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A general model of accounting information systems

Conference Paper · October 2011

DOI: 10.1109/ICAICT.2011.6110886

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A General Model of Accounting Information Systems
METIN ALLAHVERDI
Beysehir Ali Akkanat Vocational High School, Selcuk University, Konya, Turkey

Abstract – Accounting information system composes the most events. According to this, accounting can be defined as a
important part in management information systems because process providing financial information for the people in the
accounting is stated as the language of a management. Thereby, position of making decision in various institutes; this process,
accounting information obtained from accounting information in order for those being in the position of making decisions to
system is a kind of basic knowledge for the efficient management
decide consistently, gets into act toward the aim of providing
system. In particular, data gained from the accounting system
with computer base ensures extremely important contributions the correct and reliable information in time, [1]. On the other
for the management systems to be successful. In this study, the hand, accounting information system is an information system
development of accounting information system and its designed for providing success in accounting function [2].
significance for the managements are examined generally. Some concepts associated with accounting information
system are:
I. INTRODUCTION - Accounting information system is a data processing
process providing the information that will be needed for the
Today, especially in technological area, great developments users of information in the business enterprises in planning,
and changes are experienced. Each part of the world has been controlling and maintaining the activities of business
significantly influenced from this development and change. In enterprises [3].
these developments, one of the most important parts of world - Accounting information system is an information system
system, the business enterprises having the biggest share were collecting, processing and storing the data related to the
also so influenced from these changes. economic activities of business enterprises for the parts to
The business enterprise, as a system, along with make a decision about the business enterprises [4].
technological developments, makes an effort, in order to - Accounting information system is an information system
struggle with the increasing competition and keep the presenting with the financial tables for the necessary
subsystems in it in a continuously dynamic structure. information to the external financial information users [5].
Accounting department, one of the subsystems of enterprises, According the common definition appearing as a result of
has also been one of those first influenced from these above definitions, accounting information system (AIS) is an
developments and changes, in which the information gains information system collecting the data belonging to financial
importance and it interlocks with technology. This situation attributed transactions creating variation on the entities of
did not change the theoretical structure of accountancy, but business enterprise and capital and debts, which are the
inflicted the radical change the processes of documenting, resources of these entities; turning into information by
recording, and reporting forming basic accounting stages. The processing the data collected; and reporting the appearing
main subjects of accounting such as financial accounting and information [6].
reporting, cost and management accounting, auditing and
taxing, as an extension of the effects of these changes, and the III. THE PLACE AND THE IMPORTANCE OF ACCOUNTING
INFORMATION SYSTEMS IN THE BUSINESS ENTERPRISES
integration with the new technologies, as a necessity, have
emerged.
In the business enterprise, a good management is based on In order for the business enterprises to be able their
correct and timely information. Timely, meaningful, and objectives, they need a good accounting information system.
correct information undertake very important missions in An effective accounting system implements its function,
monitoring the activities of business enterprise, implementing based on the information and data, which are correct,
the functions such as planning, organizing, and controlling by significant, and obtained in time [7]. The data obtained from
the management because preparing, implementing plans computer based accounting system provide important
toward the future illiterately and making control operation are contributions in terms of the enterprise to be successful. It is
impossible. Accounting information system is also a system impossible for the enterprises deprived of this information to
presenting the correct and timely information in making be successful in today’s conditions [8]. Accounting
decision of management of business enterprise. information system includes three sorts of information the
business enterprises need in their activities. This information
