Understanding the 6 Key Components of Accounting Information Systems

At Perry & Associates CPAs, our culture of growth mindset inspires a forward-thinking, ever investing and ever-innovating approach to accounting, which includes staying on top of the latest accounting technology to ensure accurate reporting and compliance with security rules and regulations.

Accounting Information Systems (AIS)  are a crucial component of any organization’s financial management. These systems involve the collection, storage, processing and dissemination of critical financial information. For most organizations, Accounting Information Systems (AIS) consists of six primary components: people, procedures and instructions, data, software, information technology infrastructure and internal controls. In this blog, we’ll dive into these key factors of AIS and explain how they work together to keep confidential data safe and secure.

1. People

An AIS helps the different departments within a company work together, and a variety of professionals may need to use an organization’s AIS, including accountants, consultants, business analysts, managers, chief financial officers and auditors. A well-designed AIS should allow everyone within an organization to access the same system and retrieve the same information. An AIS also simplifies the process of reporting information to people outside of the organization. Ideally, an AIS is easy to use and helps the people who use it improve efficiency.

2. Procedures and Controls

Procedures and controls encompass the policies and processes that govern AIS operations and include both manual and automated methods used to collect, store, retrieve, process and report data. While AIS procedures and instructions are coded into the AIS software, it’s important that they are also “coded” into employees through effective documentation and training. These internal controls are essential to the accuracy, reliability and security of financial data.

3. Data

AIS software uses a database structure to store information, and this includes financial transactions, journal entries, ledger entries and more. The data contained in an AIS is all of the financial information pertinent to the organization’s business practices, and any business data that impacts the company’s finances should go into an AIS. This data is then used to prepare accounting statements and financial reports.

4. Software

AIS software relates to the computer programs used to store, retrieve, process, and analyze an organization’s financial data. Businesses can choose from a variety of different software packages, including the popular Intuit Quickbooks software (which we provide training for) which works well for small to medium sized businesses, and packages such as Oracle’s PeopleSoft and Epicor Financial Management for larger organizations. At Perry & Associates CPAs, our experts set up and integrate AIS software into your organization and provide ongoing support that allows this technology to automate and simplify operations.

5. IT Infrastructure

This component includes the hardware and network infrastructure that supports the AIS, such as servers, computers, databases, printers, surge protectors, routers, storage media, back-up power supply and more. It’s important for the hardware selected for an AIS to be compatible with the intended software, and also that a plan is put in place for maintaining, servicing, replacing and upgrading components of the hardware system.

6. Internal Controls and Security Measures

Internal controls are a crucial component of AIS, as they provide security measures to protect sensitive data and also ensure accuracy and reliability. This includes user authentication, access controls, encryption and other security measures to protect sensitive financial data. AIS internal controls should limit access to authorized users and to protect against unauthorized access, and also protect from computer viruses, hackers, internal and external threats to network security, and even something like natural disasters that could cause data loss.

How Can AIS Protect Your Business?

Now that you have a better understanding of AIS, it’s time to make sure you have the best software and technology at your business to stay supported and secure! At Perry & Associates CPAs, we provide the following AIS services:

  • Information Systems Auditing
  • Internal Reporting Process Optimization
  • Business Data Analysis & Analytics Consulting
  • Systems, Financial & Data Risk Evaluation
  • Process Mapping & Documentation
  • System & Organizational Control (SOC) Reporting & Auditing

We are committed to partnering with you and using advanced technology to ease the burden and protect your organization. Contact us today to learn more about our AIS services and improve operations, security and safety!