1. Explain the role, component of accounting information systems, internal control and IT governance using the documentation technique in organisations.
2. Describe the role of accountants in analysing, designing, using and evaluating accounting information systems.
3. Analyse the importance of accounting controls and the role of audit & assurance for accounting information systems.
4. Describe the steps involved in system development life cycle & business processes, the related technologies/infrastructure and challenges.
Accounting process or financial management in every organisation is the primary requirement for managing business operations. On the other hand, information system and technological up gradation is another factor that business organisation has been utilising in business management. This report is about implications of various accounting information system that organisation has in operation. Aspects related to role of accounting information system, components and IT governance have been discussed. Role of accountants while analysing and evaluating accounting information system has been discussed in this report. Important factors related to audit and assurance of accounting information system and related control measures has been discussed in this report. In last section, system development life cycle and business process has been discussed in this report.
Accounting information system is the system that is used to collecting, processing, storing and generating various financial reports by the subordinates or managers. Accounting information system fulfils data or information demand within business organisation and supports manager while preparing MIS. Main role of accounting information system is to provide manager decision support information related to financial situation of the organisation. Accounting information system is almost connected with all other departments or sub-systems of organisation since accounting is done at level of organisation (Meiryani, 2015).
Many components or sub-system of accounting information system are there which are inter-connected with each other. Components of accounting information systems can be categorised into 5 different parts and they are as follows:
1: People- It includes employees or other professional that are actually using the accounting system of organisation. People are important component because without them accounting system will be in operation and benefits of accounting system cannot be achieved. Auditor using accounting system of organisation is also included in people component.
2: Procedure- Procedure is simply process of accounting system by which it collects process and stores accounting information. Main focus of this component will be at processing of data (internal and external) for generating information (Sabale and Dani, 2012). Database development is another major aspect of this component.
3: Data- Data is the raw form of information that will become decision making information when it is proceed by accounting software. Data is essential component of every information system as it is raw material for information system. Both internal and external data is required and they are as under; sales, purchase, customer billing, vendor involve, expenses involve, payroll, taxation data and many other data.
4: Software- Software is the prime requirement of accounting information system as software is the heart of information system. Software automates functions, manage quality of information, reliability and information security.
5: IT Infrastructure- These are hardware that are used with accounting information system and to support software. It includes computer, printer, server, storage and much other hardware.
Internal Control- It is used for securing and maintaining trails of information in the system. It also includes protection of system using id and password as there are various information were stored in it. Internal control measures in accounting information system promote better quality f information and with better availability (Schaltegger and Zvezdov, 2015). Following are some components of internal control of accounting system:
IT Governance- IT governance is the process of ensuring or auditing efficiency and effectiveness of IT usage in an organisation. In this process alignment of business strategies and IT strategies will take place. It also supports measuring performance of information technology in organisation. In case of accounting information system IT governance also plays vital role in term of reviewing and performance management.
Role of human resource in the business organisation is very vital and they operate each and every aspect of organisation. Since AIS is the system which is used and managed by managers or employees of the organisation. Therefore it should be designed and operate as per requirements of accountants. Accountants are those of group of people which possess education and qualification in accounting term (Bragg, 2011). Accountant under accounting information systems are primary involved as designer, user and auditors. Following are different prospects in terms of role of accountants:
Accountants as Accounting System Designer: Accounting system will be used by accountants only and they possess relevant accounting knowledge. This makes them suitable professionals in identifying and assessing exact requirement from information system. Accounting information system will be developed by organisation for generating relevant information for decision making process. As a system designer accountants are responsible for identifying data source, specifying need of information, establishing correct accounting rule in system software, specifying format of financial reports and maintaining integrity and efficiency of accounting system (Chen et al., 2012).
Accountants as Accounting System User: Once accounting information system is developed by system designer as per requirements specified by accountants now operate the same. Accountants are the user of accounting system as they possess required professional knowledge that helps them to use accounting system. Accounting system starts with feeding relevant data into system and then system automatically process data into information. Then again role of accountant comes into play when any information is required by generating and setting format of financial reports. As a user, accountants are required to identify encountered errors, issues and any basic mistake in system.
Accountants as Accounting System Evaluator or Auditor: Auditing information system is most crucial activity that should be undertaken at all level of system development. Accountants are responsible for auditing accounting system which means they are required audit claimed procedure or process are been followed or not. Desired or documented procedure that is to be followed in the accounting system for information management, are being actually followed or not. Accountant shall ensure the same by using accounting system (Gelinas et al., 2014).
Accounting controls can be defined as the control system that is used by the organisation for controlling its accounting aspects. Accounting controls is relevant part of accounting information policies and procedures, generating financial reports, accuracy of financial reports and integrity of information and accounting system. Accountants and other professional are responsible for maintaining accounting control in the accounting information system of the organisation. Success and failure of accounting information system depends upon effectiveness of internal accounting controls. Under accounting control system there are four broader areas where accountants are required to focus on and they are; environmental control, risk assessment under accounting system, control procedures adopted, monitoring internal control system (Saeidi et al., 2015).
