Maintaining Accounting Information Systems - Assignment Example

Name: Instructor: Course: Date: Establish & Maintain Accounting Information Systems 1. Types of information system In any kind of business the owners always have the same idea in their heads that that customer satisfaction is essential and that definitely comes with profits. In achieving customer satisfaction the entrepreneur must have complete knowledge and control of business information so that necessary changes can be made with the minimum time period to avoid undesirable results. This being the daily headache of most business owners it called for the development of business information systems which would help in keeping and maintaining business records. Several information processing systems have been designed they include; Management information system This system works at broad level for the senior management and the operational management. It provides details like the quantity of product developed in a given period of time, the time consumed in their production and how effective the labour system in use is performing. Other details like the current stock, overall sales made comparison of budget expenditure for previous similar productions and finally a performance comparison report. All these data is collected and turned into useful information that the management can use to better their business and draw a plan to direct the business in future. (Information systems ,2009). Transaction processing system Every business carries many transactions from receipts issued to sales, cheques received or written, invoices, credit note and any other form of transaction. All these activities are subject to transaction processing system. The system processes all these data and clear picture can be made of the overall purchases the business made or the total amount of cash payment or cheque deposit made also included in this system is the wages and salaries of all the employees. This information is very useful for operational managers who have to keep watch of daily business transactions. with such kind of information as a manager then the business is most likely to run smoothly since payment are made in time and unnecessary delays are avoided. Accounting information system This information system sources its data from the several transaction processing system and designs an overview of business for some time. it is very important system because these is what the business, organisation senior management, any auditors who may for one reason or other have mandate to look into the business and the state use to scrutinise the business. The system indicates the financial performance and financial position and money transactions in which the business is in. taxation, employees payments compliance are also subject to the system. Thus it very important to have this system because it shows overall compliance to the regulations set for business type. (Cengage education, 2008). Computer information system This entirely refers to analysing or processing data by use of electronic means. The data collected for MIS, TIS and AIS is processed into information using the computer information system. The method is very fast, reliable and accurate. The system also keeps the system up-to date. Importance of these systems When these systems are put in place Gemma will easily be able to compare different transactions, from such analysis decisions can be made on what part of the work is doing well and which one needs improvement. Apart from that overall operations will be easy because the systems have several advantages Understandable; since Gemma has little knowledge on this it is very important that the system be easy to use. The above mentioned systems have user friendly versions which come with step by step procedure on how to operate the software. Accurate; when data is collected, processed and output done by the computer it has minimal errors compared to having done by human personnel. Fast; the computer can process huge amount of data that could otherwise take considerable length of time to be done manually Easy access; when data is stored in computer it can easily accessed and compared. this would be a very tiresome and error prone activity if done manually portable; it would be very easy for Gemma to carry all his annual data out of her work place that is if she would prefer to work long hours outside the office. (Information systems ,2009). 2. The phases of the Systems Development Cycle: The definition of a system development cycle can be termed as the principles and methods observed when developing a new accounting information system or modifying an existing one. In both cases it expected that whatever business it is the new system should be capable of meeting the continually changing market demands. There are five phases involved; Creating a master plan The beginning of this stage is put in motion when the company management decides that a new system should be made or the old one should be modified. Once these have been agreed an investigation should be conducted to find out the several things about the old system or the new one. The first approach should be to find out the failures of the existing system. Questions like how is the system not meeting the market demand should be answered at this point. It should be also realized to what extent the system has failed in its task. (Cengage education, 2008). Once it is known how far the damage is done then it is easy to decide to which extent the system should be developed and the effect these changes would cause to business. It should also be pointed out who the beneficiaries are to the new change and in overall the management should have capacity to decide on all these changes. Once investigations are complete then prioritising the review areas should be done, time frame, resource allocation for the work which include technological and human and budgetary support should be made available for its successful replacement. The developers should also have several factors in mind, the cost of implementation of the new system should be far less than expected increase in sales if this is not the case then it might be considered of no use to change it at all. The system should ensure business assets and employees are protected by installing adequate internal controls. For the system to remain in place for quite some time it should be flexible to market demands, efficiency and organizational structure should be incorporated in the new one. The most important part is that the system should adhere to principle of excellent corporate