Strenghts and Weaknesses of AIS PDF

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Strengths and Weaknesses of Accounting Information System

Accounting Project Strengths and Weaknesses of Accounting Information System

Name ABC College ABC Uni Professor Dr. ABC February 08, 2020

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Strengths and Weaknesses of Accounting Information System

Abstract An accounting information system (AIS) is a structure that a business uses to collect, store, manage, process, retrieve and report its financial and accounting data so it can be used by accountants, consultants, business analysts, managers, chief financial officers (CFOs), auditors, regulators, and tax agencies. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. Accounting information systems are designed to support all accounting functions and activities including auditing, financial accounting & reporting, managerial management accounting and tax. 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.

Strengths and Weaknesses of Accounting Information System

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Introduction An accounting as an information system (AIS) is a system of collecting, storing and processing financial and accounting data that are used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting financial reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities. Accounting information systems are designed to support all accounting functions and activities including auditing, financial accounting & reporting, managerial/ management accounting and tax. The most widely adopted accounting information systems are auditing and financial reporting modules.

Thesis Statement “Accounting Information System with its advantages and disadvantages is revolutionizing the field of accounting.” Strengths Accounting Information System Accounting information systems is designing a data processing system using software. It can also be done manually. The computerized systems make accounting job easier by the use of software which can compile financial, tax and payroll data. It can perform other bookkeeping functions. The system collects and processes transaction data. Then it disseminates financial information which management and company stakeholders use to make decisions.

Strengths and Weaknesses of Accounting Information System

Computerized financial information systems are faster and more efficient in processing data. The use of hardware such as scanners automatically generates accounting information without much ado. The information is available almost immediately. The cost of hardware such as computers is low and the availability of cheaper and user-friendly accounting software makes accounting information systems affordable. Computerized financial systems enable users to access it promptly by the click of a mouse. Unlike manual, which by the way is still very much in existence as some companies want to keep both electronic and manual accounting information systems, the user does not have to go through a pile of paper work in order to locate the information he needs. Accounting information system makes the maintenance of a bloated financial department irrelevant. The software does most of the work that would otherwise require several employees. The accounting software can journal and prepare documents such as the trial balance. Journals and ledgers are recorded in the computer data bases. There is also software that can perform functions such as billing budgeting and preparing payroll. Accounting information systems help cuts the payroll for accounting staff substantially. Another important responsibility of accountants is data protection. In manual accounting, if the paper journal used to record the numbers is damaged or lost, the accountant has to start all over again. The Houston Chronicle also points out that losing sensitive information is a big problem as confidentiality policies may be compromised. A computerized accounting information system offers an advantage since the data is entered and saved in the software. Furthermore, the data can be uploaded to the Internet where a backup copy can be stored.

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Strengths and Weaknesses of Accounting Information System

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Data stored in AIS can be retrieved via information system connected with internet anywhere and at any time. Where manually prepared books of accounts cannot be carried easily, AIS data can be. With the involvement of AIS, the reliability of data is increased. AIS follows a predefined set of instructions, therefore chances of error-prone information are less and therefore AIS have an added advantage of accurate data. In the era of rapidly changing technology and adaptation of technological advancements, there are major changes occurring in AIS. The latest changes include cloud computing, cloud accounting, real-time accounting or mobile accounting. This has made accounting much easier and convenient as compared to old ways of accounting. Advancement has reached a level which not only records, classifies, analysis and reports figures but also predicts future trends which may help to face an actual situation with much preparedness. With the advancements of technology, accounting information system will be more efficient and faster. Artificial Intelligence, an extended version of Accounting Information System (AIS) have already started reducing manual intervention and will grow at a very fast pace in the near future. Weaknesses of Accounting Information System Today we are living in an era that is totally technology driven, where, technology is changing and impacting every field of study. Today, the accountants without the technology knowledge and skills are not considered as lean and efficient accountants - their skills, expertise and knowledge are slowly getting outdated. The biggest challenge or disadvantage of Accounting Information System is its training. The accountants are not trained on this system in their academic studies. Learning an accounting