Audit is the systematic checking of performance of accounting information system of the organisation. Every organisation shall undertake audit framework for its information system as it ensures effectiveness of system. Audit of accounting systems has been now essential factor for organisation since there are various malicious and vulnerabilities acts can be spotted. Basic objectives of audit and assurance are maintaining data integrity, safeguarding assets and maintaining effectiveness in using information system and generating financial reports. For auditing of accounting control under computerised environment, The Information System Audit and Control Association has developed set of rules for maintaining control. These set of rules or framework is known as Control Objective for Information and Related Technology (Susan and Daw, 2015). Therefore audit and assurance services plays key role in improving accounting information system. Process of audit includes following activities:
System development is the process under which system software is defined (requirements), designed, tested and then implemented in the organisation. System development is generally denoted as the development and implementation of customised system software. System development included framework or defined set of sets that will be implemented for the development of software (Massey and Satao, 2012). In case of development of accounting system software or business process, Following are steps that are involved in system development life cycle:
System study- Under this current system will be analysed and following actions will be taken:
Identification of problems in current system
Background check of current system
Feasibility Study- Whether proposed system will meet user’s requirement, will work under defined conditions, effectively use resources and many other points will be examined (ZSUZSANNA, 2012). Following feasibility will be examined in this phase:
Financial feasibility
Economic feasibility
Technical feasibility
Organisational feasibility
Social feasibility
Analysis of System- Under this phase problem identification, analysis of feasibility test collection of data, etc are steps that will be undertaken. In this process, complete description and requirement of system development will be documented.
Designing System- In this phase, documented system will be designed which means Skelton of desired system will be made. Logical system design shall be made so as to make physical design of the proposed system (Durrani and Qureshi, 2012).
Testing- In this phase, once system has been developed then it shall be test for its relevancy, accuracy, matching with requirements, etc. Programme test or system test can be done can be undertaken.
Implementation- In this phase, developed and tested system shall be implemented.
Maintenance- Under this phase, adequate steps shall be undertaken by the system developers and accountants for maintaining developed system (Susan and Daw, 2015).
Conclusion
From the above report it can be concluded that accounting information system plays important role in managing financial performance of organisation. Accounting information system supports management decision making process of the organisation and therefore holds vital position. Accountants play important role in maintaining and demonstrating accounting information system. Accountants support accounting system development in terms of designing, using and evaluating it. Accounting control and internal control in terms of accounting system is very much important as they ensure weakness and risk associated with it. Audit of information system shall be conducted on regular basis so that system can remain error free and effectives of accounting information system can be maintained. For developing information system or system software, phases specified under system development life cycle shall be followed.
References
Bragg, S. M. (2011). The Controller’s Function The work of the Managerial Accountants. John Wiley & Sons Inc.
Chen, H.-J., Huang, Y., & Shaio, C. (2012). The ERP System impact on the role of accountants. Industrial Management & Data Systems , 112 (1), 83 – 101.
Durrani, Q. S., & Qureshi, S. A. (2012). Usability engineering practices in SDLC. International Conference on Communications and Information Technology , 319–324.
Gelinas, U. J., Dull, R. B., & Wheeler, P. (2014). Accounting Information System (10th International edition ed.). Cengage Learning.
Massey, V., & Satao, K. (2012). Comparing various SDLC models and the new proposed model on the basis of available methodology. International Journal of Advanced Research in Computer Science and Software Engineering , 170–177.
Meiryani. (2015). Influence Business Strategy On the Quality of Accounting Information System. International Journal of Scientific & Technology Research , 80 – 86.
OJ, A., Kekwaletswe, R. M., & Pretorius, P. (2013). The Effem of Accounting Information System in Accounting. International Journal of Advanced Computer Research , 142.
Sabale, R., & Dani, A. (2012). Comparative study of prototype model for software engineering with system development Life Cycle. IOSR Journal of Engineering , 21–24.
Saeidi, H., Prasad, B. V., & Saremi, H. (2015). The Role of Accountants in Relation to Accounting Information Systems and Difference between Users of AIS and Users of Accounting. Bulletin of Environment, Pharmacology and Life Sciences , 116-119.
Schaltegger, S., & Zvezdov, D. (2015). Gatekeepers of sustainability information: Exploring roles of accountants. Journal of Accounting & Organizational Change , 333 – 361.
Susan, P. T., & Daw, T. H. (2015). Appraisal of Accounting Information System and Internal Control Frameworks. International Journal of Scientific and Research , 1-4.
ZSUZSANNA, T. (2012). The Current Role of Accounting Information Systems. ‘Club of Economics in Miskolc , 92-94.
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