Customized Accounting Database System

Published Date: 02 Nov 2017

FTDipGS 4

CT0170964

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ACCOUNTING INFORMATION SYSTEMhttp://img.ehowcdn.com/article-new/ehow/images/a06/gb/7m/components-accounting-information-systems-1.1-800x800.jpghttp://1.bp.blogspot.com/_QG2nDPD-5DE/SaoAVZx3JaI/AAAAAAAAANE/j_tNlCFXd4Y/s200/AIS.jpghttp://img.ehowcdn.com/article-new/ehow/images/a06/3c/4r/basic-functions-accounting-information-system-1.1-800x800.jpg

1. TABLE OF CONTENT

1. HISTORY OF AIS

Before discussing about Accounting Information Systems, knowing the history of accounting itself would give clearer understanding towards how Accounting Information Systems could be exist among current companis.

Basically, the definition of accounting is system which records, classifies and summarizes any of business financial transaction which could be defined in money terms. Begin in prehistoric times, people had to count for their daily consumption to be stored in winter. Witnessed in 4500 B.C. of the Babylonian Empire, pharaohs’ Egypt, and 2250 B.C. of the Code of Hammurabi, they set up value concept and understood monetary system as they entered trading system which was evolved further with the existence of taxation. (deSantis)http://ensign.ftlcomm.com/historyacc/pacioliR.jpg

Figure 1.1.

Luca Pacioli, ‘the Father of Accounting’, writer of "Summa".

Source: http://ensign.ftlcomm.com Later on, as Venice became the Europe business birthplace in the Italian Renaissance, the traders there created and executed the double entry accounting which was then written by Fra Luca Pacioli, shown in Figure 1.1., in "Summa de Arithmetica, Geometria, Proportioni et Proportionalita" in 1494 about record keeping and double entry accounting. (Bellis) The book became the first published accounting handbook for the following 500 years.

Currently, production is being focus on R&D (Research and Development), intellectual assets, and services. (Stewart, 1997) Businesses in today’s era demand availability, ease of access and rapidity of information cause Pacioli’s system could not fulfill this necessity. Therefore, many systems start out to steer this requirement by providing services to companies by implementing accounting as database information system that could record, store and process data. Accounting Information Systems, such as MYOB, UBS, and FACT are growing rapidly afterwards.

2. INTRODUCTION

Accounting Information System is really useful towards companies, dealing in their accounting department. The purpose of writing this Accounting Information System report is to learn and understand more about the role and knowledge of the system. Accounting Information System is also found useful to be learnt especially for those who are willing to enter accountancy world, either further studies or working experience.

Information System plays a huge role among business sustainability. It collects related components and manages them to acquire useful output based on business’ objectives. Nowadays, information system is done automatically and ellectronically due to growing technology and demand of high mobility of business operation as called as Computer-Based Information System (CBIS). (Hanan, 2008)

Computer-Based Information System has distinguished into many applications, dependent on which area or department it is focused on. Accounting Information System is operating through computer with accounting program, which focuses on processing company’s transactions that has occured and recorded. (VanBaren)

Accounting Information System has many importances for a company, from simply records and stores data, processes the data into useful information that is able to support decision making, until facilitates company to make sure that their information is available anytime, precise, and dependable. (ACCOUNTING INFORMATION SYSTEMS) The computerized system is intended to diminish human error and increase accuracy. Therefore, to maximize the utilization of Accounting Information System, there are several characteristic to ponder it as useful system which are interrelated, trustworthy, total, on time, intelligible, evincible, and easy to access. (ACCOUNTING INFORMATION SYSTEMS)

A private limited Malaysian construction industry Company, ZBMS had been using Accounting Information System named ‘Contract Plus – Financial & Project Accounting’. The software is able to combine financial data to be analyzed by accountants and also top level managers to support making strategical decisions based on opportunities and threats. (Sori, 2009)

3. REAL WORLD APPLICATION OF AIS

3.1. Various Types of AIS

Different companies may have their own consideration to choose which kind of Accounting Information System they wish to apply on their business. Their consideration could be affected by the size of the company, their budget planning, or even their preferences. These are several types of Accounting Information System companies may look at : (Lutzenberger)

1. Basic Spreadsheet System

This type of AIS is done by recording and storing data as sheets into a workbook. It is practised within small business using over-the-counter spreadsheet systems. However, this AIS type is not effective enough to deal with large amounts of data.

2. Off-the-shelf Accounting System

Companies are using this type of AIS by purchasing established program from software provider and applying it to their business. The disadvantages of this system appear when it is caught uncustomized with the business requirements and very dependable on the particular provider.

3. Customized Accounting Database System

This system may vary with the business needs and format as its interface is customized based on their needs. However, if any changes needed to be done, the system has to be redesigned.

4. Enterprise Software

Some of huge companies prefer to construct their own system to make it exactly appropriate to their customized format and requirements, which is undoubtly costly.

