ACCT6001 Intermediate Financial Reporting Laureate International Universities USA
Accounting Information Systems For Local Market
a) Analyse and articulate business processes and recognize the role of accounting information systems in enhancing business process design. b) Communicate with IT professionals, stakeholders and user groups of information systems.
Introduction With the current globalization, competition is at the peak both in the local market and internationally. Therefore, its fundamental for different companies to update their operations to comply with the current innovations and technology, so us to move with the same pace as the advancing technology for competitive advantage. It is the work of the managers in organizations to initiate programs aimed at analyzing business operations and articulating them to point out areas of weaknesses and apply the relevant technology for development.
This analysis was triggered by our realization of the stiff competition in the local and international market. The fact remains that failure to adjust business operations as per the changing technological environment may hinder the achievement of organizational goals and objectives. The application of the accounting information system in business operations is one of the technologies that have displayed significant importance in enhancing competitiveness in different firm across the globe. This report, therefore, purposes at enhancing the competitiveness of the GAAM company by proposing various recommendations in reengineering business operations through the implementation of the accounting information system.
The Participants, Inputs And Outputs Of The Current System
There are many people playing significant roles in the GAAM. A typical example of such individuals includes those in the purchasing department, i.e. one manager, one secretary and two buyers. Other participants include casual workers, assistant managers, Supply chain managers, quality control personnel, finance personnel, and auditors.
Some of the inputs used in maintenance, repair and operating devices include hydraulic pump inventory such as all the equipment that require tooling, equipment used in pouring casting, and supplemental materials like foundry sand. Other inputs include gloves, oil, safety equipment, lubricants and cleaning equipment (Murray, 2017). On the other hand, the outputs produced by the company include control valves, gear pumps, telescopic cylinders and motors.
GAAM is composed of many departments like the purchasing department. Activity flow begins with the purchasing department which receives requests from 36 different personnel in the firm. Usually, the requests can be in the form of purchase requisition or MRO cards. MRO cards are used in the purchase of frequently used items whereas the purchase requisition is used for new items. Purchasing process has limitations whereby purchases over AU$1000 are endorsed by an individual higher in the rank of the purchasing authority. Ones the purchase requisition is received by the purchasing department, its reviewed, a requisition form filled and signed before it's sent back by the MRO buyer to the individuals who made the request.
The MRO buyer, in this case, is also responsible for providing the AP/0 of the products being purchased. Otherwise, if the purchase is made via the MRO card, the card must be sent back to the department after approval. However, the delivery system of the cards and purchase requisition forms is manual just like for inventory.
There are some exceptions in the Business process of the company. For instance, if the requisition exceeds the AU$1000, the card/requisition form must be endorsed by an individual with a higher rank in the purchasing authority due to the chain of command within the firm. Additionally, suppose an item is purchased by someone else rather than the MRO buyer due to an emergency, the department will require a different purchasing number from the one purchased earlier used in the normal P/O. After the number is obtained, the purchase can then be made.
Strengths Of The Current Business Process
There exists a diversity of areas where GAAM company expresses lots of strengths. Firstly, the company makes use of purchasing cards which are associated with several advantages in business operations. Firstly, the purchasing cards are known to streamline purchasing experience. Purchasing cards are known to enhance faster and improved purchasing experience when compared to the traditional means of making a purchase order. The business, in this case, makes purchases without encountering any interruptions and any delays.
The use of cards also enhances supplier relationships in organizations. Usually, the transactions made through cards take a shorter time as compared to transactions made manually using traditional means. Therefore, the use of cards enhances faster payment to the suppliers which promotes their satisfaction with the organization. Additionally, the use of purchasing cards enhances faster payment to the suppliers which promotes their satisfaction with the organization. Additionally, the use of purchasing cards enhances customer satisfaction (NAPCP, 2018). In so doing, the company can maintain a good relationship with the suppliers.
Thirdly, purchasing cards enhance flexibility in purchasing control. The company is assured of efficiency in the purchasing program as purchasing cards are capable of managing what is purchased, where and the total amount to be spent by individuals or the department (Thompson, 2016). The reporting of the solutions provided by the purchasing card displays accurate time-visibility to the company regarding the transactions made (Thompson, 2016). The use of purchasing offers opportunities for savings within the company through the reduction of reconciliation costs, purchasing costs and simplification of the processing (Bartolini, 2014). Purchasing cards have proven to be an opportunity for savings across business and public sectors. The replacement of paper invoices and manual systems has helped the company to cut on business costs (Peters, 2017). Purchasing cards are said to have cash rebates on business purchases (Cadence Bank, 2015). The discounts help reduce the cost of the purchased items thus boosting the bottom (Cadence Bank, 2015).
