What Are the Effects of Accounting Information Systems for a Company?

An accounting information system is a subset of the management information system. A management information system focuses on providing business owners and managers with supporting documents for making decisions. Accounting systems focus primarily on financial transactions. Business owners, directors and managers may not be on the forefront of the company's operations. An accounting information system provides several benefits for owners and managers needing to review financial transactions.

Workflow Improvements

o    Improving workflow is a common goal for business owners and managers. Accounting workflow represents the individual processes by which financial documents flow through a company. Internal documents relate to financial reports for business owners and managers, while external ones represent information relating to the economic market. The accounting information system ensures these documents get to the individuals responsible for making decisions.

Better Processes

o    Companies typically use several types of processes in their accounting department. Paying bills, collecting customer accounts, posting journal entries and creating account reconciliations are just a few common processes. Accounting systems often allow managers to develop processes that take advantage of the company's information system. Business owners may also be able to reduce the number of processes in their accounting department. Reducing the number of processes can decrease the amount of time it takes to process financial information.

Decision Support

o    Business organizations often use accounting information systems to provide support for management decisions. Support usually includes financial analysis from company accountants. Analysis is often taken for the company's accounting information system. Using business technology, this system can process copious amounts of documents electronically for owners and managers. Information systems also allow business owners and managers to request specific analysis reports within the scope of the company's accounting system.

Flexibility

o    Accounting information systems usually provide companies with a certain level of flexibility. This flexibility allows business owners and managers to change how their system gathers and distributes financial documents. Changes to business operations usually can create significant changes in a company's financial or accounting processes. Business owners and managers need the most current documents when reviewing their company's overall performance. Automated information systems allow companies to add new business divisions or departments into their accounting gathering process.

Definition of Accounting Information Systems

Accounting Information Systems (AIS) are systems that are used to record the financial transactions of a business or organization. The system combines the methodologies, controls and accounting techniques with the technology of the IT industry: computers, software and the user interface. The software used to track transactions provides internal reporting data, external reporting data, financial statements, and trend analysis capabilities. This information is essential to decision makers and top executives

AIS

o    The ledger book and pencil have been replaced by a computer and keyboard. Since the data is entered by people, errors in the data do still occur. The software records the data into accounts that track to the proper places within the assets, liabilities and equity columns. This information can be queried, combined, sorted, and reproduced to create many different evaluative tools or reports.

Input Devises

o    The input devices are computers, clone workstations, fax machines, and scanners. The secondary input tolls are the keyboard and mouse. All of these tools are available to help get the information into the storage drive of the computer system. The software that the user interfaces with can be either server or we based. Software loaded onto a company server is much more secure than information downloaded to a web based software package. It is important to remember to back up your material twice every day.

Output Devises

o    When you want to create a statement or report you will need to extract the information from the accounting information system through an output devise. These kinds of devises include printers, electronic transfer methods or PDAs. The information entered goes through a process of being coded by the software. This way, the computer generates the financial reports, and the user does not have to spend her time creating one. As long as the data was entered properly, the data that comes out will be accurate.

The Effects of AIS

o    Accounting information systems come in all sizes. The software that a large company uses will be very different from a small business. Large corporations have complex accounting issues like: derivatives, real estate, stocks, bonds, investments and multiple divisions, locations, and products. Smaller companies often do not have as many of these complex issues. Therefore, the software has to be much more robust as does the AIS itself. The enterprise resource planning system (ERP System) is large-scale AIS that are used for such companies. They use high end technology that is present throughout the organization. These large systems also have applications in the supply chain management and financial reporting arenas. The accounting regulation and code is built into the software.

Software

o    Accounting information systems have made the job of bookkeeping and accounting much easier. The knowledge needed to be an accountant is still necessary. However, much of the time intense work can now be done with fewer employees in a shorter time period. Accounting information systems have revolutionized the industry of accounting, tax compliance and attestation.

Why Study Accounting Information Systems?

Businesses use accounting information systems to help facilitate the accounting process. With accounting information systems, a computer program performs accounting processes such as payroll, accounts payable/receivables, general ledger and others. In addition, such as system streamlines multiple accounting processes by assisting with compiling and recording financial information for better record keeping. Because accounting information systems are expected to continue to grow over the next 10 years, there is an increased need for people who know how to use them.

1.   Function

o    The use of information systems is crucial in recording vital financial data. Major corporations keep data such as sales, profits, expenses and many other items for financial reporting and budgeting. Additionally, these systems allow some type of transaction recording on a periodic basis. Good record keeping is important for both tax purposes and possible audits. By using computerized accounting information systems to manage accounting processes and maintain proper records, companies are able provide accurate, timely data to shareholders and/or regulatory agencies when necessary.

Benefits

o    Accounting information systems provides businesses with the ability to record all types of financial information for future use. In addition, these systems are huge time-savers and make the accounting processes and procedures easily repeatable. Because of that, these systems save companies money because the number of people needed to complete accounting processes is reduced. Also, the risk of human error is drastically reduced because the computer systems manage the accounting processes, and documents are automatically created by the systems. It is imperative that businesses keep accurate books, and accounting information systems make this requirement much easier to meet.

Careers

o    Because the accounting industry has become much more computerized, the role of accountants and auditors are changing drastically. Instead of doing many of the tedious tasks that are now handled by the computer systems, accounting professionals are seen more as system managers, information analysts and/or advisers. Accounting information systems professionals usually go into careers in accounting systems, systems design, accounting systems management, auditing, consulting and other systems-related areas of accounting. The salary for these positions ranges anywhere from $54,000 to $85,000 or more a year, depending on experience.

Curriculum

o    Generally, in addition to the standard accounting curriculum, a student studying accounting information systems will take several information systems classes. Courses such as accounting information systems, systems analysis and design, and database analysis design are commonplace in most programs. Courses such as system quality assurance and controls, and e-business-type courses are also included.

Considerations

o    The accounting information systems profession is growing rapidly with the advent of businesses computerizing their accounting processes. As a result, businesses are seeking professionals with not only an information systems background, but also people who understand accounting concepts. Although students pursuing an accounting information systems degree are faced with pretty rigorous coursework, pursuing this line of study will reap many rewards because the career outlook for this profession is excellent in terms of job growth and financial rewards.

Define value chain?

VALUE CHAIN is the sequential set of primary and support activities that an enterprise performs to turn inputs into value-added outputs for its external customers. As developed by Michael E. Porter, it is a connected series of organizations, resources, and knowledge streams involved in the creation and delivery of value to end customers. Value systems integrate supply chain activities, from determination of customer needs through product/service development, production/operations and distribution, including (as appropriate) first-, second-, and third-tier suppliers. The objective of value systems is to position organizations in the supply chain to achieve the highest levels of customer satisfaction and value while effectively exploiting the competencies of all organizations in the supply chain.

Value-chain analysis looks at every step a business goes through, from raw materials to the eventual end-user. The goal is to deliver maximum value for the least possible total cost.