Introduction
An information system at large is the system of data collection, data keeping, processes, people, and activities of an organization. In the management theory, Information system is an off-the-shelf software application that is specially designed for the streamlining and integration of various business processes. In simple words, the information system has the purpose of automating the manual systems of an organization. More important function of the information system is implementation of the internal controls. Internal controls are the policies and procedures to ensure that the organization’s goals and objectives are met, resources are used efficiently and any misappropriation is controlled in advance. Usually, these systems are called ERP (Enterprise Resource Planning) systems.
Accounting Information System
The most important information system in any organization is accounting and financial information system. Both usually stand for the same module of an ERP. An accounting information system is responsible for keeping financial records accurate, up to date and complete. It also renders the financial activity under an approval system and makes it more transparent. The accounting entries and records are entered by an approved person, and the system verifies the entry of data by more than one approval authority. This usually is called the approval path in the ERP.
The information system stores huge data at very low cost and also ensures minimal human intervention. This saves storage costs in manual systems and also the risk of fraud and misappropriation.
The financial module becomes highly useful in purchase and sales processes of the organization. The ERP implementation is custom designed for the needs of the organization that is in accordance with the specific cycle of a particular process. With an ERP, all the processes are standardized and integrated that results in efficient employment of resources, efficiency and speediness of the processes.
Human Resource
Another department that finds the information system very useful is human resources. Human resource needs to maintain updated and complete data and employee records. HR needs to ensure various controls for the employees. That includes regular training, knowledge and skill updating, employee motivation, and control. The employee record and history can be readily accessed at any time anywhere in case of multiple locations of the organization.
Management Information System
Information systems find their use in the management of different business processes. One example is that of material management. The purchase of the material, the shipment and the record in the warehouse are all integrated by the information system.
Conclusion
Information systems have come with vast advantages to firms worldwide. But they have some areas where manual systems still work better. One such phenomenon is information redundancy. The computer systems, due to low storage cost and huge storage space, have too much redundant information. Secondly, the cost of acquiring the information system does not always succeed the benefits that come along with it. Some small firms might find it better to stay with manual systems if the processes are not too complex and huge.
Bibliography
- Rainer and Turban. Introduction to Information Systems, Second Edition.
- Gelinas, Sutton and Hunton. Accounting Information Systems. 6th Ed. 2005