Accounting information systems are an internal function that report financial information for management use. Historically, these systems included paper manuals and ledgers with information from multiple business departments or locations. Today’s accounting information systems involve computers and intranets that electronically transfer information. While these systems provide business owners and managers with support information for making decisions, they can face threats which hamper their overall effectiveness.
Complexity
A company's accounting information system can become too complex to be effective or efficient for use in business operations. Complexity occurs when business owners and managers attempt to create an information system that gathers more information than necessary or use the system for reasons outside of its original purpose. Companies who do not have sufficient business technology or individuals familiar with computerized accounting system can also find these systems difficult to use. Owners and managers must ensure their system is usable by all employees in the company.
Fraud
Accounting information systems can be subject to fraud or abuse by company employees. Employees can gather information for personal use or manipulate information to make financial documents appear better than the actual results. Owners and managers who are not at the forefront of their company’s operations typically rely on other individuals to provide accurate and timely information through the accounting information system. Lax employee oversight can allow for fraudulent activities in the company. Employees who should not have access to accounting information can also create problems in the accounting information system.
Age
Business technology has transformed the way companies conduct business. Companies must be sure to keep their accounting information system up-to-date so they can take advantage of current technology. While maintaining computerized accounting systems or applications can be expensive, letting the system become inefficient because of its age can create difficulties for a company. Attempting to significantly upgrade old information systems can also require more capital during the replacement process.
Complexity
A company's accounting information system can become too complex to be effective or efficient for use in business operations. Complexity occurs when business owners and managers attempt to create an information system that gathers more information than necessary or use the system for reasons outside of its original purpose. Companies who do not have sufficient business technology or individuals familiar with computerized accounting system can also find these systems difficult to use. Owners and managers must ensure their system is usable by all employees in the company.
Fraud
Accounting information systems can be subject to fraud or abuse by company employees. Employees can gather information for personal use or manipulate information to make financial documents appear better than the actual results. Owners and managers who are not at the forefront of their company’s operations typically rely on other individuals to provide accurate and timely information through the accounting information system. Lax employee oversight can allow for fraudulent activities in the company. Employees who should not have access to accounting information can also create problems in the accounting information system.
Age
Business technology has transformed the way companies conduct business. Companies must be sure to keep their accounting information system up-to-date so they can take advantage of current technology. While maintaining computerized accounting systems or applications can be expensive, letting the system become inefficient because of its age can create difficulties for a company. Attempting to significantly upgrade old information systems can also require more capital during the replacement process.
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