Information technology (IT) play𒊎s a key role in the operations and success of most businesses.

For example, it makes it possible for accounting profess💞ionals๊ and company managers to understand, organize, and master more effectively the intricacies of a wide range of financial data.

In particular, an 澳洲幸运5开奖号码历史查询:accounting information system (AIS) provides these professionals with a tool that facilitates the collection, management, retrieval, and reporting o💟f financial information that’s necessary for a business to meet its goals efficiently.

An AIS l💖inks inputs, procedures, and outputs for accounting purposes. AIS-generated reports can provide guidance for critical business decisions.

The 6 Components of an AIS

, CPA, startup accountant, fractional CFO, tax consultant, and founder of the Alajian Group Inc. in L꧑os Angeles and New York i♕ndicates that the key components of an AIS are:

1. People
2. Procedures and Instructions
3. Data
4. Software
5. Information Technology Infrastructure
6. Internal Controls.

These components serve three functions. They collect and store the necessary financial data, implement controls to accurately process it, and disseminate it to key personnel.

#1 People

Employees use the AIS within the business, while outside professionals who are enlisted for their services may also use it. These people can include key managers and accounting staff but several others as well.

“The ‘people’ component is first because it's the most important,” Alajian says. “It encompasses everyone who’s using the system: accountants, auditors, managers, and analysts. There may be both internal users, such as employees, and external users, such as regulatory agencies.”

Collecℱtively🍸, they develop and manage the system.

#2 Procedures and Instructions

The second component concerns how information is collected, processed, stored, and then retrieved. It typically involves a series of steps.

“Processing is typically done by software,” according to Alajian. “Collection may include both manual and automated components. It must be accurate or else projections won't be. Processing is what gives you usable information. Storing data gives companies the ability to analyze past performance, and it’s crucial for tax preparation.”

#3 Data

Data is all the information that goes into the AIS🍬. This component likely includes:

• Payroll information
• Sales reports
• Inventory records
• 澳洲幸运5开奖号码历史查询:Income statements, balance sheets, and cash flow statements
• Invoices
• Tax documents
• Purchases

Other data might be included depending on the business. Centralizing all this information in a single, accessible location can make it easier to get an accurate picture of a company’s financial health.

#4 Software

The software co♛mponent refers to the computer programs that automate the collection, processing, and𝓡 management of all this data.

AIS software reduces errors and supports the faster generation of financial information required by management.🎉

“Commonly used options are QuickBooks, Freshbooks, or Xero, to nam🎉e a few,” Alajian says. “Many companies have their own custom systems.”

#5 Information Technology Infrastructure

The fifth component is the information🔯 technology infrastructure that the software can’t function withไout.

“It's basically the computers or hardware you’re using as well as the network to store and share information internally, which could be cloud-based or internal,” Alajian says.

IT infrastructure also includes mice, disk drives, printers, keyboards, and yes, even pens and paper. They're all necessary to gather, organize, and distribute data.

#6 Internal Controls

Internal controls are the police of the AIS. They’re the security features that protect the data against the criminals of the technology world. They may be as simple as required passwords or as complex as 澳洲幸运5开奖号码历史查询:biometric verification methods.

They stand against the viruses, hackers, and cyber-crooks that attempt to infiltrate computer-based networks.

Integration and Efficiency

Together, these♑ six components can create a formidable network of assistance for a business that’s stri🎉ving to effectively and efficiently meet its goals.

As Scottish poet Robert Burns once said, however, “The best-laid plans of mice and men often go awry.” AISs have the potential to go awry if they're mishandled.

The American Institute of CPAs and the Canadian Institute of Chartered Accountants have pinpointed five specific factors that contribute to the reliability, sustainability, and success of any AIS:

• Security
• Confidentiality
• Privacy
• Processing integrity
• Availability

Only those with express permission to access an AIS should do so. Internal controls must be firmly in place to protect the👍 data.

“One crucial idea in internal controls is segregation of duties. For example, the person who approves payments shouldn't be the same person in charge of recording transactions,” Alajian says. “This kind of cross-checking helps to prevent unnoticed fraudulent transactions.”

Confidentiality works in tandem with privacy, and it specifically addr൩esses how the collected data is used.

Processing integrity refers to the labeling and organization of the data. It dictates that data should be all-inclusive, properly labeled, and identified. It should be readily and promptly available to those with the authority to access it.

The Bottom Line

Thanks to hardware and software technologies, an AIS can provide businesses with a reliable and expeditious way to collect, manage, retrieve, and use information that’s vital to a company's operations and overall success.

Each of the six components described abov𒊎e plays 🅰an integral role in a properly functioning AIS.

In addition, Alajian suggests a few questions to ask yourself if you're considering fine-tuning or creating your own:

“Do you have a firewall? Is information password-protected and available only to select personnel? How simple is it for those personnel to access the raw data and the reports they need to analyze your company's finances? Will an accountant or auditor have everything they need? And who’s checking to see that the raw data is complete, accurate, and reliable?”

Check these issues off your list as you implement your AIS. And don't hesitate to get the helpful assistance of a qualified accounting professional, if necessary.