Information Need For Accounting Information System AIS - Research Paper Example

Information Need For Accounting Information System AIS al Affiliation Information Need For Accounting Information System AIS An accounting information system is a man-made system that has a combination of resources such as people, procedures and records and an integrated set of manual and computer based components that are developed to a firm’s operational functions and support decision making by the management by helping managers access information to use in planning and controlling the operations in the firm (Gelinas, Sutton & Federowicz, 2004). Corporate leaders may make improper assumptions related to accounting information systems. Because of this, several negative potential impacts on business operations related to these assumptions. This paper will assess how corporate leaders may make improper assumptions related to accounting information systems and the related information. It will indicate the most negative potential impacts on business operations related to these assumptions. The paper will also suggest three to four (3-4) ways in which organizational performance may be improved when information is properly managed within a business system and evaluate the level of system security (i.e., high, medium, low) needed to ensure information integrity within automated business systems. The first way in which corporate leaders may make improper assumptions related to accounting information systems and the related information is through assuming that efficient accounting information system can be created irrespective of whether the accounting function of enterprise is properly placed and incorporated in the overall management system. Corporate leaders might consider the accounting information system as a system that can function efficiently independent of the overall management system as long as it is developed in the right manner and in line with the objectives of the company. However, this can lead to improper assumptions of the accounting information system because the accounting information system is one of the important components of the management system and as such must be integrated into business management and its performances as a part of the overall management system function (Grande, Estebanez & Colomina, 2011). The second way in which corporate leaders may make improper assumptions related to accounting information systems and the related information is through lack of information on how accounting information systems work. In the article, Management Misinformation Systems, Ackoff (1967) identified five common assumptions about information systems and then explained why he disagreed with them (Ackoff, 1967). These assumptions relate to the design and use of the accounting information systems, which mean that there must be an area where managers or corporate leaders have no information about or are ignorant of this fact. The lack of complete information on the design and use of accounting information systems may lead to improper assumptions of the accounting information systems and related information, which could be detrimental to organizational operations. The third way in which corporate leaders may make improper assumptions related to accounting information systems and the related information could come as a result of the failure in the first instance of the use of accounting information system. This could be as a result of different reasons such as poor development practices, too much speed in implementation, inadequate training, failure to include stakeholders and poor fit between the account information system and the organization and its objectives among other factors. This could make corporate leaders to form improper assumptions on accounting information systems and result in poor decision-making (Davenport, 2000). Improper assumptions on accounting information systems and related information could have the most negative potential impacts in business operations. First, improper assumptions could cost an organization loses in money and time in its business operations. For example, if an improper assumption is made and leads to miscalculation of important calculations required ensuring that a business operation becomes a success, over-estimation or under-estimation of resources could be caused. A business operation could be overfunded or underfunded because of an improper assumption, something that could be realized later into the project. This could bring about unimaginable loses for the organization (Gelinas, Sutton & Fedorowicz, 2004). Another negative potential impact of improper assumptions on accounting information system is that it could cost an organization an entire business operation. Improper assumptions could affect planning and lead to incorrect assumptions about the requirements of a business operation. This may make corporate leaders instruct those actively engaged in the business operation to add certain requirements that are unimportant to or remove certain requirements that are integral to the overall success of the operation despite their minority. This could cripple the operation in the development or in the implementation stage and lead to a complete failure of the business operation (Hendricks, Singhal, Startman, 2007). The most dangerous impact that could negatively affect an operation as a result of improper assumptions about accounting information systems and related information is incorrect decision-making on the part of corporate leaders. Improper assumptions are definitely likely to cause misinformation that will lead to poor and incorrect decision making. Poor and incorrect decision-making will affect the entire business operation and lead either to termination of the operation or misdirection of the business operation that will not link with the objectives of the organization. Organizational performance may be improved when information is properly managed within a business system in several ways. First, proper management of information within a business system helps managers make correct and quick decisions with respect to running business operations within the organization. This is because managers used management