governance and should not provide loopholes for corruption. System analysis This is complete documentation of the system under review, several factors must check appropriately. From the old method it should documented how the data inputting was carried out. It should state what data was input, which does it, when it is done and where it is stored and retrieved. The same criteria of question are asked for the data processing and for the information it should be known what, why and when information is produced. It is also important to know who needs it, how it made available and finally how it stored and retrieved. Once documentation is complete then reviews of the existing system, classification of the systems necessities, detection of systems inconsistency and appraisal of another systems and systems analysis report these four phases should be use in analysis of the system. System design The system refers to three main types of design; input design this is for input documentation, processing design these are procedures and practices that will make it possible to process input data and output design this the format in which output documentation and reports will be in. among the three designs the output design is always given priority. Consultations with the information recipients should be done to decide on the information output design which should be easily interpreted. Once an agreement has been reached then the input design can be created to ensure all output report details are included. Processing design mostly influences the storage hence it should be designed in correlation with the storage capacities available. Most common data input devices available include cash registers, keyboards, barcode scanners, touch screen, swipe card reader or magnetic ink character recognition. Processing devices are manual and electronic operations while storage may be filling cabinets or computer storage equipment. Output devices include paper, visual display units, CD burners and copiers and printers. (Cengage education, 2008). Implementation of the system There are several phases involved in system implementation they include creating a plan detailing when the implementation will be done, there should also be installation and testing of the processing equipment, picking and training of personnel and finally actual implementation and testing. In details the implementation plan should be well coordinated. The personnel should be informed of what and when to do something this would ensure minimal implementation costs. Problems may occur during the process thus advisable to carryout risk analysis ad have a back plan. The failure of the plan may create distrust of the system among the workers and should be avoided at any cost. Installation and testing is another critical stage, it should involve setting up the new system and then evaluating it. The equipment should be sourced from reliable dealer who can at the same time provide technical assistance during testing. All the appliances should be tested and counter tested to ensure good performance even under minor operating conditions. If no suppliers are capable of assisting then equipment specialists should be hired. Selecting and training personnel should be done of the technical abilities because the success of the whole process will be determined by the personnel. If there are no employees from the company with sufficient knowledge then they should be outsourced for installation and later training of the staff. Implementation can be handled in two ways either as total implementation or phase implementation. The total implementation involves the total overhaul of the old system with the new the key advantage is that the company directs all its energy in making the new system work but in the other hand it does not flow a smooth transition and many operational problems may occur. In phase implementation the new system is introduced smoothly into the company. This can be done through direct changeover where the old system activities are removed immediately after the introduction of the new one, parallel running where both systems run together until the new is totally efficient or pilot running whereby the new system runs in designated parts of the company and when successful it is introduced to the whole company. Monitoring the performance of the system. After the successful implementation there should constant monitoring and necessary changes and improvements should made for better performance. Corrective action may be performed to rectify the design. (Types of Information Systems. 2006) Q3. Controls over accounting system Control over a business entity is done after the management has realised the necessity then controls are implemented. The functions of controls are all similar regardless of the grouping. They are expected to ensure smooth running of the business. The employees are checked to ensure that company’s policies are observed and the asset are protected and used for the better good of the company and not personal benefits. In any business internal control can be divided into two major categories. There are the administrative and financial controls. The financial control in this case is implemented to ensure that the system that is the financial accounting system is producing reliable information. Since it is not regulation to have controls over once business it is upon the management to determine if they need it. In a business where by the cost of installation is surpassed by that of the benefits then it very necessary to have the system. For example if the cost amount to six thousand dollars and the losses saved by the installation are beyond ten thousand then it can considered as a good business move. The opposite of the case is a loss. The need for controls over accounting systems is directly proportional to the size of business entity. (Cengage education, 2008) The control comes in handy when the business accounting business is faced with problems. The auditors internal or external first make references to all the business transactions recorded by the accounting department. They further proceed to check on the controls to determine the weak point in this particular department. In summary the financial controls ensures; The company gets all its revenues and they are proper records to show exactly that All the assets are accounted for at any time All the liabilities are known and accounted for and necessary provision made to cater for them Expenditure are only incurred when authorised from right procedures There is reliability in the information produced by the accounting