An accounting information system (AIS) is a structure that a business uses to collect, store, manage, process, retrieve, and report its financial data so it can be used by accountants, consultants, business analysts, managers, chief financial officers (CFOs), auditors, regulators, and tax agencies.
ACCOUNTING INFORMATIONS SYSTEMS
PART 1 OF AIN1501
STUDY NOTES
STUDY UNIT 1
A. Introduction to Information Systems
Data is the raw materials available for processing information.
Information is a set of facts or data organized and processed in such a way that it
provides additional value beyond that of the facts themselves.
Information is derived from data or raw facts that represent the real world elements
as illustrated below:
Diagram for creation of data
ACTIVITY DATA INFORMATION KNOWLEDGE DECISION-
MAKING
B. Characteristics of information
a) Accurate
Information should be without any errors.
Inaccurate data entered into a process will provide inaccurate information.
Information should be checked to ensure correctness.
b) Accessible
Information should be easily available to users in order to meet their needs.
c) UP - to – Date Information
Information needs to include the latest possible information and recording time of
data should be minimised.
d) Detail information
Information should contain all the important facts but no more than are
necessary.
e) Flexibility
Information is flexible if it is usable for more than one purpose.
, f) Relevance of information
Information should be relevant to the needs of the users.
g) Cost effective
The value of information should always be balanced with the costs of producing
the information.
h) Reliability
Information is reliable if one can depend on it, and its reliability depends on the
source of information, a rumour is not reliable.
i) Timely
Information should be delivered when it is needed.
j) Format of information
Information should not overly complex and should be supplied in the required
format.
C. The use and users of information
A. Internal Users
INTERNAL SOURSCES EXTERNAL SOURCES
1. Management Internal information on Budgets Forecasting Information on
and Production economy, interest and
exchange rates
2. Financial Information of Financial Possible source of finance in
Managers statements. order to make financing
decisions
3. Production Sales Quantities and sales New Technology and
Managers forecasting. Production processes to
improve performance of
production department.
4. Staff Managers Qualifications needed and salary Availability of employee
levels. qualifications to place
employees in appropriate jobs.
5. Marketing Target market, products and Media to use for advertising,
Managers prices. their tariffs and general market
conditions, economy and
competitors.
,6. Sales Managers Production costs and all Information on clients and their
overheads in order to make spending patterns and
decision on sales prices. determine opening times for
retail outlets
7. Purchase Manager The quantity of various products Suppliers and prices in order to
or raw materials needed by make decision on best quality
production dept and price.
8. Employees Suitability of organization on Job Labour laws and Unions
security
B. External users
INTERNAL SOURCES EXTERNAL SOURCES
1. Shareholders Financial and overall Information from other
performance of the organizations.
organizations.
2. Suppliers Information on sustainability Information on
and creditworthiness of the creditworthiness from the
organization. credit bureaus.
3. Customers Information about products Products and services of
and services. Discounts, different suppliers for
interest rates and payment comparison purposes.
terms.
4. Financial Information to determine References and credit
Institutions creditworthiness of the bureaus.
organization.
5. Government Information needed for Banks and other
SARS, to determine tax organizations to obtain
liability of organization. organizations earnings.
Payrolls, Taxes and
employee retirement fund
deductions.
6. Possible future Information on sustainability Published external financial
employees of job security reasons. statements to determine
sustainability of future
possible employer
STUDY UNIT 2
, INFORMATION SYSTEMS
A. SYSTEM
It is a set of two or more components that serves a common purpose and interact to
achieve a common goal.
Components of a system
INPUT PROCESSING OUTPUT
B. TYPES OF SYSTEMS
Opened system
It is a system that interacts with its environment.
Closed system
It is a system that is isolated from its environment.
C. SYSTEM PERFORMANCE MEASURES
It is the monitoring of the working of the system to ensure it is effective, fulfil its
responsibility and make the contribution it is supposed to make.
Ways of measuring performance
Effectiveness.
This is the measurement of outcomes against the predetermined level of output.
Efficiency.
This measures the output against input to determine the rate of output over input.
Performance standards
This is a set of specific performance expectations for the information system,
observable activities explain how the job should be done.
A system variable is the quantity or item that can be controlled by the decision
maker.
A system parameter is a value or quantity that cannot be internally controlled
meaning it cannot be changed by a decision maker in the company.
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