Implications For An Accounting Information System Accounting Essay


The chief intent of this paper is to look into the major deductions for a company ‘s Accounting Information System ( AIS ) which may be affected by ERP when the house decides to implement a full map of Enterprise Resource Planning ( ERP ) system. In item, ERP is a combination of concern direction pattern and engineering with the company ‘s nucleus concern processes to enable the accomplishment of specific concern aims. In add-on, AIS is unite the survey and pattern of accounting with the design, execution, and monitoring of information systems. Besides that, this paper will cover the functions and intents for both AIS systems and ERP systems every bit good as perceived the benefits and drawbacks for companies of ERP system. Specifically the paper will analyze whether the executions of full ERP system have effected or impacted the AISs. In add-on, this paper will look at the jobs cause by ERPs and the designation of major deductions for AISs.


First of all, ERP play an of import function in provides centralised and incorporate package to assist organize and pull off the on-going activities of the map within the endeavor, which include, accounting, gross revenues, finance, merchandise planning, selling, human resources, distribution and fabrication. As Hernandez, ( 1997 ) said that, for ‘many writers, ERPs are systems which enable integrating of the assorted maps of the endeavor, to the extent that they centralize and make accessible all the information required for the assorted concern processes that run across these maps ‘ . On the other manus, the intent of ERP besides implemented to pull off those ‘existing and prospective concern policies and programs in an efficient mode under a specific rigorous deadlines ‘ ( Shelly, Cashman & A ; Vermaat, 2007 ) .

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Besides that, every execution of ERP is alone and is designed to fit to the implementer ‘s assorted concern procedures. In general, the execution of ERP system can be cost 100s 1000000s of dollars to put in it, and may take at least 4 to 6 old ages to implement and finish. Once the ERP system had installed to the house, it must be customized to fit the current concern demand of house. Nevertheless, ERP system that could supply information within the administration as analyze intent, so that direction of the organisation can portion information more easy. Consequently, ‘higher effectivity and efficiency in operations and improved client satisfaction are the ultimate benefits derived from ERP systems ‘ ( Duff and Jain, 1998 ; Gupta,2000 ) .

However, ERP system is formulated in an administration to efficaciously and expeditiously achieve the concern aim and ends of the administration. The work flow may takes topographic point between sections in return to go much more automatic, and finally, supply better service to client due to the person utilizing the customer-facing applications will hold entree to every spot of information sing each relevant procedure. Other than that, ERP systems are define as a broad administration systems and the execution of the system usually involves many stakeholders. Therefore, ‘ERP system requires informations standardization, integrating of the system with other information systems and direction of advisers and sellers ‘ ( Soh et al. , 2000 ) . Figure 1 shows how Enterprise Resource Planning fits into the operations of an endeavor.


Figure 1. ERP encompasses all of the major activities throughout a concern. ( Shelly, Cashman & A ; Vermaat, 2007, p731 )


Further, there are a figure of advantages or benefit of ERP system, which include complete integrating of information system across section, and besides helps to accomplish better undertaking of direction, better client services, improved work procedure, increase entree to available day of the month for determination devising, speedy response to altering concern operation and market status, cut down paper and so forth. In general, ‘complete integrating means that the information is shared quickly and direction receives a more complete and timely position of the organisation through the information ‘ ( Shelly, Cashman & A ; Vermaat, 2007, p731 ) . Once implemented the ERP system brings antic advantages for the company, it is due to all the systems are linked or connected together, therefore all the sections can portion information more easy within the organisation as I mention early. In add-on, a study done by Oliver, ( 1999 ) showed that ‘better and faster coverage of the province of the endeavor leads directors to better determinations ‘ . In add-on, ERP system can be utile in assisting a company to happen the best design procedure. Once a company is in the procedure of planing a merchandise, the procedure is really making every bit of import as the endA consequence. Furthermore, ERP can besides be responsible for changing how a merchandise is manufactured. Another benefit of ERP which can assist the order trailing. When a company receives orders for a merchandise from provider, the company is able to suitably track the orders can let the company to acquire elaborate or information on their clients and selling schemes ( Al-Mudimigh et Al. 2001 ) . In effect, ‘ERP systems are expected to heighten market value and house public presentation through efficiency and effectivity additions ‘ ( James, Barbara and Jacqueline 2002 ) .