information systems for preparation of accounts. (Cengage education, 2008) Financial controls Accounting controls; this is aimed at producing accurate accounting information. Several sub-controls include double entry recording and trial balance to check accuracy of ledger account postings, monthly bank reconciliations, protection of all accounting records and balancing all the subsidiary ledgers. Documents control; this is the support of accounting system with documentation. These may include logically numbered receipts and other documents, professionally produced transaction documents and manuals depicting procedures and responsibilities. All these documents should at all times be kept up-to-date. Comparison controls; this counter checks available documents with third party documents, inter department comparison and physical observation. (Cengage education, 2008) 4. Control practices SCENARIO A personnel control, it is necessary to check activities that can lead to losses for the company. Good SCENARIO B Clerical control, clerical duties should be distributed such that no one individual handle a complete transaction. Poor SCENARIO C comparison control comparing the document with third party documents good SCENARIO D administrative control this is segregation of operational duties to different departments. good SCENARIO E administrative control Mary is not fully competent in all her duties poor SCENARIO F administrative control Luka has been hired on basis of his qualification good SCENARIO G personal control the staff replacement is going to cause significant disruption to normal work routine. Poor SCENARIO H accounts control ensures timely and accurate ledger accounts is done. Good SCENARIO I administrative control she considered from experience as an employee who can take up bigger responsibility good SCENARIO J physical control all assets should be provided with security and to authorized personnel only poor. (Cengage education, 2008). 5. Commercial accounting software packages for evaluation. MYOB accounting software The package is considerably cheaper than the Australian version and might be the reason for preference by most users. The package also can be run from the computer just like the counterpart, setup should be installed then it should be ready to use. The software has also been designed to operate in large businesses. costumer details are recorded as follows open the sales command centre and select sales this opens the new item window which on the top left hand corner there is a field. This should be clicked to open the next field with several options in this case select order. This opens a window which the details can be entered, it contains item number, description, price and discount and other minor details. (Myob, 2011) To add a supplier the purchases command is opened then select enter purchases from there a new purchases window opens and here record of information regarding the supplier is made. For a stock open the inventory command centre then item list which opens item list windows. This window has no items on display and to add more then press the ‘add new’ button which opens the item information window where details are added. To record a payment the payroll command centre is opened click on process payroll this in turn opens the process payroll assistant where salary details are recorded. (Myob, 2011) Australian accounting software This program has an average cost but compared to all its applications then the value is quite reasonably. The package can be run from a normal computer all that is needed is to run the setup and start. The user interface is quite friendly and has all the necessary input functions. The software has been designed to handle countless number of customers at one given time. The program also automatically updates the customer details as they are required this reduces the extra work in other software that requires updating manually at the end of each month. The program has also in designed security programs which restrict access to the information it ensures that only allowed access only through use of passwords. (Capital office, 2011) Among other advantages the program provides for contact details, unlimited history, user defined screens, multicurrency, unlimited searches, account grouping, multi department use, central billing and reminders. The program is also designed to calculate discounts automatically reducing errors from the staff which would to customer complaints. The software also helps businesses to be compliant to government policies on businesses. It can calculate the payable tax using the government approved formulae which are incorporated into the system. (Capital office, 2011) The program also provides a very good payment rolls system for the employees ensuring that all the payments are made on time and statements are produced to support the process. The program can also reverse payment if a wrong detail were entered and still is capable of producing customized statements, export to Microsoft word processor, transfer to card files, printing transactions, provide overdue letters and statements when needed and provides a comprehensive report concerning the whole business transaction. This is possible from the first transaction made by the software. (Capital office, 2011) Some procedures for direct operation of the software are as follows; for data entry, for a customer detail open the main window then click on costumers. This key opens the customer list and from this a selection is made or new entry created. From the new window details can be shown of previous transactions if any. Purchases are made from the main window, click on suppliers to open the stock list window where the recording can be done. Payroll can be accessed form main window then cash services and finally payroll services. In general the MYOB is quite user friendly and this is made possible by allocating functions individual windows. (Capital office, 2011) References Capital office (2011) Accounting Software System Integration. retrieved on; 24/5/11 from: http://www.capitaloffice.com.au/ Cengage education, (2008). Establish and maintain accounting information systems. cengage education Pty ltd, Artarmon : Australia Information systems (2009). retrieved from; http://www.freetutes.com/systemanalysis/types-of-information-system.html Management control, (2011) retrieved from; http://en.wikipedia.org/wiki/Control_(management) Myob (2011) Making life easier. retrieved on; 24/5/11 from: http://myob.com.au/ Types of Information Systems. 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