A Computerised Accounting Information System

Published Date: 02 Nov 2017

Accounting information system (AIS) is a system that collects and stores data and processes the data into information for decision making. In the past, AIS was done manually, but today, it becomes computer-oriented. Most companies use AIS to keep track of accounting activities using information technology.

The shift from manual to computerized accounting information system will make an impact to the organization. The impacts are the time, accuracy, cost of disbursement and the internal control.

Time is important to the organization. The staffs will be able to perform tasks faster using computer. They are able to get the information at a quickly and this aspect of time is a most important advantage. On the other hand, the company needs to spend a large amount time plan and set up the infrastructure, especially a large company that may need to implement change periodically. The company also needs to spend time to train the staffs and considers the time lost when there is any system failure.

Computerized accounting information system can increase the accuracy of the information. A computer is able to spell check any misspells error or find out any missing data when staffs forget to input the data. With the increase in accuracy, the staffs will be able to process the information more efficiently and effectively.

The company needs to plan the monetary cost of the equipments, data storage system and technical support for the upgrades. They also need to plan the cost for training the staffs. An efficient computerized accounting information system can reduce the size of the accounting department, thus saving the labour and benefits cost. They also can reduce costs associated with stationeries and paper-related documents.

Internal control is an essential practice in accounting information system as it helps to ensure that the business and transaction is conducted in an orderly manner. It also ensure that the stability of the company’s asset and able to minimize the lost of information and errors when the problems occur. The internal control gets more complicated with the introduction of computerized accounting. Internal control consists of control environment, risk assessment, monitoring, and information and communication element. New hardware and software will be introduced and the company is required to equip the staffs with computerized accounting skills to make sure that the staffs will carry out their work effectively. The staffs are required to adapt to the changes in the new working environment. The methods used for retrieving, processing and storing of data will be computerized.

Control environment refers to the way the company handles their employees. The company must set up an effectively policies and regulation for the staffs to follow to meet their target. The management and the staffs also need to understand their roles in the internal control process to facilitate the flow of the work process. Having effective control environment helps the company to manage the staffs and their target’s performance.

Risk assessment means to find out all the potential threats, the causes of it, probabilities of encountering them and build-up counter-measures to evade or handle the problems. Poor risk assignment could adversely affect the achievement of the organizations. The senior management are required to determine and review the risks regularly. The risks include legal risks, market risks, operations risks, reputational risks, liquidity risks, corruption risks, financial risks and etc.

Monitoring refers to keeping track of the quality control of organization's operations and employee activities. Monitoring can also help to determine the key risks of daily operations. Effective monitoring will help the business to be carried out effectively.

Information and communication element refers to the control of information that passed effectively and accurately in the organization. The main goal is to prevent or minimize miscommunication and the loss of information. Having accurate information on time helps to enhance the productivity rate of the employee and helps the company to meet their target.

The accounting information systems contain confidential data that should be kept safe all the times. The consequences of the security threats can be devastating as it can disturb the workflow in the department. It will lead to a delay or stoppage of work. The security threats of computerized accounting information system are also associated with the use of information technology. The security hazards, ranging from internal to external threats, include power failure, computer’s component failure, computer viruses, data corruption, hostile acts, such as arson, theft and vandalism , natural disasters ,such as floods, lightning, earthquakes, landslides, tornadoes and tsunami. Company must set up properly preventive measures to prevent or minimize the problems when it occurs.

The accounting staffs and auditors must employ a high ethical standard when working with financial data. The staffs must also understand the confidentiality of the data. The company is required to select the most trustworthy staffs to handle these data. This will prevent or reduce the number of internal threats.

The company must make sure that the accounting equipment is kept securely and limit the access of the staff. The cables connecting to the equipments are to be kept away from people to prevent them from being destroyed. The Company needs to set up door locks and invasion detection devices. These could prevent unauthorized access to the key places or damaging of accounting equipments.

The system in the company must authenticate the users with username and password. Only authorized users are allowed to use the computer. The staffs must not share their passwords and required to change them regularly. The password should be long and difficult to guess. A good password contains upper and lower case letters, numbers and special characters. Individual rights are to be given according to their roles in the organization. Restrict users is necessary as they will not be able to obtain confidential data. Random personal information checks should be conducted to identify staffs and unauthorized users. This will prevent or minimize the unauthorized access or use of data.

The computer system is vulnerable to viruses and malware attacks. Some viruses enable hackers to get inside the system and create troubles for the organization. Some others can cause the entire system to malfunction and even make it. With the use of internet, the threats of viruses and malware increases. The company is required to make sure of anti-virus software, firewalls and other security devices to minimize the threats. The software is to be fully updated on regularly basis.

Backup of data refer to saving the data in a storage devices especially the data of accounting system. It is important as it can restore data when something happen to the system. It should be conducted in an isolated place, where unauthorized user is not able to access the premises. Important data such as financial data should be backed up daily, weekly or monthly according to how critical is the data. A good backup procedure takes place overnight so that the user will not disrupt the performance of it. In the event of a threat, restoring of entire data may take some time but it can minimize the organization’s liquidity loss.

Fire suppression equipments are also important to the company as fire is the most common threat. Company could gone out of business because the loss of key data such as financial reports. To effectively implement a fire-suppression system, the company needs to consult the specialists. The company are required to install the alarms at a strategic locations and connected to a fire-fighting station. Automated fire-extinguishing system must be able to dispenses suitable type of suppressant such water, foam, dry chemical, carbon dioxide, Halomethane, vaporising liquid and wet chemical at different situation. For example, extinguish fire with water will

These internal control procedures help to safeguard the organizations’ assets and maximize the effectiveness and efficient rate of the organization. It is the responsibility of management to ensure that the staffs carry out their roles properly.