Accounting Software in Australia - Literature review Example

Accounting software in Australia: literature review Organizational structure The organizational structure of any company affects the flow of information between the various departments of the company. The organizational structure of the company is flatter: the level of bureaucracy is reduced. The company in review is an Organic Restaurant shop operating in Victoria. The corporate structure is not exactly hierarchical but it has elements of the hierarchical structure. The corporate structure is such that the company is headed by the CEO but subject to the managing director, after whim the management comes second in authority. The interactions of the management and the employees are without much restriction. The decision making process is decentralized and not strictly based on the top management. Further, the responsibilities of the engagement are not strictly left to decision making as every input of the employee is considered important. The logic is that the employees are a great part of the restaurant business as they represent the face of the restaurant at large to the customers. The basic departments, at the management level, of the business are divided into sales; finance and accounting, supply and inventory. The company is dependent on technology in its operations: sales records, accounting data and financial reports are produced on accounting software. The flatter organizational structure is beneficial to the company but is not without its challenges. Even though the structure does not have a visible hierarchy in place, over time there is a possibility that a hierarchical structure could develop. This is because there is no clear hierarchical structure. Further, since all participants in the group have a say in the management of the business, the business could run a risk of lack of accountability and responsibilities (Morgan 2015). Three is possibility of role confusion in the executions of the company’s goals since management is not strict in decision making. This could result is issues being solved after a very long period. There is the risk that there will be inconsistencies in the production of information and services, and performance (Rishipal 2014). There are no available operation policies guiding the employees therefore the different employees employ different mechanisms in handling the same situation. This could impact on the financial results and data of the restaurant. The idea that the management can substitute the financial officers could lead to errors in recording or inconsistent results over a given period of time. The restaurant has available different ways in which they could acquire their systems: custom software, commercial software and ERP. The most suitable means of acquisition is determined by its organization structure and the goal of the company to achieve efficiency and eliminate their organization challenges. Since the business has recently started off, the ERP would be too much to handle for the employees as well as the costs that are needed to develop customer software. Further ERP requires complex operations that the restaurant is currently not facing. The best way to acquire their accounting software would therefore be the off the shelf, commercial software. The commercial would be appropriate as it allows for customization of the different functions and related to the need of the business. Since the available accounting software are available on different platforms and can be accessed from different devices remotely, then the risk of inconsistency will be reduced. The management can be able to tract records made by the employees, reducing accounting errors. Further, the information can be accessed simultaneously. There are also available less costly software, using cloud accounting, such as Xero, QuickBooks and MYOB. The sales procedures of the business will be very simple. It will include the customer, the waiter and the cashier. The process starts with the customer making a request through the waiter after arriving at the restaurant, the waiter then places the order through to the cashier for the billing purposes as well as to the manager in order for the meal to be prepared. The cashier then returns the bill to the waiter who gives it to the customer simultaneously with the requested order. The cashier then takes the cash and gives to the cashier in order settle the bill. Diagrammatically, the flowchart would look like: Sales system is quite efficient for the use of the restaurant but there is possibility that fraud could occur. In the system, the cashier bills the order according to how the waiter presents the order. This leaves room for the waiter to misquote the pricing. Moreover, the cashier does not double check with the kitchen manager on the same. The kitchen manager as well relies on the record presented by the waiter. This risk can be reduced if there was developed a system where the customer can make the order or reservation in an integrated system. The control problems would arise from the accuracy of the sales records, the validity of the records, efficiency and effectiveness in service delivery. Part II The adoption of accounting software in the accounting process has been faster in Australia compared to the global uptake. Recent developments has seen the Australian small and medium companies moving towards cloud computing. The Australian (2014) reports that 14% of the Australian business