Question

There are arguments to suggest many firms2are yet to fully comprehend opportunities and benefits of integrated Accounting Information Systems (AIS), which can play a key role in contributing to or enhancing business success. Critically comment on this statement including inherent counter arguments and undertake a brief literature review to examine this phenomenon within a hypothetical company or a publicly traded company of your choosing.

2. Argue the merits/demerits of a well-designed, poorly designed, or obsolete AIS system. Orient your argument to focus on your select or hypothetical company.

3. Imagine that your company or any competing entity suffered from the foregoing poor or obsolete AIS concern, what would be an appropriate resolution of this dilemma? (consider steps, threats and safeguards, principles, the public interest and conceptual framework).

answer should be a least 3 pages long

Answer 1

HELLO STUDENT

Before going into details we should know "what is Integrated Accounting System"?

So, it is system of collecting, storing and processing financial and accounting data that are used by decision makers. An accounting information system is generally a computer- based method for tracking accounting activity in conjuntion with information technology resources.

An integrated accounting system is a software application that standardizes your procedures for recording transactions and disseminating financial information. It interconnects the reporting activities of different functional areas of your business such as point of sale, stores, back office and front office. This streamlines the information input and output of your management accounting and financial reporting functions. The adoption of an integrated financial system enhances your speed, accuracy and efficiency of processing financial information.

ADVANTAGES

Integrated Accounting Eliminates Re-keying

Re-keying creates two major problems. One is that it costs time and labor that could otherwise be devoted to more productive activities. The other is that that it invites errors and omissions that either go uncorrected or require more time and labor to find and fix.

A business management system or ERP with integrated accounting eliminates re-keying, which frees up staff to focus on sales and opportunities. Re-keying information from an order management system into a standalone accounting system is not an efficient use of time, and will inevitably lead to mistakes that no one wants on their books.

Integrated Accounting Provides Real-Time Information

Standalone accounting is always behind as it waits for someone to manually take information from the ordering system and re-enter it in the accounting system. That means never having the up-to-date financial information that’s required for the best decision making possible. Since data re-entry also invites human error, standalone accounting also stands a greater chance of leading to decisions based on faulty information.

Integrated accounting provides a complete real-time picture of the business at any time since information automatically flows into the accounting system as orders are processed. A web-based business management system with integrated accounting even lets you take complete, accurate financials with you wherever you go.

Integrated Accounting Can Automatically Perform Job Costing

With integrated accounting, even sophisticated accounting processes like job costing can be performed automatically -- effectively as a side-effect of processing orders. Postings are automatically made to Accounts Receivable, Accounts Payable, and the General Ledger so that the accounting system automatically has the information it needs to calculate job costs and to perform other accounting processes.

Standalone accounting systems that do perform some form of job costing often run into problems. Standalone accounting doesn’t "talk to” the order management system like an integrated accounting system would and so it doesn’t inherently know which costs go with which jobs. Attributing certain costs and information to certain jobs and orders might become a new manual process in itself.

Integrated Accounting Results in Accurate Commission

Similar to the way that an integrated accounting system can automatically perform job costing, an integrated accounting system can automatically calculate sales commission including split commissions. Once again as orders are processed the integrated accounting system receives the information it needs to calculate commission.

Integrated accounting systems are especially useful for companies that make job costs part of commission formulas. By automatically performing the job costing, the integrated accounting system automates one of the major factors to calculating accurate commission.

