Discuss about the Management Accounting And the Information Systems.
In the following report, the implementation of an accounting system in the business process of a particular organisation has been evaluated. Woolworths Australia has been chosen as the selected organisation. In the report, the organisational structure of Woolworths Australia has been mentioned and the proposed organisational problems has been discussed thoroughly. Several acquisition methods have been discussed and a sales procedure flowchart has been made for the chosen organisation. The control and fraud problems of the new technology has been evaluated as well. The development and adoption of accounting software packages has been discussed and their market sizes have been compared accordingly. The leader of the market has been identified. Possible challenges and recommendation for addressing the issues has been mentioned as well in the report.
Organizational structure of Woolworths
The Board of Directors is present at the top level of the management board. Their prime function is ti increase the shareholder value as well as check whether the business activities of the organization are carried out effectively or not (A brief history of Woolworths 2018). They are responsible for maintaining the interests of the shareholders and every director’s activities are mentioned in the Board Charter. It contains all the responsibilities and power of every member of the Board of Directors.
Below the board of Directors comes the Group Executive who are responsible for pushing the business towards its organizational goals. They are responsible for reporting the organizational progress back to the Board of Directors (Woolworths Group: Quality Brands and Trusted Retailing 2018).
Figure 1: Details of the committee membership
(Source: Woolworths.co.za 2018)
To check certain responsibilities of the organization, the Board of Directors has appointed four independent committees namely Audit, risk management and compliance committee, People performance committee, Sustainability committee and Nomination committee.
Operational problems due to the organisational structure
Woolworths Australia is facing some serious problems due to the mentioned organisational structure. Due to the independent nature of the departments, reporting process becomes difficult and complicated as several bosses need to be updated. Also, the messages and queries for resolving the issues often change from one board to another which makes the members of the departments confused. This results in the several problems such as bad customer service. For running a proper customer service, integration with the other departments is crucial (Hyvönen 2013). Due to the lack of collaboration, the customer requests are transferred from one department to the next as no one is sure whose responsibility it is to resolve the situation. Moreover, due to the organisational structure, the members of different teams refuse to work with one another unless told by a supervisor.
Lack of communication is another issue for the organisational structure. This issue is facilitated even more when an authoritative role is taken up by a manager or supervisor of the team which confuses the members of the particular department (Woolworths: the rise and fall of the department store 2018).
Examples of system acquisition methods and the favourable method
Commercial accounting software- These softwares are used normally by medium to small sized industries. The software is used fir customizing business functions and providing special statistical graphs through summarisation of the data. Some example of commercial accounting software are Freshooks and Turbocash. The softwares have the capability to prevent wrong data entry due to their multiple error detection layers (ENTERPRISE RESOURCE PLANNING 2016). The downside of adopting this software is its requirement of maintenance crew and long installation time.
Custom accounting software- Custom accounting softwares are used for helping a business in a particular accounting problem that is specific to the business. These softwares are normally created when a business asks an employee to design a software which can handle a particular accounting function. In time, the software grows in a capability and the organisation sells the software to other businesses as a different product (Kohler 2013). These softwares are also adopted when ERP and other softwares fail to provide a solution for the particular acconting problem. The downside of using these softwares is their high maintenance cost and buggy environment.
Enterprise Resource Planning or ERP software- ERP is used by organizations who want to integrate information from separate business areas. This is particularly useful for Woolworths. The software is expensive as well as takes a long time to install. Separate modules need to be purchased which provides separate functionalities. Adopting the software allows for proper financial data management and efficient working of the supply chain management system (ENTERPRISE RESOURCE PLANNING 2016).
Hence, choosing ERP as the proper system acquisition method will be beneficial for Woolworths as they can afford the high cost of the software. Moreover, the Board of Directors can put separate modules in every separate department to look after their working and manage them proficiently (Arli et al. 2013).
Sales procedure system flowchart of Woolworths
The sales procedure of Woolworths is discussed in the following flowchart:-
Figure 2: Woolworths’ Sales procedure
(Source: Created by the author)
Problems and frauds with the ERP system 100
The control problems of the mentioned system acquisition method is written as follows:-
- Absence of maintenance plan
- No regular communication between the departments
- Little investment on the implementation team(??????? and Kharakoz 2015)
- Ignoring the change in the managerial level
- Quick implementation of the ERP without proper analysis
- Too many features can distract the organization from its goals
- Industry specific solutions need to be incorporated in the decision making process
The possible frauds of the present system are written as follows:-
- Abuse of the accounting software
- Unethical employees trying to take advantage of the new system by checking the core business processes
- Misplacement of sensitive documents (King and Thobela 2014)
- Unauthorized access to the financial processes
Accounting software package adoption and development
Due to the business risks involved, the adoption process of the accounting software packages are normally slow in organizations. The development and adoption process of several modules of the accounting packages are slow as well as cumbersome. Moreover, the accounting software needs to be implemented by keeping the old system running at the same time. The conversion process needs to incorporate the regular organizational activities as well (??????? and Kharakoz 2015). Human errors and pressure from the prospective stakeholders are real issues during this procedure.
Current market size
The market size of different organizations depend from the time to time as well as from country to country. For example, Xero, an accounting software has taken up 65% of the market share in Australia (Knox 2015). 22% has been taken up by Inuit and 50% by Sage. Similarly in USA, Inuit has over 55% of the market share and 32% is taken up by Sage. The rest is taken up by the other vendors (Monk and Wagner 2013).
Leaders in the market and reason for their competitive advantage
Currently, the leader of the accounting software market is Freshhooks.
The software provides subscription services and has an online payment system with a number of vendors. It has integrated support with other softwares. As the software comes inbuilt with a number of the other softwares, the total control of the accounting softwsre can be accessed from a single dashboard (Hyvönen 2013). Automatic backups are made and a mobile application is also present.
Challenges of accounting software implementation
The common challenges due to the implantation of the accounting software are mentioned as follows:-
- No proper budgeting
- Management team commitment
- Choosing the proper accounting software
- Lack of training of the personnel who will handle the accounting software
- No proper testing
Some recommendations are mentioned as follows:-
- Organization needs to check the challenges properly
- The personnel needs to be included in the decision making process of the accounting software implementation (ENTERPRISE RESOURCE PLANNING 2016)
- Adequate training of the staffs
- Proper testing procedures
- Budget testing needs to be analysed carefully
To conclude the report, it can be stated that the ERP system needs to be implemented in the business processes of Woolworths to mitigate the operational problems that it is facing. With the inclusion of the new system acquisition software, the management of different departments will become much easier. The report discusses the organizational problems of Woolworths and proposes suitable acquisition methods to address the issues. Flowchart has been provided for the sales procedure and the market share of different accounting softwares have been discussed. The report ends by providing the potential fraud and issues of the new system and provide suitable recommendations.
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