Accounting information system (AIS) is a term used to refer to the entire study and practice of accounting with the design, implementation and maintaining of information systems. Accounting information system through the use of modern information technology resources and traditional accounting controls and methods, provide useful financial information necessary for their users to effectively and efficiently manage their organizations. However most businesses have tended to shift towards modern technologies to aid their accounting information systems.
When using accounting information system, information can be put into the system in a number of ways. These include; scanning devices for standard data entry; electronic communication devices for electronic data interchange (EDI) and e-commerce. In order to allow devices to connect to the worldwide web, many financial systems are web enabled. The information that has been tapped is processed through computer systems ranging from individual personal computers to large scale enterprise servers. Despite the development in processing accounting information, the underlying processing model is still the double entry accounting system that was introduced in fifteenth century (Weber, 1998).
Once accounting information has been processed, it is output through computer displays, impact and non-impact printers and electronic communication devices for EDI and e-commerce. Any financial report can be produced through accounting information system. These may include: budgets, tax reports as well as multinational financial statements (Gelinas, 1993).
Development of accounting information systems.
Development of accounting information system goes through different phases including planning, analysis, design, implementation and support with each phase taking different durations. The phases are as explained below: the first one is planning-project management objectives and techniques. It involves determination of scope and objectives of the project, the definition of project responsibilities, control requirements, project phases, project budget and project deliverables.
The second phase is analysis which helps to determine and document the accounting and business processes used by the organization. The processes are redesigned for competitive advantage and dynamism in modern system solutions. The analysis can take the stated forms: data analysis-this is done in designing accounting transactions processing system, whereby accounting information being collected by an organization is reviewed. This data is then compared to the standard data that the organization should be using for managerial purposes.
Decision analysis-is another form of analysis whereby an individual managers decisions are thoroughly reviewed. Models are then created to support the user collect financial and related data create and design alternatives, and to make workable choices. Process analysis-this is done in order to properly review the organization’s business processes.
The various processes in the organization are identified and broken down into a series of events that either add or change data the processes are then modified and tailored to boost the organization’s operations. This can be achieved through lowering cost, improving service quality or management information. This method is desirable in organizations that deal with automation or engineering (Choe, 1996).
Design phase- at this phase, the results from the analysis phase are tailored into specific designs that can be implemented in subsequent phases. A detailed design of all inputs, processing, storage and output of the proposed accounting system is developed. The input may be outlined using screening outputs and application generators. Processing can be shown through the use of flow charts or maps showing various business processes that define the system’s logic operation and work flow.
The relationships among the organization’s resources, events and agents are molded through diagrams to identify logical data storage designs. This model is referred to as entity relationship diagram and can also be used to document large scale database relationships. The output design is where variety of reporting tools such as report writers, data extraction tools, query tools and on-line analytical processing tools are used to document output design. Specific software manufacturers provide tools to carry out all aspects of design in this phase (Hall, 1995).
It is important to report breakthrough in system analysis and design as this provides information that helps drive management decision making. Scheduled and on-demand accounting system may be conveyed in different forms; tabular, graphic or notices showing complex relations in diverse dimensions.
Organizations must adhere to the following reporting requirements when using accounting information systems: the reports must be accessible through the systems interface, the information contained in the report must be conveyed in a proactive manner, reports must be relevant to the needs of the user, accurate and must its crucial purpose of informing the users.
Implementation- this phase consist of two primary parts: construction and delivery. Construction includes the selection of hardware software and vendors for the implementation, building and testing the network communication program modifications and installing and testing the total system from a technical standpoint. Delivery is the process of conducting final system acceptance and user acceptance testing, preparing conversion plan, installing production database, training the users and converting all operations to the new system. Delivered systems can be customized using application development aids that are vendor specific called tool sets (Wikhinson, 1989).
AIS should be located in a locked room with access granted only to technicians. Security should be granted to protect organization’s communication system, computing environment and organization data from theft or damage and finally protecting unauthorized access to AIS. Program testing and system testing should be carried out as well as acceptance testing to ensure that AIS performs as designed. Conversion involves methodologically changing old AIS to new AIS. The two programs can be run parallel for a given period; the user can also directly cross over to the new system at a particular point or phase in the system or pilot the new system at a particular time before the entire organization. Finally the support phase helps in updating and maintaining the AIS in light of future changes to ensure consistency and effectiveness.
Below is a case study of how different accounting information systems have been used in three different organizations in different organizations types.
Microsoft Dynamics SL
This is a distribution company that delivers parcels, letters and bulky goods internationally. Consequently, it requires distribution software for its AIS to enable deal with billing changes, fraud and transit time. This organization should use Microsoft dynamics SL that offers integrated adaptable business management system. Accessibility of this business solution enables it to work with other Microsoft products to help automate processes, drive business productivity, empower employees to work effectively, enhance collaboration and monitoring system that enables a company to save on cost ant time (Driver, 1975).
