- Commercial Software: These are pre-coded packages purchased from external vendors. A common subset of commercial software is turnkey systems, which are completely finished, tested, and ready for immediate implementation with little to no modification.
- Custom Software: For organizations with highly unique requirements, custom software is built to specific individual requirements. While this offers maximum control, it is typically much more expensive than purchasing commercial packages.
- Enterprise Resource Planning (ERP): Rather than a single monolithic program, an ERP is a system assembled from various prefabricated software components to integrate different business functions.
Beyond software, organizations must manage their network administration, which involves the responsibility for the effective functioning of the hardware and software that constitute the organization's network, including configuration and maintenance.
IT Outsourcing and Cloud Computing
To manage costs, risks, and the complexity of maintaining IT staff, many firms engage in IT outsourcing. This involves contracting a third-party vendor to handle various IT responsibilities, such as data entry, network management, or application development.
A modern, location-independent variant of outsourcing is Cloud Computing. In a cloud environment, shared data centers deliver hosted services over the Internet. Cloud services are generally categorized into three models:
- Software as a Service (SaaS): The provider hosts applications over the Internet, and the client uses them without managing the underlying infrastructure.
- Infrastructure as a Service (IaaS): The provider supplies computing power and disk space. The client firm retains control over the configuration, such as operating systems and network settings.
- Platform as a Service (PaaS): The provider provides the facilities and environment that enable client firms to develop and deploy their own consumer-generated applications.
Exam Tip: When distinguishing between IaaS and PaaS, remember that IaaS provides the "raw materials" (storage and power), while PaaS provides the "tools" (the platform) to build and run applications.
The Role of Accountants in AIS
The integration of technology into accounting has not replaced the accountant; rather, it has redefined their role. Accountants now function in two primary capacities: as designers and as auditors.
Accountants as System Designers
During the systems development lifecycle, accountants serve as domain experts. While IT professionals are responsible for the physical system (the actual hardware and software used to capture and present information), accountants focus on the conceptual system.
The conceptual system involves creating alternative designs and ensuring efficient data storage. A key goal for an accountant-designer is to ensure the system captures data only once, making that single source available to all authorized users.
Accountants as System Auditors
Once a system is operational, accountants transition into the role of auditors to ensure the integrity of the data. This involves IT auditing, which is the review of the computer-based components of an organization.
Auditors perform two main types of tests:
- Tests of Controls: These determine whether the internal controls within the system are functioning properly.
- Substantive Tests: These verify whether the actual contents of the database accurately reflect the organization's transactions.
Depending on their role, accountants may provide attest services (expressing an independent opinion on the fairness of financial statements) or advisory services. Furthermore, internal auditors act as an appraisal function housed within the organization to provide ongoing oversight.
Critical Concept: Designer/Auditor Duality
A significant challenge in modern AIS is the "Designer/Auditor Duality." If an accountant helps design a system, they may lose the independence required to audit that same system effectively. Maintaining professional skepticism and clear boundaries is vital for maintaining audit integrity.
