The Accounting department at the Wisconsin School of Business prepares students both to perform expertly in a role without which

no business could function and to spearhead ground-breaking research. We offer three degrees: a BBA-which is ranked among the nation s top !" by #.S. $ews % World &eport' a (Acc' and a )h.*. (Acc students ha+e two options: the fi+e-year program' which integrates the master s curriculum with the undergraduate or the two-year graduate program' which is appropriate for students with little or no accounting background. Accounting department faculty fields of expertise include corporate go+ernance' earnings management' e,uity +aluation' health care accounting' health care financial management' internal controls and audit ,uality' international financial reporting standards' managerial accounting' Sarbanes--xley' securities regulation' strategic cost management' and taxes and federal tax policy. The Arthur Andersen .enter for /inancial &eporting and .ontrol and the &obert Beyer .enter for (anagerial Accounting and .ontrol are the research and outreach centers that call the accounting department home.

Investopedia explains 'Accounting Information System - AIS' An accounting information systems that combines traditional accounting practices such as the 0enerally Accepted Accounting )rinciples 10AA)2 with modern information technology resources. Six elements compose the typical accounting information system:

)eople - the system users. )rocedure and 3nstructions - methods for retrie+ing and processing data. *ata - information pertinent to the organi4ation5s business practices. Software - computer programs used to process data. 3nformation Technology 3nfrastructure - hardware used to operate the system.

3nternal .ontrols - security measures to protect sensiti+e data.

How to effectively implement AIS[edit source | editbeta] As stated abo+e'accounting information systems are composed of six main components:.678 When an A3S is initially implemented or con+erted from an existing system' organi4ations sometimes make the mistake of not considering each of these six components and treating them e,ually in the implementation process. This results in a system being 9built 7 times9 rather than once because the initial system is not designed to meet the needs of the organi4ation' the organi4ation then tries to get the system to work' and ultimately' the organi4ation begins again' following the appropriate process. /ollowing a pro+en process that works' as follows' results in optimal deployment time' the least amount of frustration' and o+erall success. (ost organi4ations' e+en larger ones' hire outside consultants' either from the software publisher or consultants who understand the organi4ation and who work to help the organi4ation select and implement the ideal configuration' taking all components into consideration. .ertified )ublic Accountants 1.)As2 with careers dedicated to information systems work with small and large companies to implement accounting information systems that follow a pro+en process. (any of these .)As also hold a certificate that is awarded by the American 3nstitute of .)As:the .ertified 3nformation Technology )rofessional 1.3T)2. .3T)s often ser+e as co-pro;ect managers with an organi4ation5s pro;ect manager representing the information technology department. 3n smaller organi4ations' a copro;ect manager may be an outsourced information technology specialist who manages the implementation of the information technology infrastructure. 6<8 The steps necessary to implement a successful accounting information system are as follows: etailed !e"uirements Analysis where all indi+iduals in+ol+ed in the system are inter+iewed. The current system is thoroughly understood' including problems' and complete documentation of the current system:transactions' reports' and ,uestions that need to be

answered are gathered. What the users need that is not in the current system is outlined and documented. #sers include e+eryone' from top management to data entry. The re,uirements analysis not only pro+ides the de+eloper with the specific needs' it also helps users accept the change. #sers who ha+e the opportunity to ask ,uestions and pro+ide input are much more confident and recepti+e of the change' than those who sit back and don5t express their concerns. Systems esign #synt$esis%

The analysis is thoroughly re+iewed and a new system is created. The system that surrounds the system is often the most important. What data needs to go into the system and how is this going to be handled= What information needs to come out of the system' and how is it going to be formatted= 3f we know what needs to come out' we know what we need to put into the system' and the program we select will need to appropriately 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 pro+ide management with the information needed to make decisions. 3t is a goal of an accounting information system to pro+ide information that is rele+ant' meaningful' reliable' useful' and current. To achie+e this' the system is designed so that transactions are entered as the occur 1either manually or electronically2 and information is immediately a+ailable on-line for management to use. -nce the system is designed' an &/) is created detailing the re,uirements and fundamental design. >endors are asked to respond to the proposal and to pro+ide demonstrations of the product and to specifically respond to the needs of the organi4ation. 3deally' the +endor will input control files' sample master records' and be able to show how +arious transactions are processed that result in the information that management needs to make decisions. An &/) for the information technology infrastructure follows the selection of the software product because the software product generally has specific re,uirements for infrastructure. Sometimes' the software and the infrastructure is selected from

