Management and Accounting Information System
In order to remain competitive, organisations 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 organisation effectively.
Accounting Information System (AIS) identifies, collects, processes, and communicates economic information about an entity to a wide variety of users. Such information is organised 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 organisation’s Management Information System.
An organisation 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 computerised.
Management and Accounting information systems that are wont to ensure basic control is maintained over financial recordkeeping activities, but now it’s widely recognised 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 organisation.
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 to the user and will substantiate the decision- making process. every accounting report must be able to fulfil the following criteria :
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 MIS reports may be of the following reports :
- Summary: Summarises all activities of the organisation and present in the form of the summary report. Profit and Loss account and Balance Sheet.
- Demand: This report will be prepared only when the management requests them, e.g. Bad Debts Report for a given product, Stock Valuation Report.
- 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, Vendor Analysis report.
- Responsibility: MIS structure calculate or specify the premises of management responsibilities. For example, the report on Cash Position, 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 :
- 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 on the basis of the report.
- Structure of the report: the information to be contained therein and the style of presentation.
- Querying with the database: The accounting information queries must be clearly defined and the methodology to be adopted while interacting with the database.
- Finalising the report: It helps in calculation or finalising the account information.
Data Interface between the Information System
An accounting data system is a crucial component of the organisational MIS in an organisation. It receives information and provides information to the opposite functional MIS. The following examples illustrate the relationship and data interface between the varied sub-components of MIS.
- Accounting, Manufacturing, Human Information System: The manufacturing department receives the list of workers from the Human Resource (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 also 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 could also be taken.
- AIS and Marketing Information System: the business process in the Marketing and Sales department involving the following activities: Inquiry, Contact, Purchase Orders, Dispatch of Goods, Billing to Customer. The accounting sub-system’s transaction cycle include the processing of sales orders, credit authorisation, custody of the products, inventory position, shipping information, receivables, etc
- 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
The accounting sub-system transaction cycle would therefore include the processing of purchase orders, advance to suppliers/vendors, inventory status updation, account payable, etc. All of this information has got to share with the other MIS in the organisation.
Hence, computerised 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 ones.