accounting information directly in making decisions meaning that poor management of information could lead to incorrect decision making because of the absence of correct information with respect to organizational operations. Information, such as management accounting information helps direct the attention of managers to the most important aspects of decisions that they may not take into consideration without that kind of information. Poor management of information would mean that the aspects of decision-making that depend on such information would be left out putting the overall performance of an organization at risk. This shows how important management of information is to the overall organizational performance (Choe, 2002). Secondly, proper management of information within a business system enables the realization of effectiveness within the organization. For an organization to be successful, effectiveness should be an important aspect in any operation that takes place. Proper management of information ensures that improvement in productivity is recorded within an organization. This is because proper management of information facilitates innovation in an organization because the information helps project participants and decision makers to understand the things required for the organization to realize full potential in its operations (Chenhall, 2003). Innovativeness allows an organization to have a think-out-of-the-box mentality and culture that enables all stakeholders to contribute effectively to project successes. Proper management of information enables those in an organization to determine the products and services to manufacture or develop and also informs their decision on which products and services to market in order to ensure high returns from the organizational investments. This also makes an organization flexible in the sense that an organization could change its strategies in line with changing times or the resources that are available for projects at a particular time to fit with the requirements and enable the organization to achieve optimum performance even in difficult market conditions and financial times (Boulianne, 2007). The third way in which proper management of information within a business system enables the improvement of organization performance is that it enables mental model building. For an organization to ensure improvement in performance, it requires the right mental model despite the challenges or difficulties that it could be facing. An organization must have a positive mental model or culture to perform optimally. Proper management of information fosters creativity within an organization because with adequate information both employees and managers are able to see and think about troubling areas that need improvement and formulate strategies that can help address these areas. It also helps employees and managers to reorient their thinking such that they can be able to focus on those aspects that can help the organization perform better and realize its potential and objectives instead of thinking about unimportant issues, for instance organizational politics that may not help the organization achieve success. Proper management of information helps the organization question its preconceptions and determine whether those preconceptions are important for overall organizational performance. This will help in improvement of performance because the organization will determine the issues to deal with to achieve success (Al-Eqab & Ismail, 2011). The level of system security needed to ensure information integrity within automated business systems must be high. Automated business systems must have optimum security to be safe from threats and potential intruding because these would lead to the loss of important information that could affect the organization negatively. Therefore, ensuring the integrity of information is of significant importance. Bearing in mind that the automated business systems carry important information about the company, it is imperative that the level of system security be high so that only those authorized to access information from those systems access the information. High security level ensures that the possibility of intruders accessing the information will be very difficult. Important information, such as financial information must be highly protected and a high-level security system is the ideal for this (Atkinson, Banker, Kaplan, Young, 2001). In conclusion, correct assumptions about accounting information systems and related information must be realized to avoid potential losses in an organization. This will also ensure proper management of information that can help an organization improve performance as explained above. Any automated system used in an organization must be protected by a high-level system of security to avoid potential threats and intruders. References Ackoff, R. L. (1967). Management misinformation systems. Management science, 14(4), B-147. Al-Eqab, M. & Ismail, N.A. (2011), Contingency factors and accounting information system Design in Jordanian companies, IBIMA Business Review, vol. 11: 12. http://dx.doi.org/10.5171/2011.166128 Atkinson, A. A., Banker, R. D., Kaplan, R. S., Young, S. M. (2001), Management Accounting, 3rd edition, Upper Saddle River, New Jersey. Boulianne, E. (2007), Revisiting fit between AIS design and performance with the analyzer strategic-type, International Journal of Accounting Information Systems, vol. 8: 1-16. http://dx.doi.org/10.1016/j.accinf.2006.12.001 Chenhall, R.H. (2003), “Management control systems design within organizational context: findings from contingency-based research and directions for the future”, Accounting, Organization and Society, vol. 28: 127–168. http://dx.doi.org/10.1108/18347641011023270 Choe, J. M. (2002). The Organizational Learning Effects of Management Accounting Information Under Advanced Manufacturing Technology, European Journal of Information Systems, Vol. 11, pp. 142-158. Davenport, T.H. (2000), “Mission critical: realizing the promise of enterprise systems”, Harvard Business School Press, Boston. Grande, E.U., Estebanez, R.P. & Colomina, C.M. (2011). 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