the same +endor. 3f not' the organi4ation must ensure that both +endors will work together without 9pointing fingers9 when there is an issue with either the software or the infrastructure. ocumentation As the system is being designed' it is documented. The documentation includes +endor documentation of the system and' more importantly' the procedures' or detailed instructions that help users handle each process specific to the organi4ation. (ost documentation and procedures are on-line and it is helpful if organi4ations can add to the help instructions pro+ided by the software +endor. *ocumentation and procedures tend to be an afterthought' but is the insurance policy and the tool that is used during testing and training:prior to launch. The documentation is tested during the training so that when the system is launched' there is no ,uestion that it works and that the users are confident with the change. &esting )rior to launch' all processes are tested from input through output' using the documentation as a tool to ensure that all processes are thoroughly documented and that users can easily follow the procedures so that you know it works and that the procedures will be followed consistently by all users. The reports are re+iewed and +erified' so that there s not a garbage in-garbage out. This is all done in a test system not yet fully populated with li+e data. #nfortunately' most organi4ations launch systems prior to thorough testing' adding to the end-user frustration when processes don5t work. The documentation and procedures may be modified during this process. All identified transactions must be tested during this step in the process. All reports and on-line information must be +erified and traced through the 9audit trail9 so that management is ensured that transactions will be handled consistently and that the information can be relied upon to make decisions. &raining )rior to launch' all users need to be trained' with procedures. 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 uni,ue circumstances and the 9design9 is modified with this additional information. The end user then performs the procedure with the trainer and the documentation. The end user then performs the procedure with the documentation alone. The end-user is then on his or her own with the support' either in person or by phone' of the trainer or other support person. &$is is prior to data conversion' ata (onversion Tools are de+eloped to con+ert the data from the current system 1which was documented in the re,uirements analysis2 to the new system. The data is mapped from one system to the other and datafiles are created that will work with the tools that are de+eloped. The con+ersion is thoroughly tested and +erified prior to final con+ersion. -f course' there s a backup so that it can be restarted' if necessary. )aunc$ The system is implemented only A/T?& all of the abo+e is completed. The entire organi4ation is aware of the launch date. 3deally' the current system is retained and often run in 9parallel9 until the new system is in full operation and deemed to be working properly. With the current 9mass-market9 software used by thousands of companies and fundamentally pro+en to work' the 9parallel9 run that is mandatory with software tailor-made to a company is generally not done. This is only true' howe+er' when the abo+e process is followed and the system is thoroughly documented and tested and users are trained )&3-& to launch. &ools -nline resources are a+ailable to assist with strategic planning of accounting information systems. 3nformation Systems and /inancial /orms aid in determining the specific needs of each organi4ation' as well as assign responsibility to principles in+ol+ed. 6@8 Support

The end-users and managers ha+e ongoing support a+ailable at all times. System upgrades follow a similar process and all users are thoroughly appraised of changes' upgraded in an efficient manner' and trained. (any organi4ations chose to limit the amount of time and money spent on the analysis' design' documentation' and training' and mo+e right into software selection and implementation. 3t is a pro+en fact that if a detailed re,uirements analysis is performed with ade,uate time being spent on the analysis' that the implementation and ongoing support will be minimal. -rgani4ations who skip the steps necessary to ensure the system meets the needs of the organi4ation are often left with frustrated end users' costly support' and information that is not current or correct. Worse yet' these organi4ations build the system 7 times instead of once. Accounting 3nformation Systems ?xplained Accounting 3nformation Systems 1A3S2 collect' record' store' and process data to produce information for decision makers. Accounting information systems are a set of interrelated components' that interact' to achie+e a goal. (ost accounting information systems are composed of smaller subsystems and +ice-+ersa' e+ery organi4ation has goals. Accounting 3nformation Systems can use ad+anced technology' be a simple paper-and-pencil system or be something in between. Technology is simply a tool to create' maintain' or impro+e a system. An accounting information systems topics impact corporate strategy and culture.

