Question

Case Study 03:

You have been recently employed as a trainee accountant to a large manufacturing business. After three months you have observed that the accounting information system is rather inefficient with data input being conducted on an ad-hoc basis, with processing systems being inefficient, where some information from the system is not forwarded to appropriate personnel and where some managers are not able to read or interpret information presented to them.

Required: Write a brief report to the chief accountant outlining the benefits of implementing a more efficient accounting information system.

Answer 1

Report on Efficient Accounting Information System

To,

The Chief Accountant

Subject- Benefits of an efficient accounting information system

Sir,

On an analysis of the accounting information system implemented in our company, certain inefficiencies and discrepancies have come into the light. It has been observed that the data input is being conducted on an ad-hoc basis without any consistency. Further, the inefficiency and inadequacy of the system can be analysed from the fact that appropriate information is not forwarded to the appropriate personnel at the appropriate time. In some cases, it has also been found that the managers have expressed an inability to read or interpret the information presented to them.

In ligt of the above findings, I would like to present before you the benefits of having an efficient accounting information system:

• Speedy decisions- With an efficient accounting information system in place, right information is transmitted to right person at the right time. This leads to faster and accurate decision making. The utility of an information gets multiplied manyfold if it reaches the appropriate person at the appropriate time. The results may be seen as gradual increase in profitability and overall efficiency in the longer period of time.
• Accurate information- A piece of information holds worth only when it is supported by the numbers and facts accompanying it. An efficient accounting information system would collect the input data on a systematic basis rather than an ad-hoc basis as is collected in the present accounting information system. Hence, it would provide accurate information which can be used while determining estimates and budgets and thereby reducing unexpected results.
• Increased reliability- It is a widely known fact that the possibility of a computer system making an inadvertent error is far less than that of a human making an error. An efficient accounting information system would therefore prove to be more reliable and fruitful while making decisions.
• Cost Effective- While it may seem to be a costly affair prima-facie to implement a new accounting information system, but it would greatly reduce the requirement of human intervention. The present value of future savings in employee costs therefore make it a cost effective system in the long run. Not just this, if the incremental profits to be earned as a result of an efficient accounting information system are considered, it would exceed the cost of the accounting information system by large margins.
• Scalability- With the ever increasing size of our business, there is an abundant requirement of resources. But an efficient accounting information system once introduced needs not to be looked at time and again. It can cope up with an enormous amount of data and information without the requirement of multiple spendings.
• Security- In this era of cut-throat competition, security of data is one of the most important aspects of business that an organisation must consider. An efficient accounting information system will not just process data, it will also store it in a secured and encrypted format which can be used only by the authorised personnel, thereby reducing the possibility of data breach to a great extent.

Considering the above mentioned benefits that could be safely derived from an efficient accounting information system, it would be in the best interest of the organisation that the existing accounting system be replaced by a more efficient one.

With inputs from accounting staff and internal auditors,

Mr ABC

(Trainee Accountant)