Accounting Information System (AIS)

What is an Accounting Information System (AIS)?

An Accounting information system comprises the acquiring, storage, and processing of accounting and financial data that internal users make use of to report essential information to tax authorities, creditors, and investors.

Generally, it is a computer-based method that helps to track the accounting activity in combination with information technology resources. An AIS creates a combination of traditional accounting practices.

Functions of Accounting Information System

When talking about the functions of accounting information system, it comprises a variety of elements that are important enough in an Accounting Cycle. Although the information varies among the size of a business and industries, a basic AIS contains data related to tax information, employee information, customer information, expenses, and revenue.

Certain data comprises financial statement information, trial balance, ledger, payroll, inventory, invoices, purchase requisitions, analysis reports, and sales orders. An accounting information system should have a database structure to keep information.

Typically, this database structure is programmed with a query language that enables data and table manipulation. An AIS has several fields to input data and edit previously stored information. Along with that, accounting information systems are extremely secured platforms with pre-cautious measures taken against hackers, viruses, and other sources trying to gather information.

Several accounting information system outputs demonstrate the versatility of data manipulation competences. An AIS creates reports that include accounts receivable reports that are based on customer information.

Advantages of Accounting Information Systems

Interdepartmental Interfacing

An accounting information system aims to interface across several departments. Within the system, the sales department gets to upload the budget of sales. This information gets used by the inventory management team to execute purchase materials and inventory counts.

While purchasing the inventory, the system can send a notification to the finance department regarding the new invoice. An AIS also share details of a new order so as the Manufacturing, shipping, and customer care departments know about the sale.

Internal Controls

An essential part of AIS is related to the internal controls. Procedures and policies can be placed in a system to make sure that sensitive business, vendor, and customer information is kept maintained within the security of the company.

With the help pf physical access, access logs, login requirements, segregation of duties, authorization, and more can be restricted to relevant information required to perform the business operation.