Computer-Based Accounting Systems

An accounting information system (AIS) is a system of collecting, storing and processing financial
and accounting data that are used by decision makers. An accounting information system is generally a
computer-based method of tracking accounting activity in conjunction with information technology
resources.

Computer-based accounting system fall into two broad classes: batch systems and real-time
systems. Batch systems require separate programs for input, process and output while real-time systems
involve a continual input, process and output data. Here is a summary of some of the distinguishing
characteristics of batch and real-time processing.

Distinguishing Feature Batch Systems Real-time Systems

Information time frame
Resources
Operational Efficiency
Lag exists between time when
economic event occurs and
when it is recorded.
Generally, fewer resources are
required.
Certain records are processed
after the event to avoid
operational delays.
Processing takes place when
economic event occurs.
More resources are required.
All records pertaining to the
event are processed
immediately.

Alternative Data Processing Approaches.

There are two alternative data processing approaches, the legacy systems and the modern
systems. Legacy system tend to have the distinguishing features of, they are mainframe-based application,
they tend to be batch oriented, early legacy systems use flat files for data storage, but hierarchical and
network data-bases are often associated with later-era legacy system. Modern systems, on the other
hand, tend to be client-server (network)-based and process transactions in real time.

Updating Master Files from Transactions

Whether batch or real-time processing is being used updating a master file record involves
changing the value of one or more variable fields to reflect the effects of a transaction. Example: Structure
for sales order transaction file and two associated master files, A/R and Inventory. The primary key (PK)-
the unique identifier for A/R is the account number and for inventory is the inventory number. (Figure
6.28, page 254, J.Hall Book)

Database Backup Procedures

Each records in a database file is assigned a unique disk or address that is determined by its PK
value, because only a single valid location exists for each record, updating the record must occur in place.
The master file record is permanently stored at disk address designated. The update program reads both
the transaction record and the master file record into memory. (Destructive Update Approach)

To preserve adequate accounting records in case the current master becomes damaged or
corrupted, separate backup procedures must be implemented. (Backup and Recovery Procedures for
Database Files)
Batch Processing Using Real-Time Data Collection

A popular data processing approach-large corporations is to electronically capture data at the

source as they occur. By distributing data input capability to users, certain transaction errors can be
prevented or detected and corrected at their resource. The result is a transaction file that is free from
most of the errors that plague older legacy systems. The transaction file that later processed in batch
mode to achieve operational efficiency. To maintain the integrity of data, once a record has been accessed
for processing it is locked by the system and made unavailable to other users until its processing is
complete.

Real-Time Processing

Real-time system processes the entire transaction as it occurs. Real-time processing is well suited
to systems that process lower transaction volume and those that do not have common records. These
systems make extensive use of local area network and wide area network technology.

Controlling the TPS

Controls are, by their very nature, application and technology specific. Also, manual, automated
batch systems, and real-time system require different control techniques to accomplish the same control
objectives. (This is discuss in the later chapter of J.Hall Book)