People And Processes In Accounting

PEOPLE PROCESSES ACCOUNTING 1 Running head: PEOPLE PROCESSES IN ACCOUNTING

People and Processes of Accounting Information Systems for Development and Management. David "Toby" Meyers BSA/310 – Business Information Systems Donna Dulo – Instructor University of Phoenix July 5, 2009

Abstract This article assesses Accounting Information Systems management and technology implementation. It attempts to describe Information Systems that meet the assumed needs and the perspective needs of accounting and the business processes that are involved. It explains the necessity of an understanding of financial accounting process in the Accounting Information Systems for management and technology implementation. Asserts that implementation, development and management of Accounting Information Systems requires an analysis of the companies accounting structure. It describes the purpose of accounting Information Systems. It also explains the necessity of the information to be presentable to persons who may not understand the accounting process.

People and Processes of Accounting Information Systems for Development and Management. Planning and managing Accounting Information Systems (AIS) requires an understanding of how the organization processes its accounts and structures its information. Information Systems (IS) developers and managers must understand the process of accounting and financial reporting in order for executive or management to respond to financial climate, taxes and legal concerns. An understanding of the companies accounting structure is integral to AIS development. AIS must present information in a readable and understandable record of the complete financial transactions of the institution. An understanding of the accounting process of a company is integral to developing AIS. IS developers and managers must respond to the needs of the business that use those systems. In accounting, IS respond to the needs of accounting and of the business process and to produce readable and reliable data that analyzes the companies’ financial situation. “Accounting is the practice of tracking a business's income and expenses and using those figures to evaluate its financial status,” (Allbuisness.com, 2005). Accounting handles the creation and audit of documents that display the companies’ financial information in a readable and understandable (Shultz, 2006) format such as a record of the complete financial transactions of a company that include purchases and expenditures, as well as, transactions with customers and taxes paid or owed, the balance sheet which is a contrast of expenditures and income, which includes measures of assets, equities, liabilities and receipts which are records of transactions,” (Allbuisness.com, 2005). These documents are essential to the business process and they are the direct responsibility of accounting personnel.

“The essential purpose of bookkeeping is to reveal the amounts and sources of the losses and profits for any given period. Proper bookkeeping should also reveal the nature and value of the assets and liabilities of a firm, as well as its net worth at the close of that period, (The Columbia Encyclopedia, Sixth Edition, 2008). Implementation of AIS requires an analysis of the companies accounting structure. Different companies use different processes to analyze financial records. Implementing AIS requires an understanding of current financial practices because these systems must match the current financial records and continue to process financial information in the way in which a business processes its financial claims. (Dummies.com, 2008) Eighteen units of Accounting and Auditing are required for the AIS major at University of Scranton. (University of Scranton, 2009) This illustrates the importance of an understanding of accounting to design and implement AIS. The best time to implement new AIS is at the end of a financial period; otherwise, you have to input data for all the months of the year that have passed. (Dummies.com, 2008) “Quality information is one of the competitive advantages for an organization,” (Xu, 2009). Company standards define data quality and are the most important system of insuring data quality, as well as, training and involvement by management, according to Hongjiang Xu’s case study of stakeholders rating of the importance of the factors,” (Xu, 2009). “Organizations should pay attentions to both systems and organizational factors. Different stakeholders of the systems and data quality controls need to work together to ensure the data quality in AIS,” (Xu, 2009). Quality data is the goal of any accounting system, taking account for the way an organization organizes its data and the people involved in that data is the basis for implementation of any AIS. Financial information must be in a readable and understandable record of the complete financial transactions of the institution. Accounting documents are essential to the business

process and are the direct responsibility of accounting personnel. The way accounting information is packaged and communicated can play a major role in the success or failure of a business, (Thomas, 1990). "Why is accounting blamed for the problems confronting American industry? Field interviews and questionnaires involving four corporate and 68 plant-level managers suggest that the answer lies in the way accounting information is packaged and communicated to users, (Thomas, 1990). Corporate managers rely heavily on the accounting reports they receive it is necessary and appropriate to measure performance against standards, and strongly support the system that ties managers' bonuses to standard cost variances, (Thomas, 1990). “Although corporate management depended on the accounting information they received, plant managers consistently and openly disdained it. In some cases, they abstracted important information from these reports and provided it to lower-level managers. Often they generated their own variance reports from data they had collected in-house,” (Thomas, 1990). If Thomas is correct in his assumptions, then the way that accounting information is presented plays a role in how it is used and understood by people who do no work in accounting. Corporate managers gave reports of information that they abstracted in a readable and understandable way that they used to define their management strategy. This is costly in human resources and undermines the process of accounting to present accounting information to management in a readable way. This is because not only accounting has to prepare a report, but management has to prepare a second report. This article examined the factors uses for developing and managing AIS for organizations. The intent of IS development in business is to improve operational efficiency. The AIS part of the IS enterprise resource planning has its very own process, management and development must have or present: An understanding of the accounting process of a company is

integral to developing AIS. Financial information must be in a readable and understandable record of the complete financial transactions of the institution. The development and management of AIS can better organize accounting information, make it more reliable and humanize the information so that the whole business structure can function smoothly.

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