TYPES OF ACCOUNTING SOFTWARE USED BY MANY COMPANIES

• FreshBooks – A fully-featured and simple client invoicing and time-tracking system used by more than 5 million businesses around the world. Ideal for freelancers and small businesses looking to fast track their sales cycle, and keep their processes in line with standards and regulations. Well integrated and mobile friendly. If you need a reliable FreshBooks alternative check out our other comparison articles.
• Xero – A handy asset for managing different accounting operations, preferred by sole accountants and small business teams. A competent accounting management system that works in line with businesses’ rules and priorities, and manages money in and out of their budgets in a way that will coincide with their goals and long-term missions.
• QuickBooks – Available in several different editions, QuickBooks caters to the accounting needs of any company. Being a worthwhile Xero alternative it offers a vast array of insights and organizational capabilities which will help companies keep accounting data organized, including their overdue items, payable bills, accounting notes, and contacts’ data, and standard accounting operations. Also popular for great Profit&Loss reporting.
• Wave – It’s the definition of what a free accounting system for small and developing businesses should be. A solid QuickBooks alternative that combines accounting, invoicing, and receipt scanning into one compact and straightforward package, and you can integrate it with many third-party applications for seamless data migration. Wave is likewise fully-optimized for mobile usage.
• Zoho Books – The accounting app of a reputed software family, designed to help small businesses handle their finances and stay on top of their financial operations. It offers an array of unique accounting features, including cash flow statements, P&L, Balance sheets, and many more.
• Adra Acccounts – A powerful reconciliation management software that provides businesses with the platform to match their transactions in a blazingly fast manner without compromising accuracy. This transaction matching tool improves efficiency while bringing down costs and saving you and your business precious time that you can channel on other matters.
• Envoice – An automated invoicing software that simplifies your invoicing processes, making it easy and quick for you to generate and deliver invoices to your clients and get paid faster than ever.
• CashManager – An on-premise/cloud-based accounting software designed to streamline your accounting processes, from computation, automated quotation and invoicing, and reconciliation of banking statements and faster than ever without sacrificing accuracy.
• Declaree – a cloud-hosted expense management solution that has a mobile app which can be utilized by company employees in digitizing their expenses. With the assistance of this software, staff can instantly capture receipts instead of manually filling out end-of-month expense forms. This functionality affords companies full control over their workers’ expenditures.

There are many other examples of accounting software that are popular and reliable.

As your business grows, your accounting demands and requirements become more complicated than ever. What worked for you back then prior to your expansion no longer cuts it. Freemiums and entry level accounting software solutions are just not adequate to address and catch up with your developing needs. You know very well that to perform accounting processes at the higher level, you need a platform that can definitely deliver the goods when the going gets tough, and the tough gets going, or so the adage goes.

Different companies uses accounting software according to their nature of business, if the nature of business is small, then simple softwares are used like tally and quickbooks etc

Large companies, like apple, Goldman, GE ,IBM have complex operations and reporting needs and require complex, powerful and flexible accounting software running into the millions of dollars. LIKE SAP

AMAZON uses its own software for accounting operation.

so choice is very subjective regaring with a accounting software for operation as per the suitability.

2) MERITS OF WELL DESIGNED ACCOUNTING INFORMATION SYSTEM

To keep your business growing at the dramatic rates you plan for, it is essential to have your business software applications integrated around a single codebase, database and business process. The advantages of designing your systems in this manner yield tremendous cost savings and improved business productivity, including:

Process Efficiency Across Your Organization: There are several key processes that you may encounter in your daily operations, such as order management, fulfillment, invoicing, cash collection, expense approvals, and financial consolidation, to name a few. Automating such processes enables you to avoid new hires that would otherwise be required to manage these processes, and redeploy staff to higher-value activities to help your business innovate and grow. In an ROI study by independent analyst firm Nucleus Research, of customers using NetSuite, the world's leading integrated cloud business suite, Nucleus found that, by using an integrated suite, companies accelerated their financial close times by up to 50%, increase sales productivity by 12.5%, and increase inventory turns by 50%, amongst other efficiencies. In the same study, another customer, Advantage Sign Supply, cut its order processing time by 66%.

Dramatically Improved Visibility: Real-time visibility is important in making timely informed decisions. When information can be accessed instantly from almost anywhere, without wasting resources on data extraction and tying data from different sources together, employees are better informed and can make more accurate, faster decisions. For example, by having all their business data available in real-time, König Wheels was able to monitor their suppliers' workloads in real-time and doubled their business in four years while saving $120,000 annually.

