Accounting information systems collect and process information from transactions and then

organize it into useful information for company management

It is a structure that a business uses to collect raw financial data and process it into information
to report the financial information so it can be used by chief financial officers (CFOs),
accountants, consultants, business analysts, managers, auditors, regulators, and tax agencies.

Specially trained accountants work in-depth with AIS to ensure the highest level of accuracy in a
company's financial transactions and record-keeping, as well as make financial data easily
available to those who legitimately need access to it—all while keeping data intact and secure.

Early accounting information systems were designed for payroll functions in 1970s. Initially,
accounting information systems were developed "in-house" as no packaged solutions were
available. Such solutions were expensive to develop and difficult to maintain. Therefore, many
accounting practitioners preferred the manual approach rather than computer-based. Today,
accounting information systems are more commonly sold as prebuilt software packages from
large vendors such as Microsoft, Sage Group, SAP AG|SAP and Oracle Corporation Oracle
where it is configured and customized to match the organization’s business processes. Small
businesses often use accounting lower costs software packages such as Tally. ERP 9, MYOB and
QuickBooks. Large organizations would often choose ERP systems. As the need for connectivity
and consolidation between other business systems increased, accounting information systems
were merged with larger, more centralized systems known as enterprise resource
planning (ERP). Before, with separate applications to manage different business functions,
organizations had to develop complex interfaces for the systems to communicate with each other.
In ERP, a system such as accounting information system is built as a module integrated into a
suite of applications that can include manufacturing, supply chain, human resources. These
modules are integrated together and are able to access the same data and execute complex
business processes. Today, Cloud-based accounting information systems are increasingly
popular for both SMEs and large organizations for lower costs. With adoption of accounting
information systems, many businesses have removed low skills, transactional and operational
accounting roles.

Accounting information systems generally consist of six primary components: people,

procedures and instructions, data, software, information technology infrastructure, and internal
controls. Let's look at each component in detail01
1. People:
These are the users of system, including consultants, managers, and business analysts,
Auditors and those to which such information is useful.

Example: The management can establish sales goals for staff which they then can order
the appropriate amount of inventory. The inventory notified the accounting department of
a new payable. When salesman make sales and enter customer orders, accountant
invoices customers and
from there the warehouse
assemble the order, and
again the accounting
department gets notified
about the new receivable
and the system creates sales
reports for the management.
The Managers also sees
relevant costs through the
system.

2. Procedure and Instruction:

The instructions and the ways through which the data is collected, stored, retrieved, and
processed. These methods can be both manual and automated. The data is obtained from
both internal sources such as employees etc. and external sources which includes online
orders etc. Instructions are coded into AIS software—. For effective AIS the procedures
and instructions are to be followed correctly by employees

3. Data:
It includes all the information that is provided and used by AIS. To store information, the
AIS should have a well-structured database such as structured query language (SQL), a
computer language which is commonly used for databases. The AIS also needs different
input screens for each type of system users and data entry, as well as different output
formats for the different users and varying types of information.
 The type of data included in an AIS generally consist of the following:

 Sales orders
 Customer billing statements
 Sales analysis reports
 Purchase orders
 Retailer invoices
 Check registers
 General ledger
 Inventory data
 Payroll information
 Timekeeping
 Tax information

4. Software:
It consists of computer programs used for processing data.

The software component of the Accounting Information System (AIS) are the computer
programs which are used to store, retrieve, process, and analyze the financial data. Before
automated Accounting Information System (AIS), an AIS was a manually based system
but this is age of technology and the companies are using computer software as the basis
of the AIS. Small businesses use programs such as Intuit's QuickBooks or Sage's Sage 50
Accounting, and there are other programs. Small and mid-sized businesses use SAP's
Business One. For the large businesses there are programs such as Microsoft's Dynamics
GP, Sage Group's MAS 90 or MAS 200, Oracle's PeopleSoft or Epicor Financial
Management. AIS software programs are usually customized to meet the unique needs of
varying types of businesses.

5. Information technology infrastructure:

It includes all the hardware which is required to operate the AIS. Information technology
infrastructure is a fancy name used for the hardware which are used to operate the
accounting information system.
 The hardware components a business needs to have includes computers, mobile
devices, servers, printers, surge protectors, routers, storage media, and also needs back-up
power supply. In addition to cost, factors which are to be considered while selecting
hardware usually includes speed, storage capability and either it is compatible with the
software program which is used by the system. Another thing which is to be considered is
that whether it is expandable and upgradeable.

