Accounting Information System – Add value to business

Topic

Accounting Information System

“Add Value to Business”
Computerized Business and Accounting System Environment

By: Dennis Merontos

Objectives for this presentation:
1) Audience should be able to identify business functions and
activities automated by an Accounting Information System
(AIS);
2) Audience should be able to visualize the architecture of an
AIS, identify its components and understand how the system
operates;
3) Audience should be able to identify development standards
and practices of an accounting information system;
4) Audience should be able to experience/view processing of
business transaction in a computerized system using an
Enterprise Resource Planning (ERP) software ;
5) Audience must be able to trace and identify the flow of the
processed transaction in the software, from one module and
moving to another module and be able to analyze data and
design and print report .
 Introduction
Accounting Information System (AIS) is designed to
modernize all accounting functions and activities as well as
auditing, financial accounting & reporting, management
accounting and taxation. (wiki)

Currently, latest technology provide options that offers

enormous amount of data storage commensurate with the
speed of the latest generation of processors and at a very
competitive price. As a productive reaction to this,
companies worldwide aimed to revolutionize business
transaction coverage by taking most information out of it
(Data Banking e.g. business email, credit resource management, etc.), and
storing it within its information system.
 Accounting Information System

Approval to install an Accounting Information System

(whether new, upgrade or a departure from a legacy system)
attracts material amount of investment coming from the
business. However, compliance with established
standards, concepts and practices on project
implementation provides guarantee that the intended
deliverables are realized. Needless to say, standards must
include, the proper consideration of the latest technology
available and should be aligned with the business
requirement, prior to inclusion in the design of an
approved accounting information system.
 Accounting Information System

How AIS add value to business?

 Accounting Information System (AIS) is designed to modernize

all accounting functions and activities (not all inclusive); (Improvement)

 A productive reaction from businesses to keep itself competitive

by using the latest existing and available technology; (now and future)

 Business requirement ALIGNED TO latest technology prior to

inclusion in the design, not the other way around; (based on need)

 Approval attracts material amount of investment coming from

the business, but compliance with established standards,
concepts and practices on project implementation provides
guarantee of delivery; (control and risk management)
 Catch-up STOP and get ready to GO

1) Check around for anyone experiencing lag on

processing information regarding AIS. Ask if there is
any matter that needs to be clarified. Discuss
concisely, to maintain timeline;

2) Once done, move to another part of the discussion.

Apply techniques that will generate attention and
stimulate focus that will embrace the next discussion.

3) For today, IMAGINE this!

 IMAGINE this.
As the instructor, you are convinced that your students
are now equipped with a thorough understanding and
application of accounting standards relating to nature and
composition of accounts, initial recognition, measurement,
analysis of business transactions, analyze accounting
transactions, prepare accounting entries, summarize the effects
of the transactions, and presentation in the financial statement
of: cash, receivables inventories, etc., and prepare and present
these accounts in the financial statements in conformity with
the financial reporting framework accounting.
What will be the initial reaction from your class if you will
send them to SM and individually pick a counter (Big Cart) only
just to prepare accounting entries for each customer transaction
and reflect inventory movement to individual ledger card for
each inventory sold? How about sending half to Land bank ATM?
 AIS – Looking way back.. (relate to the imagine activity to open discussion)
• Traditionally, accounting is purely based on manual approach;
• Experience and skilfulness of an individual accountant are
critical in accounting processes;
• Even using the manual approach can be ineffective and
inefficient;
• AIS resolve many issues and support an automation of
processing large amount of data and produce timely and
accurate information.
• Early AIS 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.
(Wikipedia)
Accounting Information System (AIS) – not so way back…
 AIS are more commonly sold as prebuilt software packages
from large vendors such as Microsoft, Sage Group, SAP AG|SAP
and Oracle Corporation;
 Small businesses often use accounting lower costs software
packages such as Tally, MYOB and Quickbooks;
 Large organisations prefer enterprise resource planning (ERP)
systems. Where AIS were merged with larger, more centralized
system. This is to address issues on connectivity and
consolidation with other business systems, mostly
incompatible to one another;
 In ERP, a system such as accounting information system is built
as a module integrated into a group of applications that can
include manufacturing, supply chain, human resources and are
able to access the same data and execute complex business
processes.
(Wikipedia)
AIS – in the future?…

 Cloud-based accounting information systems are increasingly

popular for both SMEs and large organisations for lower costs;

 Accounting Information System is the future of your business.

