1.4 Why Study AIS?
Learning Objectives
At the end of this section, students should be able to:
Explain why accounting systems are important and why they should be studied.
Understand how studying AIS provides students with many career options.
A student's knowledge of accounting is not complete without an understanding of accounting systems for several reasons. While technical accounting knowledge is required, not understanding how accounting information is collected, stored, and extracted for analysis can put you at a disadvantage. The goal of this textbook is to help you understand the nature of AIS, how to develop them, and how to make them work effectively.
Is an AIS Course about Accounting?
Introductory and intermediate accounting courses are typically concerned with how well a business is doing from a financial point of view. The class emphasis is on making journal entries and preparing reports from data provided (e.g., producing information).
In an AIS course, we ask: Where did the information come from? How was it produced? Is the system providing timely and accurate information? What can go wrong, and how can you control these risks? How can an accounting system be used to add value to a business? How are effective systems developed? The objective is to understand how a business critically assesses how well it is doing (from a strategic or physical process point of view), how effectively the current method is working, what alternatives are available, and if there is a better (more cost-effective) way of doing it. Hence, a good deal of strategic management and critical thinking is involved with using accounting information.
The accounting system—wherever its boundaries are drawn—touches most or all of an organization’s activities:
External activities through transactions with customers and vendors, through statements prepared for managers, owners, stockholders, and creditors
Internal activities through product costing, payments to employees, budgets and payments of loans
People are also aware that they are being monitored by accounting information and may manipulate the measures or adjust their behavior. Hence, due to the pervasive influence of accounting systems, the quality of information and the related system should be of great concern to managers. The accounting system is an organization's “key to success,” and most organizations will fail if the system ceases to function.
How Does Studying AIS Prepare Me for an Accounting Career?
As a student graduating with an accounting degree, you have many options. Accounting careers can be in public accounting where you may be an auditor, tax specialist, or consult with other companies in an advisory role. You may also decide to work directly for a company or with the government. The following video discusses the many options of where you can work after graduating with an accounting degree.
What to do with an Accounting Degree
This video is from an accounting professional and discusses options for a first job in accounting.
Specifically, a career in public accounting requires the knowledge of fundamental AIS because you will be working with your client’s information systems. This means that there will be a variety of technologies’ that you will need to understand; however, the fundamentals of AIS will still be useful regardless of the accounting software your clients use. Auditors, for example, must rely on accounting systems to reduce the high cost of their audits. In addition, auditors who understand accounting systems can better protect themselves from “fraudulent management,” who may manipulate information to gain unfair advantage. Hence, auditors who do not understand accounting systems may have failures in their audit process. Tax accountants will need to understand how to extract relevant transactions from their client’s AIS for tax planning and preparation purposes. Consultants would be involved with how to design better systems and controls for their clients to help the clients gain competitive advantage or to solve system problems. If you have a career in public accounting, you are seen as an advisor to your clients.
While you are not strictly limited to public accounting, you may decide that you want to work for one company, be an entrepreneur, or work in the government/nonprofit sector. What do all of these varied career choices have in common? They need to understand how information is captured and flows to the financials of the organization. All managers need to know how well their organizations are doing. In fact, technology will change how we work in the future. This is an exciting time to be an accountant. This video explains more on how technology will change the accounting profession.
Accountants, Automation, and Change
This video is about technology changing how accountants will work in the future.
Key Takeaways
In this chapter, we began our journey toward understanding accounting from a systems perspective. Our first stop was an examination of a real-world case that illustrated the need for accounting information. From there, we examined a definition of systems in general. We looked at what constitutes a system problem, the possible causes, and the importance of critical thinking. We then expanded the general definition of a system to focus on accounting and identified the four main components. Next, we learned about the differences between data and information. We also learned that data are classified in an organization as internal and external and that data can be quantitative or qualitative. We examined what makes information useful and how to determine the value of this information. We explored how accounting technology has advanced and can be used to create competitive advantage. Finally, we discussed the importance of accounting systems and why we should study them. We also learned that accounting students have many career options and how technology will change how accounting is done in the future.