3.2. Payroll and Personnel Information System (P2IS)

One of the application of Accounting Information System is P2IS Software which is created by Trends & Technologies ,Inc.’s Software Service Group, handling payroll and information system. The system processes payroll repeatedly as needed until the period closing. Personnel information is capable to detect attandance history and other information about employees. There are some features P2IS present as its superiority, which are : (Trends & Technologies, Inc.'s Software Services Group)

Ability to facilitate precise planning, managing, and imposing all employee compensation perspectives;

Competence to list, detect, enumerate, and arrange employees time and other crucial information for input to Payroll applications;

Capable in generating statements by capturing chosen payroll/personnel data by organizational level or employee name;

Ease for users to gain information from any sections;

Excellent security upon salary control and personnel information;

Complete inputs and updates;

Uncomplicated system.

3.3. Contract Plus used by ZBMS Company

As previously mentioned in Introduction section, ZBMS, a construction industry company performing construction of building, infrastructure, energy, waste water, property, and oil and gas EPCC (engineering, procurement, construction, and commissioning) which is a private company of Malaysia supports their Financial Department using an Accounting Information System called Contract Plus – Financial & Project Accounting constructed by ZYXW, a private company.

The principal purpose of Accounting Information System is determining quantitative value of economics occurances exist in the past, present, and future. ZYXW’s Contract Plus software helps ZBMS to generate financial statements, such as income statements, balance sheets, and cash flow statements. (Sori, 2009) The system then will turn the data into accounting information from input, processing, and output phases which become useful for internal and external users. Figure 3.1. picturizes how Contract Plus Accounting System turns input into output through processing.

Figure 3.1.

C:\Users\IT PENABUR\Desktop\vanessacha2\kaplan\3rd term diploma\BIS\assignment essay\zbms.pngSource: www.eurojournals.com

4. AIS FUTURE TRENDS

Accounting Information System are predicted to be getting in with Cloud Computing in the future as it is considered more beneficial to be company’s data centers. Below is the news talking about SAP Enterprise Resource Planning that is planned to be in Amazon cloud system. (Henry Chao, 2012)

4.1. Is SAP ERP in the Cloud currently?

Lionsgate, a movie studio posted in November 2010 that they had a scheming to move SAP into Amazon Web Services cloud in order to acquire cost effectiveness compared to constructing its own data centers. SAP Enterprise Resource Planning modules that are going to be included into the cloud are accounts receivable, accounts payable, general ledger, and business intelligence. Freedom OSS will be assisting them during the transition. However, CIO of Lionsgate, Leo Collins stated that only the SAP modules of sandbox and email are placed in the Amazon cloud while Lionsgate is constructing their own data centers as they found it is complicated and inconvenient to place the mission-critical SAP system in the cloud. Even with the SAP sandbox, the transferred data should be encrypted or prepared anonymous.

4.2. Is the Cloud reliable and secure?

Table 4.1. The cloud has issues to handle before businesses make use of it, such as reliability. There are three categories of cloud, which are public, private, and hybrid as explained in Table 4.1.

Category of Cloud System

Definition

Public

Outsourced application software and outsourced data hosted art a service provider’s data center

Private

Purchased application software and hosting service from a provider and maintained by private network client

Hybrid

Mix of public and private cloud defined by the client

Source: http://www.accountingtoday.com

Amazon Web Service had a system error in Virginia data center in April 2011. This occurance affected multiple backups and crash had to be written by the servers and leaked that Amazon placed backups in the same server box, disregarded its protocol and advertisement about multiple data centers backups.

The cloud-based accounting information systems are not invulnerable. A provider of online payroll and book-keeping, Intuit, created a problem for small business when they could not access its cloud-based information system. As the impacts, small business could not process credit card payment and transaction for a week in May 2011. In fact, this error happened after Intuit committed to make changes due to similar incidents took place in June 2010.

4.3 The Cloud’s future

Based on a survey held by CoreNet Global and Newmark Knight Franks in December 2011, more than 50 per cent of companies are still using their own data centers. They are choosing not to do outsourcing on data centers due to risk management and known data center locations. This fact may indicate that cloud computing needs to be more reliable and secure to be able to support accounting information system.

The cloud computing existence is considered to make an impact in defining accounting information system future. Currently, SAP purchased the SaaS cloud company and turned out to be beneficial for $3.4 billion. However, it is important to await for security and reliability bugs have been handled. Companies should undergo wait-and-see approach before deciding to place mission-critical data in the cloud. Meanwhile, companies are suggested to rely on traditional data storage by placing their data behind a corporate firewall which is owned by corporate data center.

5. CONCLUSION

In conclusion, Accounting Information System is a useful computer-based information system which supports accounting department of a company from data recording, data storing, data processing into useful information, until providing information anytime precisely. The system helps to decrease human error as well as increase accuracy.

Different companies would come into different preference of Accounting Information type. Dependent on their size and budget, companies may choose Basic Spreadsheet System as over-the-counter system for small business, Off-the-shelf Accounting System that is purchased from a software provider, Customized Accounting Database System which purchased from provider and may vary with the business needs, or Enterprise Software as they construct their own system.

As its future trends, Accounting Information System could be applied to companies as it getting in with cloud computing. However, cloud-based accounting information system still has weaknesses on data security and reliability. Therefore, as it is trying to improve its service system, companies should consider more to develop their computer-based accounting information system into cloud-based accounting information system in the near future.