(Wikipedia)
 WHAT IS AN
ACCOUNTING
INFORMATION SYSTEM?
Accounting Information System (AIS) – Described…

• A system of collecting, storing and processing financial and

accounting data that are used by decision makers;
• 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;
• Designed to support all accounting functions and activities
including auditing, financial accounting & reporting,
managerial/ management accounting and tax; and
• With adoption of AIS, many businesses have removed low
skills, transactional and operational accounting roles.
(Wikipedia)

Objective number 1 unlocked.

DESIGN, SETUP, BUILD
 AIS Architecture
An AIS typically follows a multi-rank architecture separating in
distinct layers: Presentation to the user; Application processing;
and Data management.

Presentation Layer manages how the information is displayed to and

viewed by functional users of the system (through mobile devices, web
browsers or client application).

The Application Layer retrieves the raw data held in the log database
layer, processes it based on the configured business logic and passes it
onto the presentation layer to display to the users.

The entire system is backed by a database that stores all of the data. As
transactions occur, the data is collected from the business events and
stored into the system’s database where it can be retrieved and
processed into information that is useful for making decisions.
(Wikipedia)
Discuss each layer.
TRANSACTION PROCESSING
 AIS Architecture – transaction flow..
With an AIS, an accounts payable clerk enters the invoice,
provided by a vendor into the system where it is then stored in
the database. When goods are received, a receipt is created and
also entered into the AIS. Before the accounts payable
department pays the vendor, the system’s application processing
layer performs a three-way matching where it automatically
matches the amounts on the invoice against the amounts on the
receipt and the initial purchase order. Once the match is
complete, an email is sent to an accounts payable manager for
approval. From here a voucher can be created and can process
payment to the supplier.

Raise PO  Receive Goods  Enter Invoice  Process Payment

(Wikipedia)
Discuss the business logic on payment.
 AIS Architecture – module to another module..

Transaction Module Use

Raise PO PO Module
Enters supplier invoice Accounts Payable Module
When goods are received Inventory Module
Process Payment Banking Module

See pronto files to have an illustrated presentation of modules and module to

module transaction activity.

Modular to address both connectivity and consolidation issues.

IMPLEMENTATION
 AIS Implementation

Stages to implement an accounting information system

are as:
• Detailed Requirements Analysis;
• Systems Design (synthesis);
• Documentation;
• Testing;
• Training;
• Data Conversion;
• Launch/Rollout/GoLive;
• Tools; and
• Support
(Wikipedia)

Briefly discuss each..

AIS Setup

Briefly discuss each..

USER Interface (UI)

Briefly discuss each..

 Accounting Information System
“The Millennial Accountant”
Common characteristics of a Millennial (thebalancecareers.com)

Tech-Savvy
AIS keeps itself updated with the latest technology available. If not controlled, it might get all costly
updates available though, not all are required.

Achievement Oriented
AIS must deliver its intended purpose. If not, “see you in my office”, CEO.

Team-Oriented
AIS seeks the input and affirmation of other components to be most productive. No-component-left
behind.

Craves attention
AIS craves feedback and guidance. It is developed based on requirement therefore it can deliver
what is required. However, users must keep AIS informed of their other needs that are yet to be
delivered.

Prone to Job-hopping
AIS nowadays are built in modules. A transaction is processed starting from one module and
requires another module(s) to finish the task.