However, with all those benefits that ERP offers, there are besides a figure of drawbacks as good. Possibly one of the major disadvantages to this system is the cost of implement every bit good as the preparation cost. To implement a full map of ERP can be cost 100s 1000000s of dollars to put in, and may take several old ages to finish as I mention early. Even if a company has adequate money to implement a to the full map of ERP, but they may non be able to successfully utilize it if they do non hold adequate money to develop their employees on the procedure of utilizing new system. Therefore, the cost drivers to preparation of employees are high. Another biggest jobs with ERP is that it is difficult to custom-make, it must be modified to accommodate their demands. Therefore, Bingi et al. , ( 1999 ) said that ‘very few companies can efficaciously utilize ERP due to this system is hard to utilize ‘ . Kumar and van Hillegersberg, ( 2000 ) research, ‘many big administrations have made important investings of both capital and clip to put in and implement ERP systems, other than that, non all executions go every bit good as intended ‘ . It is due to even when a company does get down altering the system, but they are limited in what they can and able to make. Besides that, Mohania and Bhide ( 2008 ) claim that the ‘information integrating job has become the biggest hurting point for endeavors today ‘ . Furthermore, there are a Numberss of the incorporate links need high truth in other to applications to work in more expeditiously and efficaciously. Harmonizing to Mohania and Bhide ( 2008 ) , ‘the growing of organisations ever leads to the creative activity of multiple stray information beginnings that are disconnected from each other, taking to cut down efficiency ‘ .


The simple intent of Accounting Information System ( AIS ) is to ‘collect informations, procedure it into information and describe the information which are sing events that have an economic interruption down upon the administration and the communicating, care and processing of information to the internal and external stakeholders ‘ . ( Constantinos J. Stefanou, 2006 ) . FactorsA that shape the AIS include ‘natures of the concern, the size of theA house, volume of informations and the informational demand that direction andA others topographic point on the system ‘ ( Kieso and Weygandt, 1998 ) . This information is used for the rating of the fiscal place of the administration and for decision-making intents such as aid pull off the organisations more strategically and expeditiously.

Furthermore, these systems can be customise to run into the demands of a concern. For case, information engineering professionals and concern procedures are responsible for the AIS which there can unite to work together to implement and develop such a system so that the concern will automatically gets information from other beginnings which is already in usage by the concern. Besides that, AIS can be set up to have certain maps that are of import to the concern and extinguish maps minor to the concern. Seddon, Wong and Yip ( 1992 ) claimed that ‘there has been really small research into the characteristics that make one transaction-processing accounting system better than another. Brecht Martin, ( 1996 ) done a research on issues related to ‘accountants play functions of great significance in the economic system, if without the information expertness of comptrollers, concern will non be able to measure their net income of loss and cost place, concern public presentation, or to be after future fiscal success ‘ .


Harmonizing to Joseph F. Brazel and Li Dang, ( 2005 ) research showed that ERP systems have become ‘the system of pick for the bulk of publically traded companies and have wholly changed the manner accounting information is analyzed, processed, disseminated and audited ‘ . ERP systemsA are big scale information systems that affect a company ‘s Accounting information systems. The execution and use of a full map ERP systems represent ‘a extremist alteration from the bequest systems of the past as concern maps are integrally linked through workflow mechanization and one important database ‘ ( O’Leary 2000, Bradford and Roberts 2001, Winters 2004 ) .

ERP systems are expected to roll up and circulate timely information to directors and therefore better their ability to procedure and analyse accounting information ( Davenport 1998 ; Hitt et Al. 2002 ) . ERP systems are besides implemented to supply direction with a incorporate endeavor position of the house ‘s fiscal status at all times ( Dillon 1999 ) . In add-on, these integrated systems eliminate barriers between house maps, leting directors unprecedented entree to accounting information ( O’Leary 2000 ) . Concurrently, recent research indicates that there may be decreases in internal control effectivity and audit quality in ERP system scenes ( Wright and Wright 2002 ; Hunton et al. 2004 ; Brazel and Agoglia 2005 ) .

Traditional Accounting information systems recorded fiscal information and produced fiscal statements on a periodic footing harmonizing to GAAP dictums. Modern ERP systems provide a broader position of organisational information, enabling the usage of advanced accounting techniques, such as activity- based costing ( ABC ) and improved managerial coverage utilizing a assortment of analytical techniques.


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