II. THE DESCRIPTION OF ACCOUNTING INFORMATION is the information to be presented to the internal users, the
SYSTEMS information to be presented to the external users, and the
necessary information for assessment. Thus, that accounting
Accounting is a very comprehensive process in terms of the information system presenting information to such a wide
events it observed and the information it produced about the
area harms is seen an important reason of entraining of considering the accounting as a system is the leafing of the
business enterprises to the negative conditions. important developments seen in the last years in the
The contributions the accounting information system accounting area. The most important factor in emerging and
provides to the business enterprise can be examined under the developing of this approach is that the computers provide a
following titles [9]. great effectiveness and that a number of social scientists
- Increasing quality and reducing the costs of product and examining the business enterprises and their organizing adopt
service: Accounting information system monitors the the systemic approach. In 1966, systemic approach in
systems, in order for the operators to take action immediately accounting is grounded with an accounting statement
when one moves to out of acceptable quality limits for (ASOBAT –A Statement of Basic Accounting Theory)
process. These monitoring system realized by accounting introduced in a theoretical study published by American
information system provides to maintain the product quality, Accounting Association and here, it has been accepted that
to reduce the amount of waste material and, costs of accounting is primarily an information system [10].
reprocessing simultaneously. Development in computer technology also influenced all
- Increase productivity: A well designed accounting systems as well as accounting information systems. But,
information system, providing more information in time, whether manually operated systems or extremely automated
helps increase the productivity. For example, in-time systems with computer control, there is no change in the
production approach needs the constant, correct, and actual fundamental structures of systems. In other words, “input
information about raw material inventory and its place. processing, output, and feedback flow”, one of the rules of
- Improving of making decision: Accounting information being able to express the system as a system is existent in all
system, providing the information needed by employees systems. What revealing the difference in the systems is the
correctly and timely, facilitates their making decisions. For informational process activities in the system (the way the
example, the firm Frito-Lay, in order to analyze better the sale works are carried out) and the technologies used [11].
trend of its managers, collects the information about daily As seen in Fig. 1, in general, the elements of accounting
customer’s stocks. This enables for Frito-Lay to establish information system are users, resources of data, data
rapidly the reasons of variations in the sale and make collecting, data processing, management of database,
corrective actions. In Texas, when a decline in the sales of production of information, and feedback [12].
Tostitos Cips was experienced, Frito –lay started an - Users: Users are divided into two as external users and
investigation and found that a small competitor introduced a internal users. The external users consist of creditors,
new white corn tortilla chips. Frito Lay, in three months, shareholders, potential investors, regulative institutes, tax
presented its own white corn chips and recovered its market offices, suppliers, and customers. These users can receive
share lost. information about the data of business enterprise such as
- Sharing information and expertise: A well-designed financial tables, tax statements, purchasing orders, invoices
accounting information system can help to the management, the other report. Among the internal users are the managers of
in order to develop the activities rapidly and providing a organization in every environment and operation staff.
competitive advantage. For example, business enterprises, in
External Environment
order to share the most perfect harmony between the people
working in distinct offices and provide communication
support, utilize the applications such as Intranet, Internet, Information
Extranet, and electronic data replacement etc. The employees System Data Base
can review the data base in the scope of business enterprise, Management
in order to identify the relevant experts to provide data for a
special customer.
According to these contributions, it can be said that External Data Data Information External
accounting information system realizes the information resource data Collecting Processing Production Users
system toward planning, developing, and improving of
operational and financial situations of organization.
Feedback
IV. THE BASIC STRUCTURE OF ACCOUNTING INFORMATION Internal Internal
resource data Business Users
SYSTEMS Organization

