Accounting information System

1. Accounting information system (AIS)
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.
An accounting information system is a way of tracking all accounting
and business activity for a company. Accounting information systems
generally consist of six primary components: people, procedures and
instructions, data, software, information technology infrastructure,
and internal controls.

2. AIS Data:
• An AIS must have a database structure to store
information, such as structured query language (SQL),
which is a computer language commonly used for
databases.
• SQL allows the data that's in the AIS to be manipulated
and retrieved for reporting purposes. The AIS will also
need various input screens for the different types of
system users and data entry, as well as different output
formats to meet the needs of different users and
various types of information.
• The data contained in an AIS is all of the financial
information pertinent to the organization's business
practices. Any business data that impacts the
company's finances should go into an AIS.

3. AIS Data:
Sales orders
Customer billing statements
Sales analysis reports
Purchase requisitions
Vendor invoices
Check registers
General ledger
Inventory data
Payroll information
Timekeeping
Tax information
The type of data included in an AIS depends on the nature of
the business, but it may consist of the following:

4. Advantages of Accounting Information System (AIS)
• Cost Effectiveness – In the era of digitalization and artificial intelligence, each
organization is moving towards cost cutting with the use of artificial
intelligence. AIS has helped to reduce manual efforts and can perform the
same operation more cost-effectively.
• Time Effectiveness – AIS has assisted business organizations to reduce the
amount of time involved in recording, classifying, reporting any financial
information. A large quantum of manual work can be completed by AIS with
much fewer efforts and time involved.

5. Advantages of Accounting Information System (AIS)
• Easy Access(Portability) – Data stored in AIS can be retrieved via information
system connected with internet anywhere and at any time. Where manually
prepared books of accounts cannot be carried easily, AIS data can be.
• Accuracy – With the involvement of AIS, the reliability of data is increased. As
we had discussed earlier in this article that an AIS follows a predefined set of
instructions, therefore chances of error-prone information are less and
therefore AIS have an added advantage of accurate data.

6. Benefits of Accounting Information Systems
• Interdepartmental Interfacing
An accounting information system strives to interface across
multiple departments. Within the system, the sales
department can upload the sales budget. This information is
used by the inventory management team to conduct
inventory counts and purchase materials. Upon the purchase
of inventory, the system can notify the accounts payable
department of the new invoice. An AIS can also share
information about a new order so that the manufacturing,
shipping, and customer service departments are aware of the
sale.

7. Benefits of Accounting
Information Systems
• Internal Controls
An integral part of accounting information systems relates to
internal controls. Policies and procedures can be placed
within the system to ensure that sensitive customer, vendor,
and business information is maintained within a company.
Through the use of physical access approvals, login
requirements, access logs, authorizations, and segregation of
duties, users can be limited to only the relevant information
necessary to perform their business function.

8. The Reliability of Accounting Information Systems
• The American Institute of CPAs (AICPA) and Canadian Institute of
Chartered Accountants (CICA) have identified five basic principles
important to AIS reliability:
1. Security – Access to the system and its data is controlled and limited
only to those authorized.
2. Confidentiality – The protection of sensitive information from
unauthorized disclosure.
3. Privacy – The collection, use, and disclosure of personal information
about customers is done in an appropriate manner.

9. The Reliability of Accounting Information Systems
4. Processing integrity – The accurate, complete, and timely processing of
data done with proper authorization.
5. Availability – The system is available to meet operational and
contractual obligations

10. The Use of Accounting
Information Systems in ZKB:
• ZKB is a private limited company registered in Lahore, Pakistan
that operate in construction industry, where the main activities
ranging from construction of infrastructure, building, power, road
construction to property development.
• The company used automated AIS known as ‘Contract Plus –
Financial & Project Accounting’ package in their Finance
Department, which was commercially developed by a private
company (ZYXW).
• Contract Plus is a fully integrated business solution designed
specifically for companies in the engineering and construction
industry. The software will generate financial data to be analyzed
by the accountants and subsequently used by top level of
management for strategic decision making, thus, these managers
could identify future opportunities and limitations face by the
company and industry

11. The Use of Accounting
Information Systems in ZKB
Findings
• ZKB is a company that operate in construction industry. The
industry was identified as one of the most difficult to
understand due to its complexity.
• However, these challenges are under control with the advent
of technology such as software development that allows
systematic data processing.

12. The Use of Accounting Information Systems in ZKB
Inland
Revenue
External
Auditors
Client
Suppliers
Site Office Design
Team
Sub-
Contractors
Bankers
ZKB Head Office
Finance
Department
ZKB Head Office
Management Team
Information Flow of ZBMS

13. The Use of Accounting Information Systems in
ZKB
Users of AIS
• Accountants) and head office such as the Financial Accountants, Management
Accountants and Finance Manager are the internal users of the system.
• Also, the management team that consists of Finance General Manager, Chief
Operating Officer, Managing Director and Board of Directors are among the
internal users of the system.
• On the other hand, the external users consist of government agency (i.e. Inland
Revenue), external auditors and creditors. Indeed, wide variety of people within
and outside the organization uses accounting information for decision-making

14. Conclusion
• The wide varieties of people that involve in the company’s operation
get the benefits from the implementation of AIS and the use of
Contract Plus software developed by ZYXW.
• The system assists the operational managers to come out with
monthly reports for the top managerial level (i.e. tactical and
strategic) plan, control and decide resources allocation. In addition,
the report showed that the AIS add value to information processed
within the company.
• The use of AIS indicate the growth of tacit and explicit knowledge,
where personnel were trained intensively and experience and trouble
shooting were recorded for future reference and training