The use of purchasing cards in the company also enhance security and expense management. Usually, the authority streams and payments are locked down to enable mitigation of internal accounting frauds within the purchasing department (Cadence Bank, 2015). The company controls the expense sector by giving provisions, standards and limitations to the use of capital. For instance, the purchasing level within GAAM company is limited between AUS500 and AUS1000 above which the requisition/card reimbursement must be endorsed by an individual higher in ranking following the purchasing authority.
Even though GAAM company has improved its competitiveness through the purchasing card, several gaps have been presented in the business processes of the company. For instance, the company is dominated by traditional operations and strategies. Traditional strategies are time-consuming and costly. A typical example of such instances is the manual transportation of the requisition forms from the purchasing department to the individuals who made the requests. The transmission of credit cards from the MRO buyer is also manually done. In such a case, heavy transportation costs are incurred.
Additionally, manual transportation of the cards and requisition forms is time-consuming. Following the fact that most of the purchases made are for the old and outdated replacement parts, manual operation is a huge inefficiency within the organization. Such operations force the MRO buyer to conduct periodic pricing and vendor research Such an ideology is not just tedious for the MRO buyer but also time-consuming.
Use Of Information Technology
Information technology encompasses the software, hardware, IT personnel and all the assets created by IT (Romero, 2015). Currently, different firms are investing in the IT program with expectations of improving their profitability, intangible assets, productivity, client satisfaction and general profitability (Romero, 2015). However, the Impact of IT on Business operations cannot be quantified (Romero, 2015). Therefore, this section proposes some of the IT applications in curbing displayed inefficiencies in the GAAM company.
The fundamental issue that needs to be addressed circumnavigated around manual operations. As already mentioned, the manual operation comes along with a diversity of problems including the time factor and cost expenses. Therefore, I would recommend for automation of all the operations in the company. Most importantly, the delivery of purchasing cards should be automated. The requisition process should also be automated. Automating the requisition process will come along with a diversity of advantages to the company. Automating the requisition process enhance centralization of procurement. Centralization of procurement enables the buyers to bundle purchases manage the purchasing power of the company in negotiating for more contract terms (Deltabid, 2018). Automating requisition also enhance the storage of communications hence a step out of uni-deal email form of storage of information.
I would propose for the implementation of the requisitioning software that smoothens the approval process by ensuring that buyers waste no time to track the right person. Automation of the requisitioning process centralizes the stakeholders communications and purchasing processes thus enhancing accuracy and efficiency in the fulfillment of requisitions (Deltabid, 2018). Therefore, automation of the requisition process promotes quick approval, faster requisition process, easy tracking of requisitions, communication storage and centralization of procurement.
Automation should also cover the purchasing card sector. In so doing, the program will eliminate checks, invoices and purchase orders to allow the MRO to modify, reconcile, review and approve transactions both in the day and during the night (Cadence Bank, 2015). Such a program enhances swiftness in the management of business transactions. Automation of the purchasing card program enhances management reporting (Cadence Bank, 2015). In such a case, data can be easily managed by the MRO buyer using the merchant category code, or geography on the computer (Cadence Bank, 2015). The ideology also applies in the accounting platform integration. I such a case, the automated data capture provides detailed information that is essential for cost allocation and integration of the accounting platforms to prevent duplication of keyed invoice data. The automation process improves the efficiency of processing the payable accounts.
Business Process Reengineering
Business Process re-engineering refers to the radical redesigning of the operations in the firm for the achievement of the dramatic improvements in quality and overall productivity (Brain.com. 2018). The re-engineering process involves starting with a blank sheet of paper and rethinking of the current business operations that will deliver more value to the customers (Brain.com. 2018). Following the current processes of GAAM corporation, various processes need to be redesigned. Firstly, the delivery of credit cards needs to be automated. In such a case, there is a need to scan the cards and sent them through computer software applications such as emails. The requisition process should also be automated. The requisition forms can also be scanned and sent through the email rather than using manual delivery mechanisms. Automation of the requisitioning process can be done using the slingshot requisition management software that enables automatic approval, collection and fulfillment of requisitions in the company. The automated software enables employees to enter into requisitions without any training (slingshotsoftware.com. 2018). Additionally, the software saves on time and enhance automatic deriving of the general ledger accounts.