Literature Review: Tesco’s Accounting Software Packages In Australia

Part 1

Nowadays, the accounting software packages are considered as an important strategic data system which assist the organizations in storing, accumulating as well processing of accounting and financial data. This study is a literature review of Tesco organization located in Australia which wants to use and update its accounting softwares to prepare accounting reports. The first part of this report highlights the organizational structure of Tesco, different operational problems which the organization is facing, system acquisition method, and control issues and frauds in the system. The second part of this report includes a literature review on adoption of the accounting software, leaders of accounting software in the market, and current gaps and challenges encountered.

Tesco organization’s organizational structure

The company has 4,000 supermarket offices in almost 14 countries, and it wants to adopt a new accounting software package which will help the organization to meet its main objectives and to simply and easily prepare the accounting invoices of the organization. Tesco plans to cut-down the time consumed in paperwork and needs an accounting software which can automatically prepare reports (Tescosw.cz, 2017). Tesco needs an accounting software which can manage its accounting reports, although the accounting software, likewise, should have the applications which can also be applied to its supply chain reports.

Fig 1:organizational structure of Tesco

Image Source: tesco.au

According to Dudovskiy, there are several operational issues and problems which Tesco is encountering because of their present organizational structure (Dudovskiy, 2017). The president of the organization’s production department is not able to oversee and manage the functions as well as the operations of the product management and materials management. However, the organization’s production department uses raw materials as well as other assets received from the storage warehouse and the functions and operations ought to be isolated to justify the chances of theft. If the Tesco’s production division is completely answerable for all the purchasing, they should likewise acquire the goods in the inventory which enhances the danger of fraud and theft. The process of buying should likewise be managed by a distinct product management and warehouse section because it might be highly time consuming as well as it would decrease the productivity. The listing control ought to be managed by the Tesco’s accounting deparment. However, the product management division of the organization receives or houses the invoices and also how the production department section use the invoices, accounting department ought to manage or maintain the invoices; they will likewise be capable to prepare reports for the expenses of the products must include in the invoices (Gutmann, 2011). This structure shows that the teams and groups are carrying out some unrelated functions. The accounting invoices, tracks or monitors the product movement as well as the sale of all finished goods of the organization. It likewise authorizes the acquisition of products along with the disbursement of payment to employees as well as vendors.

Part 2

Kukreja and Gupta in 2016 explains here that for this situation, Tesco must utilize a custom accounting software package as it will help them to prepare suitable accounting invoices for their products and its sales (Kukreja and Gupta, 2016). As the customized accounting software packages can provide them proper financial or products, reporting with complete automation, and diminish the human asset cost as well as help Tesco to increase their overall productivity by giving quicker reporting along with the decision support information. The customized or well-defined accounting software packages can boost Tesco’s competitive benefits. In the accounting software market, there is only one rule that software companies follow at the competition, i.e. to stand first in the crowd. Only customized accounting software can provide the high competitive benefit to the company in technology as extremely customized software means extremely automated as well as faster responding software (BBC News, 2017). But, if Tesco will only depend on customized accounting software for their competitive benefits, then it will not be good. Although, customized accounting software can give the great advantages to the organization, the management still be an important part of the organization to overcome the issues of accounting reports and invoices and attain the competitive advantages in the dominating accounting market. The firm always has to modify their business, such as, modifying its Customer Service, Sales Service, Powerful Data System as well as Product Quality. To accomplish these competitive benefits, regular accounting framework is not adequate.

Fig 2:Tesco’s sales procedures

Image Source: tesco.au

Dudovskiy identifies that many control issues and several types of fraud can also occur in the system (Dudovskiy, 2017). The accompanying frauds can happen because of these control shortcomings:

Kickback extortion: Since Tesco chooses the provider and furthermore places the requests and orders, the organization could arrange accounting invoices which are not required and are above from the market cost from a provider with whom the firm has an individual fraudulent course of action. In the transaction, the provider reimburses a payoff to the storage warehouse manager.

Seller fraud: Tesco authorizes, receives and order the goods; the organization could set up themselves as a seller and procedure fraudulent proceedings.

Theft of delicate invoices: Tesco can merely remove the resources from the storage warehouse, sale them, as well as adjust the invoice records. A balancing between the corporal inventory and on-hand records would point no discrepancies.

The acceptance of new and innovative accounting softwares in all over Australia is growing with much higher speed. According to Bishop, Xero, which is a New Zealand based accounting software enterprise has conducted a survey in which they included almost 1,622 small and large business organizations and found that the large amount of Australian small organizations are further leading for the acceptance or adoption of the accounting software packages as compared to the other nations (Bishop, 2016). Several Australian organizations are quickly adopting accounting software framework to minimize the tedious paperwork, oftentimes defined by faults of commission and omission, costly and time-wasting. The accounting procedure starts with many ledgers, purchase ledgers, sales ledger, cash books, inferior cash ledgers, and trial balance to adjust entries, and lastly to prepare financial reports.