Strengths and Weaknesses of Accounting Information System

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information system can often be difficult and time-consuming. Individuals must be trained on a system, and this can cause a disadvantage to companies in terms of time and manpower. An accounting information system is made up of many different components, and almost all systems are computerized. Because of their complexity, some people may find them hard to use. It can take weeks or months for a person to understand an accounting system, and usually the individual still does not understand completely what the system is capable of. If the employee quits working at the organization, it can take weeks or months, once again, to train another employee. The academic should include IT and AIS in the curriculum to meet and equip the accountants with the changes caused by AIS. Revolution of information technology has changed many aspects of accounting practices, which resulted in greater demand for accountants with sufficient information technology (IT) knowledge and skills. Information technology has revolutionized business practices and played a vital part of business strategies. Advancement in IT has increased the ability of organizations to make good business decisions based on the large amount of information their enterprise produces. Hence, investment in sophisticated IT is now considered fundamental for firms of all sizes to support, sustain and grow the business. According to Elliot (2002), accounting is one of the important business areas facing unprecedented challenges due to the rapid development of IT. Many aspects of accounting practice have been changed fundamentally by advances in IT, including financial reporting, managerial accounting, auditing and taxation. The widespread use of IT in organizations has expanded the role of accountants in the analysis and design, evaluation and use of information systems For example, auditors need to

Strengths and Weaknesses of Accounting Information System

embed technology in everything they do during the audit process similar to the practices of their clients Therefore, accounting professionals, especially auditors, have to integrate new and sophisticated technology into their practices to stay relevant. Thus, the accounting schools now needs to induct AIS and IT in their curriculum to provide the best accountants to the job market. Accounting information systems are usually computerized. Because of this, there is always a risk of losing information through power outages or system crashes. When this happens, there is a chance that all the information in the system could be lost. Companies take precautions for this problem by backing up their files regularly and performing standard maintenance on all computer systems. They also install anti-virus software as another precaution. Still, none of these steps eliminates the potential problem that may occur. Accounting information systems store a company’s financial information for years. If a system crash occurs, it causes a major disadvantage to the company. All, or some, information is lost, and there’s a chance it may never be recovered. In today’s business environment, there are many computer frauds and computer crimes through computerized accounting information systems. Fraud can be defined as ‘deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage. In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual’. As a household electrical appliances company, the internal employees or managers as well as the shareholders can be also fraud through the computerized accounting information system. The information stored electronically can be manipulated and accessed if proper controls and security measures are not taken place. This will affect the operation of the business.

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Strengths and Weaknesses of Accounting Information System

A disadvantage of accounting software is the cost involved. Beyond the initial outlay to purchase the software there is the cost of maintenance, customization, and training and computer hardware. While time savings may justify the cost, for some businesses it may take years before an accounting software investment pays for itself.

Conclusion As a conclusion, accounting information system brings a lot of disadvantages to the organization in today’s business environment, but accounting information system combines the study and practice of the accounting with the concept of designing, implementing, controlling and monitoring the information systems. It also combines the modern information technology and the traditional accounting system to provide a better financial system to manage and improve the financial performance of the organization. Thus, is easy to say AIS is revolutionizing the field of accounting.

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Strengths and Weaknesses of Accounting Information System

References American Accounting Association. (2018). AIS as a Facilitator of Accounting Change:. JOURNAL OF INFORMATION SYSTEMS, 1-15. Retrieved from https://aaajournals.org/doi/pdf/10.2308/isys-10412 Dillon, T. a. (2004). The Emergence of Accounting Information Systems Programs. Management Accounting Quarterly. Elliot, R. (2002). Twenty-first Century Assurance, Auditing. Journal Pract Theory, 17. Fontinelle, A. (2019). Introduction to Accounting Information Systems – AIS. Retrieved from https://www.investopedia.com/articles/professionaleducation/11/accounting-informationsystems.asp Kearns, G. S. (2014). The Importance of Accounting Information Systems in the Accounting Curricula: A CPA Perspective . AIS Educator Journal, 24-40. Manda, G. (2019). The Benefits of Accounting Information Systems. Retrieved from https://bizfluent.com/list-6588708-benefits-accounting-information-systems.html The WritePass Journal. (2012, December 23). Advantages and Disadvantages of Accounting information systems (AIS). Retrieved from The WritePass Journal: https://writepass.com/journal/2012/12/advantages-and-disadvantages-of-accountinginformation-systems-ais/

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