1. The system of collecting and processing transaction data and disseminating financial information to interested parties is known as the accounting information system. (Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, 2005). Implementing new accounting system information can be difficult because it may involve many areas, such as accounts payable, inventory and sales. IMPLEMENTATION OF ACCOUNTING INFORMATION SYSTEMS The steps necessary to implement a successful information system in the organization are as follows: Detailed Requirements Analysis
In the very first step, all individuals involved in the system used in the Amoy Chemicals are interviewed. The current system is thoroughly understood, including problems such as: breakdown by location and by consumer group. The complete documentation of the current system used in the Amoy Chemicals is also gathered. This would help you to know where the problems arises in the previous system and how do you control your costs in the near future. Systems Design The analysis is thoroughly reviewed and a new system is created in this organization. What data needs to go into the system and how is this going to be handled?
What information needs to come out of the system, and how is it going to be formatted? If you know what needs to come out and what you need to put into the system then the program you have selected will appropriately handle the process. The system is designed to include appropriate internal controls and to provide management with the information needed to make decisions. Documentation As the system is being designed, it is documented. The documentation includes vendor documentation of the system and, more importantly, the procedures, or detailed instructions that help users handle each process specific to the organization.
Most documentation and procedures are on-line and easy to handle. Testing Prior to launch, all processes are tested from input through output, using the documentation as a tool to ensure that all processes are thoroughly documented. It is also ensured that users can easily follow the procedures so that you know how it is working. This is all done in a test system. Training Prior to launch, all users of the information system in the organization i. e. production manager, sales manager and other concerned members need to be trained with procedures.
This means, a trainer using the procedures has to show each end user how to handle procedures. The end user then first performs the procedure with the trainer and the documentation and then performs the procedure with the documentation alone. Launch The system is implemented only AFTER all of the above is completed. The entire organization is aware of the launch date. Ideally, the current system is retained and often times run in “parallel” until the new system is in full operation and deemed to be working properly. Support Support has two objectives. The first is to update and maintain the information systems.
This includes fixing problems and updating the system for business and environmental changes. For example, changes in generally accepted accounting principles (GAAP) or tax laws might necessitate changes to conversion or reference tables used for financial reporting. The second objective of support is to continue development by continuously improving the organization through adjustments to the Accounting information systems caused by business and environmental changes. These changes might result in future problems, new opportunities, or management or governmental directives requiring additional system modifications.
Figure [ 1 ]: SYSTEM DEVELOPMENT LIFE CYCLE 2. It is important to carry out a system survey before a new system project should be approved because of following reasons: * The current system of Amoy Chemical has to be surveyed to identify what aspects of old system should be kept. The current system of Amoy Chemicals is installed by their predecessors for years ago. Sometimes there are some important things in the previous technology which we can’t find in the modern technology. So the old system has to be completely reviewed so that the old aspects should be kept which are beneficial for the organization. The existing stem must be reviewed to know the problems in the existing system. It is very important to know the areas which are creating problems in the previous process so that the same problems will not occur again in the new system. The existing system is outdated in Amoy chemicals so it is failed to provide the necessary and timely information. * It is also important to plan the budgets for the future on the basis of previous cost. This will help in reducing excessive cost in the future and the organization can save money for more important functions. . System analysis is the stage in the system development process whereby an existing system is analysed so as to ascertain the problems associated with it in order to proffer solutions to the problems identified. (Retrieved from : Scribd) In this phase, the current system is studied in detail. A person responsible for the analysis of the system is known as analyst. In system analysis, the analyst conducts the following activities: Data analysis is a thorough review of the accounting information that is currently being collected by an organization.
Current data are then compared to the data that the organization should be using for managerial purposes. You have to collect and review all the previous data to find out the problems and to know the cost structure of the organization. The data is studied completely to make some appropriate changes so that the problem’s doesn’t occur again in the new system and to know how to control the excessive cost spent on raw materials. For this purpose, various tools may be used. The most popular and commonly used tools for data analysis are: * DFDs (Data Flow Diagrams) System Flowcharts * Connectivity Diagrams * Grid Charts * Decision Tables etc. Decision analysis is a thorough review of the decisions a manager is responsible for making. The primary decisions that managers are responsible for making are identified on an individual basis. Then models are created to support the manager in gathering financial and related information to develop and design alternatives, and to make actionable choices. After all the data has been collected the manager’s have to take important decision regarding the changes made in the previous process.
The managers have to take into the consideration the problems and the difficulties with the previous system. Process analysis is a thorough review of the organization’s business processes. Your organization is using the original information system which has been developed and installed by the predecessor’s four years ago. This system is now outdated and creating lots of difficulties so it is important to implement new information system in this organization. In process analysis the process used by the organization is also reviewed.
Organizational processes are identified and segmented into a series of events that either add or change data. These processes can then be modified or reengineered to improve the organization’s operations in terms of lowering cost, improving service, improving quality, or improving management information. Data Gathering In this step, all the sufficient data about the system to be developed is to be collected. There are different tools and methods used to collect data, depending on situation. These are: * Written Documents The data may be collected from written documents available from manual-files of an organization.
