Describe the accounting information system that is being followed by your Organization. Also point out the flaws in the prevailing system. if any and give suggestions to overcome the same.
Ans. Accounting Information System
Accounting is a service activity. Its function is to provide qualitative information, primarily financial in nature about economic activities, entities that is intended to be useful in making economic decisions
It is universally accepted that making available the qualitative accounting information is an important objectives as these are the basis to make decision by its users. The accounting information expected by its users is provided through financial statements. Accounting information refers to the financial statements generated through the process of Book-Keeping, use of which enables the users to arrive at the correct decision. The financial statements generated are Income statements, Balance Sheet etc.
Accounting Information System of an organization My organization (Lakhia Chartera Accounting firm) is using computerized database as an Accounting information System. It means a collection of data (centralized) needed by an organization. These database generally stored on a disk and used by the computer for various jobs for computational purposes, data is
regarded as a which a programme acts to make it more meaningful. Data when organized into more useful form by manipulating is called information. Information is the result of data processing. Data processing is a series of actions that converts accounting data into useful information. Organization is using electronic data processing which in areas like production, inventory control, planning and control, budgetary control, sales management, invoicing, billing, pay roll procedures, management accounting and several others areas of decision making. The basis of DBM’s in our organization is:-
(i) Database Files:-
These files have data elements stored in database file format. The database is created in such a manner as to balance the data management objectives of speed, multiple, access paths, minimum storage, programme data independence, and presentation of data integrity. Data base is containing the information about the customers as their names addresses, phone numbers etc. as well as credit, debit histories.
(ii) Data Dictionary
This is a centralized depository of information in computerized form about the data in database. The data dictionary contains the scheme of the database, that is,the name of each item in the database and a descriptions
and definition of its attributes. These description and definitions are referred to as the data standards’. The data dictionary includes information about the data with most database systems, the DBM’s received a request from a program fro data and then accesses the database dictionary to determining whether the program has the right to receive the data.
(iii) On-line access terminals
These may be adjacent to the computer or thousands of mutes away These may be jump terminals smart terminals, smart terminals, or micro computers.
(iv) Report Generator
This provides organization routine reports, documents and special reports.
(v) Data Base Management System
It manages complex files. The DBM’s accesses the files, updates the records, and retrieve data as requested, added or deleting records and so on. It generates or withhold clearance tot he application programs and terminal users for accessing database files.
Flaws in accounting Information system.
As we have seen that bhakia Charted Accounting Firm is using DBM’s system like others, it too has few flaws which are as follows.
(i) The database management system is centralized. All the information is stored in the Head Office. This makes for other departments and offices to retrieve information difficult.
(ii) Security
As the data is centralized, several people are held responsible to maintain information. This allows beach of security easily as passwords are easily accessible in nature.
(iii) Authenticity of database is lost and there is lack of consistency in the information.
(iv) Many times, we can see that the information is entered twice in the data
Suggestions to improve flaws
I can suggest few measures in order to reduce the flaws:-
(i) Decentralization
Every department should maintain its own information system. It would make easy for all the offices to retrieve, add and delete information very easily.
(ii) Decentralization would allow the security of data as all the data would not be stored at one place and customers would be able to get information faster than before and would not be too difficult to retrieve.
(iii) For security purpose, passwords must be changed on the regular basis. The information should be only in few hands so that others may not retrieve it easily. This would also increase the authenticity of data.
(iv) Data entered must be checked to see if it has already been entered or not to avoid duplication of data.
This will also improve consistency of data at high level.
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