Accounting Information Systems: an Overview
Accounting Information Systems: An Overview The ’systems’ concept was created in order to minimize common errors such as duplications and, overall, encourage ‘integration’. Systems are almost always composed of subsystems, which are in charge of specific functions needed to support the larger organism. Subsystems are expected to follow the main organization’s goals even if it implies not meeting their specific targets.
The value of the information reported by an entity is the difference between the benefit obtained from that organized data, minus the cost of implementing an Accounting Information System in charge of collecting, recording, storing and processing the data. Effective Accounting Information Systems are key items in the success of organizations: the human mind can effectively absorb and process up to certain amount of information, otherwise ‘information overload’ is said to occur which tends to significantly affect the quality of the decision-making process.
An AIS is formed by six main components: those employees who operate the system, the set of instructions and procedures involved in using the system, the data itself, the software used to organize the data, the information technology infrastructure which is all the computers and other devices involved in the process, and lastly, the internal controls and security measures implemented to safeguard the integrity of the stored data. In order to be as useful as possible, information is expected to be relevant, free from errors and unbiased (reliable) and it must not omit important details (complete).
Information should also be provided in time and be presented in a useful and intelligible format (timely and understandable). Needles to say, it needs to be verifiable and has to be available to users when needed. With the continuous advance of technology, now more than ever Accounting Information Systems add value to organizations by providing them with well organized, easily accessible, accurate and timely information. They have also demonstrated to improve the quality and reduce the overall costs of products and services, making operations more efficient and improving internal controls and decision making.