The field of accounting information systems (AIS) combines that of accounting with the much newer field of information systems, systems that include people, processes, procedures, and information technology in a flexible resource used to handle data. Specifically, accounting information systems are a subset of management information systems, systems designed to support and supplement the decision-making process at all levels of management. The field of AIS includes the use, design, and implementation of such systems, and their adherence to traditional accounting methods and contemporary standards in accounting practices.
On the technology front, AIS systems usually include computers—ranging from ordinary personal computers, to specialized workstations, to dedicated servers for processing large amounts of data—equipped with scanners (for data entry) and internet access, compatible with electronic data interchange (EDI), and set up to print out various financial reports. Applications generally cover procedures and reporting areas
like budgeting, inventory, assets, purchasing, accounts payable, accounts receivable, and billing, as well as human resources applications like benefits and pension administration, payroll, and time sheets.
AIS systems can cover everything from complicated financial management planning that would take significant man hours to compute and double-check, to basic transaction processing. Generally speaking, everyday business transactions—buying, selling, and producing—will be recorded, summarized, and classified at the time of recording, making it easy to access data for new modules after the time of transaction. Depending on the nature of the business, cost accounting systems may be put in place in order to track production costs of goods or the efficiency of services—or analytical systems may track performance and highlight areas where resource allocation can be improved. Management is typically given greater access to this information than employees.
The development and needs-tailoring of an AIS is a five-stage process. As with all systems development, planning comes first, with the objectives and scope of the system made explicit. The analysis stage documents the processes in use, reviews the types of data generated or recorded by the business, and analyzes what can be automated, streamlined, or otherwise altered. Sometimes most significantly, the analysis stage also registers what sorts of decisions management employees make on a regular basis, often with the result of identifying areas in which AIS can be applied that were not foreseen in the planning stage. The analysis can take a long time, particularly if the nature of the business is such that it must be observed for a lengthy period of time in order to collect a full set of data (businesses subject to seasonal impacts, for instance, like restaurants facing crowds on Valentine’s Day or resorts dealing with seasonal slumps, should ideally be monitored for the full year, or incorporate information from a model based on such a set of observations).
The third stage, design, develops elements of the proposed system based on the results of the analysis. Typically, flowcharts or other visual reports are used to present the designs of processes and some other elements. Part of the design stage involves identifying the reports that will be generated by the AIS, and the form they will take. Not all information collected should be present in standard reports, or the critical information will be lost to the casual glance; at the same time, reports should be tailored to their expected audience, not only in content but in presentation. Extensive software options are available to assist in the design stage.
The implementation stage involves the construction and delivery of the system, as well as the testing and security checks thereof. This may require a conversion sub-stage if the AIS is going to replace any processes or systems in use at the business. Finally, the support stage, which continues long after the AIS has been put into use, updates and maintains the AIS, confirms that it is performing as intended and expected, and reevaluates the business to see if further improvements can be made.
- Nancy A. Bagranoff, Mark G. Simkin, and Carolyn Strand Norman, Core Concepts of Accounting Information Systems (John Wiley & Sons, 2008);
- James A. Hall, Accounting Information Systems (South-Western College Publishing, 2008);
- Marshall B. Romney and Paul J. Steinbart, Accounting Information Systems (Prentice Hall, 2008).
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