A well-structured AIS also includes a scheme for maintaining, repairing, servicing and
upgrading the components of the AIS hardware system, and a well-structured plan for the
discarding of outdated hardware so the sensitive data in it can be completely destroyed.

6. Internal controls:
These are the security measures used to protect data. The internal controls of the
Accounting Information System (AIS) are the security measures to protect sensitive and
valuable data. These measures include protection such as simple passwords and complex
biometric identification as higher level of security. An Accounting Information System
(AIS) have internal controls to protect against unauthorized computer access including
hackers and give limited access to authorized users according to their needs.

An AIS contains confidential information of the company and also its employees and
customers. This data includes Social Security numbers, salary information, credit card
numbers, and sometimes personal information. Therefore, all of the data in an AIS must
be encrypted, and access to the system should be under surveillance. In a good
Accounting Information System (AIS) the system activities are also traceable.

Implementation
Many large and SMEs are now adopting cost beneficial cloud-based accounting information
system in past years.
Looking few years back, many organizations, even larger ones, hire outside consultants, either
from the software publisher who understand the organization and who work to help select and
implement the best configuration, taking all components into action.
Following are the steps by which a system is implemented

 Detailed Requirements Analysis:

Where all individuals involved in the system are interviewed. The current system is
properly understood, including problems, and complete documentation of the system
transactions, reports, and questions. User needs that are not in the current system are
documented. Users include everyone, from top to bottom. The requirements analysis not
only provides the developer with the specific needs, it also helps users accept the change.
Users who have the opportunity to ask questions and provide input are much more
confident than those who sit back and don't express their interest.
 Systems Design (synthesis):
The analysis is thoroughly reviewed and a new system is created. The system that
controls the system is often the most important. The program we select will need to
properly handle the process. The system is built with control files, sample master records,
and the ability to perform processes on a test basis. The system is designed to include
appropriate internal controls and to provide management with the information needed to
make decisions. It is a goal of an accounting information system to provide information
that is

 Relevant
 Meaningful
 Reliable
 Useful
 Current

To achieve this, the system is designed so that transactions are entered as they occur and
information is immediately available online for management.

Once the system is designed, an RFP is created detailing the requirements and
fundamental design. Vendors are asked to respond to the proposal, to provide explanation
of the product, and to specifically respond to the needs of the organization. Ideally, the
vendor will input control files, sample master records, and be able to show how
transactions are processed that result in the information that management needs to make
decisions. An RFP for the information technology infrastructure follows the selection of
the software product because the software product generally has specific requirements for
infrastructure. Sometimes, the software and the infrastructure are selected from the same
vendor.

 Documentation:
As the system is being designed, it is documented. The documentation includes vendor
documentation of the system and, more importantly, the procedures that help users handle
each process specific to the organization. Most documentation and procedures are online
and it is helpful if organizations can add to the help instructions provided by the software
vendor. Documentation and procedures intend to be an afterthought but is the insurance
policy and the tool used during testing and training before launch. The documentation is
tested during the training so that when the system is launched, there is no question that it
works and that the users are confident with the change.

 Testing:
Before launch, all processes are tested from input through output, using the
documentation as a tool to ensure that all processes are properly documented and that
users can easily follow the detailed instructions. They know it works and that the
 procedures will be followed consistently. This is done in a test system not yet fully
populated with live data. Unfortunately, most organizations launch systems before
testing, adding to end-user frustration when processes don't work. The documentation and
procedures may be modified during this process. All identified transactions must be
tested during this step. All reports and online information must be verified and traced
through the audit trail so that management is ensured that transactions will be handled
consistently and that the information can be used to make decisions.

 Training:
Before launch, all users need to be trained, with instructions. This means a trainer using
the procedures to show each end user how to handle a procedures. The procedures often
need to be updated during training as users describe their unique circumstances and the
"design" is modified with this additional information. The end user then performs the
procedure with the trainer and the instructions. The end user then performs the procedure
with the instructions alone. The end user is then on his/her own with the support, either in
person or by phone, of the trainer or other support person. This is before data conversion.

