MIS for Finance

We all know the invaluable worth of computers in our daily lives and our work. But did you know computers are also essential to an organization’s decision making? There are computer software and systems that help businesses analyze data in a scientific way to ease the decision-making process.

Like MIS, Accounting Information System (AIS) is also a computer-based system, which an organization uses to take important financial decisions. An AIS will collect, process, analyze and store financial data of a company. And when called upon it will retrieve and report such data to its users, namely accountants, consultants, financial officers CFO, auditors, government tax authorities etc.

There are three basic objectives of an AIS, which are:

• It helps an organization fulfill its statutory obligations of preparing and publishing certain accounting statements and information
• It analyses financial data and provides reliable and accurate financial information to the users of the AIS
• Protects a firms accounting data from breach or theft (which can be a significant problem)

Components of Accounting Information System

An AIS, like most computer systems, consists of six basic components.

• People: These are the users of the AIS. Internal users include accountants and other financial officers o the company. Then there are also users outside the organization, that can be given access to the AIS. Some such external users are auditors, consultants, tax authorities etc.
• Procedures: These are the procedures the system follows to collect and process data. The database for such a process can be internal (like employee names, sales figures) or external databases (like customer orders, tax slabs etc). The feeding of the data can be both manual as well as automated.
• Data: An AIS mainly deals with all kinds of financial and commercial data. Any data that is pertinent to the accounting of the firm will be input data for an AIS. Care must be taken that the data entered is accurate and complete. Examples of such data include invoices, orders, payroll, bills etc.
• Software: AIS software performs all the functions of storing, processing, analyzing, retrieving financial data of a company. The software can be generalized software that is available in the market (Tally, Oracle etc) or can be specialized software created specifically for a particular company and it’s accounting needs. Some of this software has an inbuilt internal control and audit options. They even help in tax management.
• Hardware: Like any other information system, AIS will also require some hardware components. these can include computers, laptops, servers, printers, scanners, secondary storage hardware etc.

Financial Management Information Systems (FMIS) support the automation and integration of public financial management processes including budget formulation, execution (e.g. commitment control, cash/debt management, treasury operations), accounting, and reporting. FMIS solutions can significantly improve the efficiency and equity of government operations, and offer a great potential for increasing participation, transparency and accountability. Whenever FMIS and other PFM information systems (for example, e-procurement, payroll, debt management) are linked with a central data warehouse (DW) to record and report all daily financial transactions, offering reliable consolidated platforms can be referred to as integrated FMIS (or IFMIS). The World Bank is a leading provider of financing and technical assistance for FMIS development.