In: Accounting
What AIS (Accounting Information System) software package would be ideal for small barber shop?
Choose two potential candidates and compare them. The following problems will need to be taken over by the AIS: payroll; personnel; scheduling; accounts payable and receivables; vendors; potential income disbursements; all sales data; retail inventory and working inventory. The barber shop employs 6 people (4 barbers, one accountant, one manager) and makes $200,000 annual sales. Make all other assumptions if necessary. Create a comparison matrix for your packages. Which AIS software package would be best choice for the barber shop and why?
An accounting knowledge process (AIS) is a structure that a business uses to acquire, retailer, control, system, retrieve and document its monetary information in order that it can be utilized by accountants, consultants, business analysts, managers, chief monetary officers (CFOs), auditors, regulators and tax companies.
In particular informed accountants work in-depth with AIS to ensure the best degree of accuracy in a enterprise's fiscal transactions and recordkeeping, as well as make financial information with no trouble on hand to those who legitimately need access to it all even as preserving knowledge intact and secure.
Accounting know-how programs more commonly encompass six major components: persons, procedures and directions, data, application, understanding technology infrastructure and interior controls. Let's seem at every factor in element.
1. Humans
The persons in an AIS are without problems the system customers.
Gurus who may just need to use an group's AIS incorporate
accountants, consultants, industry analysts, managers, chief
economic officers and auditors. An AIS helps the special
departments inside a organization work collectively.
For illustration, administration can set up income goals for which staff can then order the correct quantity of inventory. The stock order notifies the accounting division of a new payable. When sales are made, income men and women can enter purchaser orders, accounting can bill customers, the warehouse can gather the order, the delivery department can send it off, and the accounting department gets notified of a brand new receivable. The purchaser service department can then track patron shipments and the approach can create revenue stories for management. Managers may see stock costs, transport charges, manufacturing costs and so on.
With a well-designed AIS, all people within an group who is permitted to do so can entry the same process and get the same information. An AIS also simplifies getting information to folks outside of the group, when essential.
For instance, consultants might use the understanding in an AIS to analyze the effectiveness of the company's pricing structure with the aid of watching at rate data, income knowledge and earnings. Additionally, auditors can use the information to determine a enterprise's inside controls, financial condition and compliance with the Sarbanes-Oxley Act (SOX).
(find out more on accounting laws; examine out monetary history: the rise of trendy Accounting.)
The AIS should be designed to satisfy the desires of the men and women who will probably be utilising it. The procedure must also be effortless to use and will have to beef up, not restrict, efficiency.
2. Process and directions
The method and instructions of an AIS are the approaches it makes
use of for amassing, storing, retrieving and processing data. These
approaches are each manual and automated. The information can come
from each interior sources (e.G., staff) and external sources
(e.G., patrons' on-line orders). Techniques and recommendations
will be coded into AIS application they must even be "coded" into
staff through documentation and coaching. To be amazing, tactics
and instructions must be followed consistently.
(Does a job as a financial sleuth sound interesting to you? Study more in Uncovering a career in Forensic Accounting.)
3. Knowledge
To store information, an AIS ought to have a database structure
corresponding to structured question language (SQL), a laptop
language typically used for databases. The AIS will even want quite
a lot of enter screens for the exceptional types of method
customers and knowledge entry, as well as exclusive output formats
to satisfy the wishes of special customers and various types of
knowledge.
The data contained in an AIS is all the economic understanding pertinent to the group's trade practices. Any industry data that impacts the manufacturer's price range will have to go into an AIS.
The style of knowledge integrated in an AIS is determined by the character of the industry, but it is going to encompass the next:
sales orders
customer billing statements
revenue evaluation reviews
buy requisitions
supplier invoices
assess registers
normal ledger
stock knowledge
payroll information
timekeeping
tax expertise
this knowledge can then be used to prepare accounting statements
and experiences such as accounts receivable getting older,
depreciation/amortization schedules, trial steadiness, revenue and
loss, and so forth. Having all this information in a single
location within the AIS allows a industry's recordkeeping,
reporting, analysis, auditing and determination-making events. For
the data to be priceless, it need to be complete, right and
significant.
Alternatively, examples of information that would no longer go into an AIS involves memos, correspondence, shows and manuals. These records could have a tangential relationship to the corporation's budget, but with the exception of the general footnotes, they aren't relatively part of the manufacturer's economic recordkeeping.
4. Program
The program factor of an AIS is the pc programs used to store,
retrieve, process and analyze the company's fiscal information.