Data Conversion:
Tools are developed to convert the data from the current system to the new system. The
data is transferred from one system to the other and data files are created that will work
with the tools that are developed. The conversion is properly tested and verified before
final conversion. There’s a backup so it can be restarted, if necessary.

 Launch:
The system is implemented only after all of the requirements are completed. The entire
organization is aware of the launch date. Ideally, the current system is retained and often
run in "parallel" until the new system is in full operation and working properly. With the
 current mass-market software used by thousands of companies and fundamentally proven
to work, the "parallel" run that is mandatory with software tailor-made to a company is
generally not done. This is only true, however, when the above process is followed, the
system is thoroughly documented and tested, and users are trained before launch.

 Tools:
Online resources are available to assist with strategic planning of accounting information
systems. Information systems in determining the specific requirements of each
organization, as well as assigning responsibility to principles involved.

 Support:
The end users and managers have ongoing support available at all times. System
upgrades follow a similar process and all users are thoroughly apprised of changes,
upgraded in an efficient manner, and trained.

Many organizations chose to limit the time and money spent on the analysis, design,
documentation, and training, and move right into software selection and implementation.
If a detailed requirements analysis is performed with in proper time being spent on the
analysis, the implementation and ongoing support will be minimal. Organizations that
skip the steps to ensure the system meets their needs are often left with frustrated end
users, costly support, and information that is not a correct.

Computerized Accounting information system:

CAIS play a key role in
operation, treatment, storage,
transportation, and financial
data processes for the benefit
of units through the computer,
communication methods,
network connections, and other
equipment, and operate,
run, and submit data as
information to the users, where
they benefit from its outputs
(Hall, 2011). CAIS consider
as the unit structure used in the
implementation of accounting
work, and contain
interconnected set of
documents,
books or ledgers, records, reports, and procedures, which are done electronically by collecting,
analyzing,
recording, catalog, summarizing, and interpreting data that are related to the economical
transactions of financial
status. Researchers in this paper will explain the elements of CAIS, are as following

 Human resource
 Equipment
 Databases
 Procedures
 Control

Advantages of Computerized Accounting System:

 Speed and Accuracy of Operation.

 Ability to see the real-time company financial statement.

The Different Facility Which Computerized Accounting system provided is given below

- On-screen input and printout of sales invoices

- Automatic updating of customer accounts in the sales ledger
- Recording of suppliers invoices
- Automatic updating of suppliers' accounts in the purchases ledger Recording of bank receipts
- Making payments to suppliers and for expenses
- Automatic updating of the general ledger
- Automatic adjustment of stock records
- Integration of a business database with the accounting program
- Automatic calculation of payroll and associated entries

Computerized Accounting system provide summary of accounts and instant reports for
management purposes.

For Example:

- Trial balance, trading and profit and loss account and balance sheet
- Stock valuation
- Sales analysis
- Budget analysis and variance analysis
- GST/VAT returns
- Payroll analysis
The Main Advantage of Computerized Accounting system are mentioned below

 Speed

Data Entry onto Computer with built in databases of customer and supplier and also kept records
of stock more quickly than any manual process.

 Automatic Document Production

All type of documents is produced automatically produced.

Example: Fast and accurate invoices, credit notes, purchase bills and order, any type of printing
statement.

 Accuracy

There are almost zero chances of error in computerized accounting system and there is only one
entry in computerized accounting system rather than 2 or 3 in manual recordings.

 Up-to-date Information

The balance of records are automatically get balanced through software Accounting.

 Availability of Information

The data is available at different places at same time for different parties.

 Management Information

Reports are produced instantly which cause decision making a bit easy and control the business.
For example, debtor’s analysis will show us that costumer account is overdue or not.

 GST Return

The automatic creation of figures for regular GST/VAT return.

 Legibility

The data provided by computer or printed data should always be helpful and legible so will avoid
errors which is caused by poor figure.

 Efficiency

It is efficient to use. Cash flow should improve through debt collection and better inventory
control.
  Staff Motivation

By Using Comprised Accounting software, staff is trained to use new skills which make them
feel more comfortable.

 Cost Saving

Computerized Accounting Software can reduce the audit expense and save the time of accounts
department.

 Reduce Frustration

Management can easily be done by this system and thus reduce the stress levels associated with
what is not known.

 The Ability to deal in Multiple Currencies

There are many computerized systems which allow business to trade in ease. They provide basic
data about Currency Exchange.