Role of Internet in Financial Reporting, Auditing, Business Intelligence, Tax, and Management Accounting - Essay Example

Sur Supervisor Intranet and Extranet Introduction While intranet serves the internal needs of accountant in a business, extranet goes beyond the internal boundaries of a business to connect with customers, suppliers, contractors, distributors, channel members and other trusted associates behind virtual firewalls. Both support the activities of accountants to make their jobs more effective. Intranet and extranet both use the Web technology to access data, text, audio as well as video. Internets open and standard protocols are used without any need to have any proprietary systems. Businesses use intranets/extranets as a potential tool to accomplish several accounting and financial functions. Net and Web technologies have made possible the use of intranet and extranet in businesses. History of Intranet and Extranet In true sense, Intranet and Extranet are the distinct ways of using internet, the origin of which can be traced back to the US Department of Defense when they initiated a project in 1969 to connect scientists of different universities electronically. The purpose was to share information necessary for research projects. The project was called Advanced Research Projects Agency Network or ARPANET as acronym. Those were the days of cold war with Russia that the US was engaged with and the need was to keep communication lines intact among all concerned departments in case of a nuclear attack. The technology used to develop such communication net work was then taken from the Rand Corporation being one of the leading names in the computer industry. The technology was known as packet switching aimed at dividing information into small pieces and putting them into an electronic envelope to be transmitted over a network. Each packet contained the senders address, the destination address as well as error checking information. In the event when transmission path for forwarding a packet would become nonfunctional a device called a switch developed by the Bolt Beranek and Newman (BBN) company was used. Later ARPANET was handed over to the National Science Foundation to work for a wider use in the days to come (Pearson Higher Education). The major internet advancement occurred in 1989 when the World Wide Web came (www) into existence – the way of organizing the internet. In those days, the users were needed to learn commands as browsers were not developed by that time. Mosaic, the first browser was developed in year 1993 by the engineers from the University of Illinois. Thereafter the internet users were spared of from learning cumbersome commands to communicate with others on the World Wide Web (Pearson Higher Education). The Internet Society (ISOC), a nonprofit group began developing policies for Internet. Hardware and software manufacturers began complying with the standards adopted by the ISOC for the simple reason that everyone wanted their products to run seamlessly with the internet. Internet Corporation for Assigned Names and Numbers (ICANN) look after policies that are used to decide internet addresses. This is a private international organization behind the creation of .com, .org, .net and many other kinds of domain names. Internet names and addresses are registered by Network Solutions Inc. to run the Internet Network Information Center (InterNIC). Intranet and Its Current Status The internet technology has been very well used by businesses for communicating within the organization (intranet) and among business partners located outside (extranet). Intranet works as a local area network (LAN) to facilitate e-mail, Web pages, communication among staff. Browser used is the same as used for internet access. Intranet serves the purpose of dissemination of information, communication, and sharing of data. Accountants are currently hooked to intranets in the same way as they are connected to internet. Intranets provide all necessary information such as revenue, costs, overhead costs, budgets, production data, dispatches, sales data that are necessary for accountants. By using intranet, accounting ledgers such as receivables, inventory, cash, and payments due are updated in real-time helping management to perform several important functions. The data help forecast cash flow requirements for next day or a week. Several uses of Intranet are devised; some of them can be listed as per the following (Kogan et al.). Distribution of management directives, orders, circulars Sharing of organization policies/rules Submission of reports Sharing employee database Accessing production programs and customer database Creating home pages for Human Resource Department Extranet and Its Current Status Extranet applications are numerous. In an era of globalization, extranet has been hugely crucial to connect with business associates that include suppliers, distributors, vendors, trading partners and all those need to connect and communicate with the organization. Extranets are extensible, scalable, flexible and portable. They can be employed for integrating cross-platform, distributed and heterogeneous system environments. Barriers to cross-organizational networking are significantly reduced by employing extranets (Kogan et al.). Some of the extranet applications can be discussed as per the following. Component suppliers can review inventory and plan production processes on