Accounting Information Systems

Accounting Information Systems

According to Peter Drucker, computer based processing and accounting functions operate separately from each other in most organizations. Discuss some ideas about how these two functions might be merged.

Both of these functions are so integral to each other, with accounting being the primary internal "customer" or consumer of computer-based processing resources in many organizations, that the merging of the two serves to make the entire organization more efficient. Underlying the merging of computer-based processing and accounting however is a more fundamental shift occurring in many organizations, and that is the use of computer-based processing or as the function is sometimes called, information technologies (IT) for streamlining and making business processes more effective, measurable, and more agile overall. The merging of IT and accounting needs to start at the dominant process levels first of the accounting function, and these include Accounts Payable, Accounts Receivable, and the General Ledger. The integration of IT with accounting after a merger of functions has a major impact on the most critical financial reporting functions of an organization. A second major idea of how the functions of IT and accounting could be merged is for the accounting department to define which routine, easily taught processes are best outsourced. There are many routine tasks that have a low level of complexity that could easily be outsourced to any number of providers. IT functions globally are seeing this dynamic, and often are also finding the more routine, more easily taught tasks can actually be done less expensively outside the organization. The bottom line is that the strategic objectives of an organization are what is defining the direction of IT today, and with that, defining the re- alignment of business processes to support those objectives. IT merging with accounting needs to provide the highest levels of agility in system response while supporting core financial and accounting processes to enable an organization to function effectively.

The information age is likely to have a continuing impact on financial accounting. What are some changes you think will occur in the way financial information is gathered, processed, and communicated as a result of increasingly sophisticated information technology?