Question

Question 1
The accounting information systems designed and installed in organizations are exposed not only to risks that emanate from users such as fraud, terrorisms, theft and other intentional acts for which control measures must be installed to check and minimize these risks, but also risks that emanate from natural disasters such as widespread flood, earthquake, fire, hurricanes, pandemic outbreak etc. which in most cases are uncontrollable or prevented. In this regard, organizations must have a disaster recovery plan (contingency plan) in place so that the full impact of a naturally occurring disaster can be absorbed to ensure business continuity.
a) Explain how the outbreak of the COVID-19 pandemic impacts on the accounting information system as a natural disaster and the strategies businesses can adopt to maintain current business operations.                                                                                                                              
b) Discuss the contingency plans that must be in place before, during and after the outbreak of COVID-19 so that businesses can fully absorbed the pandemic to ensure business continuity.                                                                     

Question 2                                                                                                                  
The outbreak of COVID-19 has negative as well as positive repercussions on the design of accounting information systems. Discuss.

Answer 1

1)

a) COVID -19 has huge impacts on accounting information system. They are as follows :

• Due to this pandemic situations, the cash conversion cycle period for various firms have increased as firms are not able to gather cash and remain deprived of cash for long. This is having impact on the accounting as either debts are being continuously increasing because firms are taking loans from other sources or the company is making losses. Thus anyway there will be effects on accounts.
• Firms are facing problems because of shortage of demand by customers as only essential items are being utilised in this time. Thus companiesare not able to make profit.
• Due to this situation many firms are not able to pay their monthly installments and loans burden are increasing having a great effect on accounting of the firm.
• Many firms have stopped their functioning as no employees are easily available in this situation to work. So basic process are facing hault because of which profit is again affected causing loss to companies that directly effect the accounting.

Strategies to be adopted are :

• Firms should try to negotiate from its debtors the amount they owe to firm, to return at regular intervals so as the firm is not facing problems in its day to day activities.
• Firms should try to improve their transportation facilities to make their product reach their target customers so that their products are sold and they can make profits.
• Firms should try to retain its earnings and try to save maximum amount so that in the time of emergency they can be used in the firms.
• Employees if possible can be called to work but they should be prepared with every precaution possible in this pandemic time.

b) There must be some contingency plans to be made for before, during and after the outbreak of this pandemic situation.

Before any such situations occur and the firms have to face problems regarding cash , the firm should create its own reserves of cash which can be made to be employed in the pandemic time .

This step would be of a great help during the pandemic time.

If we consider the period of during pandemic time, all safety measures should be taken by the firm ,first keeping in mind the health of its employees and secondly the items they are exporting, should be good for the customers to use. All one should do is to try to minimize the risk of pandemic situation while its various functions. This would give profit to firms as well as protect people and environment.

Once, thus situation gets over, after that firms should take steps to recover all its losses that occurred during thus oeriod by attracting customers and developing markets.

Firms should try they their best to maximize the profits.

These all steps will help in proper continuity of the business firms .