Improving Accounting Information Systems For Luxurious Firm Essay.

8 Pages / 1,891 Words Published On: 18-12-2020

The CEO of Luxurious firm, Mr. Alex, believes that the current accounting information systems is inadequate for the developing needs of the business. He asked you to do a number of things for him in your ‘new role’ as the Accounting Information Systems Development Officer.

He asked you to write a brief report identifying the role that would be expected of the management team in the development and design of a new accounting information system. The underlying issue is really the role you would expect Alex “your boss” to play.
Would you expect that the people who will use the new system should have a role in any analysis leading up to, in the selection of and implementation of the new accounting information system should one be selected?
Write a clear and comprehensive report on what would be involved in the adoption of a life cycle approach to adopting a new accounting information system. Specifically identify the stages that would need to be engaged in, and staff likely to be involved.

Part 2:

Luxurious firm performs its expenditure cycle activities using its integrated ERP system as follows:

Employees in any department can enter purchase requests for items they note as being either out of stock or in small quantity.

Occasionally, special items are ordered that are not regularly kept as part of inventory, from a specialty supplier who will not be used for any regular purchases. In these cases, an accounts payable clerk creates a one-time supplier record.

Each day, employees in the purchasing department process all purchase requests from the prior day. To the extent possible, requests for items available from the same supplier are combined into one larger purchase order in order to obtain volume discounts. Purchasing agents use the Internet to compare prices in order to select suppliers. If an Internet search discovers a potential new supplier, the purchasing agent enters the relevant information in the system, thereby adding the supplier to the approved supplier list. Purchase orders above $10,000 must be approved by the purchasing department manager. Electronic Data Interchange is used to transmit purchase orders to most suppliers, but paper purchase orders are printed and mailed to suppliers who are not Electronic Data Interchange capable.

Receiving department employees have read-only access to outstanding purchase orders. Usually, they check the system to verify existence of a purchase order prior to accepting delivery, but sometimes during rush periods they unload trucks and place the items in a corner of the warehouse where they sit until there is time to use the system to retrieve the relevant purchase order. In such cases, if no purchase order is found, the receiving employee contacts the supplier to arrange for the goods to be returned.

Receiving department employees compare the quantity delivered to the quantity indicated on the purchase order. Whenever a discrepancy is greater than 5%, the receiving employee sends an email to the purchasing department manager. The receiving employee uses an online terminal to enter the quantity received before moving the material to the inventory stores department.

Background

The accounting information system is used to perform works with the financial data, which includes collection, retrieval, storage and access of the financial data that can be further used by consultants, accountants, business analyst and tax agencies to keep highest record of the accuracy regarding financial cash transaction and recordkeeping. It aids in keeping data intact and secure. The six components that deals all the online financial transaction and record systems in account information systems that are people, procedure and instructions, infrastructure and internal controls, data and software.

The Luxurious firm is one of the famous developing company situated in Australia needs a better planning and improvisation regarding its accounting information system. The company found the accounting information system inadequate to meet the development needs of the company. This was causing a big barrier in the growth of the organisation. The report will discuss the various improvement methods that can help the organisation to upgrade by using the new accounting information system.

Discussion

The account information system should be designed in a manner that it could be understandable to the stakeholders that are using them. There are four steps of developing and design of the accounting systems. The role of the management team are assigned according to the process that need to be carried out for the development and the design of the accounting system.

Part 1: Identification of Role

As discussed before there are four-step process for the development of the accounting systems. The role of each member will be discussed according to the procedure taken under consideration (Abdallah, 2014).

Analysis:

The analysis of the account information system makes sure of the information, which is necessary for the internal and the external users of the organization. This role will be taken care by the industrial analyst.

Design:

The design of accounting system involves a lot of work in a construction. The application requires the design of forms, document working and process, preparing tools to ensure data security and prepare report wherever necessary. The auditors collects the financial data, manages and arranges them in forms and documents.

Implementation

Accountants do the implementation. It is the duty of the accountants to look forward if the design is being implemented or not.

Follow up

Other employees that make the entry and that are new will do the follow up.

Role of the boss : The senior employee of the company will provide the instruction and supervise all the departments that will have each role in the accounting information system .

Question 2

The new account information system will provide the role to the people that leads to the analysis of the selection and implementation of the account system. The account system that is used in the organisation needs the user to enter the financial data so that the system can analyse the data as per the record and the financial transaction that has been occurring in the system through internal or external purpose.

Without the auditors, the account system would not be able to judge which transaction to analyse which not. The auditors would provide a proper design as per the requirement of the firm, the selection and implementation is provided by the agencies of taxation in the organization. The employees will have their own roles in each case, the analyst will analyse the process that is going on in the organization. The auditor would arrange the data into forms and then in documents while there will be selection of the accounting process done according to the departments and their seniors.

Development of Accounting Information System

Question 3

The account system needs to follow a SDLC approach of any system requires seven steps.

Planning

Since the previous accounting system could not fulfil the requirements of development of the Luxurious firm, there was a new accounting system needed for the company to provide the better financial advice to the company, create better online keeping.

System analysis and maintenance

The overall analysis proved that the organization has a scarcity regarding updated development tools for the needs of the organisation. The organisation was falling apart without a proper accounting system. The new accounting system had online book keeping, tax managing services, key progress advices and financial transaction is done by this new accounting system. There are security tool in addition to help the system grow in a better manner (Dora & Dubey2015).

