Discuss about the Accounting Information Systems for Cash Flow Statements.
Accounting information systems are used for accomplishing the essential objectives pertaining to management of financial assets that involve monitoring their utilization and performance alongside the cash flow. The necessity for financial management is perceived in the capabilities of financial capital to provide opportunities for sustainable development to the organizations. The different references to significance of accounting information systems as well as their specific functions of promoting stability and control in the financial management infrastructure of the organization have been noted in literature (Amrollahi, Ghapanchi & Talaei-Khoei, 2013).
The effectiveness of accounting information systems can be distinctively observed in the functionality of outcomes such as precise cash flow statements, detailed accounting reports, control over internal dynamics of financial assets and institution of credible frameworks for data collection and processing. The literature review is also indicative of the case of a prominent organization in Australia, Myers, which implements AIS and therefore references to the organization’s structure, operational issues, methods for system acquisition, control issues and sales flowchart are evidently placed in the review.
Organizational structure of Myers i.e. the selected organization for the literature review could be observed as a flat organizational structure with specific demarcation of the merchandizing department into a brand and marketing department. The flat organizational structure of Myers is characterized by assignment of ultimate authority to the CEO of the organization over other departments (Astri & Gaol, 2013).
The various departments in the organizational structure of Myers refer to the HR and legal, digital and data department, planning and business development, merchandise and marketing, secretarial management and store development initiatives. Organizational structure is a formidable precedent for determining the nature of information system infrastructure to be implemented in case of Myers (Astri & Gaol, 2013). Therefore an evaluation of operational issues emerging from individual departments and their operational implications owing to organizational structure has been included as a promising insight in this literature review.
The organizational issues which are identified with respect to organizational structure can be observed in the ambiguity of objectives, limitations for communication, conflicts among departments and the concerns of inconsistency. Myers Australia is liable to experience issues due to the discrepancies in functional segmentation and the limitations on accounting flexibility (Dorasamy, Francis & Jinabhai, 2014). The accounting management services of the organization are found to be implemented specifically for individual departments wherein the individual departments are held accountable for their departmental activities alongside monitoring the financial aspects of the department.
The flat organizational structure that can be observed in case of Myers also poses another formidable threat in the form of reduction in reliability of the information. The unreliable nature of the information is responsible for creation of operational issues that lead indirectly to discrepancies in strategic decisions (Galliers & Leidner, 2014). The minimal association of accounting and physical activity leads to proliferation of confusion that ultimately leads to depreciating performance of each department in the organization.
The system acquisition method refers to identification of an approach to design a suitable system that could address the organizational requirements for managing accounting information systems. The process for evaluating the appropriate accounting information system is initiated with a comprehensive review of available software packages in the market and reflecting on the capabilities of the package to fulfil the organization’s requirements (Haux, et al., 2013). System acquisition is considered as a crucial part of the implementation of AIS in an organization since it involves comparison of the software package’s ability to satisfy the organization’s requirements with the desired specifications presented by client. The System flowchart of the sales procedure is shown in appendix.
The evaluation of capability to fulfil organizational needs is necessary for determining the options for internal development of information systems or custom development software in case the software package is unable to cater the requirements for accounting information management. The evaluation stage leads to provision of RFP by the senior management of the organization to induce changes in hardware and software thereby implying notable changes in the AIS package selected in the previous stage (Higgo, 2016). Custom developed software is a reasonable option that can be considered as a system acquisition method for the selected case organization of Myers Australia proving to be efficient in the resolution of accounting concerns of the specific individual departments in the organization. On the other hand, the selection of custom developed software system acquisition method results in profound requirement of time and resources alongside inducing higher chances for errors.
The prospects that could be derived from employing an external agency, software house or computer agency that can assist in fabrication of the custom software alongside facilitating the benefits of sustaining effective communication flow and controls over costs involved in the distinct organizational departments (Islam, 2015).
Some of the critical issues that could be noted in the implementation of accounting information systems are observed for the aspects of control and possibilities of fraud that can be traced in the information systems (Jin, et al., 2014). The risks pertaining to control and fraud implications in the accounting information systems are reflective of remedial measures such as integration of control in the development process, include strict implications for enforcement, environmental security and initiatives for training and development of workforce responsible for monitoring security of the accounting information systems.
