Lecture 6- The Evolution of Accounting Information System

The Evolution of Information System Models

Lecture 5- The Evolution of Information System Models -Over the past 50 years, a number of different approaches or models have represented accounting information systems. Each new model evolved because of the shortcomings and limitations of its predecessor. An interesting feature in this evolution is that the newest technique does not immediately replace older models. Thus, at any point in time, various generations of systems exist across different organizations and may even coexist within a single enterprise. The modern auditor needs to be familiar with the operational features of all AIS approaches that he or she is likely to encounter.

The Evolution of Accounting Information System ,e commerce and accounting information system case study solutions course is being taught in many university at undergraduate level to BBA.BCOM. MCOM, MIT, and many other classes.

Similarly In this category we will provide you best handouts of AIS course , AIS and E commerce from best recommend books like James Hall, and Daniel.

Moreover Handouts will be the best source of preparation and learning.

Manual Process Model

The manual process model is the oldest and most traditional form of accounting systems. Manual systems constitute the physical events, resources, and personnel that characterize many business processes. It includes order-taking, warehousing, materials, manufacturing goods for sale, shipping goods to customers, and placing orders with vendors. It also includes the physical task of record keeping.

Flat File Model

It is based on Legacy Model of computers. Large mainframe systems that were implemented in the late 1960s through the 1980s are used for Flat File Model. Organizations today still use these systems extensively. Eventually, modern database management systems will replace them, but in the meantime accountants must continue to deal with legacy system technologies.

  • Data Storage at single place….
  • Data updating on multiple …
  • Outdated information
  • Task-data dependency
  • High Data redundancy
  • Low consistency
  • Low integration

Data Storage

Data is not stored at single location so that all users can access it. Flat File system captures data in form of multiple collections and at multiple sites. User private need is not fulfilled. Some commonly used data may be duplicated dozens, hundreds, or even thousands of times.

Data Updation

Data stored at multiples location is difficult to update. Frequent updating periodically increases the cost of an accounting system. For example updating of a vender’s address may take place at multiple sites.

Currency of information

Here currency means value of information. If updating information process fails then we may get an outdated and old version of information. In few files information has been changed but in due to failure this is not done in single. Hence there is chance of incorrect decision making on the basis of outdated information.

Task Data Dependency

As we know AIS has interdependency, when a user need to obtain additional information as his or her needs change from the domain of other user then this problem is called task-data dependency. However The user’s information set is constrained by the data that he or she possesses and controls. Users act independently rather than as members of a user community. Moreover In such an environment, it is very difficult to establish a mechanism for the formal sharing of data. Therefore, new information needs tend to be satisfied by procuring new data files. This takes time, inhibits performance, adds to data redundancy, and drives data management costs even higher.

Limited data integration

Files are structured, formatted, and arranged to fulfill the specific needs of the single user. However Suring such structuring a particular user may exclude data attributes that are useful to other users. This is called limited data integration across the organization.

Database Model

An organization can overcome the problems associated with flat files by implementing the database model to data management DBMS (Database management system) . However the DBMS is a special software system that is programmed to know which data elements each user is authorized to access. Moreover DBMS validates and authorizes access to the database in accordance with the user’s level. He or she is not authorized to access, the request is denied. Clearly, the organization’s procedures for assigning user authority are an important control issue for auditors to consider.

Benefits of Database Models

  • Grouping of data into a common shared database for organizational users.
  • Their additional need is only constrained by the limitations of the data available to the entity and their rights to access it.
  • Each data element is stored only once, thereby eliminating data redundancy and reducing data collection and storage costs
  • Because each data element exists in only one place, it requires only a single update procedure. This reduces the time and cost
  • Current values. A single change to a database attribute is automatically made available to all users of the attribute.

Database Model

The REA Model

This model is also based on modern database technology but with different viewpoint of implementation. However REA is an accounting framework based resources, events, and agents (REA) and the relationships between them. Moreover Both accounting and non-accounting data about REA identified, captured, and stored in a relational database. And then different user views are constructed that meet the needs of all users in the organization.

The REA model was proposed in 1982 as a theoretical model for accounting. Advances in database technology have focused renewed attention on REA as a practical alternative to the classical accounting framework.

  • Recourses
  • Events
  • Agents

Resources

Economic resources are the assets of the organization. They are defined as objects that are both scarce and under the control of the enterprise. In traditional model AR was stored and maintained separately. In REA An account receivable is an artifact and AR values are derived from the difference between sales to customers and the cash received in payment of sales.

Events

Economic events are processes that affect changes in resources. Similarly they can result from activities such as production, exchange, consumption, and distribution. However Economic events are the critical information elements of the accounting system and should be captured in a highly detailed form to provide a rich database.

Agents

Economic agents are individuals and departments that participate in an economic event. However they are parties both inside and outside the organization with discretionary power to use or dispose of economic resources. Examples of agents include sales clerks, production workers, shipping clerks, customers, and vendors.

There are many functions of accounting information system . Similarly The functions offered by accounting information system are now available in many accounting information system software. Moreover You can use accounting information system software to accomplish or to complete your different accounting information system projects.

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Author: Habibullah Qamar

Its me Habib Ullah Qamar working as a Lecturer (Computer Sciences) in Pakistan. I have an MS(M.Phil) degree in computer sciences with specialization in software engineering from Virtual University of Pakistan Lahore. I have an experience of more than 15 years in the filed of Computer Science as a teacher. Blog Writing is my passion. I have many blogs, This one is special made with the aim of providing 100% Free online coaching and training to the students of under-graduate and postgraduate classes. Most of the students enrolled in computer sciences, information technology, software engineering and related disciplines find it difficult to understand core concepts of programming and office automation. They find difficult in understanding and solving their assignments.