Accounting information systems offers +alue and is a +ery important part of the +alue chain. Although Aadding +alueB is a commonly used bu44word' in its genuine sense' it means making the +alue of the finished component greater than the sum of its parts. 3t can mean' making it faster' making it more reliable' pro+iding better ser+ice or ad+ice' pro+iding something in limited supply' pro+iding enhanced features or customi4ing it. >alue is pro+ided by performing a series of acti+ities referred to as the +alue chain which includes primary acti+ities and support acti+ities. These acti+ities are sometimes referred to as AlineB and AstaffB acti+ities respecti+ely. 3nformation technology can significantly impact the efficiency and effecti+eness with which the preceding acti+ities are carried out. An organi4ation s +alue chain can be connected with the +alue chains of its customers' suppliers' and distributors.

Internal (ontrol Structure

)ri+ate banking sector is getting increasing attention due to its significant stance in the financial system. 3t plays a crucial role for the de+elopment and growth of the economy. Internal (ontrol Structure is highly important for achie+ement of proper operational goals' reliable and rele+ant information and compliance with laws and regulations. .onsidering this importance' we ha+e made an attempt to e+aluate the Internal Control Structure in the listed local pri+ate banks and the extent of achie+ement of corporate goal by applying different 3nternal .ontrol Structure techni,ues. This study mainly focuses on the e+aluation of the internal control structure in local listed pri+ate banks. The present study co+ers the extent of implementation of internal control structure techni,ues. .ommittee of Sponsoring -rgani4ations of the Tread way .ommission 1.-S.-2 s landmark study titled 3nternal .ontrol- 3ntegrated /ramework is widely used and accepted by the ma;or #.S Accounting Bodies as the authority on internal controls. The Study defined internal control structure as a system' structure' or process' implemented by a firms board of directors' management and other personnel' intended to pro+ide reasonable assurance about achie+ing control ob;ecti+es in the following categories: C. !. 7. ?ffecti+eness and efficiency of operations &eliability of financial reporting .ompliance with applicable laws and regulations

At the organi4ation le+el' internal control ob;ecti+es relate to the reliability of financial reporting' timely feedback on the achie+ement of operational or strategic goals and compliance with laws and regulations. At the specific transactions le+el' internal control refers to the actions taken to achie+e a specific ob;ecti+e 1e.g.' how to ensure organi4ations payments to third parties are for +alid ser+ices rendered2. 3nternal control procedures reduce process +ariation' leading to more predictable outcomes. 3nternal .ontrol Structure is important for all types of organi4ation to achie+e its ob;ecti+es. Because' if a proper 3nternal .ontrol Structure is implemented' all of the operations' physical resources' and data will be monitored and under control' ob;ecti+es will be achie+ed' risks will be minimi4ed' and information output will be trustworthy. -n the other hand' if the 3nternal .ontrol Structure is weak and unsound' the firm s resources may be +ulnerable to loss through theft' negligence' carelessness' and other risks. As a result' the Accounting 3nformation System will likely generate information that is +ulnerable' untimely' and perhaps unrelated to the firm s ob;ecti+es. ?specially in a banking sector it is the key element to sustain in a modern competiti+e market. 3ncase of banks the degree of risk exposure is +ery high because it deals with the most +ulnerable assets particularly cash and the fre,uency of dealing with cash is greater than any other organi4ations. 3n addition e+ery transaction in banks is of higher amount. So the magnitude of potential loss is greater. 3n fact banks are sub;ect to all the three factors that affect the degree of risk exposure. Whether a bank achie+es operational and strategic ob;ecti+es may depend on factors outside the organi4ation' such as competition or technological inno+ation. Thus 3nternal .ontrol Structure is highly important for banks to achie+e the control ob;ecti+es.

3nformation Systems

Information

systems can

be

grouped

into

business function categories' howe+er' in the real world information systems are typically integrated combinations of functional information systems. Such systems support business processes' such as product de+elopment' production' distribution' order management' customer support' and so on. There is a strong emphasis in many organi4ations to de+elop such composite or cross-functional information systemsthat cross the boundaries of traditional business functions in order to reengineer and impro+e +ital business processes. These organi4ations +iew crossfunctional information systems as a strategic way to share information systems resources and impro+e the efficiency and effecti+eness of a business' thus helping it attain its strategic ob;ecti+es. 3nformation Systems Applications Applications of information systems in the functional areas of business include: C. !. 7. <. @. )roductionD-perations 3S (arketing 3S /inancial 3S Accounting 3S Euman &esource (anagement 3S

