Good accounting systems do not just happen. They are carefully planned, designed, installed, managed, and refined. Generally, developing an accounting system involves the following four phases or stages.
Analysis involves determining internal and external information needs, identifying inefficiencies and bottlenecks in the current system, sources of information and the need for controls, studying alternatives. If an existing system is being analyzed, its strengths and weaknesses must be identified. The analyzed information will record in a series of data flow diagrams and entity-relationship diagrams so that the system can be design.
For a new system, forms and documents must be designed; methods and procedures selected from alternatives; job descriptions prepared; controls integrated; reports formatted; and equipment selected. Successful system design depends largely upon the capabilities of the designer. Redesigning an existing system may involve only minor changes, a complete overhaul, or replacement of a manual system by a computerized system.
Whether a new accounting system is created or creating or an existing system is revised, the plan and design must be implemented. New or revised documents, procedures, reports, and processing equipment must be installed and made operational. Personnel must be hired, trained, and closely supervised through a start-up or transition period. Implementation stage is the stage when the theoretical design becomes a working, practical system.
It is the users department that carries a major workload here. Whit out careful planning, the result is always chaotic. This is a most crucial stage in the attainment of a new, successful system and in providing user confidence in it.
After the system is up and running, it must be evaluated and monitored for weaknesses and breakdowns. Also, its effectiveness and efficiency must be compared to the desired organizational objectives and correction action must be taken if the actual result is deferred from the planned.
These phases, which represent the life cycle of an accounting system, suggest that few systems remain the same forever. As experiences and knowledge are obtained, and as technological and organizational changes occur, the accounting system may also have to grow and changes.
Factors Influencing Design of AIS
As shown in the figure below the development of IT organization culture and organization strategy are among factors which influence the design of AIS
Figure 1.3 shows that new development in IT affects the design of AIS. Indeed, in the past decade, IT has profoundly changed the way that accounting and many other business activities are performed. Moreover, that impact is likely to continue in the future.
How to evaluate the costs and benefits of new IT developments requires developing a basic understanding of corporate strategies and how IT developments can be used to implement existing organizational strategies or create an opportunity to modify those strategies (note the arrow from IT to strategies Figure 1.3).
Moreover, because an AIS functions with in the organization, it should be designed to reflect the values of that organizational culture. The arrow between organizational culture and the AIS is bidirectional. This reflects the fact that the AIS influence the organizational culture. One way, it does so is, through choices on how, and to whom, it disseminates information. For example, AIS that makes information easily accessible and widely available is likely to increase pressures for more decentralization and autonomy.