Control objectives for an organization are independent entities that should be supervised through policies and procedures rather than exposing them solely to the concern of data processing methods. The noticeable factors which are responsible for proliferation of concerns of fraud in case of the accounting information management frameworks include formidable references to the increasing competition in the retail industry, expanse of distribution of the wide area networks and widespread demand for business intelligence (Jung, 2014). These factors increase the vulnerability of accounting information of an enterprise to external agencies such as hackers and competitors that would indicate profound inefficiency of the accounting information system.
Therefore Myers could face cognizable setbacks with respect to internal controls in the domain of preventive, detective and corrective controls. For example the preventive controls could be influenced by the misappropriation of information from accounting information systems thereby implying the setbacks in comprehensive analysis of the available information (Mochoge, 2014). The organizational codes of practice as well as regulations established on the grounds of benchmarks derived from experiential analysis could be flexibly assumed as influential factors that can facilitate adequate opportunities for recognizing and resolving issues such as control problems and instance of fraud. It is imperative to resolve control and fraud related issues since these issues are associated with detrimental consequences of reduction in organization performance especially on the financial front.
Development of an accounting software package alongside ensuring its feasible incorporation in the framework of Myers organizational structure is an uphill task that should be realized for obtaining plausible outcomes from the accounting information systems implemented in the organization. Technical support is explicitly necessary for an organization to leverage the unique competences facilitated by internet in the form a widespread network of telecom installations across varying industries.
The capabilities of the internet to serve as a common platform for integration of diverse information network could be reflective of necessary requirement for adoption to obtain desired outcomes of implementing accounting software packages for financial management of Myers.
The functions of human resource management in the specific domains of technical skills, training and development of accounting competences cannot be undermined. Therefore the functions should be provided to the staff at all times in order to address the basic objectives of the accounting software package such as design, usage and fabrication of accounting information and information technology services (Munemori, et al., 2013). The operational aspects of accounting information systems are subject to the observed efficiency of human resources in maintenance and monitoring of the system.
Therefore the management of Myers must consider comprehensive integration of the workforce at all levels of system requirements that can be a viable contributor to the coordinated resolution of accounting management issues associated with the various departments through the accounting software package. Myers has been developing consistently and its efforts in technological advancements and innovation have led to the proliferation of necessity to adopt a computerized accounting framework. Computerized accounting software can be invariably considered as the promoter of organizational efficiency since it is capable of facilitating legible depreciation in time required for delivering products and services as well as providing reasonable platforms for development of operational processes (Obwegeser, Burcharth & Carugati, 2015).
Accounting software packages have become popular owing to the increasing concerns of intensive competition and therefore they have acquired potentially favourable market size. The developments in the designs of accounting software packages over the course of the last 10 years suggest prolific indications towards the diversity of application noticed in case of AIS (Sood, 2013). Despite the favourable statistics depicted by the accounting software packages in terms of market share, the efficiency of software packages cannot be solely attributed to the implications of market share since market share is a subjective entity. On the contrary, the efficiency of accounting software packages is observed in the performance of tax and audit services that are included in the packages.
The performance of the tax and audit services is estimated as a plausible determinant of revenue and the independence of these services from the implications of variation in economic environment is a promising factor associated with the packages. The proficiency of accounting software packages is also observed in other noteworthy services such as advisory and consultancy services which are enhanced through the integration of innovative technological aspects in the package. Some examples of integration of innovative technology in the accounting software package include cloud computing services and data analytics.
The notable accounting software packages which have established credible reputation in the Australian market include MyOB, Xero and Intuit. The presence of these packages has intensified the competition in the market alongside creating major ambiguities for clients. The necessity of the contemporary accounting software packages for financial management can be validated on grounds of requirement for effective and precise supervision and maintenance of accounting records (OTIM, GROVER & SEGARS, 2015).
The popularity of these software packages could also be evaluated on the grounds of inefficiencies observed in the traditional accounting frameworks and physical record keeping in the form of duplication, inappropriate formats and incorporation of irrelevant data. The rapid growth of the industrial as well as business sector in Australia characterized by development of SMEs created the increased necessity for fulfilling the primary requirements of accounting management through computerized systems.