Accounting, experiencing an evolutional process

Feedback
nowadays, also maintains the operations of recording,
classifying, summarizing, and reporting it has traditionally Fig. 1. General Model for Accounting Information Systems
carried out. Accounting, in the base of this function of its,
aims at providing the information which is needed for the - Data Resources: These are data consisting of financial
people in and out of the business enterprises. The accounting transactions coming into the system from both internal and
function oriented to realize this aim is a component turning external resources. These data emerges from economic
the raw data into the financial data in real meaning Thus,
tradeoffs with the other commercial establishments and the abhorrent to the user and result in its using in the wrong
people outside the firm. The transactions such as sales of actions or making wrong decisions.
goods and services, stock, purchasing, and cash receipts can Actuality; this is a critical factor determining the usefulness
be given as example. Internal financial transactions are the in information age. Information must be older than the action
resources consisting of transactional tradeoffs in organization. of making decision.
For example; movements of raw material, depreciations of Correctness; Information materials must be eliminated
fixed asset, product stocks and labor. from the errors. The information with substantial error can
- Data Collecting: Data collecting is the first operational result in the users to be unsuccessful in making the necessary
stage of information system. Data must be eliminated from decisions. Therefore, system managers should present the
their substantial errors before entering the process. This stage correct information to users in time and sufficient degree.
is the most important ones from many aspects because there is Integrity; For making decision or implementing the
a risk of producing incorrect information not eliminated from mission, any part of the information must not be missing.
its substantial errors. That such a thing occurs can lead to the Summarizing; Information system should present the
wrongly actions and incorrect decisions by the users. correct and brief information grouped according to the need
There are two rules in data collecting; appropriateness and of user. The information used by managers of lower level can
effectiveness. Only appropriate data must be drawn into be more detailed. Toward the managers of high level,
information system. The main mission of system operator is information must be summarized.
to know which data are appropriate. He/she learns this, - Feedback: Feedback is the way the information is sent to
analyzing the needs of users. As a result, only appropriate the system, which is the resource of data. Feedback is divided
data will contribute to information. In the stage of data into two as internal feedback and external feedback. Internal
collecting, a filter should be designed for inappropriate data. feedback will restart the process of order for renewing the
In an effective data collecting stage, data is collected for stocks, while external feedback will result in making a new
only once. These data can be later used by a number of users. arrangement on uncollected customer account.
These effective data used can be later backed up. The In order for the information produced for accounting
capacity of information system related to colleting, processing information system to be used for decision makers in the best
and storing data is limited. In backing up the data, way and rapidly, it is necessary for it to be reliable, complete,
overloading the system will result in decreasing the objective, comparable, and arranged in time [13]. The
effectiveness of system. absence of this information will generate troubles in all
- Data Processing: The collected data need to be processed functions of management [14]. Especially the first function of
for information. Mathematical algorithms used for planning makes it impossible to do planning forming an infrastructure
production, statistical techniques for prediction of sale, and for the other functions. Hence, it can be said that accounting
procedures for accounting applications can be given as information system has an attribute significantly affecting to
example. be made a decision by the accountancy [15].
- Database Management: The database of organizations is
physical financial data storage. This storage area can be a file V. THE FUTURE OF ACCOUNTING INFORMATION SYSTEMS
cupboard or computer disc. Whatever they are, all data can be
represented on data base in a logical hierarchy. Data base In the business enterprises, the first application areas of
management has three main functions: storing, retrieving, and computerized systems became accounting system. From this
deleting. In storing process, new records are entered and the possibility the big companies utilize, with the spread of
records are transferred to a suitable place on database. personal computers, middle and small sized business
Retrieving function is to take out an existing record on enterprises have also began to utilize [16]. On the basis of
database. After the data taken out are reprocessed, storing computer, the applied accounting systems, since they are
function reloads the updated data, while deleting function is rapid, precise, and very reliable, are chosen from the business
to remove the old and unnecessary data on the database. enterprise [17]. Today there are a few business enterprises not
- Information production: Information production is the doing the accounting operations via computer. While the
process of arranging, formatting and presenting information accounting package programs are the programs not being so
to the users. This information can be an operational document complex providing to use the uniform chart of accounts
such as sale order, a structural report, or a message on published in the general application declaration of accounting
computer display. A useful information has five attributes system at the beginning via the main and auxiliary accounts;
such as appropriateness, actuality, correctness, integrity, and helping to be issued work sheets, income statements, and
summarizing. balance sheets, nowadays, it has turned into more complex
Appropriateness; The content of a report and document structure including the modules such as financing, budgeting,
must serve to an objective. This information can be a support production, cost accounting etc. besides accounting modules
in making decision of a manager or officer. Therefore, [18].
information system reports should present only appropriate Traditional accounting software is the one running on the
data. The reports presented in inappropriate data may be main independent computers and not having the remote
accessible feature. The accounting software of today is
graphic based and easy to use and has remote accessible enterprises and healthy produces the necessary information, in
feature. From now on, it is not under consideration to make a order to be able to plan the future. Today, it is clear that the
discrimination between accounting software because today’s decision not based on accounting data is not healthy. As
accounting software reached the point of ERP systems having known, the most important decisions made by the top
integrated information operation systems or modules of management are the decisions about planning the future and
accounting and financing. In these ERP software, accounting accounting information system which is a primary system
modules are in interaction with the other functional modules providing the necessary information so that they can plan the
such as marketing, production, human resources, substantial future. Hence, the developments in the area of accounting
fixed assets etc. as well as the institutes outside of information system must be continuously followed and
organization and shareholders [19]. system must be revised for the one who desires to reach the
Along with the increase of expectations of decision makers information at the moment.
from accounting, accountants have to prepare the reports in
sort of that they cannot previously prepare due to ACKNOWLEDGMENT
technological insufficiencies. Especially, in ERPs, besides
organizing the information flow between departments This study is supported by the Scientific Research Projects
horizontally, reporting the various reports to help to the Unit of Selcuk University.
managers in making decision on the basis of units, product or
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