Accounting Information Systems (AIS)
Choosing an AIS is like choosing a long-term relationship…it has to be equipped with sufficient functionality to cover the basic and immediate needs of the company but it also has to have the ability to grow and adapt to new and improved reporting needs. Managers often feel that nobody could possibly understand their needs and they end up settling for an inferior product that covers the basics. But database designers are the match-makers between the company and their AIS. The good ones don’t bother designing a customized database for their clients because they’re familiar with the many wonderful AIS products of which one is bound to fit a given client's particular needs.
In addition to meeting the reporting needs of management, an AIS is an asset that adds-value by expediting external reporting. Having your financial data organized in a way that’s consistent with basic accounting standards and which is maintained current through routine procedures reduces audit costs and makes tax reporting readily available.
What is an AIS, to be more exact?
An AIS is a computer program that is structured to store data from various sources and that stores such data in ‘tables’ and that utilizes such ‘tables’ to generate reports. Each table is designed to capture information that will be utilized to build additional tables without duplicating fields. The more ‘data redundancy’ can be reduced the more ‘data integrity’ can be achieved. Meaning that duplicate entries are avoided because the program will reject any entries that are not within its limits. The most common example of this is that vendor invoices are only accepted once because the program is designed to read the invoice number on a one-to-many relationship where the invoice number is set-up as the primary key.
How are tables designed?
Tables are designed to capture the sufficient data that meets your financial reporting needs. Most businesses have various reporting needs but the most common are financial statement reporting and payroll. Depending on your business, it’s possible that you might benefit from additional layers of reporting that funnel through to the top financial reporting layer. Such examples are Inventory Management for merchandising businesses and Job Costing for construction managers. However, secondary reporting layers extract information from the primary layer tables to summarize groups of information.
The most basic and essential table of any AIS is the Chart of Accounts. This table is designed with as few as two columns: (1) General Ledger (GL) Number and (2) Name of Account. Each column is its own data- entry-field and will define the contents on the list forming the table. Other basic tables include the ‘vendor table,’ the ‘customer table,’ and the ‘employee table,’ which are built on fields to describe the characteristics of that tables’ purpose. The ‘vendor table’ might include a field for the vendor address, for example. Upon receiving an invoice from a vendor, it’s no longer necessary to reenter that vendors’ address because when that vendor is selected as the payee, the address listed on the ‘vendor table’ is automatically generated.
This is because the AIS is designed to read a relationship between the ‘vendor table’ and the ‘payables table.’ This is a simple example but relationships work the same way across tables. With this in mind, the most challenging aspect of an AIS design is the planning stage: defining table properties and mapping the intended outcome as transpired through financial reporting. But it beats spending more time on having to redo/duplicate work that can be addressed once, the correct and efficient way.