Question

The Alkin Chemical Company manufactures and sells chemicals for agricultural and industrial use. The company has grown significantly over the past five years. However, the company’s AIS is the original one developed and installed by the former president’s son while he was in college. Much of the information generated by the system is irrelevant, and more appropriate and timely information is needed.

The controller is concerned that actual monthly cost data for most production processes are compared with actual costs of the same processes for the previous year. However, the production supervisors contend that the system is adequate because it accounts for discrepancies. The current year’s costs seldom vary from the previous year’s costs when adjusted for inflation; thus, the supervisors feel that costs are under control.

The vice president of manufacturing has found that preparing even the simplest of cost analyses requires that she spend days compiling information generated by the current system. She believes the system should be flexible enough for managers to quickly develop their own recurring reports.

As a result of these concerns, the new president has appointed a committee to review the system. It will determine management’s information needs for cost control and decision purposes and ensure that the company’s and employees’ behavioral needs are met. The vice president of finance and administration chairs the committee.

Shortly after announcing the formation of this committee, the vice president of finance overheard a cost accountant say, “I’ve been doing it this way since the company began and now this committee plans to make my job redundant.” Several employees in the general accounting department also assumed that their positions would be eliminated or changed significantly. Several days later, the vice president of finance and administration overheard on production manager state that he believed the system was in need of revision because the most meaningful information he was receiving come from a junior salesperson.

Required

1. Identify the behavioral implications of using an AIS that does not appear to meet management’s needs.
2. Identify and explain the problems employees have with the AIS.
3. Identify policies or practices the company could follow during systems implementation that would reduce costs without laying off employees
4. Note: this accounting information system chapter 20

Answer 1

a. Following behaviour implications which may not meet management's need-

1. Resistance to change

2. Fear pshychosis of loosing job in mind of team

3. Fear that Junior salesperson may become more relevant

b. Following is problem of employees with AIS-

1. Human tendency to resist change

2. Re-skill requirement to stay relevant

3. Fear of loosing job

4. Uncertain enivronment of possible impact on each fucntion

c. Cost and benefit analysis should be peformed to understand the problem in detail before progressing towards any choices of MIS. Following MIS practices could be used-

1. Review the current process and controls and re-align the process for flow of information.

2. Provide information in number to dispel accountants belieft that current system is appropriate to institute a behavious change towards acceptability

3. Look at alternatives like Power Bi, sem-automatice AIS rather than full fledged MIS as aim is to reduce time taken and to provide meaningful information.

4. Consider changing the roles of employees to give a shock to the system.

5. Hire an outside agency to help communicate the need of the MIS

6. Institute a hiring freeze and assign the employees performing roles which are becoming reduntant to new roles by training them for new skills.

7. Outplace employees who are being laid off.