Accounting Information Systems Overview

Accounting Information Systems (AISs) combine accounting with the design, implementation, and monitoring of information systems. 

These systems use modern information technology resources together with traditional accounting controls and methods to provide users the financial information necessary to manage their companies.

The purpose of an AIS is to accumulate data and provide decision makers (investors, creditors, and managers) with the information they need to make an informed decision.

Technology of the Accounting Information System

You can break the AIS technology into 3 seperate categories:

Input - These are the devices that input the data into the accounting system. Typcially, these include standard personal computers or workstations that are running applications. Data can also be input from scanning devices, electronic communication devices for electronic data interchange (EDI) and e-commerce. More recently, many financial systems come "Web-enabled" to allow devices to connect to the Internet.

Process - This includes the basic processing of the data and it is achieved through computer systems ranging from individual personal computers to large-scale company servers. The primary processing model is still the "double-entry" accounting system that was initially used in the fifteenth century.

Output - Typical output devices include computer displays or monitors, impact and nonimpact printers, and electronic communication devices for EDI and e-commerce. The output content may encompass all types of financial reports that range from budgets and tax reports to international financial statements.

In the past, most accounting systems consisted of notebooks and ledgers. With the advent of the computer, those accounting books have been replaced with accounting software programs. The AIS has greatly changed the way accountants perform their jobs and has improved accounting effectiveness and efficiency.

An accounting information system must by definition have a target system. The target system must be related to operations of the business. 

Other non-accounting aspects of business operations are covered by information systems such as Human Resources Information System, Management Information System, Production Planning/Scheduling System, Strategic Planning System, and so on.

The target system for an accounting system has to do with the aspects of business operations that have to do with accountability for the assets/liabilities of the enterprise, the determination of the results of operations that ultimately leads to the computation of comprehensive income, and the financial reporting aspects of business operations.

Accounting information systems cover all of the business operations from accounting transaction to sophisticated financial management planning and processing systems.

Financial reporting begins 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 are typically used in manufacturing and service businesses. These allow companies to track the costs associated with the production of goods and services. The accounting information systems can alos provide advanced analyses for improved resource allocation and tracking of performance.

Management Accounting Systems are used to allow organizational planning, monitoring, and control for a variety of activities. This allows managerial-level employees to have access to advanced reporting and statistical analysis. The systems can be used to gather information, to develop various scenarios, and to choose an optimal answer among different scenarios.