Business organizations such as Myers adopt accounting software packages in order to accomplish the objectives of reducing workload due to paperwork involved in accounting systems. Other necessary advantages that can be observed in case of the software packages refer to drastic reduction of needs for commissioning human capital, omission concerns and the implementation of financial resources as well as time. Adoption of an accounting software package becomes a profound concern for Myers owing to the lack of autonomy of individual business units such as tax and legal department, planning and development and the HR department.
The prominently noticed lack of principles of accounting flexibility require the individual departments to prepare their individual accounting and financial reports and refer them to the accounting department. This creates the presence of a redundant accounting management framework involving major concerns of duplicated data as well as the implications for data security (Obwegeser, Burcharth & Carugati, 2015). Data security can be compromised by the circulation of accounting information among departments which could be addressed favourably by the information centric security approach that can be complemented by the services of cloud data security in order to obtain plausible outcomes and sustainable competitive advantage.
However, accounting software packages have been associated with formidable setbacks as identified by various clients and customers. The various setbacks are observed in the form of out-dated modules, lack of accuracy and features, minimal efficiency and security issues. Other profound issues could also be noted in the concerns of access privileges for external parties in the software which jeopardizes data security (Jin, et al., 2014). Furthermore, accessibility of data and the flexibility of the user interface also imply potential pitfalls in accounting software packages which have to be addressed by the application developers in order to provide a credible end product to customers.
Conclusion:
The report provided a clear impression of the implementation of accounting software packages with respect to the case of Myers Australia, a leading retail chain in Australia. The report’s major highlights were observation of operational issues and control problems in the accounting information system of the organization and the implications of HRM functions to realize efficiency of the software packages as well as a critical overview of potential issues that are perceived by customers of accounting software packages.
References
Amrollahi, A., Ghapanchi, A. H., & Talaei-Khoei, A. (2013). A systematic literature review on strategic information systems planning: Insights from the past decade. Verified OK.
Astri, L. Y., & Gaol, F. L. (2013). Information System Strategic Planning with Enterprise Architecture Planning. International Journal of Communication and Information Technology, 7(1), 22-37.
Cassidy, A. (2016). A practical guide to information systems strategic planning. CRC press.
Dorasamy, N., Francis, R., & Jinabhai, D. C. (2014). An investigation into data management as a strategic information tool and its importance at the Durban University of Technology.
Galliers, R. D., & Leidner, D. E. (2014). Strategic information management: challenges and strategies in managing information systems. Routledge.
Haux, R., Winter, A., Ammenwerth, E., & Brigl, B. (2013). Strategic information management in hospitals: an introduction to hospital information systems. Springer Science & Business Media.
Higgo, H. A. (2016). Managing Strategic Information Systems: A Systemic Perspective.
Islam, F. B. (2015). Relationship between human resource information system and strategic capability among employees in Jordanian companies.
Jin, P. J., Walker, A., Cebelak, M., Walton, C. M., & Nassar, E. (2014). Strategic environmental sensor station (ESS) location determination method based on weather-related crash data for road weather information system (RWIS). In 93rd TRB Annual Meeting.
Jung, H. M. (2014). Comments on “Strategic Information Transmission”. Mathematical Economics Letters, 2(1-2), 13-18.
Mochoge, O. C. (2014). Determinants of implementation of strategic information systems in small and medium firms. International Journal of Advanced Research in Computer Science, 5(7).
Munemori, J., Korin, T., Itou, J., & Yuizono, T. (2013). Rantore: A strategic exertainment system using location information. Procedia Computer Science, 22, 1210-1218.
Obwegeser, N., Burcharth, A. L. D. A., & Carugati, A. (2015). The Value of IT: Explaining the Strategic Role of Information Systems for Fast Growing SMES. In MCIS (p. 37).
OTIM, S., GROVER, V., & SEGARS, A. H. (2015). The role of Organizational Learning in Strategic Information Systems Planning in Uncertain Environments. Planning for Information Systems, 233.
Sood, D. (2013). Role of management information system in strategic human resource management.
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