Traditional Accounting System refers to the process of managing the different accounting, compliance and the related procedures, on papers and through hands, instead of the computer systems and the networking techniques. The methodology is best suited for the small size of businesses, where the transactions are fewer and are less complex to understand and manage. Accountants manually fill the various columns of the books such as cash registers, journals, and more. In addition, the bills are prepared using hands and the trial balances and the preparation of the financial statements is done manually. Some of the chief benefits of using the traditional accounting systems are as follows. Firstly, the traditional accounting systems are run at relatively lower costs as compared to the computerised accounting systems. The gross investment and the maintenance expenditure are lesser in the traditional accounting processes (Arcega et. al, 2015). The second advantage of the traditional accounting systems is that these are generally free from the cyber security threats and the security risks involved on account of the digitalisation, loss of the shared data, unauthorised access and such. The third major strength of the traditional accounting systems is that the amount of time and the expertise required to manage the operations effectively is less. However, the traditional accounting systems have some weaknesses as well. These are listed as follows. First major weaknesses in using the traditional accounting systems are that the possibility of the occurrence of the errors is quite more (Brown, Dillard & Hopper, 2015). The errors can be out of the calculation mistakes or simply because of entry not being posted in the respective second account, according to the double entry system. Another major weakness is that there is no backup facility for the data to be stored and accessed in critical situations. The data is wholly recorded in the said books, and storage of the books and papers manually is a tedious task for the accountants (Schaltegger & Burritt, 2017). Some other disadvantages are that manual accounting procedure is bound to be less reliable because of the human involvement and the related factors such as boredom, tiredness, manipulation and more.
Some of the various accounting techniques that can be opted by Walton Brothers, as they try to automate the accounting systems are being explained as follows. Firstly, the entity can make more use of the Microsoft office techniques such as Microsoft Excel, Microsoft Word, online tax calculators, and more. This way, an entity can opt for a combination of manual and automated processes. The second technique that can be opted by the owners of the entity is to integrate the computers and networking systems into the accounting processes of the entity. This can be done by installing accounting soft wares as described below.
Two of the most popular accounting software that can be used by the owners to fasten and make the accounting processes more reliable is MYOB Business Software and Accounting Solution, and XERO. The MYOB software is referred to as an accounting solution for the businesses of all sizes and types. The software is embedded with tools for management of the taxation, preparation of the invoices, maintain the payroll, management of the expenses and preparation and reporting the financial statements in an effective manner. XERO accounting software is the cloud-based accounting software system mainly suited to the small and the medium-sized businesses (XERO, 2018a).
MYOB is further divided into various categories i.e. the MYOB Essentials, MYOB Account right, MYOB Invoices and the MYOB Account edge, for the small businesses (MYOB, 2018). Both of the above-mentioned accounting software comes with various) subscription plans, depending upon the requirements of the businesses. While the MYOB Essential software subscription starts from $ 20 per month (MYOB, 2018), XERO offers the first subscription for $ 9 per month (XERO, 2018b). Both the subscriptions involve different features and therefore the difference between the costs. The major investments that are required to be made by the owners in integrating the accounting processes with the modern accounting soft wares are the cost of computer systems, printers, internet connections, other hardware infrastructure, the installation cost of software, training cost for the employees, and other related software. However, these are one-time investments only, which hold the potential to yield benefits for a number of years.
Currently, the issues concerning the timely management of operations are the main concerns faced by the entity owned by Walton Brothers. In addition, the accountant of the entity is unable to manage the various tasks simultaneously. As she concentrates on one task, the other task is delayed. The software like above would solve the entity’s problem of timely management and reliability of operations. These would automate a number of procedures such as calculations of taxes, depreciation, values at the year-end, double posting of journal entries, tracking expenses, managing purchase orders, inventory and payroll management and more. The accountants are simply required to record the transactions the first time, the rest of the operations are almost automated. In addition, both the software uses the cloud computing system for the storage of the backup of the processes and data, which can be readily accessed as and when required and is safe. Some of the other strengths of the usage of the software like above are online training and support for installation and use, customised services, legal compliances, interaction with the online software communities and more (Simkin, Norman & Rose, 2014).
However, the cost consideration, training, and the security issues are still a major concern for the use of the accounting software. In addition, as the employees of the company, especially the accountants are well versed and comfortable in handling the traditional accounting systems, employee resistance is also crucial for the successful installation and working of the software. The owners must also be careful of the security concerns arising out of the cyber hacks, spoofing, phishing, and such other crimes to protect the vital data of the entity (Quinn & Strauss, 2017).