are shifting to cloud software compare to the global rate of 11% while 46% of those not already in the system were willing to shift in 12 months. The managing director of Xero notes that the increase is likely to continue at a faster rate (the Australian 2014) and predicts that 75% of Australian business will have applied the cloud technology in accounting by 2015. A survey carried out on 1622 companies in Australia revealed that the number of Australian business using the Xero accounting software had doubled in 2014(Dinham 2014). In the 2015 financial year, Xero recorded an increase of paying subscribers by 51% (Foye 2016) while MYOB had a 46% increase its online users (Ramli 2016). There was an increase in the intuit customer base: QuickBooks users had increased by 60% in the 2015 year, maintain third position after Xero and MYOB (Tadros 2016). The market for this software has also considerably grown in the last few years to include more players. Currently, the three largest players in the market for accounting software are Xero, MYOB and Intuit (Heber 2015). In the recent past, the market has been reduced to a battle between the entrant Xero and the established MYOB (joass 2015). The competition has driven these companies to invest more in the cloud technology. A research conducted by Canstart (2016) shows that Xero was leading vendor of the accounting software. The financial review remarks that the leading provider is Xero followed by MYOB (Tadros 2016). Canster (2016) reveals that the most important factors that determine the choice of any accounting software include at 35% importance, the value for money followed by integration capability, functionality, customer interface, ease of use and lease its reporting tools. The same research ranked Xero to be the most used software amongst the small medium businesses especially in its cloud accounting. The study on the use of accounting software in Australia showed that the main reasons why they used Xero were the cloud technology, at 61%. 38% of the respondents quoted the real time syncing ability of the software. The cloud technology embedded on the software gives Xero the competitive advantage over MYOB. Further Xero’s availability on multiple devices and ease of integration with third parties products puts it ahead of MYOB. Moreover Xero has an intuitive user interface and allows for multiple users that increase the ease to use. BPO However, the users of Xero also expressed their concern over the security features of the software as a possible risk and challenge in the application of the software in business management (Australian 2014). Xero, as all cloud based software, depends on internet connection for its performance hence could prove to be inefficient in times when the internet strength is low or unavailable. Australian (2014) reports that the survey carried out on the 1622 small medium enterprises show that 56% of the enterprises thought the possible failure of technology was a risk to be dealt with. The challenges experienced by use of accounting software can be addressed by an improvement of technology. The risk of security and specifically the loss of data assets loom in all corporations that depend on technology of its operations. The possibility of losing data will always be present; however, the chances of this loss can be reduced by further encryption of the files. Strong security on the data can reduce hacking. Further, the companies can ensure that only authorized persons have access to these files, each with a password protected access. The less the people that can access the information, the less the chances of thee information getting into unauthorized persons. The failure of technology possibility will exist as long as the technology is being used in accounting. The best way to protect the company for technology failure would be to have a backup of the data in use. This is easier in the cloud software that allows for back up for data and encrypted information. Moreover, the purchase of credible, authentic and original hardware helps in reducing this risk. References The Australian December 2014 Australian SMBs ahead of the cloud accounting curve [online] available from: www.theaustralian.com.au/business-spectator/australian-smbs-ahead-of-the-accounting-curve/news-story/2369a42be5910eca02d6215b4d405734 [26/4/2017] Canstar Blue 2016 accounting software for small business [online] available from: www.canstarblue.com.au/services/business/accounting-software/ [26/4/2017] Foye B may 2016 Xero paying subscribers jump by 240,000 [online] available from: https://www.crn.com.au/news/xero-paying-subsribers-jump-by-240000-419449 [26/4/2017] Joass M March 2015 Has Xero already beaten MYOB in Australia Sydney Morning Herald [online] available from: www.smh.com.au/business/motley-fool/has-xero-already-beaten-myob-in-australia-20150312-142820.html[26/4/2017] Ramli J February 2016 MYOB chases Xero with surge in online users [online] available from: https://www.crn.com.au/news/myob-chases-xero-with-surge-in-online-users-414739 [26/4/2017] Rishipal 2014 Analytical Comparison of Flat and Vertical Organizational Structures European Journal of Business and Management vol. 6 no.36 2014 pp 56-65 issn 222-1905 Tadros E October 2016 QuickBooks users jump by 60pc but Xero, MYOB remains leaders Financial Review [online] available from: www.afr.com/business/accounting/quickbook-users-jump-by-60pc-but-xero-myob-remains-leaders-20160929-grrwm0 [26/4/2017] Read More