Improving Transactional Processing in AIS - Research Paper Example

? Transactional Processes al Affiliation) Innovative Technologies a) Compliance Checking Systems A compliance check is used to identify departments or processes that have failed or are failing to adhere to company rules, regulations and policies (Gelinas, 2010). Compliance checking systems are usually designed to ensure that compliance checks are carried out in the best way possible so as to achieve the best possible results. Compliance checks can be governed by local ordinances that stipulate standards for carrying out checks, agencies or people responsible for carrying out the checks and appropriate penalties for employees, departments, vendors, servers or suppliers who fail to meet set standards or they can be voluntarily implemented by licensing or law enforcement authorities. Purposes of Compliance Checks/Checking Systems a) Enforcement: to enforce company administrative policies, criminal statutes or both. b) Educational: to warn, educate and identify processes, departments or employees that are not meeting required standards. Implementing Compliance Checks/Checking Systems Employees, departments and various are made aware that compliance checks will be conducted at different times annually. They are also informed about potential penalties for lagging behind in the uplifting and maintenance of accounting regulations, standards and requirements (Williams & Spaul, 2011). If employees and personnel keep flaunting or falling short of accounting standards, the company can issue citations either to departments or specific people. These citations stipulate actions that may be taken to address such matters and how they will be addressed so that normal operations are maintained. Importance of Compliance Checking Systems In many companies, maintaining relevant accounting standards is a huge challenge. Employees and company officials may find it easier to come up with compliance checks than to maintain them. Compliance checking systems ensure that all relevant and appropriate standards are maintained as is necessary. Compliance checking systems may be the most effective and efficient method for enforcing rules, regulations and other stipulations concerning or relating to accounting standards. Recent studies have shown that compliance checking systems are effective. Two studies found that following the implementation of compliance checking systems, operations became more efficient and effective and employees found it so much easier to meet set targets without having to struggle (Bagranoff, 2008). In one company, for example, operational efficiency increased from 10% to 28% from 28% to 10% following the introduction and implementation of compliance checking systems. In another company, there was an immediate increase in the levels of compliance (12% to 29%). In addition to this, a national survey revealed that 66% of companies approve of compliance checking systems and policies (Williams & Spaul, 2011). Compliance checking systems provide a way through which employees and companies can "police" themselves. This is in addition to providing a source of motivation, participation and support that can greatly enhance overall accounting operations. Considerations for Implementation If compliance checks are not implemented well, they may be legally challenged by employees, suppliers and vendors who can claim unlawful entrapment. Successful compliance checking systems steer clear of tactics that may be viewed as "entrapment." (Gelinas, 2010). Apart from this, compliance checks and checking systems should be carried out, implemented and reviewed regularly in order to prevent laxity and a drop in standards. Companies that carry out checks at least twice a year report an average efficiency and compliance rate of 60%, which is good for business and efficiency. b) Cash Disbursements Systems Objectives of Compliance Checking Systems include the following: a) Maintaining security of all cash held and received on a company’s premises. b) Banking all cash that are received intact every day c) Maintaining secure procedure for handling cash in order to prevent errors, theft and fraud. d) Providing accurate documentation of a company’s cash receipts e) Reconciling records of all cash received in a company and therefore providing evidence of cash received. f) Ensuring accurate records of cash received in ledgers and/or cash journals g) Providing timely and relevant information to company management for decision making with regards to cash receipts Explaining the Subsystem When a remittance and cheque advice is received, it is opened by an administration clerk. The administration clerk sends it to the practice manager, who applies it in the updating of the cash received book (Williams & Spaul, 2011). The remittance advice is filed and classified by date. In the meantime, from the cheque, the administration clerk updates customer records. The administration clerk then (in duplicate) writes a receipt of which the top copy is given to the client while the second copy is numerically filed. The administration clerk then prepares the deposit slip and banks the cheques and cash. When the bank statement is received the practice manager reconciles it with the journal on cash receipts and then drafts a Bank Reconciliation Statement that is then filed (together with the corresponding bank statement) by date. A major weakness in this system is that only a single person (the Administration clerk) opens and reads the mail. This could provide an opportunity for the administration clerk to steal money received from the inward mail and cover the theft. A solution to this involves another employee (accounts clerk) to be with the administration clerk for the 25 minutes required each day to open the mail so the two of them can do it together (Bagranoff, 2008). This prevents the stealing of inwards cash because in the presence of another person theft is unlikely to occur. Despite this, the accounts clerk would be taken from his/her work and therefore reduce their productivity (almost 2 hours of chargeable time is lost every week). A key strength of this technology is that the bank reconciliation statement is prepared by the practice manager upon the monthly receipt of the bank