System design:

The forms and the database of the accounting system are automated in updating and deletion of the entries. There is a backup as a cloud storage that helps to create a security for the data that is being entered in the system. the platform of development chose to create this accounting system is big data that provide online assistance for security of data

Development:

The accounting system is made using the Big data and MySQL to develop this accounting system. The system is made platform independent so the software of the accounting system could run on either computer system or mobile phones( Griffith & Paelinck, 2018).

Integration and testing:

The integration of the accounting systems does provide ERP to the organisation; it has also be tested under resource-based view for knowing the efficiency of the project. The integration of the accounting system shows how helpful is to the organization (Ismail & King.2014).

Operation and maintenance :

The operation and maintenance of the accounting system will require the cost of installation of both hardware and the software systems. There must be a proper training of employees to make them aware about the new system before recruiting. The main systems will be used by the authorised personal only(Patel,2015).

Part 2

The weakness that are noted through the existing cycle process are stated with respect to the case study that has been provided as follows (Ibrahim & Adetya,2017);

Employers can list the purchase items as out of stock or in small quantity. There must be more options to categorise the resources purchased in the market with the dates of purchase and the transaction details (Prasad & Green, 2015),
The special order is not being created the part of the inventory can let sometimes to miss out the detail which can lead to incur a loss for the company, even when there a separate file maintained for it. The accounting system should keep a track of all the orders that has been on a daily basis or as special inventory should be entered. There must be proper update of the accounting system.
There must be better billing system to ensure that there is no bills that are not calculated in the case of the rush periods. The large orders that are purchased by the company sometimes remain unnoticed this can cause the loss to the system (Schaltegger & Burritt, 2017).
The email has to be sent in to ythe department manager whenever the disparency is greater than 5% , handling a large number of orders is quite tough to send and there could be chances of errors that much email. The system must be that advance that it could send a default memo to department manager when the disperancy turns out to be greater than 5 %.

Part 3

Improper segregation of duties means there could be cases in organization leads to the mismanagement and chaos. The organization here as per the ER chart it is shown that there is improper distribution of the employees for the task(Tsui, Davis & Sahlin, 2018). The following examples shows how this uneven distribution can lead the Luxurious firm to incur huge loss:

The company have uneven distribution of employees, there are huge number of orders taken by employee a ,b and c but very less cases are there to approve credit and employee A. the employee should have been evenly distributed.
The people who takes order also take the bill of the customers, but only few bills are being analysed if there are 250 orders only 10 bills.
There is very less people to arrange the credit memo that is highly important for the company.
There is quite overpressure in some departments while other departments remain unnoticed,
All the transaction are done in one account.

The nature of the table shows that there is no consistency in the organization the randomized distribution of the duties have led overpressure and mismanagement of the company. all the transaction procedure is done with one bank account and any financial setback can affect the organization directly(Wise et al. 2014).

Conclusion

The report concludes with proposing of new accounting system in an organization that are used to enhance the financial security of the organization. The report is mainly divided into three parts. The first part mainly discusses about the development of the accounting systems and role of the people who will be using the accounting system. It also describe the impact of the using the accounting system in the organization and should there be a proper analysis done before implementation of the account system. The second part mainly discuss the weakness that have been observed through expenditure analysis among the employees and throws light on the loopholes of the system management. The report suggest measures to improvise the organisation. The third part mainly impart the knowledge about the improper segregation-taking place in the company and nature of such problems.

References

Abdallah, A. A. J. (2014). The impact of using accounting information systems on the quality of financial statements submitted to the Income and sales tax Department in Jordan. European Scientific Journal, ESJ, 9(10).

Dora, S. K., & Dubey, P. (2015). Software Development Life Cycle (SDLC) Analytical Comparison and Survey on Traditional and Agile Methodology. National Monthly Referred Journal of Research Science and Technology, 2(8).

Griffith, D. A., & Paelinck, J. H. (2018). Linear Expenditure Systems and Related Estimation Problems. In Morphisms for Quantitative Spatial Analysis (pp. 201-213). Springer, Cham.

Ibrahim, A., & Adetya, Z. (2017, November). Analysis of weakness of data validation from social CRM. In Data and Software Engineering (ICoDSE), 2017 International Conference on (pp. 1-5). IEEE.

Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information systems in small and medium sized Malaysian manufacturing firms. Journal of Information Systems and Small Business, 1(1-2), 1-20.

Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education India.

Patel, F. (2015). Effects of accounting information system on organizational profitability. International Journal of Research and Analytical Reviews, 2(1), 168-174.

Prasad, A., & Green, P. (2015). Organizational competencies and dynamic accounting information system capability: impact on AIS processes and firm performance. Journal of Information Systems, 29(3), 123-149.

Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Routledge.

Tsui, R., Davis, D., & Sahlin, J. (2018, July). Digital Engineering Models of Complex Systems using Model?Based Systems Engineering (MBSE) from Enterprise Architecture (EA) to Systems of Systems (SoS) Architectures & Systems Development Life Cycle (SDLC). In INCOSE International Symposium (Vol. 28, No. 1, pp. 760-776).

Wise, R. M., Fazey, I., Smith, M. S., Park, S. E., Eakin, H. C., Van Garderen, E. A., & Campbell, B. (2014). Reconceptualising adaptation to climate change as part of pathways of change and response. Global Environmental Change, 28, 325-336.

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