Establishing and Maintaining Accounting Systems - Assignment Example

Name: Tutor: Institution: Date: Establishing and Maintaining Accounting Systems Question 24 (Part A) Question 1 Data and information are used commonly as if they are the same thing. In isolating data from information, data are information assembled in asset order, format for further processing to produce a meaningful result that support of an existing theory or hypothesis (Henson, 2006). For example data can be drown on individual say he is height or by average age and gender or take a descriptive of the world we can perceive data with our senses and then the brain can process. It can be raw material for data processing. On the other hand information are set of characters or quality or quantity or even combination of all of attributes of items of both tangible and non tangibles. Information allows as expanding our knowledge beyond the range of our senses. We can compute data in information and move it about for people can access it at different times. For instance, if I take an individuals photograph is information. But what the individual look like is data. Question 2 Transaction processing system and the accounting information play different functions in any organization. For instance, the transaction processing system (TPSs) has a role of collecting, storing, modifying and retrieving transaction of the organization. For information generated in the TPSs to relied own, data store has to be left in a consistent state (Strawser, 42-46). For example, if any electronic payment is made, the amount has to be withdrawn from one account and deposited to the other. In case of a failure the program is designed in a manner that prevents the transaction completion and the partially executed transaction rolled back by the TPS. On the contrary, the accounting information system combines the information already processed in the TPS makes an analysis, study the practice and designs used in the accounting for the organization transaction process, implementation, and monitoring information systems. Such accounting system use both modern and traditional accounting control methods in providing users with the financial information necessary for management of the organization. Question 3 The accounting systems such as the Management information systems (MIS) are interactive human machine programs that work to support decision making for users both in and out of the traditional organizational boundaries (Elliott, p. 39). The systems are used to support an organization’s daily operational activities, for both future and current tactical decisions and overall strategic direction decisions of the firm. The management information systems consist of several applications that include but not limited to, the financial and human resource systems. The financial application make up the heart of an accounting information system in practice such as the ledger, payables, purchasing systems ad the receivables and so forth. While the human resource application make up of part of the major modern information systems that are commonly integrated with accounting information systems. All this is indented to achieve better results concerning decision making by organization’s management. Question 4 Importance of Record keeping Claims by Elliott, record keeping is crucial for successful business management (29). A comprehensive for instance, a record of cash purchases, withdrawal, payment, and drawings makes it possible for the entrepreneurs to develop an accurate and timely financial report, which clearly generates a possible analysis on performance of business and management can easily compare performance of the business on either monthly, quarterly or annual basis to measure business growth, and analyze a possible trends and plan for future business under taking. For instance, if the business has to make funds borrowing in support of business expansion the lender will at all time demand for financial statements to access if the business qualify for loans. Accurate recording and accounting for the business expenditure and income indicates what the business is doing when it concerns profit making or loss incurred (Elliott, 78-90). This creates the analysis process easier and the management can easily determine if price adjustment or tightening business activity. Many business ventures have collapsed as a result of poor record keeping, looking at the recording shortfall undertaken by John William indicates a possible fall if proper measures in the accountability are not addressed. Part B Question 1 SMC Manufacturing Company needs to build efficient and reliable accounting information systems. Currently the accounting information systems are sold as prebuilt software packages; they are configured and customized in a manner that matches with the organization business processes. SMC having difficulties with its accounting personnel on matters of recording and interpreting report, can be a problem well solved if these accounting systems are adopted and effectively used. These accounting systems has benefits which helps the firms management as the firm is able to highlight its business strength and weaknesses due to information obtained reports of revenue, employee performance record. Identification of these aspects can boost company’s operations (Phiri, p. 25-33). Availability of customer data and feedback can aid the company to align their business processes according to the needs of the customers, by so ding the sales trend and behavior can be predicted through analyzing revenue reports among other related company transaction