Management and Accounting Information System

Management and Accounting Information System- In order to remain competitive, organizations depend heavily on Information Systems. Management Information System (MIS) is used as the most common form of information system. A management information system (MIS) is a system that provides the information necessary to make decisions and manage an organization effectively.

Accounting Information System (AIS) identifies, collects, processes, and communicates economic information about an entity to a wide variety of users. Such information is organized in a manner that correct decisions can be based on it. Every accounting system is essentially a part of the Accounting Information System (AIS) which, in turn, is a part of the broader system, viz. the organization’s Management Information System.

An organization operates in a given environment surrounded by suppliers and customers.

An accounting Information System (AIS) is a collection of resources (people and equipment), designed to rework financial and other data into information. This information is communicated to a good sort of decision-makers. Accepting information systems performs this transformation whether or not they are essentially manual systems or thoroughly computerized.

Management and Accounting information systems are wont to ensure basic control is maintained over financial recordkeeping activities, but now it’s widely recognized as a broader concept, and accounting system is a sub-component. The reports generated by the accounting are disseminated to the various users – internal and external to the organization.

The external parties include the proprietors, investors, creditors, financiers, government suppliers and vendors, and the society at large. The reports used by these parties are more of a routine nature. However, the internal parties – the employees, managers, etc. use the accounting information for decision-making and control.

Designing of Accounting Reports

Data when processed becomes information. When the related information is summarised to satisfy a specific need, it’s called a report. The content and design of the report are predicted to vary depending upon the extent to which it’s submitted and decided to try to make on the idea of the report. A report must be effective and efficient for the user and will substantiate the decision-making process. every accounting report must be able to fulfil the following criteria :

    1. Relevance
    2. Timeliness
    3. Accuracy
    4. Completeness
    5. Summarisation

The accounting reports generated by the accounting software could also be either routine reports or on the precise requirements of the user. For example, the ledger may be a routine report while a report on supplies of a specific item by a given party is an on-demand report. However, from a broader perspective, the accounting-related Management and Accounting Information System reports may be of the following reports :

I. Summary:

Summarises all activities of the organization and presents them in the form of a summary report. Profit and Loss account and Balance Sheet.

II. Demand:

This report will be prepared only when the management requests it, e.g. Bad Debts Report for a given product or a stock Valuation Report.

III. Customer/Supplier:

According to the specifications of the management, it’ll be prepared. For example, Top 10 Customers report, interest on Customer Account/Invoices, Statement of Account, Customer Reminder Letters Outstanding/Open Delivery Order, Purchase Analysis, and Vendor Analysis report.

IV. Responsibility:

MIS structure calculates or specifies the premises of management responsibilities. For example, the report on Cash Position is to be submitted by the top of the Finance and Accounts department.

The various steps involved in designing accounting reports from accounting data are as follows :

i) Definition of objectives:

the objectives of the report must be clearly defined, who are the users of the report and the decision to be taken based on the report.

ii) Structure of the report:

The information to be contained therein and the style of presentation.

iii) Querying with the database:

The accounting information queries must be clearly defined and the methodology to be adopted while interacting with the database.

iv) Finalising the report:

It helps in the calculation or finalizing of the account information.

Data Interface between the Information System[/su_heading]

An accounting data system is a crucial component of the organizational Management and Accounting Information System in an organization. It receives information and provides information to the opposite functional Management and Accounting Information System. The following examples illustrate the relationship and data interface between the varied sub-components of Management and Accounting Information Systems.

I. Accounting, Manufacturing, Human Information System:

The manufacturing department receives the list of workers from the Human Resources (HR) department. It sends the small print of production achieved by the workers on the idea of which the HR department to the finance and accounts (F&A) department to pay the wages.

The small print of the wages paid and statutory dues also are sent by the F & A department to the assembly department to the HR department to watch the performance of workers. The HR department communicates to the opposite departments about the good/bad performance on the idea of the decision on various operational matters that could also be taken.

II. AIS and Marketing Information System:

The business process in the Marketing and Sales department involves the following activities: Inquiry, Contact, Purchase Orders, Dispatch of Goods, and Billing to Customers. The accounting sub-system’s transaction cycle includes the processing of sales orders, credit authorization, custody of the products, inventory position, shipping information, receivables, etc

I. AIS and Manufacturing Information System: Similarly, the business process within the production department may involve subsequent activities :
• preparation of plans and schedules
• issue of fabric requisition forms and job cards
• issue of inventory
• issue of orders for procurement of raw materials
• handling of vendors’ invoices
• payments to vendors

Similarly, the business process within the production department may involve subsequent activities :
• preparation of plans and schedules
• issue of fabric requisition forms and job cards
• issue of inventory
• issue of orders for procurement of raw materials
• handling of vendors’ invoices
• payments to vendors

The accounting sub-system transaction cycle would therefore include the processing of purchase orders, advances to suppliers/vendors, inventory status updation, accounts payable, etc. All of this information has to be shared with the other Management and Accounting Information System in the organization.

Hence, computerized accounting as a sub-component of the accounting data system transforms the financial data into meaningful information and communicates the knowledge to the decision-makers. The report demanded could also be routine or specific.

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3 responses to “Management and Accounting Information System”

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  3. […] Management and Accounting Information System is used as the most common form of information system to make decisions and manage.  […]

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