CHARACTERISTICS OF ACCOUNTING INFORMATION SYSTEMS | QUANTITATIVE AND QUALITATIVE | COMPONENTS AND CATEGORIES OF AIS

Characteristics of accounting information systems are those features that distinguish an ordinary system from a system that is designed to provide management of all levels timely, relevant, reliable and unbiased processed data that is suitable for decision making.

Accounting information system (AIS) is a well structure secured medium of gathering, processing, sending and receiving both financial and non financial business intelligence information to the users of accounting information systems. An important business success factor that every manager has come to understand is the presence of well defined AIS. An accounting information system cannot be effective if it does not possess all the necessary ingredients that make up an information system. Care needs to be taken at the planning stage of AIS investment appraisal stage so as not to defeat the economic and business sense behind investing in information system.

There is a misconception that an accounting information system must be computerised. Well, if you have been in that class of people who think that an AIS system must be computerised, I am not here to rubbish your idea but to point out a fact that you have been missing. Maybe defining what a system is will be a better way to convince you. A system is any organised setting that comprises of components in a harmonious way in order to ensure that a stated objective/ mission is met and possibly surpassed. Although in this modern age and time, all accounting information systems ought to be fully automated and computerised, that still doesn’t mean that AIS must be computerised, at least, to accommodate the non quantifiable strategic elements of an AIS.

FEATURES | ELEMENTS | PARTS | CHARACTERISTICS OF A ROBUST ACCOUNTING INFORMATION SYSTEM

For an AIS system to be highly robust and scalable, it must have a perfect mix of both financial and non financial inputs. This section of this article highlights and briefly describe the inputs and infrastructures of a high quality AIS.

  1. Completeness
  2. Accuracy
  3. Security
  4. Clarity/Understandability
  5. Timely
  6. Reliability
  7. Comparability
  8. Verifiability
  9. Neutrality
  10. Cost effective
  11. Closely aligned to business objective of a company
  12. Communicated in a simple and right format
  13. Highly relevant
  14. Robust in terms of producing information that is suitable for both internal decision making and external reporting
  15. Compliance conscious

CATEGORIES OF AIS

Accounting information systems are categorised based on the nature of the activity involved in the process. There are basically three broad categories of AIS. They are:

  1. Processing mode AIS
  2. Entity objectives AIS
  3. Time based AIS

COMPONENTS OF AIS

There are basically five components of accounting information systems. These components are called different things by different people. What it is called by your accounting tutor or instructor does not matter. Below are the components that made up complete and functional AIS.

  1. People (both system designers and administrators)
  2. Technologies (software and hardware infrastructures)
  3. Procedures and processes
  4. Data
  5. Controls and checks

 

From the above discussions, it is evident that the importance of accounting and importance of business ethics will not be fully appreciated if not for the effects of the characteristics and features of accounting information system on the quality of financial information produced by AIS.

I feel sad whenever I see people calling all sorts of craps accounting information system. Any AIS that cannot produce information that can be used for fundamental analysis, business analysis, business valuation, strategic management and planning, investment analysis and appraisal, effective and accurate costing, feasibility studies, variance analysis, implementation of internal control, fighting fraud, etc in a timely, dynamic, cost effective, ethical and viable manner cannot be said to be an AIS.

This is to say that for an AIS to do what it ought to do –which is to create value, it must be properly integrated with the 15 features of a good AIS system that have been identified in this article.

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