There are six different components on the basis of which Accounting Information

System (AIS) works. Following are the six components of accounting information
system (Saedi, Prasad & Saremi, 2015):

• People are the users of the system who inputs data as well as use the output data
to make inferences where required. These are the management of the company like
CEO’s, CFO’s, officers, accountants, auditors, consultants or any other personnel
who have business interest in such information. The external parties like external
auditors or consultants can also have access to the information system so as to
have a qualified reporting, price structuring and information at place.

• Procedures and Instructions are the techniques used for collecting, storing,
managing and reporting financial data in qualified terms. The data can flow in
through internal, external, offline and online sources, whether manually or
automatically. The input of data in the system is facilitated through coding into the
software by employees who are well trained.

• Data is stored in the system with the help of SQL (Query language) and a computer
language in a well-structured format. Any key financial information is stored in the
software. There should be various screens for inputting data for system users in
addition to output screens and formats for various types of information that are
needed by different users.

• Software is the automated format of managing accounting information. It is the

computer based system that needs an input data, which is automatically converted
into useful financial reports in order to be served to various users. There are much
 software for accounting information system like Sage Peachtree Accounting, SAP,
Intuit’s QuickBooks, Microsoft’s Dynamics GP and many more.

• Information Technology infrastructure are the hardware used for the accounting
information system like computers, servers, routers, mobile devices, storage media,
surge protectors and back up etc.

• Internal controls are the protection in the form of biometrics, passwords and face
recognition that are employed by the organization to limit the access of data, check
fraudulent activities and secure its data from being leaked.

Functions / Need of Accounting Information Systems (AIS)

Accounting Information Systems are needed for managing the financial data and
protecting it from fraudulent activities. It has various functions that illustrate its need to
the organizations.

• Collection and Storage of Data is the first and foremost function of AIS. These
information systems collect the accounting data and store it in the system in order to
process the data into useful information.

• Supply of information is the processing function of AIS where all the data being
processed is converted into useful financial statements and reports, which are
accessed by the users for relevant decision making and for other business aspects.

• Internal control is the function through which the accounting data is being
monitored against fraud, thefts and deviation in work by the users so as to integrate
internal processes and implicate high level security to the key financial information of
the business.

Uses of Accounting Information System (AIS)

In this fast-growing economy, technological advancement has led to the increase in the
usage of automated software’s in the business vicinity.

The most commonly used business software’s are Accounting Information System
(AIS), Entrepreneur Resource planning (ERP) and Customer Relationship Management
(CRM).

AIS allow the time advantage of recording and processing financial information with
great efficiency in the manner of reduced manual errors and defects. Following are the
high end uses of Accounting Information System (AIS):

• Increase in globalization and foreign investments, have led to the installation of a

system that maintains proper records and add value to the resources (Ponisciakova,
Gogolova & Ivankova, 2015). AIS is thus, used by the foreign investors to secure
 themselves of the high investments that they are ought to make on the business in
context with financial situation of the business and availability of the data.

• AIS are used in order to control the high costs and expenses incurred in the
business. High costs and wastages in any processes and operations can be
observed readily and controlled on time to avoid future losses as well as risks
(Ponisciakova, Gogolova & Ivankova, 2015).

• Secrecy of data and unauthorized use of data is protected via implementing internal
control checks through biometrics and passwords in AIS. This may authorize valid
parties or users to access the confidential data of the organization.

• Use of AIS facilitates the companies to face the increasing competition

(Ponisciakova, Gogolova & Ivankova, 2015) in the industry in context to continuous
improvements in the business structure, costing, key decisions and sustainability.

• Error free or minimal errors as compared to manual accounting have allowed greater
availability of time and resources for other key productive areas. Hence it increases
the productivity of the business with efficiency.

• Communication and integration between the departments and units have improved
in context to speed, accuracy and coordination. This has increased overall
productivity and sustainability of the company against the challenges of globalization
and sheer competitiveness.