Significant IT Time and Cost Savings: With IT no longer having to procure, install, and maintain multiple systems as well as the various integrations between them, a significant reduction in operational costs can be realized while IT time can be spent improving the business operations.

Accelerated growth: With an integrated software system, expansion to multiple locations and additional sales channels can be accomplished a lot faster because of unified order and accounting management processes and data. Companies can also upsell and cross-sell more efficiently to their existing customer base because of the improved visibility they obtain. Beyond the Rack, a company that was started as recently as 2009, was able to rapidly grow to serve 4 million customers by deploying an integrated system, NetSuite OneWorld.

User-Driven Innovation: Because process changes can be implemented quickly, everyday business users are able to apply their functional expertise to tailor processes and applications in a way that improves performance. Meanwhile, IT is liberated to focus on strategic initiatives that can add value to the bottom line by building innovative value-added solutions.

Conclusion

Today, companies in virtually every industry are using sophisticated business software to fuel their growth but many are still struggling to keep up with their growth and manage costs effectively because of a hodge-podge of disconnected functional systems causing process bottlenecks and employee productivity issues. Integrated business software suites are transforming how companies run, and enabling them to transcend growing pains that previously were holding them back from taking their business to the next level of profitable growth.

DEMERITS OF OBSOLETE ACCOUNTING INFORMATION SYSTEM

• Data Errors – Older accounting applications have limited capabilities for dealing with the large amounts of data that are now routine. As a result, mistakes, oversights, and inaccuracies are inevitable. Preventing these mistakes is next to impossible, and even limiting their damage is an uncertain challenge.
• Regulatory Inefficiency – Evolving accounting laws put new emphasis on auditing and reporting. The capabilities of older accounting software often fall short, and they are not designed with the specific demands of compliance in mind. As a result, they only increase the administrative burden of regulations while making strict compliance difficult to maintain.
• High Maintenance – Companies that have not upgraded to something like cloud ERP accounting software have to accept all the IT maintenance requirements themselves. Large amounts of resources must be dedicated to the issue, especially as older software loses the support of vendors. At some point the investment required to make this software workable exceeds whatever value it returns.
• Missing Automation – Accounting workloads include a number of responsibilities that current accounting software are able to automate. Accounting professionals are able to avoid many routine tasks and focus their talents towards more productive things. Older accounting software that lacks the capabilities of modern automation simply forces well-educated accountants to work as data-entry clerks.
• Lax Security – The data in older accounting software is highly-vulnerable to today’s sophisticated security threats. At this point, the vulnerabilities of these applications have been thoroughly explored and exploited. And once they begin to lose vendor support, weak systems get even weaker. The consequences of an accounting data breach are significant, and older accounting software always invites risks.
• Mobility Issues – Accounting data that is confined to the office or even trapped in a single computer terminal has little utility in today’s business world. But mobility is a relatively recent concept, and some older accounting systems make few to any accommodations for mobile access. Both accountants and clients expect relevant, up-to-date information to be available anywhere, anytime, on any device.

Enterprise IT is growing and evolving in breathtaking ways right now. But the pace of change in accounting has not always kept pace. Managers and teams who are committed to older tools and processes may be reluctant to embrace a radically updated way of doing things. Rather than focusing on the disruption of a change, consider the consequences of misplaced loyalty to outdated technologies. All this accomplishes is to make the limitations of the past the accepted way of doing business. No company can hope to thrive by committing to remain behind the times.

3) IF My company is suffering from an obsolete accounting information software, i would try to change it with a best alternative or a suitable AIS as per the nature the of business i have it.

i will try to glance the basic problems related to my obsolete AIS But how? this is the main question

i will check out its basic elements(functions) or variables first. ie speed, accuracy, reliability, costs as per the company standards. and change it if it is not as per the company requirements.