Author Vahdani said that the accounting software method is simple and a fast method for Tesco to utilize for managing its accounting issues as it needs only inputs to make accurate and correct accounts as well as reports are also generated automatically (Vahdani, 2016). The strength and effectiveness of the accounting software packages are leading factors for its adoption or approval by ever-growing amount of businesses. As per the Siegel, the Xero’s accounting software company play the largest contributing role in sharing participation of accounting softwares in the Australian market, which underlines the cloud accounting softwares (Siegel, 2014). The company provides the appropriate accounting softwares for all small and large size organizations. Tesco organization has known gaps in the users of the desktop or PC based accounting software. The organization was facing several challenges and issues in their accounting system because their accounting divisions are not independent units. The accounting department of Tesco is entrusted in assembling, processing, as well as maintaining the accounting books, however, the main challenge with the desktop book-keeping software might not accommodate accounting reports of the products and sales from other sections due to mismatched formats as well as duplication. Therefore, authors Givoly and Shi in 2008, said that the reconciliation of all annual accounts of the Tesco organization became very tedious, full of errors, time-consuming, as well as inconsistent (Givoly and Shi, 2008). The utilization of the desktop accounting framework and information repetitiveness was the origin of the issue and challenge.

According to Rogers, Barbuto and Day, Reckon is the Australian organization which is a software firm that provides appropriate desktop as well as cloud accounting software packages for the accountants, book-keepers, SME organizations as well as for personal users (Rogers, Barbuto and Day, 2012). Tesco must choose this organization to adopt a software package to overcome the issues they faced in their accounting system. Reckon organization is listed as one of the best accounting software provider firms in the ASE (Australian Securities Exchange). Reckon firm has almost 600,000 enterprises that are utilizing its accounting software all over Australia and New Zealand. Reckon was established by Mr Greg Wilkinson in the year 1987 and he also worked as a CEO of the company until 2006. Funded at first with just $2,000 dollars, with the help of his friend, Greg started selling accounting software packages planned in the United Kingdom and supplied it to the Australian market. Nowadays, the competition is continuously increasing in the market of Australian accounting softwares. According to Ramasubbu and Kemerer , Xero’s software which Reckon organization has provided is the suitable accounting software for the Tesco organization to gain the competitive advantage as this software best utilizes a framework of SaaS (Software as a service) (Ramasubbu and Kemerer, 2014). It gives an autonomous API to the outsider or a third party supplier and clients to combine different applications on the singular integrated ledger within the cloud. The SaaS model provides the ability to give users the application which is operating or running on the cloud structure as well as operated simply through a very thin user program, for example, simple web or net browser.

The accounting software issues are truly common among the firms which are already utilizing accounting software packages which they think can prepare all of their accounting processes and works easier (Givoly and Shi, 2008). The users and customers of different accounting packages are common as the accounting software which provide users so many problems or issues are mostly those that are not user-friendly and outdated. The users of the accounting software package, most of the times, have to worry about the protection of their delicate data because they are approached by the third or foreign parties. Even though the firewalls are considered as they have the ability to overcome this issue, the firewall mode of a data processor might get screwy; when this occurs, there is not so much which an accounting software can do (Gutmann, 2011). A few accounting software packages are not helpful in assisting users who want to acquire their organization’s business information out.

The author here suggests that the cloud accounting program permits Tesco to store or accumulate the large data files in a much secured place (Mohd, 2015). The suitable accounting software should permit a few personalization around the task lists and dashboards. Too many file categorization from an individual screen with customized search filters will extraordinarily aid the Tesco’s ability to manage or organize its accounting reports, therefore, it should be controlled. Tesco’s accounting software package should manage the large files efficiently and quickly (Hyvönen, Järvinen and Pellinen, 2006). An ERP system takes the accounting system of an organization to the very next level by combining finance characteristics with business information tools. Bespoken reporting, enterprise analytics, customer and vendor management, along with billing tools should be combined with few standard or high quality accounting software to provide accountants more certainty and support by the analytics when foretell the upcoming future of the entire business(Levin and Yadid, 2012).

Conclusion

On the basis of this study, it has been concluded that Tesco organization must utilize the Xero’s accounting software to prepare the accounting invoices simply and easily. This software can help the organization to prepare accounting reports in a very short time-period and assist the organization to gain the competitive benefits. This study also concludes that the accounting software packages have noteworthy features as they assist organizations to run a very simple program and also help to run highly complex computing frameworks. In Australia, there are three largest accounting software package providers that compete with each other in the market to provide the best accounting services for ever-growing SME’s and large organizations. The Xero accounting software company has much remarkable reputation in the Australian accounting market as it coordinates the accounting software with the cloud platforms as a method to solve challenges and issues linked with the desktop accounting software packages.

References

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