Question

Database systems may change the nature of external reporting. Instead of preparing the traditional financial statements, the company can make the same information available for external users. Identify some ways that the company can use to make its financial data available to external users and discuss its implications on the AIS as a financial reporting system.

Answer 1

As we all know, the financial data of the company is required by both internal as well as the external users. so it becomes important for the company to be able to share and provide such financial information to its users. The company can use various reporting software and mediums to share its data.

The company shares its financial data by publishing them in financial journals and magazines.

Also, some financial data is published in newspaper so that the external users such as investors can remain updated regarding company's performance.

Data is made available through tax journals.

The AIS (Accounting Information system) has functions which helps in creating reports according to the requirements of various external users such as lenders, government, investors and so on.

Also, they have some pre- created report format which reduces the time and effort taken to create such reports.

Also, various functions in AIS such as comparison helps to create a trend analysis and helps to present information in more effective way.

AIS can automatically take information from its past database and helps in improving efficiency as well as effectiveness of the whole process.

Also, AIS can take information from the external environment which helps in creating comparison analysis with the companies in the same industry, or with its competitors. Thus, providing a holistic view.