgets and tax reports to multinational financial statements and sustainability reports.
Management information systems (MISs) are interactive human/machine systems that support decision making for users both in and out of traditional organizational boundaries. These systems are used to support an organization's daily operational activities, current and future tactical decisions, and overall strategic direction. MISs are made up of several major applications, including the financial information and human resources systems.
Financial information applications make up the heart of AIS in practice. Modules commonly implemented include: general ledger, payables, procurement/purchasing, receivables, billing, inventory, assets, projects, and budgeting.
Human resource applications make up another major part of modern information systems. Modules commonly integrated with the AIS include: human resources, benefits administration, pension administration, payroll, and time and labor reporting.
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AISs cover all business functions from backbone accounting transaction processing systems to sophisticated financial management planning and processing systems.
Financial reporting starts at the operational levels of the organization where the transaction processing systems capture important business events such as normal production, purchasing, and selling activities. These events (transactions) are classified and summarized for internal decision making and for external financial reporting.
Cost accounting systems such as activity-based costing (ABC) systems are used primarily in manufacturing environments, but increasingly are being applied to service companies, such as banks, real estate firms, and insurance companies. These allow organizations to track the costs associated with production of goods and performance of services.
Management accounting systems such as master budgets are used to facilitate organizational planning, monitoring, and control for a variety of activities. Such systems allow all managerial levels to have access to prompt reporting and statistical analysis. The systems are used to gather information to consider alternative scenarios, and to identify an optimal answer among the hypothetical scenarios.
The...
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