What is the Role of Accounting Information System?

What is the Role of Accounting Information System?

For years, drastic changes took place in the business environment due to the widespread use of information technology, new communication means, and market globalization. With these developments, a lot of organizations have searched for the most efficient use of resources to dominate its respective markets.

Before going into details on the roles of Accounting Information System (AIS) in the Philippines, allow us to shed light on the meaning of AIS.

Accounting Information System is a software that a business uses in collecting, storing, and processing financial data that are used for decision-making. It is a computer-based method to track down accounting activity in conjunction with information technology resources. To simplify, Accounting Information System gives accurate data to the managers before making any significant decisions that will either make or break their business.

The basic functions of Accounting Information System are:

  • Collect and Process Data

This is the phase where accountants or bookkeepers gather data from cash sales, receivables, and payroll. By using an Accounting Information System, the software processes all the debits and credits into an accurate management database.

  • Providing Important Reports to the Management

Management uses the reports derived from AIS to analyze the company’s current operations and financial condition and gear up for the future by making plans and setting up goals.

  • Accuracy and Security

You can improve security by limiting the number of people who can access your system. By doing this, you can ensure that the data remains confidential and data are being secured. Plus, if anything goes wrong, it is easier for you to track down the digital footprints.

Since we are in a digital world, by having a computer-based accounting information system, it gives you the efficiency that you need for your business. The advantage of having AIS is that it streamlines and automates reporting, making everything just a few clicks away when your company heads require financial reports from your team.

Back then, organizations particularly large companies hire third-party help – software development companies or consultants who understand the nature of the business. But companies are looking for solutions that will provide efficiency and cost-effectiveness. That’s why most big companies are slowly adapting the idea of getting their own cloud-based accounting information system. Like other software solutions in the market, money alone cannot make it effective. Proper implementation is the key to reach the potential of your newly acquired software. Here are the steps to successfully implement accounting information system:

  1. Detailed Requirements Analysis. All end-users of the new system will be interviewed. This is to ensure the current system is thoroughly understood, including the complete documentation of the system being gathered. Through this analysis, it will be easier for the staff involved to accept the changes that will happen. It is best to allow your staff to ask questions and let them provide inputs. By doing these, your staff is more receptive to the change that you want to implement.
  1. System Design. After analysis, a new system is created. Knowing what you need means knowing what you need to input into the system. The system is designed to incorporate appropriate internal controls that can provide the management with the information needed to make vital decisions for the organizations. The goal of an accounting information system is to provide information that is pertinent, significant, consistent, useful, and up-to-date. In order to achieve this, the system is created and designed so that transactions are entered concurrently and the information is readily and immediately available online for management.
  1. Documentation. While the system is being built, ensure that everything is well documented. This documentation provides the users a detailed procedures or instructions with regards to the new system. This also plays a vital role and can be used as a tool for testing and training before rolling out the system.
  1. Testing. Before launching the system, all processes are tested. This is where the proper documentation will be put to good use. The documentation that you have gathered beforehand will ensure that all processes are thoroughly documented and procedures are easily followed. Consider this phase as your “trial and error” stage. This stage allows you to do some system modifications. Ensure that all processes are tested. All reports and online information must be verified and can be traced through the audit trail to ensure that transactions are handled consistently.
  1. Training. Providing training is the best and only way to prepare your staff to involve in the changes you want to implement when it comes to AIS business software. Also, through this stage, you can get a sound input from your staff to improve the system. After all, they are the one who will be using it.
  1. Data Conversion. This is where your existing data from the current system will be transferred to the new system. This phase should be tested and properly verified before starting the final conversion. It is also advisable to have a back up of all your data in the event that you need to restart all over again.
  1. Rolling Out the New System. The entire company must be aware of the launch date of the new system. Some staff retains the old platform while the new one is being implemented and will continue to co-exist until the new platform is fully operational. This is the ideal scenario for organizations switching from one platform to the other.
  1. Tools. Online resources should be made available to the person who will be involved in using AIS. It is also best for organizations to determine the responsibilities of each employee involved.
  1. Support. The management and its end-users should have on-going support available at all times. System upgrades should be monitored at all cost, as AIS is where the upper management will base their decision towards the success of the organization. Not only should the company monitor the system upgrades but as well as continuous staff training to adapt to the changes or upgrades in order to attain the efficiency of the new system being rolled out.

The success of the organizations relies on the data being gathered. The data gathered are the basis of whatever decisions your upper management will make for the business. It is best and ideal to follow the above phases to ensure proper implementation and the success of your new platform. In conclusion, when you have a well developed and properly maintained accounting information system, that gives you efficient and accurate data, which is an important component of a successful business.