The written documents may be reports, forms, memos, business plans, policy statements, organizational charts and many others. The written documents provide valuable information about the existing system. * Interviews Interview is another data gathering technique. The project team members or assigned analyst interviews managers, users/ clients, suppliers, and competitors to collect the information about the system. It must be noted that the questions to be asked from them should be precise, relevant and to the point. * Questionnaires Questionnaires are the feedback forms used to collect Information.
The interview technique to collect information is time-consuming method, so Questionnaires are designed to collect information from as many people as we like. It is very convenient and inexpensive method to collect information but sometimes the response may be Confusing or unclear and insufficient. * Observations In addition to the above-mentioned three techniques to collect information, the team may collect Information through observation. In this technique, the working, behaviour, and other related information of the existing system are observed. * Sampling
If there are large numbers of people or events involved in the system then you can use sampling method to collect information. In this method, only a part of the people or events involved are used to collect information. 4. Benefits of outsourcing the IS function for Amoy are: (James Bucki, Outsourcing Advantages: A Back-Office Operations Illustration) * Cost savings: By outsourcing the IS function from outside computing bureau you can get a better cost control. You can outsource a vendor that specializes in a given function and performs that function more efficiently than the company could. * Staffing levels:
By outsourcing you will reduce the workload on your employees (freeing them to take on additional moneymaking projects for the business), or to provide more development opportunities for your employees by freeing them from tedious tasks. * Focus: Outsourcing will help you to eliminate distractions and force yourselves to concentrate on your core competencies. Outsourcing can free the entrepreneur from tedious and time-consuming tasks, such as payroll, so that he or she can concentrate on the marketing and sales activities that are most essential to the firm’s long-term growth and prosperity. Flexibility: Outsourcing will help you to maintain financial flexibility in your organization. For eg: the sale of assets that formerly supported an outsourced function can improve the organization’s cash flow. * Knowledge: Outsourcing will helps you to gain access to new technology and outside expertise. This will helps you to reduce the costs to hire computer experts or develop the in-house expertise to maintain high-level technology. This will help you to compete with larger companies. Drawbacks of outsourcing the IS function for Amoy is: * Loss of control:
When you ask an external firm to provide information system services, the external firms handle the system generally. Therefore, the services provider can operate the system without asking the ideas of business. In this way you can lose control over the function performed within the organization. * Loss of security: When the information system is outsourced, you can not only lose the control, but also your security. The provider has known many customers’ confidential information. Hence, there is a risk that you may lose your confidential information to your competitors. * High costs of selecting and monitoring providers:
Although outsourcing reduces the costs in development systems and staffs salaries, but it may raise the cost of inspection. Selecting the outsourcing providers is a complex process. It involves searching the available providers, measuring the reliability and costs of provider and so on. * Inflexibility: When you decide outsourcing, you must make contract with the provider. In order to preventing the benefit of the provider, the contract must include the time horizontal of service provided. If there are environmental changes, such as fewer profits due to recession, then you cannot cut its information technology cost immediately.
The constraint of contract makes it more difficult for you to manage the changes. * Loss the benefits of end-user development End-user development is the development of information systems by end users with little or no formal assistance from technical specialists. It leads to a higher level of user involvement and satisfaction with the system. It may reduce the involvement and satisfaction of the end users. RECOMMENDATION As soon as the accounting information system becomes operational, it is recommended that the following should be considered: System monitoring:
After the system has gone live and proved to be performing satisfactory, it is still necessary to monitor the system to ensure that no abnormalities occur and to remove the cause if any arise. System maintenance: It is important to maintain the system properly after it is implemented i. e. to change business practices in accordance with changing economic circumstances and the introduction of new legislation. Retraining personnel: New system is implemented in the organization so there is a need to retrain existing personnel or recruit personnel from external sources for the new types of task which have been created
REFRENCING: 1. Kieso, Donald E. , Weygandt, Jerry J. , Warfield, Terry D. ( 2005), Fundamentals of intermediate accounting? (P. g. 62). John Wiley ; Sons, the University of Michigan Press. 2. Sadagopan, S (2004), Management Information Systems (p. g. 174). PHI Learning Pvt. Ltd. 3. Oz, Effy (2008), Management Information Systems – Page 415. Cengage Learning. 4. Wilkinson, J W, Accounting Information Systems – Essential Concepts and Applications. 4th Edition, John Wiley and Sons 5. Design and Implementation of Real Processing in Accounting Information System, Retrieved from: http://www. cribd. com/doc/24652150/Design-and-Implementation-of-Real-Processing-in-Accounting-Information-System. 6. Analysis Phase of System Development Life Cycle, Retrieved from: http://www. computerfreetips. com/main_page/System_Analysis. html 7. Accounting Information Systems, Retrieved from: http://www. enotes. com/business-finance-encyclopedia/accounting-information-systems 8. James Bucki, Outsourcing Advantages: A Back-Office Operations Illustration. Retrived from: http://operationstech. about. com/od/officestaffingandmanagem/a/OutSrcAdvantg. htm