Accounting Information System Statistical and Finance

Question: Describe about the Accounting Information System for Statistical and Finance. Answer: Accounting Information System Accounting information system (AIS) is basically a subset of Management Information System (MIS). It is used for providing accurate financial and statistical information in a timely manner to managerial parties in order to assist them in the process of decision making. In present era use of AIS is not restricted to the financial field as it is also assisting manufacturing entities. The present study is focused on role and significance of AIS in manufacturing organisations. Role of AIS in the value chain of manufacturing organisation The major objective of manufacturing entities is to provide valuable products to their customers who are free from defects. These business entities are considered to be profitable if value creates by it higher than the cost of production (Reuter, Brambring Hempel, 2016). AIS adds value to manufacturing entities by providing accurate information in a timely manner by which five major value chain activities can be done in an effective manner. Timely information assists in sound decision making by which quality is improved and cost of production is reduced. Three major functions of AIS in manufacturing entity is as follows: Effective and efficient processing of data regarding transactions of company Provide information of managerial parties for making useful decisions through financial statements and managerial reports (Singh, 2013). To develop appropriate internal control by assuring that information is reliable, is in safe hand and able to satisfy objectives of management. AIS is able to provide inventory status, performance reports and budgets through which manufacturing activities can be effectively managed. Value is business is provided by performing a series of activities referred in the value chain. These activities are inclusive of primary as well as supportive activities (Prasad Green, 2015). Information technology has a significant impact on effectiveness and efficiency of preceding activities. It is because, value chain of manufacturing entity is directly connected to stakeholders such as distributors, suppliers and customers. Figure 1: Role of AIS in the value chain of manufacturing organisation (Source: Singh, 2013) Use of AIS in decision-making in a contemporary manufacturing organisation On the basis of above description, it can be said that there is the crucial role of AIS in manufacturing entities. Study of Christ Burritt (2015) shows that manufacturing enterprises are required to make strategies decision that have long-term impact on business. AIS assists in making valid and viable decisions by providing timely and accurate information in following forms Financial and economic forecasting: For future planning of business forecasting is required to be done by manufacturing enterprises. For this aspect, they are required to make predictions based on existing market conditions (Reuter, Brambring Hempel, 2016). Thus, for financial and economic forecasting appropriate information is required. In a situation where information is reliable, they businesses have to face heavy losses. In this aspect, AIS ensures that right information is available at the right time to the right person. Planning of funds: Huge funding is required by manufacturing entities for their daily operational activities. For this aspect, they are required to make the decision to obtain funds for a viable source to minimise In this aspect, AIS provide information regarding available options of financial sources and assist in making a comparative analysis of the same. Preparation of budgets: Budgets are prepared to plan the use of available sources in order to generate maximum profits. Accounting information system provides information for preparing this budgets on the basis of which strategies decision can be taken for making optimum utilisation of available resources. The decision regarding capital budgeting: Manufacturing concerns have various options for investments, but they are required to select a most optimum plan in order to strengthen the financial position of business (Christ Burritt, 2015). For this purpose, they are required to do a comparative analysis of available options which can be done by AIS effectively. AIS comprises inbuilt tools that assist in implementing investment appraisal techniques for high profits. Competitive advantage of using value chain in manufacturing organisation The value chain is influenced by porters concept that is directly connected to competitive advantages for business entities (Reuter, Brambring Hempel, 2016). Manufacturing entities are required to make decisions which have a direct impact on their competitive position in the market. In accordance with the Porter, value chain analysis can be used to develop effective strategies in order to attain competitive advantage. Figure 2: Porter's Generic value chain (Source: Strategic management, 2010) The objective of value chain activities is to offer the customer value that exceeds its cost in order to provide them benefit. These activities provide mainly two competitive advantages which are enumerated as below: Cost advantage: Manufacturing entity can attain cost advantage by making a reduction in the cost of individual activities or by it reconfiguration (Kaplan Atkinson, 2015). For this aspect, management of business organisations can conduct a cost analysis to the value chain activities. Cost advantage can be attained by controlling following drivers: Learning Geographical location Optimum utilisation of capacity Timing of market entry Institutional factors Policy for cost differentiation Timing Vertical integration Interrelationships and linkage among various activities Further, structural modifications can be made in the value chain to attain competitive advantage as it will improve the production process and develop new distribution channels. Differentiation: Benefit of differentiation can be attained through any part of value chain activity. For example procurement of inputs which are not utilised by competitors can be used for forming differentiation (Christ Burritt, 2015). It can develop distribution channels that will offer a high level of services. This approach will attract new customers and retain existing one. On the basis of the present study, the conclusion can be drawn that there is the significant role of AIS in manufacturing entities. AIS provides valuable information through which effective decisions can be made for the betterment of the business. It improves performance through implementing low-cost strategy and product differentiation strategy. It develops a better strategic position to generate synergy and growth. References Books and Journals Christ, K. L., Burritt, R. L. (2015). Material flow cost accounting: a review and agenda for future research. Journal of Cleaner Production, 108, 1378-1389. Kaplan, R. S., Atkinson, A. A. (2015). Advanced management accounting. PHI Learning. Reuter, C., Brambring, F., Hempel, T. (2016). Approach of information provision for high resolution production control. Arabian Journal of Business and Management Review, 2016. Prasad, A., Green, P. (2015). Organizational competencies and dynamic accounting information system capability: impact on AIS processes and firm performance. Journal of Information Systems, 29(3), 123-149. Online Strategic management. (2010). The value chain. [Online]. Available through https://www.netmba.com/strategy/value-chain/. [Accessed on 23rd November 2016]. Singh, V., (2013). Accounting information system. [Online]. Available through https://www.slideshare.net/wiweck/accounting-information-system-18527651. [Accessed on 23rd November 2016].