An Over View Regarding AIS

Parts of an Accounting Information System
An accounting information system typically has six basic parts:

I. People who use the system, including accountants, managers,
and business analysts.
II. Procedures and instructions that represents the ways that
data are collected, stored, retrieved (getting back), and
processed.
III. Data that should be entered for processing through AIS.
IV. Software which consists of computer programs used for
processing data.
V. Information technology infrastructure which includes all the
hardware used to operate the AIS.
VI. Internal controls that represents the security measures used
to protect data.
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:
I. Security - Access to the system and its data is controlled and
limited only to those authorized.
II. Confidentiality - The protection of sensitive information from
unauthorized disclosure.
III. Privacy - The collection, use, and disclosure of personal
information about customers is done in an appropriate manner.
IV. Processing integrity - The accurate, complete, and timely
processing of data done with proper authorization.
V. Availability - The system is available to meet operational and
contracting obligations
Functions of an Accounting Information System
Accounting information systems have three basic functions:
* The efficient and effective collection and storage of data
concerning an organization’s financial activities, including
getting the transaction data from source documents,
recording the transactions in journals, and posting data
from journals to ledgers.
* To supply information that are useful for making decisions,
including producing managerial reports and financial
statements.
* To make sure that controls are in place to accurately
record and process data.
Accounting Information System Jobs
Students can aim (track of / Strive for) bachelor’s, master’s,

and doctorate degrees in accounting information systems.
These degrees generally provide students with both
accounting knowledge and an understanding of the
technology involved in setting up an AIS.
This prepares accounting program graduates to work with
the information technology, information systems, and
people needed to set up and maintain an AIS.
Accounting information system specialist jobs’ are available
in corporations, accounting firms, consulting firms, non-
profit organizations, and government agencies (units).
The basic subsystems of the (AIS)?
The (AIS) subsystems are:
1) The financing cycle, which involves activities of
obtaining the necessary funds for financing the
entity’s activities from different sources, either from
owned funds; capital from Owners as investors
(shareholders), or borrowed; through loans from
banks and bondholders).
2) The expenditure cycle, which involves activities of

buying and paying for goods and assets purchased
or services rendered for the entity.
3) The production cycle, which involves all
activities and processes needed for converting
raw materials into finished products, in
manufacturing entities for example.
4) The human payroll cycle, which involves

activities of hiring and paying for workers &
employees.
5) The revenues cycle, which involves activities of

selling goods or rendering services as well as
collecting these revenues.
Why studying (AIS) is important
for any organization?
It is important because:
1) The main Accounting objective is providing useful
information to the different managerial levels for
fulfilling the different functions, through data
collection, identification, measurement
processing and communicating.
2) Providing Financial & Accounting information
reports for different other purposes either for
internal or external uses.
3) Understanding how Accounting System work as:
Collecting data about different activities &
transactions,
Processing the data to get useful information,
Insuring the availability, reliability & accuracy

of these information for assuring their
effectiveness in fulfilling the different
functions.
Data, Information & their Usefulness
Data, are facts – known as raw data - that should

be collected, recorded, and processed through
an information system.
Information, represent processed data that gives
meaning to the user of these information.
(Notice that: good, accurate, enough and reliable

information means better decisions and
achieving the entity’s goals effectively).
Benefits of information may include:
 Reducing uncertainty,
 Improving the function of decision making,
 Improving the ability to plan & schedule activities.
Information will be useful when they are:

* Relevant, * Complete,
* On time, * Understandable,
* Verifiable * Accessible (we can get it)
* Reliable (dependable.)
Information are to be used Internally & Externally,
* Internally, for all the functions and the different
managerial levels inside the entity.
* Externally, for different users; such as:
 The lending entities and bondholders,
 The tax authority,
 The social & medical insurance authorities,
 The controlling bodies,
 Stockholders, through the stock exchange, and
 Others.
Why Accountants have to study their
entity’s (AIS)?
Because they should understand:
How the system is designed, implemented and
used,
How financial & accounting information are

reported &
How to use these information for performing

the different entity’s functions.
What are the main financial statements that
entities should prepare?
After preparing the trial balance and adjusting it through the
different adjustments relating to the accounting period, the
entity needs – usually – to prepare at least:
The Income Statement (I.S.)
The Balance Sheet, that shows the entity’s
Financial Position through its Statement (F.P.S.)
The Change in Equity Statement (Ch. in E.S.) &
The Cash Flow Statement (C.F.S.)
The following form is for clarification:
Thanks & Good Luck
Prof. Adel T. Fayed
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Parts of an Accounting Information System

An accounting information system typically has six basic parts:

Students can aim (track of / Strive for) bachelor’s, master’s,

2) The expenditure cycle, which involves activities of

4) The human payroll cycle, which involves

5) The revenues cycle, which involves activities of

Processing the data to get useful information,

Insuring the availability, reliability & accuracy

Data, are facts – known as raw data - that should

(Notice that: good, accurate, enough and reliable

Information will be useful when they are:

How financial & accounting information are

How to use these information for performing

Prof. Adel T. Fayed

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