The Importance of Accounting Information Systems

Table of Content

In most organizations S. Are made up of interrelated components that interact to achieve a common goal. Throughout this paper will look at the history of ASS, why the A. I. S. Is important to corporate America, and what future developments are necessary to move ahead with the system History Of the ASS In order to understand Accounting Information Systems better it is important to break down what the term really means and why it is so important in modern day accounting. The development of ASS dates all the way back to Babylon, in the year BECAME, this is when the oldest known cord of any business occurred.

It is believed that ASS were used in many other countries before making it’s way to the U. S. Countries such as Greece, China, and Rome are all believed to have used this system during trade activities. A. I. S. Were first comprised of someone jotting down notes with a pencil and paper and now years later it has developed into extensive software programs that take human error out of the equation. The emergence of the ASS discipline has arisen from the application and of information and communication technology in the accounting portion of the business. (Sutton, 1996).

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ASS are vital to all businesses (Birthing and Clark, 1990) in order to collect raw data and transform it into financial data to be presented to the decision makers. ASS and decision making in a firm. Information systems are what companies rely on to provide adequate and necessary information to make decisions. ASS are used as a tool designed to help in the controls related to organizations financial areas. There are many different types of AS, yet there is no specific way for a company to do their accounting. As long as companies are disciplined and compile all the facts, the accounting method may vary.

It is very important for companies to identify and collect meaningful information in order to make important business and financial decisions. Advancements in information and communication technology have made decision-making processes better for management because now it is possible to improve and constantly upgrade the accounting information system. (Pierce, Idea. 2003) It is important for companies to reach a common ground between AS, management, executive functions and external users. This is vital for compatibility of all functions in the company to be established.

If a common ground is achieved, coherence teens management and accounting information systems leads to the simplification of business and financial decisions. (Granular, 2011) What do the ASS really do? The ASS has many different functions but the most important task of the ASS is dealing with the following. – Recording monetary forms of business events – Data processing and drawing account reports – Publishing financial statements with financial communities In today’s business world besides the General Manager or President of a company the financial auditor has one of the most important roles in the company.

The GM handles the daily operations and decision-making reoccurred of the operation but the financial auditor working within the ASS is responsible for the accurate and dependable financial reporting of the company. Melanin and Thoracic (201 1) believe that within a company comprised of people, equipment, software, and data; the AS, which includes communication and network solutions that connect all elements of the organization is the most important piece. Different Sub Systems of ASS and the Advantage of this Method The ASS is part of a subsystem of a larger system called the business information systems.

Within the IBIS there are four subsystems dealing with counting, marketing HRS. And management. The accounting subsystem is the one that we will at closer. Since the first published paper on accounting was written by Lucas Petiole, (Shine, E. , Barb, J. , Deal-Ri, Marcia, F. , 2007) there have been basic principals that still remain the same today. The principles are used in the implementation of the ASS. The ASS can be made up of the following: 1) Made of individual sub-systems 2) Integrated 3) Combination When speaking about bullet point # 1 above, sub systems are one method of accounting used in ASS.

There are many different types of individual sub yeasts that can be developed for all different types of organizations, some include. – Sub systems for processing of transactions – Sub systems of book keeping journal – Sub systems of fixed assets – Sub systems of reporting to management – Sub systems of general ledger – Sub systems of analytical book keeping There are many different sub systems because of the different needs of organizations. To try and make one system that would fit the needs of all companies would be impossible.

In this system, regardless the needs of any individual organization, there is a sub system that can assist management in he decision making process. In addition to the advantages Of the sub systems fitting individual company needs, also the sub systems allow for data transfer automatically between the analytical book keeping sub system to the general ledger sub system. Bullet point #2 from above explains how integral accounting systems operate in a much different manner. Integral accounting systems operate differently than sub systems in that data is only entered once online.

By doing accounting this way interactions between accounting modules enables that one business activity from one cycle causes certain changes in other yeses. Reliability and usefulness of the ASS With the recent accounting scandals and the need for accurate information to base company success, the ASS has a lot of pressure to make sure that there reporting the correct figures. Despite the extreme importance of reliable information, few safe guards have been produced to check the accuracy of the ASS. (Felix & Niles, 1988) until 2003 the reliability of the ASS was known to be questionable but Serbians-Cooley Act passed by the U.

S. Congress required firm’s CEO and SCOFF to certify the reliability of data reported in financial statements. Before this Act was put in place it was estimated that 10-30 percent of financial reporting was inaccurate to some degree. (Goff 2003) Financial information in computerized environments is highly superior in comparison to manual management. The accounting profession has changed significantly by the implementation of the computerized systems, many fear this could lead to job loss and exploitation but if used correctly computerized systems will be a great benefit to companies for years to come.

AS and Computer Security Threats Much like everything else, accounting practices are moving towards imputer programs that make the job of the accountant and the corporation easier. The worry for the future is the security threats that are imposed on any information being sent through the Internet. As ASS continue to develop, they are being replaced with what is now known as CASSIS or computerized accounting information systems. The CASSIS has a lot of questions to answer before employers will be comfortable with using them primarily for their accounting needs, however, the accounting world is ready for a more efficient way of data collection.

Research has shown that the security of the CASSIS is efferent depending on what company and what level of experience you’re dealing with. The following are known risks to the system; design quality of individual systems, education level of system users, and work experience of system users. Although many of these security threats might seem simple to fix, these threats have many in the accounting world steering clear of this practice until there are more fail proof programs to work with.

Research has found that the greatest threat to the CASSIS is carelessness of users not following the correct procedures and negligence when it comes to appropriate training and supervision. As we look to the future with the CASSIS ad it becomes more available for all businesses the need to employ the correct systems and personnel so security is not an issue. Although the fight to maintain security is a never ending battle, when dealing with highly confidential information it will have to be the focus in order for the CASSIS to remain successful.

Studies on ASS importance in a world Financial Market Flynn (1992) put together a study on the effectiveness of ASS and organizational performance on companies in Dublin financial market. Rooney et al. , 1987 define information systems as organized means of collecting, entering, and processing data. In years past information systems have centered on recording and summarizing data. Flynn (1992) found that organizations in the past have managed organizational performance using the balanced scorecard methodology.

This performance measure is tracked in multiple dimensions such as financial performance, performance management, social responsibility and employee stewardship. Results are used to evaluate usefulness of ASS on effective organizational performance. The study found that ASS is the variable that impacts financial performance the greatest, financial performance and management have a direct affect on organizational performance, and that barriers in a companies implementation of ASS can lead to a negative effect on the company.

Changes Going Forward in the System Changes in the ASS revolve around updates or improvements to the existing system in order to work with the newer technology. The ASS is now part of the modern day Computer Based Information system or CBS, which uses computer technology and consists of data collection and management applications. As with any other computer-based programs the accounting world will have to find ways to safeguard the information to be reported so it doesn’t fall into the wrong hands.

It is a known fact that the future of accounting revolves around computer software and the CASSIS, it is up to researchers and accountants to make sure the programs and the transferring of data is done in a secure and uncompressed way. Conclusion The ASS was developed to meet management needs and to better insure that companies are reporting the correct information. By working alongside pop management and constantly improving information strength, the ASS helps to improve business and financial decision-making.

As we have seen in the past without the ASS accounting in businesses is very different and less reliable than what w?re used to today. Like anything else, there are constantly new laws and improvements being made to the practice but for the most part, accounting and corporate America is better because of the system. Going forward we continue to implement and improve the CASSIS, which will eventually take over completely and hopefully make the accounting recess quicker and more secure for all businesses References: Goff, J. 2003. Drowning in data.

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