Question

true of an effective accounting information system?

Answer 1

Information system usually collects data and process and finally converts it into meaningful information and distribute to the users. The purpose of AIS or Accounting information system is to process the financial and accounting data. Therefore AIS collects, store and process financial and accounting data and produces financial reports to the users include management, investors etc… Nowadays all AIS process are computer based and usually we use soft ware for the same.

The Accounting Information System’s functions include

• Collection and storage of data such as recording and bookkeeping of transactions happened in the business.
• Then they process it to financial reports for decision making and finally supply it to the end users as information.
• And there should be adequate controls to be placed.

The components or parts of AIS include:

• People; who are the employees such as accountants, managers and business analysts etc…
• Procedure and instruction; on which how the data to be collected, processed and disseminated.
• Data; that is the raw data to be processed as information
• Software; it include all computer programs and soft wares used in the process of data processing such as Tally ERP.9, Quick Books, Dynamic’s GP, MAS90,Oreon, Oracle etc…
• Information Technology infrastructure; such as all hard ware components
• Internal controls; they are the most used security measures for protecting the accounting data and these must be validated upon time.

The reliability factors for AIS identified by AICPA and CISA are as follows:

• Security; the access to the system and use of data is limited in number within the organization.
• Confidentiality; the information should be protected from unauthorized access.
• Privacy; collection, use and disclosure of information is kept as private.
• Integrity; accurate, timely and complete processing of data.
• Availability; the processed information should be accessible to the available users accordingly.

These are the factors required for an effective Accounting Information System for every organisation whether its big or small. Therefore quality, security and reliability of the accounting information is the key responsibilities of every Accounting Information System since all of the decisions in the organization are taken upon that processed and stored information.