The aim of the report is to determine relevant sources for research and undertake the review that is based on the theoretical concepts. The topic on which the opinions of different authors have been taken is effect of the accounting information and auditing on the design of organisation and on ensuring the behaviour of the groups and individuals.
According to Collier (2015), history of accounting is intertwined with the development of the trade between the tribes and records related to tokens. The accounting information system is a structure that an organisation make use to gather, store, direct, process and report its financial data. Moreover, this has been said by the author that the accounting majorly focus on meeting the needs of the managers. The information accounting increasingly becomes decentred from the accounting departments within the organisation and this makes the line managers of the company to prepare budgets in all the areas of business (Collier, 2015). Thus, the authors show that managers behaviour gets affected due to the accounting information and auditing. Further, the managers in the company make use of the accounting information in marketing, operations and human resource departments for the effective decision making.
Agreeing to this, Patel, 2015, accounting information system is a part of the company’s information systems that assist in facilitating the decision making in organisation that can effect in modifying the environment, structure and requirements of the task. Thus, the author says that the design of the organisation can affect the profitability of the company. This is clear with the relationship between the Accounting information system that is used by the enterprises and profitability.
Contrasting this Givoly, Hayn and Katz, 2017, the change in the time has brought the information at ease of the accounting number to shareholders. The information accounting system not only creates the impact on the design of the organisation but it also affects the groups of debt holders. The rise in the changes in information system brings the changes in relation to the credit risk and to reporting factors that can affect the debt holder’s behaviours.
Contrasting this, Nallareddy and Ogneva, 2016 exhibits that accounting information system is used with the motive to predict or determine the restatements in indicating the macroeconomic factors. These factors include the unemployment change, labour reallocation, aggregate output and others. Thus, the determination of the accurate details requires the use of the accounting information system. Thus, it provides the benefits to the group for which the calculation related to macroeconomic elements.
The common theme that has been focused by the author in the four articles is the usage of the accounting information system. The accounting information systems are the sub system within an organisation as it accumulates the information from the entity’s different subsystems and communicates it to the company information processing subsystem (Collier, 2015). The use of accounting information can be done by the groups and individuals such as shareholders, debt holders, managers and others within the organisation.
In entire four articles, the accounting information system focus in taking the effective decision making that supports the design of organisation. Thus, this has been found that accounting information and auditing has effect on the design of organisation which is formed once decision has been taken by the company (Patel, 2015). Moreover, this has been found that the structure of the organisation affects the business profitability which is evident in all the articles. The use and role of accounting information system for making the decisions is discussed. According to the Givoly, Hayn and Katz, 2017, these decisions vary from individuals to group. Further, all these decisions contribute in taking the steps for planning and controlling the operations with the support of financial statement. Moreover, the predications related to the macroeconomic elements also include the decision making theme.
The different themes that are presented in the four articles are covered in this section of the literature review: –
The article presented by Nallareddy and Ogneva, 2016, depicts the use of the accounting information in predicting restatements in Macroeconomic Indicators which majorly include earnings growth dispersion. The calculation of the growth depression includes the trends related to the allocation of labour, unemployment change and aggregate output. This type of use of the accounting information is not specified in the other articles.
On the hand, agreeing to this Collier (2015), said that the paper presented by him is clear with the name that is Accounting for Managers: Interpreting Accounting Information for Decision Making. Thus, this shows that the book focus on accounting to fulfil the needs of the managers for making the effective decision related to the operations of the company. The managers of the company are supposed to interpret and analyse the accounting information so managers can understand the financial consequences of the decisions taken by the manager. Thus, the paper includes the use of the accounting information by the managers in organisation. Thus, the theme which is different from the other articles includes the manager’s interpretation of financial information. This article also presents the effect of the accounting information system and auditing on the design of the organisation.
Further, Patel, 2015 reflects the relationship between accounting information system and auditing with profitability of the company. Thus, Profitability is different in this article then the remaining articles. The paper written by the author evaluate the effectiveness of the accounting information systems in the decision making for the different aspects like better decision making by managers, enhancement and improvement of the financial reports quality, effective internal control systems and it helps in extension of profitability of organisation. This has been found by the author that accounting information system and auditing influence the decision making which affect the profitability.
Further, Givoly, Hayn and Katz, 2017 exhibits that the article includes the different theme that shows the association between the number and valuation of bonds. This has been found that information content to the debt holders has improved with the time. The findings of the article include the usage of the accounting information by the debt holders that can be a group or individuals whose behaviour can change because of the financial reporting that meets the unique needs.
The managerial implications include the results that mean in terms of the actions. In simple words, the managerial implication compares the results to the action and indicates what all actions should be taken in response. In all the four articles, this has been found that use of accounting information and auditing influence organisation design and can affect behaviour of individuals and group.
According to Collier (2015), this has been found that accounting information and auditing influence the decisions taken by the manager strongly. The correct interpretation is required for the managers for which the effective training should be provided to them which helps them in analysing the information in the effective manner so that they can make accurate decisions.
The article presented by Nallareddy and Ogneva, 2016, strongly reflects that use of information accounting system for analysing the trends of macroeconomic factors. This has been found that it influence the behaviour strongly for which there is need of the accuracy in calculating the same. Thus, an effective tool should be used in financial recording which leads to accuracy.
Further, Patel, 2015 has been found that the accounting information and auditing affects the decision making which include the structure of company as well as impact the profitability. To improve the decisions and profitability, the company should analyse the consequences of the decision and at the time of decision making they should consult the same with the experts who can guide them effectively.
The author found that debt holders majorly depends on the accounting information which shows that it can influence the individual and groups (Givoly, Hayn and Katz, 2017). There should be concern team that can help the debt holders in analysing the risk related to the credit and opportunity to meet their needs.
Conclusion
In the end this can be concluded that there is strong effect of the accounting information and auditing on the design of organisation and on ensuring the behaviour of the groups and individuals.
References
Collier, P.M. (2015) Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.
Givoly, D., Hayn, C. and Katz, S. (2017) The changing relevance of accounting information to debt holders over time. Review of Accounting Studies, 22(1), pp.64-108.
Nallareddy, S. and Ogneva, M. (2016) Predicting restatements in macroeconomic indicators using accounting information. The Accounting Review, 92(2), pp.151-182.
Patel, B. P. (2015) Effects of accounting information system on Organizational Profitability. International Journal of Research and Analytical Reviews, 2(1), pp. 72-76.
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