their own Product specifications, supply status can be accessed by company dealers and distributors Customer queries/complaints are registered and replied for better customer satisfaction Interactive tax audits as per the requirement of the federal and local government can be done. Similarly, regulatory authorities can perform compliance audit through extranet saving significant time of theirs Intranet and extranet use internet standards such as FTP/HTTP, HTML, TCP/IP protocols along with myriads of other technologies such as Java, Active X, or Enterprise Resource Planning system. It will be interesting to know what these standards or technologies mean. HTML Similar to internet, intranets and extranets use Hypertext Markup Language (HTML) as it is easier to program. HTML is also a language for database applications and information systems across the internet. Information can be modified using HTML forms on the intranet and extranet. FTP & HTTP Intranet and extranet need to support File Transfer Protocol (FTP) for file transfer without which it cannot support other related functions. HTTP, the short form of HyperText Transfer Protocol, is the key protocol that is used by the World Wide Web. The protocol governs and defines how messages on the intranet and extranet will be formatted and transmitted. The protocol decides actions for browsers and web servers need to take in reply to various commands. It is also known as a stateless protocol for the simple reason that command is executed independently. HTTP has several limitations and in order to overcome it, several new technologies such as Java, JavaScript, ActiveX are employed. Java Many accounting software runs only when Java is installed. Java is a programming language that has changed the ways extranet can be employed for many applications. Java virtual Machine is a part of Java software that is needed in web interaction. ActiveX While ActiveX is not a programming language, it provides a set of rules for applications to share information. It is a component program that is used by many application programs on extranet or intranet. Enterprise Resource Planning (ERP) Systems Accountants are now widely using software such as Enterprise Resource Planning (ERP) systems. The program integrates several departments of the firm facilitating seamless operations. Different departments such as sales and marketing, production and processes, finance and accounting, human resources share real time data from a common central database. The software program compiles all data on the click of mouse. The core ERP module is a boon for accounting and financial professionals. The program immensely helps in decision making processes and effective governance for improved outcomes. Current Technological Changes Cloud Computing Currently, Cloud Computing has become a norm in the businesses. By storing their data in the cloud, a network of servers in virtual place, accountants can retrieve those data as and when required. The information or data saved can be accessed from any part of the world providing freedom of movement and work for accountants and finance professionals without carrying data with them (MongoDB). Electronic Commerce With increasing quantum of electronic commerce across the globe, accountants will have to invent new accounting systems; existing accounting procedures will be needed to modify. On-line selling of products will need on-line accounting entries, billing, discounting and many other related activities. On-line financial investment services will force accountants to report asset creations and dispensations on real time basis. Virtual banking will change the accounting rules for cash and cash transactions (Siegel et al.). Big Data: A Trend of Future In recent years, the most noticeable innovation in technology field has been Big Data. Big data is a current trend that businesses and technology are moving towards rapidly. It is not related to the single kind of technology or initiative. When data are too diverse, rapidly changing and massive to handle through conventional techniques, infrastructure, or skills, Big Data provides the solution for improved outcomes. Big Data analytics are employed to resolve complex issues that cannot be solved by existing software programs. In the days ahead, accountants will employ Big Data for providing solutions that are not only effective but competitive too (MongoDB). Conclusion With the spread of internet and e-commerce, there is no doubt that professional practices in financial reporting, auditing, tax accounting, business intelligence, management accounting will also undergo significant changes in the days to come. Accordingly, intranet and extranet will also get transformed employing new tools and applications to keep pace with the enhanced service requirements. However, one thing is clear that intranet and extranet are going to stay here for a long time. Works-Cited Kogan, Alex, Sudit, Fred, and Vasarhelyi, Miklos. The future of accounting and Electronic Commerce on the Internet. School of Management:Rutgers University. Newark. Web. 2009. 11 May 2015. MongoDB. What is Big Data? mongodb.com. 2015. Web. 11 May 2015 Pearson Higher Education. Networks: Internet, Intranets, and Extranets: Chapter 6. Web. 11 May 2015. Siegel, Joel, Hartman, Stephen, Qureshi, Antique. The CPA and the Computer. The CPA Journal. Web. 11 May 2015. http://www.cpajournal.com/1998/0298/dept/CPAC298.htm Read More