Before there were desktops, AISs had been manual, paper-centered
systems, however in these days, most businesses are using laptop
program as the groundwork of the AIS. Small businesses might use
Intuit's Quickbooks, Sage Peachtree Accounting, or Microsoft's
Small industry Accounting, but there are numerous others. Small to
mid-sized organizations would use SAP's industry One. Mid-sized and
big businesses might use Microsoft's Dynamics GP, Sage team's MAS
ninety or MAS 200, Oracle's Peoplesoft or Epicor financial
administration.
Pleasant, reliability and security are key accessories of potent AIS software. Managers rely on the expertise it outputs to make selections for the manufacturer, they usually need excessive-first-class know-how to make sound choices.
AIS software programs will also be custom-made to satisfy the exact wants of one of a kind types of companies. If an existing application does now not meet a manufacturer's desires, software may also be developed in-house with tremendous enter from finish customers or may also be developed through a third-social gathering company in particular for the institution. The method might even be outsourced to a specialized enterprise.
For publicly-traded firms, it doesn't matter what software application and customization choices the business chooses, Sarbanes-Oxley regulations will dictate the constitution of the AIS to a degree. This is for the reason that SOX laws establish inside controls and auditing systems that public firms have got to conform to.
5. Understanding technological know-how Infrastructure
knowledge technology infrastructure is just a fancy name for the
hardware used to operate the accounting information system. A
majority of these hardware gadgets are matters a business would
have got to have anyway, together with computer systems, cellular
instruments, servers, printers, surge protectors, routers, storage
media, and possibly a backup vigour supply. Additionally to rate,
explanations to consider in making a choice on hardware comprise
velocity, storage ability and whether it can be improved and
upgraded.
Probably most importantly, the hardware selected for an AIS have got to be suitable with the meant software. Ideally, it could be now not simply suitable, but choicest a clunky method will be so much less important than a quick one. One way businesses can with no trouble meet hardware and software compatibility requisites is by using buying a turnkey process that involves each the hardware and the program that the business desires. Buying a turnkey method approach, theoretically, that the business will get an ideal combination of hardware and software for its AIS.
A just right AIS must also incorporate a plan for maintaining, servicing, replacing and upgrading add-ons of the hardware method, as good as a plan for the disposal of broken and outdated hardware in order that touchy knowledge is thoroughly destroyed.
6. Inside Controls
the interior controls of an AIS are the security measures it
comprises to shield sensitive knowledge. These can also be as
simple as passwords or as complex as biometric identification. An
AIS have got to have inner controls to shield against unauthorized
computer entry and to limit entry to authorized customers which
includes some users throughout the manufacturer. It have got to
also restrict unauthorized file entry by individuals who are
allowed to access only decide upon components of the system.
How AISs Work In real life
we have now noticeable how a good-designed AIS permits a trade to
run smoothly on a day-to-day groundwork or hinders its operation if
the procedure is poorly designed. A 3rd use for an AIS is that
after a business is in hindrance, the info in its AIS can be
utilized to find the story of what went wrong.
The instances of WorldCom and Lehman Brothers furnish two examples.
In 2002, WorldCom interior auditors Eugene Morse and Cynthia Cooper used the company's AIS to uncover $4 billion in fraudulent expense allocations and different accounting entries. Their investigation resulted in the termination of CFO Scott Sullivan, as well as new laws section 404 of the Sarbanes-Oxley Act, which regulates organizations' interior fiscal controls and strategies.
When investigating the factors of Lehman's collapse, a review of its AIS and different data programs used to be a key aspect, together with document assortment and assessment, plus witness interviews. The search for the factors of the manufacturer's failure "required an large investigation and evaluate of Lehman's operating, buying and selling, valuation, economic, accounting and different data systems," consistent with the 2,200-web page, 9-volume examiner's report.
Lehman's methods provide an instance of how an AIS must not be structured. Examiner Anton R. Valukas's document states, "on the time of its bankruptcy filing, Lehman maintained a patchwork of over 2,600 application programs and functions... A lot of Lehman's techniques had been arcane, out of date or non-normal."
The examiner decided to focus his efforts on the 96 systems that appeared most primary. This examination required training, gain knowledge of and trial and blunder just to study learn how to use the techniques.
Valukas's record also noted, "Lehman's methods were particularly interdependent, however their relationships had been tricky to decipher and now not good documented. It took distinguished effort to untangle these systems to obtain the necessary knowledge."