data on regional basis (Romney, et al 28-33). Question 2 a) Systems analysis The term has many different meanings. Systems analysis is a clear formal inquiry carried out to help individuals identify a better cause of action and make a better decision than they would have otherwise made (Phiri, p121). The systems analysis has characteristics that are attributed of solving complex issues whose uncertainty of the outcome of any course of action that might reasonably be taken. It can also be a study of interacting entities that include computer systems analysis. Development of computer based information initiated to enhance data model, a number of different approaches are developed. b) System documentation This is a computer programs used in tracking and storing electronic documents or image of paper documents. The system is enabled to track different versions created by different users. The program can be used as a component of enterprise content management (ECD), for example the program can be digital enabled to work as an asset management, document imaging, workflow data and recording of management data (Henson, 2006). c) System requirements These are computer hardware and software components that are required to be installed efficiently and effective use of the computer. The software manufacturer develops the system requirements if used computer does not meet the manufacturer’s demands in the package, then the system may not function correctly. The requirements are listed recommendations that have to be met by the system user to offer better usability, it is important to check system requirements for the hardware devices. For instance, when making a purchase of a printer it may require a particular software i.e. Window XP. Question 3 A successful implementation of business accounting information system does not just happen. Most successful data systems in business development are products of good design, proper planning and project development and involving a hard work skilled as well dedicated team of professionals. Start by making a thorough review of the business requirements and processes of building a better responsible accountable data records (Phiri, p. 49-55). Develop a train test accepting building on the lessons learned in the previous period in doing business. Using test data migrate from previous system. This may include coaching on improved practices and business procedures, the sign off have to be secure stating progress and to be sure the adopted system is acceptable. With an on going support, the focus should on implementing business objectives in producing exactly the same or even exceed both internal and external challenges. 4. Internal control element a) Control Environment-sets are tone of organization that influence control consciousness within any business b) Risk assessment of internal control, this on element relevant in reducing achievement of business objectives c) Information and communication systems Question 5 Many audit results indicate that the probability of lateral switch among the clients on big auditors is significantly increasing in both all an aspects of client audit risk and financial risk. This even though the risky clients are more likely to switch auditors, for many willing auditors are willing to accept engagement. In providing more evidence on the nature of lateral, profound auditors switches, on overall these similar client-related risks, however there are much smaller and tend to have a growing concern on audit opinions, suggesting that the larger the risk the firms tend to switch laterally to another audit. While smaller firms which posses a lower economic risk switch downwards to non-big auditors. Question 6 a) Control 9environment, this refers to the attitude of the company, management and staff regarding internal controls. b) Risk assessment, for any organization it has to establish policies and procedures to help ensure that management has identified its riskiest areas and initiate controls to prevent or detect errors or fraud. For example unrecorded revenue or expense transactions that are recorded c) Control activities, these are policies and procedures that help the firm in ensuring that management directives are well carried out. For instance policies to ensure company checks for amount exceeding $ 2,000 requires two signatures. d) Information and communication -, it is important that staff members get to understand management’s information technology, accounting and communication systems for better operational processes. e) Monitoring, this will involve understanding how management monitors its controls and establish how effective the monitoring is. The internal controls may be worthless if not monitored. Question 7 Internal audit is part of the internal control environment, when performing an audit in judging the reliability of client’s internal control procedure the audit professionals have to be a ware of the risk the business is involved in. identify the components and understand them to plan for an audit, the audit process is put in place to safeguard the activities and help the management support business operation knowing the risks involved (Phiri, p.71). Question 25 Part A Question 1 Developing a credit purchase or sale data system in any firm, calls for recording of financial transaction. A transaction system has to be developed to recognize business transaction entry as made by a staff responsible for the role. This might include sales, purchases, income and payments by individual in the organization. The system has to design end reports in a manner that support generation of financial