5 Signs You Need a Cloud Accounting System

1. Too many manual processes
2. Inadequate reporting
3. Costly system maintenance
4. Integrating accounting with other business systems
5. Growth and change

Manual Processes

One of the most obvious signs that your existing accounting system is obsolete is the ongoing need to re-key data into the accounting system. Often, this involves staff using Excel spreadsheets outside of the system for workarounds in reporting, expense reports, purchase orders, and other processes. Such manual tasks are often repetitive and time consuming, draining staff productivity and ripe for automation.

As companies grow, products and services become more complex, and so do revenue management and billing requirements. Entry-level and most traditional mid-market accounting systems are not designed to handle this increased complexity, and many organizations are forced to use manual spreadsheets to manage such processes.

Manual processes also affect the next sign of accounting system obsolescence, reporting.

Inadequate Reporting

Old, entry-level legacy accounting systems affect reporting in both the timing and the quality of information available. For example, a QuickBooks user took up to 45 days for month-end close. After implementing a cloud solution, month-end close was reduced to a few days, with multiple entities.

Real-time reporting is often not possible with entry-level and legacy accounting systems. By definition, web-based software-as-a-service (Saas) accounting solutions provide anytime, anywhere, remote and even mobile access reports, and role-based dashboards.

New accounting solutions incorporate both a multi-dimensional General Ledger and an embedded reporting and analytics engine. This allows companies to more easily analyze real-time consolidated and local financial and operating metrics across their business with the ability to drill down in real time to supporting details.

With new cloud solutions, reporting is facilitated by a library of pre-configured, industry-specific financial templates with built-in best practices charts of accounts, financial processes, reports, dashboards and much more. Templates easily map your existing charts of accounts, automatically creating all of your account hierarchy structures and giving you extensive financial reporting out of the box.

Maintenance Costs

On-premise legacy accounting systems incur significant expenses for annual maintenance fees, along with ongoing IT infrastructure upgrades, both hardware and software. No question, IT staff resources are required, including outside consultants for support and report development.

The following is a list of ongoing maintenance required for on-premise accounting systems:

• Applying Fixes, Patches, Upgrades
• Downtime
• Performance tuning
• Rewriting customizations
• Rewriting integrations
• Upgrading dependent applications
• Maintaining/upgrading hardware
• Maintaining/upgrading network infrastructure
• Maintaining security
• Maintain/upgrading databases

Software Integration

There is a growing need to integrate accounting with other business systems like customer-relationship management (CRM), salesforce automation (SFA), payroll, expense reporting, invoicing, business intelligence, and other operational systems. In addition, there might be requirements for category-specific systems (project accounting, fundraising, associations, sales tax and ecommerce, manufacturing, supply chain, and many others).

Ideally, such integrations can be automated, and tie together the applications to give their end-users and executives a “holistic” view. With new cloud solutions, API’s and connectors can replace extensive and expensive programming required of legacy ERP systems.

Growth and Change

Organizations change over time, most often by growing larger by adding multiple offices or entities, international locations, remote users and stakeholders. This can lead to complex multi-currency, consolidation, and reporting requirements.

With growth comes the need for more complex requirements like revenue deferral and recognition and expense allocation. Can your old system handle multi-currency or multi-entity requirements? Does it support multiple business entities and on-demand financial consolidations? Can your old system adhere to tighter accounting and regulatory compliance standards?

Many legacy accounting systems cannot scale easily to accommodate the increasing complexity of a growing organization without adding manual processes and additional costs.

So Many other Signs

In addition to the “5 Signs” identified, any given organization may experience many others. From auditors concerned about financial controls, to data security, system backup and data recovery, and unfortunately, fraud.

Increasing regulatory and compliance requirements, such as Sarbanes-Oxley and the tightening GAAP guidelines, are forcing many businesses to demonstrate greater “auditability” and “traceability.”

Visibility and streamlined reporting have never been more critical. Companies need to be able to make prior period adjustments and easily view the change history to appease financial auditors concerned about today’s stricter regulations.