Business firms are turning to 3nternet technologies to integrate the flow of information among their internal business functions and their customers and suppliers. .ompanies are using the World Wide Web and their intranets and extranets as the technology platform for their cross-functional and inter-organi4ational information systems. 3n addition' many companies ha+e mo+ed from functional mainframe legacy systems to cross-functional clientDser+er network applications. This typically has in+ol+ed installing enterprise resource planning 1?&)2 or supply chain management 1S.(2 software. 3nstead of focusing on the information processing re,uirements of business functions' ?&) software focuses on supporting the supply chain processes in+ol+ed in the operations of a business. 3nformation Systems .urrent Trends

.omputing has become more decentrali4ed and networked. 3ncrease in use of computers to share and distribute sensiti+e information and data. >ast amounts of personal data are collected' stored' and processed electronically. 3ncrease in the reliance on computers for daily operations. &eports of computer fraud and abuse continue to rise. 3ncrease in the complexity of technology. 3ncrease in use of the 3nternet for e-business.

3nformation Systems Security 3nformation Systems Security is the protection of the information systems against unauthori4ed access to or modification of information whether in storage' processing or transit' and against the denial of ser+ice to authori4ed users' including those measures necessary to detect' document' and counter such threats.

Strategic )lanning Strategic +ariances can be di+ided into:

(utually exclusi+e F collecti+ely exhausti+e sets of +ariances which capture the separate impacts of key underlying causal factors' for example' de+iations between

actual and budgeted sales +olumes and mixes' market si4es and shares' manufacturing costs' contribution margins.

*iscretionary costs. .onceptuali4ing mission in terms of profitability and a build' hold or har+est perspecti+e and strategy in terms of low cost leadership or product differentiation.

By analysing the +ariances with explicit reference to a firm s mission and business strategy' you can determine the extent to which de+iations between actual and budgeted performance are or are not consistent with the mission and strategy and identify specific dimensions of performance which need impro+ement. Analysing the +ariances without reference to mission and strategy can be uninformati+e or misleading. Strategic )lanning: )erformance (easurement Systems )rofit-linked models e+aluate measures of return-on-in+estment and net income into:

)roducti+ity )rice reco+ery .apacity utili4ation -ther managerially rele+ant dimensions of performance. ?ffecti+eness +ariances 1market si4e' market share' selling prices' and product +olume and mix +ariances2 ?fficiency +ariances 1materials and labour price and efficiency' discretionary and committed cost spending +ariances' andDor acti+ity-based cost +ariances2.

)rofit +ariances can be di+ided into:

?ffecti+eness +ariances are of particular importance to business units pursuing differentiation strategies and efficiency +ariances to units pursuing low cost' high +olume strategies.

Strategic )lanning: Theoretical and ?mpirical &elationships 3n )orter s framework' to achie+e a competiti+e ad+antage' a firm must de+ise a strategy to defend against' or take ad+antage of' the structural determinants of the nature and intensity of competition. The le+els and time-paths of the ratios reflect outcomes of managers efforts to exploit sources of bargaining power o+er consumers and suppliers and to reduce threats from new entrants and substitutes' as well as the intensity of competition. ?mphases on impro+ements in producti+ity and capacity utili4ation' shifts in product mix toward products with lower unit costs' and low price reco+ery are consistent with low cost strategies. Gess emphasis on producti+ity and capacity utilisation' changes in product mix which may be more costly but ser+e less price sensiti+e consumers' and higher price reco+ery are consistent with differentiation. These relationships are fairly general and should hold for any industry or SB#. -perating choice +ariables of structural and exceptional cost and re+enue dri+ers and their relationships to the ratios are conceptually similar across industries but often industry-specific in terms of measurement. Within industries' the design of each SB# s products differs depending upon the SB# s particular customer and market orientation and the configuration as well as characteristics of each SB# s operations.

Limitation

I. Accounting is only one source of information and primarily provides information based on financial terms: Although this information is vital, decisions cannot be based solely on a monetary basis. Various decisions depend upon a diverse range of issues being considered. A unique combination of Quantitative as well as Qualitative factors should be considered to ensure an effective decision making process.