report indicating accounts payable and account receivable to enable easy recognition of the credit sales and purchases (Stolowy, p. 120). Question 2 a) Dr. account payables with a value $8, 000 Cr. cash account with equal amount $ 8,000 b) Dr. Computer ledger account by amount on the invoice Cr. cash ledger account by given amount on the invoice c) Dr. Motor vehicle account by $ 880 Cr. Cash ledger account by $ 880 d) Dr. Courier services ledger account $ 100 Cr. Cash ledger account $ 100 e) Dr. Account payables by amount on the invoice Cr. Cash or bank account by the value of the invoice f) Dr. Account receivables with the value of the accrued loan installments (last quarter installment) g) Cr. AMP Insurances account with the value of the accrued loan installments (last quarter installment) Question 3 A chegue are types of bill of exchange and are developed to make payments without the need of caring a larger amount of cash. However, there are weaknesses of this form of payment settlement associated affecting the third party. For instance, funds embezzlement during the float period may involve delay notices on the existing funds. The parties involved here try to convince merchants or other recipients, hoping the recipient will not suspect the cheque, this gives time for the fraudster to escape. Question 4 Handicap international flowchart payment system The handicap international flowchart is designed to accommodate its internal risk controls, and it majorly varies from other organizations. HI purchasing department Payable voucher a) Credit purchases b) Cash purchases Purchasing orders a) Orders delivered to the firm store b) Undelivered orders Vender Invoicing Preparation of voucher sets and general accounting a) Request orders b) Approved orders for supply c) Delivery reports d) Invoice reports e) Due date for payment Part B Question 1 It is important for an organization to carefully monitor money movement in their cash registers and maintain a proper control of all cash register of transactions. Foe better business practice cashers have to periodically make deposit of their daily cash into a safe while getting a paper voucher indicating cash deposits. This minimizes robbery attempts to the drawers. Question 2 BWZ Wine Boutique out-let store & Distributers Every worker remembers his or her pay day. Over the year BWZ business payroll system has remained effective in delivering data on expected pay for the whole staff listed in the firm. However there have been delays on several occasions pending to poor records worker attendance and job rate, the system requires some improve measures to cater for proper tracking of all transactions. To the business advantage the BWZ is designed to relief the management from burden concerning tax returns and customer service among other tasks as they are automated. Question 3 Computerized accounting and bookkeeping system increases data accuracy while reducing labor involved. The system generates a powerful tool, allowing easy extract of data orders in preparing reports and boost while allowing easy analyzing of transaction information stored in the system. This serves as a better and faster way of generating important information required to determine business performance for decision making, as it keeps the firm on the right financial path (Strawser, p. 122). Question 4 In determining an efficient accounting system within any organization, the firm has to develop an analysis process identifying possible strength and weakness of the potential replacement of the current accounting systems (Strawser, p. 48-51). Risk analysis, on how well will the desired systems has to work, identify potential strength of improving the internal accounting risks witnessed in the current system that has to be solved by introduction of the new system. If all the risk worries according to the current system can be reduced then Malinda management system has to adopt a new system to boost on accounting risk, to boost its financial performance and ultimate better performance of the firm. Question 6 Employing a part-time and casual bookkeeper will cost the firm Part-time $30,000p.a Casual bookkeepers 3* 20 hours each at $25.5/ hour Fulltime $40,000 p.a Bookkeeping service Hours worked Rate per hour Total cost 1 Part-time fixed fixed $30,000 3 Casual 20 each $25.5/hour $1530 1 Full-time fixed fixed $40,000 Basing on the analysis in the table above the out-sourced accounting services will meet the cost cutting measure as demanded by the XYZ ltd since the cost annually is $2,650 lower compared to other options of having three casual with a part-time bookkeeper totaling to $(30,000+ 1530) = 31,530 annually thorough lower than employing a full time bookkeeper who will costs $40,000. For cost cutting measures I advice that XYZ ltd out source its book keeping tasks to the local accounting firm at $$2,650 cost lower according to the three options given. Works cited Barry Elliott, Jamie Elliott. Financial accounting and reporting. London: Prentice Hall,, 2007. Henson, Walter. "ACCOUNTING INFORMATION SYSTEMS." ACCOUNTING (2006): http://accounting.e-articles.info/title/ACCOUNTING-INFORMATION-SYSTEMS/. Hervé Stolowy, Michel Lebas. Financial accounting and reporting: a global perspective. London: Cengage Learning EMEA, 2006. Jeffrey W. Strawser, Joyce A. Strawser. Financial Accounting and Reporting 7e. London: Cengage Learning, 2006. Phiri, Michael. Information technology in construction design. New York: Thomas Telford, , 1999. Romney, Marshall B., and Paul John. Steinbart. Accounting Information Systems. London: Pearson Prentice Hall, 2009 Read More