An accounting information system is a way of tracking all accounting activity in a business. There are six included elements: people, procedures and instructions, data, hardware, software and internal controls.
The system users are people, such as accountants and business analysts. An AIS provides different departments with easy access to the same information. For example, when sales are made, sales people enter customer orders, accounting invoices customers, the warehouse assembles the order, shipping sends it, and accounting gets a new receivable.
The procedures and instructions are the methods an AIS uses to collect, store, retrieve and process data. The data can come from internal sources, like employees, or external, such as online orders.
The data is all pertinent financial information to an organization’s business practices. That includes sale orders, billing statements and sales analysis. Having it all in one AIS facilitates recordkeeping and other important functions.
Information technology infrastructure is a fancy term for the hardware an AIS uses.
Before computers, AISs were manual, paper-based systems. Today, most companies use software such as Intuit’s Quickbooks or Sage Peachtree. Software can be customized to meet unique needs, but quality and security are crucial.
And internal controls are the security measures that protect sensitive data. These can be as simple as passwords, or as complex as biometric identification.
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