Relationship Between Accounting Information Systems and Organizations

RELATIONSHIP BETWEEN ACCOUNTING INFORMATION SYSTEMS AND ORGANIZATIONS
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Relationship between Accounting Information Systems and Organizations
Organizations do shape their Accounting Information Systems to fit their demands but on the other hand, the Accounting Information Systems also shape the organizations regarding planning, organizing and controlling of resources in the routine operations. An accounting information system is a compilation of data and their procedures of processing that create the requisite information for its users.
Accounting is the systematic way of keeping financial records, reports, and the analysis of all transactions of an organization. An accountant is in charge of accounting duties, and the person has the mandate to follow the set rules and regulations of accounting. Accounting consists of three basic activities that include; identifying, recording and communicating the economic affairs of an organization to the interested users while Information is raw data that has been processed and organized to give meaning to the users. Usually, better information and more information translate into superior decisions (Agbejule, 2005).
Information has several benefits in the organization such as reduction of uncertainty, better decision-making, and improved ability to timely schedule and plan activities. The characteristics that make the information useful to the organization includes; reliability, relevance, completeness, timeliness, understandability, verifiability, and accessibility. Also, information is provided for both internal and external users. External users use information that is either mandatory like those that are required by the government entities or essential information like those required in conducting businesses with external parties, for example, purchase orders. On the other hand, internal users use discretionary information that focuses on the production of information that ensures the benefits exceed the costs, meaning the information has positive values (Chenhall and Langfield-Smith, 1998).
A system can be defined as a set of interrelated components that interacts to achieve the set goals of an organization while an input is a device that enter the raw data into an accounting system. Typically, inputs include workstations or ordinary personal computers that run the applications. Data can also be input from electronic communication devices, scanning devices for e-commerce and electronic data interchange (EDI). Recently, most of the financial systems are "Web-enabled" to allow connection of devices to the Internet. The basic processing of the data is achieved by the use of computer systems that range from the small individual personal computers to the large-scale organization servers. The primary processing models are still the "double-entry" accounting systems that were initially found application in the fifteenth century. Also, a typical output device such as a computer display or monitor, non-impact and impact printers, and electronic communication devices for e-commerce and EDI. The output contents can encompass all the types of financial reports ranging from the tax reports and budgets to international financial statements (Grabski, 2012).
In the past, many accounting systems were consisting of ledgers and notebooks. With the advent of computers, the accounting books are now being replaced with accounting software programs. The AIS has significantly changed the manner in which accountants do their jobs and has caused an improvement in the effectiveness and efficiency of accounting. Accounting information systems should have a target system by their definitions. The target systems should be related to the operations of the organization. Other aspects of non-accounting in operations of the organization are covered by information systems. For example, the Management Information System, Human Resources Information System, Production Planning or Scheduling System, and Strategic Planning System (Janke, Mahlendorf, and Weber, 2014).
The target systems for accounting systems have to do with the aspects of operations of the organization that is relevant to accountability for the assets or liabilities of the organization. The evaluation of the outcome of the operations that leads to the computation of the financial reporting, and inclusive income aspects of organization operations (Jermias and Setiawan, 2008).
Accounting information system can cover all the operations of the organization from accounting transactions to sophisticated financial management processing and planning systems. The presentation of financial reports starts at the operational levels of the company, where the systems of transaction processing capture crucial events of the organization such as purchasing, normal production, and activities of the sales. These crucial events of transactions are summarized and categorized for the decision making of the internal and external financial reports of the organization (Lau and Scully, 2015).
A cost Accounting System is used in service and manufacturing businesses. The system allows the company to track the costs attributed to the services and production of goods. Also, the accounting information system provides advanced analyzes for better tracking of performance and resource allocation. A Management Accounting System is used in allowing the organizational monitoring, planning, and control for a diversity of operations. It allows the managerial-level employees to get access to advanced statistical analysis and reporting. The system can be used in the gathering of information, developing of various scenarios, and in choosing an optimal answer between different scenarios (O'Leary, 2008).
ACCOUNTING AND INFORMATION TECHNOLOGY
The information technology and the age of its creation significantly influence all areas of accounting in all organizations.
Financial Accounting
The major aim of a financial accounting information system is to give relevant information to persons and groups outside the boundaries of the an organization such as investors, creditors, state tax agencies, and federal. An accountant can achieve the informational aim by preparation of such financial statements as balance sheets, cash flow statements, and income statements. Certainly, the majority of the managers within an organization c...