Accounting as an Information System

The American Accounting Association (AAA) defines accounting as “the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information.”

Accounting provides information that is useful in making business and economic decisions. It is the primary means of communicating financial information to owners, lenders, managers, Government and its regulatory agencies and others who have interest in an enterprise.

It helps the users in taking better decisions by providing relevant, reliable and timely information on the financial and operational position of an enterprise.

With the development of the use of accounting information systems and expand the application of quantitative methods in addressing the problems of organizations has become decisions makers more dependent on accounting as a result of favorable data generated by the IT for the purposes of decision-making and planning activities and which is characterized to be associated with the future.

The Reliability of Accounting Information Systems

Because an AIS stores and provides such valuable business information, reliability is vitally important. The American Institute of CPAs (AICPA) and Canadian Institute of Chartered Accountants (CICA) have identified five basic principles important to AIS reliability:

  1. Security – Access to the system and its data is controlled and limited only to those authorized.
  2. Confidentiality – The protection of sensitive information from unauthorized disclosure.
  3. Privacy – The collection, use, and disclosure of personal information about customers is done in an appropriate manner.
  4. Processing integrity – The accurate, complete, and timely processing of data done with proper authorization.
  5. Availability – The system is available to meet operational and contractual obligations.