II. The historical perspective of financial accounting: In order to obtain a recent estimate of an entitys financial performance, the corporate managers carefully scrutinize financial accounting information. In retrospect, this information is based on past performance. The information does provide clarity on the monetary issues but does not provide a definite insight into the strategic future; as the future holds various changes in terms of technology, economic situations as well as political scenarios etc. Such factors in relation to accounting are unpredictable. Therefore, a careful balance between historical accounting as well as the future forecasted outlook is required.

III. Historical cost accounting vs. underlying value in use: Some items loose their monetary value over a period of time, but under the financial accounting rules need to be included in financial reports. Though mentioned year after year in the books as monetary figures, the information may be unreliable due to the historical assumptions made on the items measurability criterion. For example, a machine in a textile factory is considered to have a useful life which extends over a period of ten years in monetary terms; however, after the period of ten years, the machine may still have the same value as prior years and contribute significantly to the overall operability of the factory.

IV. Inability to reflect the true value of strategic management: Various factors such as goodwill and natural circumstances influence the operations of an enterprise; however, these elements are difficult to measure thus, leading to their unavoidable exclusion from financial reports. For example companies depend upon their shareholders, who in turn depend on the performance of the Chief Executive Officers. Although the CEOs may have been hired by the company based upon prior performance, their future performances are not reliably measurable as they may continually vary. In the initial stages, it may be impossible to measure whether the CEOs presence will deter or appeal to the shareholders, which in turn will influence the profitability of the enterprise.

V. Measuring Volatility of external factors: Financial accounting information does not take into consideration volatile and ever increasing changes in the natural and commercial environment. Although scarcely measurable in monetary terms, their unstable nature may have adverse effects if included within the financial reports and have a volatile and cosmetic impact upon the earnings of the firm. For example, tariffs on trade, duties and other environmental issues can have significant short-term volatile effects on the organisation.

VI. The effect of non-stable monetary unit: Based from region to region, accounting information is generated at all enterprises based on the assumption that the monetary unit is stable over a period of time. In the real world scenario, the unit fluctuates on a daily basis. Enterprises usually decide on a flat rate to calculate their financing and investing needs. However, this can have adverse impacts which cannot be communicated to shareholders, if the unit has high fluctuations. For example: Indonesia 1995 US$ 1 = RP 6000, 1997 US$ 1 = RP 12000, 1999 US$ 1 = RP 9000. (Figures are approximates, just to provide an insight into the argument about the effects of the fluctuations)

From the answer above, it is evident that certain limitations of accounting information have to be taken into consideration before enterprises use merely financial information to aid their decision making process. Accounting is a crucial function for every business large or small. There are two types of accounting systems, manual and computerized. Where accounting functions were once performed by hand by trained professionals, today there is a wealth of accounting software available to help anyone keep the necessary accounting records. Whether you chose to use an accountant to perform accounting manually or use a computerized system depends upon your specific accounting needs.

Advantages That Can ave !oney

Computerized accounting systems offer several advantages for small businesses. ystems for small and medium sized businesses can be purchased off the shelf at low cost. These programs allow managers to see the company"s financial position in #real$time# and make ad%ustments to the business strategy as needed. Computerized systems can also provide instant reports on stock evaluation, profit and loss, customer accounts and payroll and sales analysis, again, allowing faster ad%ustments in your business strategy. &n addition, transactions need to be input only once, and, with some training, anyone in the company can handle the inputting.

Advantages That Can ave Time

'sing a computerized accounting system can save you time. Accounting software allows faster data entry than manual accounting, and allows documents such as invoices, purchase orders and payroll to be collated and printed (uickly and accurately. )ecause of its efficiency and ease of use, computerized accounting systems also allow you to improve inventory control and payment collection, saving time and improving cash flow. )ecause computerized systems update some records automatically, your account records will always be up to date, saving time in updating.

*isadvantages
'sing a computerized accounting system comes with its own set of problems, such as the need to protect against data loss through power failure or viruses, and the danger of hackers stealing data. Computer fraud is also a concern, and you need to instigate a system of controls for who has access to the information, particularly customer information. &f there is a security breach and data is stolen, management can be held personally liable for the loss of data. +ou also need to make sure that the data has been correctly entered into the system, as a mistake in data entry can throw off a whole set of data.