Walton Brothers can use the technique of the enterprise resource planning (ERP). ERP is a process management software can aid an organisation in managing the overall operations of an enterprise and can automate the accounting, billing, human resource functions and more (Harwood, 2017). The ERP system can be customised according to the needs and requirements of a particular business and the major issues faced. The ERP helps in integrating the various business processes like product planning, manufacturing, sales, marketing, accounting, and others, through a single database and network (Ram, Wu, & Tagg, 2014). In addition, the ERP system can also be linked with the cloud computing and thus, the data can be backed up safely.
It is well known that accounting is the language of any business. Many changes have been made through the period. However, the alterations or the modifications in the accounting technology play a very significant role in the simplification of the task of an accountant. The technologies increase the capacity of the accountant to understand the data properly and in the effective manner (Sledgianowski, Gomaa & Tan, 2017). In the past time, various attempts had been made to add machines to make the work of the accountants easier and to yield the relevant results and solutions. After the additions of the working machines into the operations, the invention of the calculator for the correctness of data was much needed. As technology improved so did the speed of work and proficiency of the work of an accountant.
Further, the information system plays an important role in eliminating the data error possibilities. There are three elements to eliminate the risk of data errors. These elements are focussed on person, procedures and the technologies. By making sure that the people understand the data, what is the direction to follow, and how to enhance the quality related to data, the company could decrease risk at a great level (Libby, 2017). With the help of proper procedure, a company can implement proper data governance initiatives and the structure, which forms framework and liability to report the correct data. In this way, the information system plays a significant role to help the managers in managing the data processing and the activities related to record keeping. It helps to eliminate the data error possibilities at the great level.
In the present time, the accounting profession is very much important to make the focus on the procedure of the paperless work. The smart techniques increase the traditional manner of the working. It helps in reducing the paperwork and thus, making the work of the accountants easier. (Enyi, 2016). The paperless environment decreases the chances of errors related to data.
Telstra is a good example of a technology driven company, which has gone from a small scale to Large-scale Company with the help of a technology-driven approach. Telstra sets innovative strategies or technologies to enhance the experience of clients or customers. These innovative approaches or technologies make the overall management and reporting structure simple. These technologies help to cut the unnecessary costs. These technologies simplify the operations of the company. The strategies or technologies adopted by the Telstra have four major pillars such as fundamentally simplify the product contributions, remove the problem or issues of clients or customers, and form the all-digital experience (Telstra, 2018). The second pillar is to develop the separate structure or the business set up to conduct performance and set up optionality post the rollout. The next one is to simplify the frameworks and manners of functioning to authorise the people and serve the clients. The last one is industry leading cost declining scheme and portfolio management.
The modifications form last three-year scheme making on the planned investments Telstra announced in 2016. The CEO, Andrew Penn said the strategy will basically change the scope of telecommunication product and service in Australia by removing various problems and issues for the customers. The rate and speed of modification in the industry are progressively driven by technical revolution, improvement and the race. In the environment of the traditional corporations, it does not respond to the factors related to risk. The company has worked hard in making the Telstra for this market dynamic in the comparison of the previous progress of the company. It ensures that the company did not act rashly. However, the company is now at a tilting point, where the company is required to make the action more strongly if it will be the continue to be the leading telecommunications company of the country. In this way, the technologies adopted by Telstra by the technologies driven approach create the new Telstra, which is capable to continue to lead the market.
The Enron is one of the organisations, where internal controls have failed to operate efficiently. The scandal led to the biggest audit failure of the history and the bankruptcy of the Enron Company. The charges have been levied on the various executives of the Enron Company, who were later imprisoned for the same. In this case, the auditor of the company was regarded as the chief offender. The auditor was found to be guilty of destroying the important official papers. After the judgement of the Supreme Court, the company had lost the trust of their clients or customers. The workers and stakeholders of Enron took limited proceeds or yields in the proceedings, in spite of losing money in the pensions and price of the stock. Because of this scandal, the new rules, regulations, and laws were passed to increase the correctness of financial reporting for the public company (Martinette, Obenchain-Leeson, Gomez, & Webb, 2014).
The auditor-firm of Enron, Arthur Andersen was blamed for the implementation of irresponsible and uncontrollable norms in conducting the audit due to interest conflict over the important accessing fees made by Enron. The audit firm of Enron was well appointed with internal controls to secure against conflicted enticements of common partners (Jaggi, Mitra, & Hossain, 2015). The audit firm was not successful to secure the conflict of interest due to the ineffective internal control of the company.
