The Role of Information

Technology (IT) in the

Accountancy Profession
 The accounting information system definition and functions;

 Components of Accounting Information System

 Accounting Information System value to an organization

Accounting Information Systems
- collects, records, stores and processes accounting and other
data to produce information for decision makers.
 Accounting
- is the language of business

Accounting Information Systems

- is the intelligence- the information- providing- vehicle of that
language
Accounting Information Systems
 Components of Accounting Information Systems
1. The people who use the system
2. The procedures and instructions used to collect,
process and store data
3. The data about the organization and its business
activities
4. The software used to process the data
5. The information technology infrastructure
6. The internal controls and security measures.
Components of Accounting Information Systems

 Collects and stores data about organizational activities,

resources and personnel.

 Transform data into information

 Provide adequate controls.

Accounting Information Systems

 Manual system (paper-and-pencil)

 Complex system using the latest in IT (Computerized)
 Comparison between Manual and Computerized
System
Manual Computerized
1. Start with the account balances in the ledger at the 1. Same
beginning of the period
2. Analyze and Journalize transactions as they occur. 2. Analyze and classify business transactions by type. Access
appropriate menus for data entry.
3. Post journal entries to the ledger accounts 3. Computer automatically posts transactions as a batch or
when entered online.
4. Compute the unadjusted balances in each account at the end 4. The unadjusted balances are available immediately after
of the period each posting.
5. Enter the trial balance on the worksheet and complete the 5. The trial balance if needed can be accessed as a report.
worksheet
6. Prepare the FS. Journalize and post the adjusting entries and 6. Enter and post adjusting entries. Print the FS. Run automatic
closing entries closing procedures after backing up the computer’s accounting
records.
7. Prepare the post closing trial balance. This trial balance 7. The next period’s opening balances are created
becomes step1 for the next period automatically as a result of closing.
AIS value to an Organization
1. Improving the quality and reducing the costs of products or services.
2. Improving efficiency.
3. Sharing knowledge.
4. Improving the efficiency and effectiveness of its supply chain.
5. Improving the internal control structure.
6. Improving decision making.
 *An AIS can help improve decision making
in several ways:
It can identify situations requiring management action;
It can reduce uncertainty and thereby provide a basis for choosing among
alternative actions;
It can store information about the results of previous decisions, which provides
valuable feedback that can be used to improve future decisions;
It can provide accurate information in a timely manner;
It can analyze sales data to discover items that are purchased together
and it can use such information to improve the layout of merchandise or
to encourage additional sales to related items