Microsoft Dynamics SL solutions will offer a number of benefits to DHL concerning its operations. These include passing promotions to the customers; DHL managers can easily control the complex promotional activities which may be specific to a particular product line or customer. It also helps in strengthening customer relationship as it is built to fulfill orders in the way your customers request within delivery times, handling multiple schedules, billing cycles and special peaking.
The solution enables accurate track recording, shipping and delivery of products by tightly integrating automatic data collection (ADC) functionality. For example, integrating your warehouse and customer delivery system ADC with your financial, inventory and sales order systems. The solutions also streamline product and service entry to enable the manager to enter data about new product quickly, easily and efficiently.
Unisef- Nonprofit organization
SAGE MIP Fund accounting software
As an organization that does not rely on profit, sage MIP come handy for unisef to help manage and raise funds using solution products like sage MIP fundraiser.
Sage MIP fund accounting is a software for nonprofit and governments organizations that help to plan and manage budgets, maximize grants and produce accurate customized reports within short time. Sage MIP fund accounting addresses the specific nonprofit financial management needs of an organization that need to track and report on multiple funds across multiple budget periods to meet their reporting requirements and demonstrate accountability (Wikhinson,1989)..
Enhancement throughout the software makes the data entry and navigation easy, natural and intuitive. The analysis and decision making has also been made straight forward. By using sage MIP, nonprofit organizations will be able to enjoy a range of benefits that includes improved decision making since the information will be provided across the organization.
The software will also convert data into actionable, fact-based knowledge hence information gathered will be easily and effectively put to use. The solutions streamline data entry through uncluttered and user-friendly grid entry screens. Information will be of high quality as this is made possible by sharing and collaborating with other teams. The reports and output can be easily customized with expanded crystal reports capabilities. The solutions also enable the user to create own user friendly fields and tables.
Confiseria Leonidas-chocolate manufacturing company.
This is software that enhances manufacturing capabilities by integrating manufacturing with the other operations in the business. It offers comprehensive solutions for managing manufacturing operations with embedded, lean and six sigma (Galbraith,1973).
With SAP manufacturing, the management and production department gain real time visibility into key data enabling them to act quickly. The managers can document, track and interpret quality and performance using rich analytics capabilities. The software enables process manufacturers to optimally plan, schedule, sequence, execute and monitor all the manufacturing processes. It also achieves high profit and expand the market boundaries for its goods.
The users can also coordinate operations with partners and suppliers. Exemptions and performance deviation can also be detected and resolved in real time and at low cost. it Institutionalizes lean and six sigma processes and monitor production to achieve continuous improvement. The SAP manufacturing ensures that manufacturers comply with environmental, health and safety standards. It also improves employee productivity and creates a high quality work environment.
For efficiency in performance, SAP manufacturing integration and intelligence (SAPMII) helps manage business in good time, exchange information between manufacturing and supply networks, SAP MII also ensure adaptability of manufacturers, profitability replenishing supply network as well as dynamically responding to unpredictable change. The solution provides a direct connection between shop flour system and business operations. It also provides data about manufacturing in good time including information about orders, materials, equipment status, and cost and product quality.
The solutions safeguard the organization with IT infrastructure enabling the delivery of information securely over the internets, extranets and intranets without the need for modification. This allows for superior manufacturing performance while lowering the total cost of ownership. With SAP MII, a business can reliably produce to target at low cost and quality improvement to meet the competitive age.
The manufacturing processes can also be linked to master data and run the business based on transparency. This guarantees the manufacturing company of responsiveness and performance. Finally, Sap manufacturing provides capabilities that enable a company to carry out manufacturing planning, manufacturing execution, quality management, maintenance management and environment, health and safety management. Read about B ig Bath accounting
Accounting information system has transformed from the traditional manual system which were paper based to manual system which are technologically aided. The modern accounting information system employs various accounting information system softwares which are industry specific: manufacturing, construction, distribution, human resource management as well as marketing. These AIS softwares can be used to perform a variety of business processes saving the business from manual labour.
These dynamism and flexibility provide a variety of benefits to the business. These include: helping the employees increase productivity, project management and accounting integration, improved team collaboration, increased efficiency as well as reduced cost.
Choe, J.M. (1996). Performance of accounting informa5tion system, influence,
factors and evolution level of information. Journal of management
information system 3(1): 54-69.
Driver, MJ. (1975). The accounting processing and design style theory and
accounting information system. New York: Routledge
Gelinas, U. J. (1993). Accounting Information System. London: Sage.
Hall, J.A. (1995). Accounting information system. New York: West publishing
Wilkinson, J.W. (1989). Accounting information system essential concepts and
Applications. New York: John Wiley and Sons.inc.
Weber, R.A. (1989). Information Systems Control and Audit. New York:
Galbraith, J.R. (1973).Design Complex Organizations. New York: Addison-Wesley Longman.
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