statement. The reason for considering this as a strength is that the reconciliation statement will verify/check the accuracy of the company’s cash records against the monthly bank statement (Romney & Steinbart, 2010). Since the practice manager (and not the staff) does the reconciliation, it is very hard to conceal theft of cash. Controls Revenue Cycle 1. Allotment Control This stipulates the degree of control that allotment programs can exercise over obligations. A different degree of control may be selected for each fund in the system, but the primary level is chosen based on the control options perspectives available. There are 4 levels when it comes to allotment control, these include the following: Full . Total number of obligations charged against the period of allotment cannot go beyond the current allotment figure. Presence . The allotment period of the allotment program must exist but it should not go beyond the allotment figure. None . Allotment periods cannot be established. Cumulative . Leftover unobligated figures can be utilized in future allotment periods. 2. Budget Authority Option This establishes the amount of budget authority that can be used as the foundation for the evaluation of available amounts when the option of Appropriation Full Control is selected (Gelinas, 2010). This option is usually selected individually for every appropriated program. The decision is made when the appropriated program and appropriation transactions are implemented simultaneously. There are five types of budget authority: Appropriation Only Actual Receipts. Estimated Receipts. Greater of Actual or Estimated Receipts. Expenditure Cycle 1. Cash Edit Option This option enables the system to have the ability to edit the funds availability at the level of balance sheet account balance. When it is implemented, every line on a manual warrant document and payment voucher checks the balance indicated on the Balance Sheet Account Balance (BBAL) for all funds entered on the line. 2. Penalties This control allows one to enter values in the Penalties Computed field that establish whether overdue payment penalties are processed for payment vouchers when disbursements are made (Williams & Spaul, 2011). The option cuts across the system, therefore the entire expenditure program is run by similar penalty policies. Production Cycle 1 Accurate inventory records and sales forecasts 2 Restricted access to both blank order production order documents and production planning programs Human Resource Cycle 1. Sound and effective hiring methods and procedures, including a verification of prospective employees’ references, skills and employment history. 2. Automating data collection. This includes carrying out edit checks and reconciling job time ticket data with timecard data. Financial reporting System 3. Maintaining and entering complete, accurate, and timely accounts and records for all funds, corporate assets, business transactions and corporate liabilities. 4. Using corporate resources efficiently and effectively. Processes/Procedures for Adapting to Changes a) Training Company staff, management and other personnel should be trained on how to use the new technologies and acclimatize to the changes made so that the company can move forward normally in the shortest time possible (Gelinas, 2010). Employees can be taken through training sessions in seminars and other educational meetings that enlighten them on how to adapt to the adjustments made by the company and the best way to take advantage of those adjustments so as to make progression easier and smoother. b) Systematic Implementation After formulating and approving the necessary changes that should be made in terms of the technological aspects of accounting information systems (AIS), implementation should be carried out in a methodical manner that allows employees (and the company) to easily adapt to those changes (Romney & Steinbart, 2010). Implementation can be carried through the following strategies: Phase- the changes are implemented in stages to allow employees enough time to adapt and get used to them. Parallel- the new changes are implemented alongside previous systems in order for employees to experience a gradual and systematic shift to the new system. Pilot- the new changes are implemented as a testing program that is continuously monitored with regards to its suitability and employee’s reaction to it. This will enable the company to decide whether it would be wise to proceed with the proposed changes. Aggression or Caution? Based on my knowledge of accounting information systems (AIS) and their relation to technology, as well as the extensive readings I have done with regards to this subject, I am convinced that companies need to be aggressive when updating or changing AIS applications and processes considering the rapid pace at which technology is changing. According to Bagranoff (2008), the rate at which technology is changing requires companies to keep up; sitting back will only result in watching rivals take advantage of technology to gain a vital edge in the market (Romney & Steinbart, 2010). On the other hand, aggression should be controlled, and decisions should be made based on detailed and comprehensive information and data. As a result of this, I am of the opinion that companies should invest in methods and techniques of obtaining the latest information concerning AIS and related technologies. This will allow them to stay abreast of the latest developments and provide for wise decision-making when it comes to choosing and shifting to a new technology. In summary, I would like to state that aggression is the only way for companies to survive in the technological world where changes occur very rapidly and laxity is detrimental to growth, development and profitability. References Bagranoff, N. A. (2008). Core concepts of accounting information systems (9th ed.). Hoboken, NJ: Wiley. Gelinas, U. J. (2010). Accounting information systems (8th ed.). Mason, Ohio: South-Western/ Cengage Learning. Romney, M. B & Steinbart, P. J. (2010). Accounting information systems (10th ed.). Upper Saddle River, N.J.: Pearson Prentice Hall. Williams, B. C & Spaul, B. J. (2011). IT and accounting: the impact of information technology. London: Chapman & Hall. Read More