In the given case of Enron Company, it is found there are many reasons or the factors of the failure of the controls of the company. The first factor was that the Board of Directors of the company failed to complete the fiduciary duties to the shareholders of the company. The second factor is that the executives at the top level of Enron were desirous. The executives at the top level of Enron were acting for their self-interest. Further, various employees in the Enron Company witnessed the unlawful or impermissible actions of the executives at the top level of the company. In this regard, few whistleblowers came forward. At last, Enron Company contracted external audit for the function of internal audit in the place of developing the functionally internal audit tool and the external auditor agreed in the implementation of uncertain or the problematic accounting and fake financial reporting. It is found that there were various weaknesses of the corporate governance structure of Enron Company, including the role of the board of the company, mostly the executives at the top level, the corporate culture of the company, the system of whistle-blowing, and the internal auditor of company and external auditors of the company.
Enron was an advanced corporation. The company’s downfall may be found to highest superciliousness raised by considerable success; the bad modification decision, poor administrative observes, bad practices, which led, over time, to irresponsible betting and moral idea. The moral ideas were enabled by bankers and consultants of Enron Company and mainly missed by the company’s board of directors and some watchdogs. The Enron scandal could be avoided by adopting good practices. Firstly, the strong culture could have helped the company to avoid the scandal or failures of controls. This type of scandal would never have occurred in the corporate culture with dignity, morals, reliability, and the beliefs.
The responsibility and transparency could have eliminated the problems or the failures of the company. It is required by the Enron to be fair and truthful towards the stakeholders of the company and partners of the company. If the partners of the company were removed from the financial statements, then the stakeholders of the corporation could have notified in notes associated with the financial statements or by conducting the entries related to the memorandum of the partnerships. It is required by the Enron to tell the specific figure or data of income and benefits to the partners of the company in the place of overstated ones. There should be the provisions of the company to make the regulators related to the markets.
References
Arcega, C. K., Datinguinoo, E., Guerra, J., Guno, C., Mayuga, H. J., Villamena, E., & Manongsong, J. L. (2015). Computerized vs. Non-computerized Accounting System of Small and Medium Enterprises in Lipa City, Philipines: A Comparative Analysis. Asia Pacific Journal of Academic Research in Business Administration, 1(1).
Brown, J., Dillard, J., & Hopper, T. (2015). Accounting, accountants and accountability regimes in pluralistic societies: taking multiple perspectives seriously. Accounting, Auditing & Accountability Journal, 28(5), 626-650.
Enyi, E. P. (2016). Accounting in the Digital Age: Creating Values with Paperless Decision Support Systems. Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2837776
Harwood, S. (2017). ERP: The implementation cycle. Oxon: Routledge.
Jaggi, B., Mitra, S., & Hossain, M. (2015). Earnings quality, internal control weaknesses and industry-specialist audits. Review of Quantitative Finance and Accounting, 45(1), 1-32.
Libby, R. (2017). Accounting and human information processing. In The Routledge Companion to Behavioural Accounting Research, Oxon: Routledge, 42-54.
Martinette, L., Obenchain-Leeson, A., Gomez, G., & Webb, J. (2014). Relationship between learning orientation and business performance and the moderating effect of competitive advantage: An accounting services firm’s perspective. The International Business & Economics Research Journal (Online), 13(4), 779.
MYOB. (2018). Accounting Software. Retrieved from: https://www.myob.com/au
Quinn, M., & Strauss, E. (Eds.). (2017). The Routledge Companion to Accounting Information Systems. Oxon: Routledge.
Ram, J., Wu, M. L., & Tagg, R. (2014). Competitive advantage from ERP projects: Examining the role of key implementation drivers. International Journal of Project Management, 32(4), 663-675.
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Oxon: Routledge.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information systems. UK: John Wiley & Sons.
Sledgianowski, D., Gomaa, M., & Tan, C. (2017). Toward integration of Big Data, technology and information systems competencies into the accounting curriculum. Journal of Accounting Education, 38, 81-93.
Telstra. (2018). Tech & Innovation. Retrieved from: https://exchange.telstra.com.au/tech-innovation/
XERO. (2018a) Small business accounting software that’s beautifully simple. Retrieved from: https://www.xero.com/us/features-and-tools/accounting-software/
XERO. (2018b). Pricing Plans. Retrieved from: https://www.xero.com/us/pricing/
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