What is an Accounting Information System (AIS)?

An accounting information system (AIS) refers to tools and systems

designed for the collection and display of accounting information
so accountants and executives can make informed decisions. It is
considered a pivotal component of finance offices throughout the world.
The systems are largely software-based and can be deployed as a part of a
company’s IT solutions.

Accounting information systems help with the flow of information

regarding all the aspects of a company’s financials, including taxes,
reporting, or, if need be, an audit. The software-based solutions allow large
and small businesses greater control of their finances and provide a
competitive method for in-house accounting for small businesses where
resources are scarce.

 
Deploying an Accounting Information System

Deploying an accounting information system shares many similarities with

other styles of IT deployment. The software must be created, tested, and
onboarded in a way to ensure minimal disruption to existing operations, as
well as simultaneously ensuring that there are no catastrophic errors that
can disrupt productivity or cause an outage.

Software deployment of any kind comes with a high likelihood of failure,

and special care should be taken by large corporations when they deploy
such a system that involves its critical components. There is a continual
feedback loop after the software is deployed to ensure that it is continually
tested so that bugs, errors, and vulnerabilities are quickly found and rooted
out.

Below, we see a visual representation of a simplistic deployment and

feedback loop:

When to Use

Information systems of all types are lowering the barriers to entry for many

businesses with regard to utilizing software as a tool to streamline
operations and remain competitive. Accounting information systems are no
different.

For example, if you are someone who is starting a small business or

growing an existing one, a software-based solution that displays your
accounting data to help you make managerial-level decisions is an
incredibly useful tool to gather, analyze, and display information.

In the hands of the informed user, the accounting information system can
help to provide insights into business deficiencies or areas for
improvement. It can also aid in reconciliation and in keeping track of
capital. For larger companies, it can help boost investor confidence and
make it easier to practice regulatory compliance.

Sarbanes-Oxley and Accounting Information Systems

The Sarbanes-Oxley Act was a regulation passed after the financial scandals

at WorldCom and Enron. The scandals involved largely accounting-based
fraud and loss of confidence, resulting in the creation and passage of the
law on July 30, 2002.

The legislation requires that public companies implement strong audit and
regulatory controls that can be provided partially by deploying effective
compliance and accounting information systems. It helps create market and
investor confidence, reassuring the public that the financials are transparent
and accurate.

Financial reporting is a critical part of accounting information systems,

helping to ensure the ethical allocation and discussion of capital in the
investment community and the public. Financial regulations globally make
the effective deployment of an accounting information system a near
necessity for any small, medium, or large-sized business.