ACC 340Accounting Information Systems I
ACC/340 Week Two
Information Systems Infrastructure
Introduction
Information technology (IT) has revolutionized the how business is conducted as well as having a profound effect on personal lives. IT is a very powerful agent of change. Companies taking advantage of technological advancements in the design and implementation of information systems are capturing important competitive advantages. Information systems help businesses become more efficient and more responsive to customer needs.
In order to take full advantage of the revolution in information technology, accounting professionals need an understanding of the capabilities and components comprising an information systems infrastructure. Information systems infrastructure components include computer hardware and software, networks, telecommunications and the Internet. Although they may not need to be technical experts, accountants need a basic understanding of information systems infrastructure for a number of reasons. First, accountants are system users. They need to know how to access and analyze data on their own without assistance from company IT staff. Additionally, accountants play a major role in systems development and the management of computer resources. They may oversee the purchase of the systems, supervise those who use them, and evaluate the use of hardware and software components. As auditors, accountants evaluate the strengths and weaknesses of accounting information systems on the basis of such criteria as the adequacy of internal controls and the usefulness of the overall system. Without an understanding of information technology infrastructure, it would be difficult for the accountant to assess systems effectively.
IT Terms and Basic Concepts
Information technology is a powerful agent of change, transforming the way business is conducted and the way companies operate. For business to harness the capabilities afforded by the IT revolution, they must first understand systems terminology. Computers are the cornerstones of any information system infrastructure. Computer hardware is the physical equipment used to accept, store, process, and output data. All computers have the same basic components and operate the same basic way. Software is the detailed set of instructions that tell a computer how to accomplish a particular task. Businesses often refer to software programs as “productivity tools.” Word processing software such as Microsoft® Word®, spreadsheet applications such as Microsoft® Excel®, and presentation software such as Microsoft® PowerPoint® are all examples of “productivity tools” designed to increase business productivity and efficiency. Telecommunications have helped businesses to rapidly process information over geographically dispersed areas. Without a fast, reliable telecommunications infrastructure, the basic business activities, such as telephoning, faxing, and e-mailing would be impossible. The key to fast and efficient telecommunications is networks. A network is a set of devices electronically linked together via a telecommunications capability. Networks make information available across standardized user interfaces. The Internet has been one of the most exciting developments in telecommunications and networking. Innovative software and advanced telecommunications linking thousands of networks has change the way we communicate, shop, learn, and conduct business. Companies can now conduct business electronically with each other and directly with consumers.
Many of us might think that people are speaking a foreign language when they begin to talk about information technology. Accountants who do not understand the basics of information technology will encounter difficulty when it comes to understanding an accounting information system. As an accountant you can no longer afford to say, “Understanding information technology is not my job; it is the job of the IT staff.” Most accountants need to understand what computers are, what they are composed of, how they operate, and how they store and process data. They need to understand how to evaluate and use software packages, since much of their work is dependent on them. Telecommunications technology and the networks it supports are critical to the rapid and efficient dissemination and use of information. Businesses are increasingly dependent on fast, reliable means of communicating information. As a result, accountants need to have a solid understanding of the ways telecommunications technology and networking facilitate business processes.
IT Changes the Business Landscape
The United States’ manufacturing industry has undergone tremendous changes in the past 20 years. Once the mainstay of American business, the manufacturing sector has struggled with aggressive global competition, changing consumer tastes, and shifts in product allegiances. After years of mergers, consolidations, and bankruptcies, the survivors are reemerging leaner, stronger, and more competitive. One reason for the resurgence is the way that companies are using advances in information technology. Computer-aided engineering analysis has boosted automobile companies’ competitive advantage through improved design processes. Aerospace manufacturers use computers to store vast amounts of data used in the design and construction of aircraft and parts. Their information systems allow for the exchange of design information with international and domestic partners. Pharmaceutical manufacturers use computers to gather and store critical data including safety evaluation, development, and manufacturing data to meet government regulations. Given the current business environment, many business leaders argue that the decision to acquire an accounting information system is a business decision not a systems decision.
Conclusion
Some students question the focus on information technology nuts and bolts in an accounting course. Their preconception is that an accounting information system is little more than a packaged software application such as QuickBooks® or Peachtree® adapted for a particular application. Many students expect to spend their time in this course learning one of these or perhaps another software application. The assignments and self-assessments for this week should help dispel that notion. Obviously no one system works for every company. Accounting information systems vary widely from one business to another. Information infrastructure (computers, software, telecommunications, and networks) are the components needed to implement even the simplest of accounting information systems. Accountants are more than the end users of a system designed by IT professionals. They are integral participants in the design, development, implementation, evaluation, and supervision of the systems comprised of these components.
Information technology provides many opportunities and challenges for the accounting profession. IT has had a profound effect on accounting information systems. An appreciation for accounting information systems infrastructure helps accountants play a major role as participants of accounting information systems design and acquisition teams. Accountants also need an understanding of accounting information systems infrastructure to evaluate the adequacy of internal controls and the effectiveness and efficiency of the overall system. As more businesses automate and network their accounting information systems, a strategic understanding of IT will provide you with a source of competitive advantage. This week we begin the process of developing that competitive advantage.
Questions to Consider
- What issues enter into a given company’s design, acquisition, and implementation of accounting information system?
- Do you agree or disagree with the statement that “decision to acquire an accounting information system is a business decision not a systems decision”? What role does competitive advantage play in the decision to acquire an accounting information system?
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