Accounting Information Systems of Hurst trail Company

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Requirements

Question

1- Write a note on Accounting Information Systems in approx 2500  words with references to Harvard.

Solution

Answer to Question 1

Hurst trail Company is a family photography business. The business has a good reputation. In addition, it has many clients among the schools for photography. The company uses a small accounting package and the staffs that use the package are complaining that the transaction processing is slow. The capacity of the system is nearing it full capacity and it has the added feature of handling digital imaging requirements of the business. Hurst Trail Company is aware that an upgrade is necessary but they are not sure how to go about it because that would need 2 full time IT employees. The company is also not clear as to how the system needs to be managed. What Mr Johnny Wright feels is that capita should be spent now so it can meet the future needs of the business rather than have to spend again after 2 years to increase the capacity of the system.

  • Johnny Wright’s statement is not correct. Even if the processing of the business goes back to normal and the transaction processing is faster, it does not mean that no money will be needed to maintain the system once an upgrade is done. Money needs to pay regularly to the vendors for the service used only; there are license fees that will need to be paid.  The service level agreement needs to be renewed for which the company has to pay on a yearly basis (Marshall and Steinbart 2017). The licence fees will need to be paid and if the company is system is not using a public cloud system then further expenses will need to be done for a private cloud or a hybrid clod for the accounting information system of the company.

  • Hurst trails Company should replace the MYBP with a SAP – ERP system, it is an expensive system but it will take care of the future needs of the company and it will be cheaper during the future activities for the company. There will be no need to worry about capacity of process automation, the real costs of operating the business will be halved and the security and maintenance aspects of the accounting system will be the responsibility of the vendor. In addition, regular automatic updates will be installed for the system without any additional costs, the vendor will maintain the security aspect of the system and it will be place on SAP’s own cloud platform where external data sources will also be made available. Using the Hana after the implementation of the Sap ERP means that the there will be no expenses incurred for the cloud platform only for the services that are provisioned by the company (Hassanet al. 2017)

  • If the SAP ERP is implemented the company will not require a separate application service provider s the SAP ERP system has its own application service provider which is the best in the world. It provides high speed networking and the Sap software applications are customized to meet the integration of the legacy system of Hurst trail Company. The 3 major applications service providers from SAP are:
    A- Blue Star Solutions
    B- QCS
    C- Seal Consulting

  • The SAP – ERP is a standardized system where all the compliances are inbuilt. Each process function is available for the accounting and the processing of financial data. The accounting system does not require manual inputs as all the processes are automated, it is only at the initial stage of input that there is a human computer interface. The system extracts data automatically from all other business processes for accounting. Whatever customization is needed the SAP team who will manage the project of migration and change of system will customize the processes within the inbuilt business processes which are detailed and complex and meets all the needs for a financial accounting system, it would be better and cheaper to buy a new system from SAP than to develop a system. (Simkinet al. 2014)
    The process steps that are used for the evaluation of a vendor for the ERP system for accounting information are:
    A- Planning the system upgrade or change
    B- Listing the specific requirements of the business and checking if the ERP system meets the needs of the business through a vendor
    C- Analysing the vendor’s reputation in the markets and the type of clients the vendor has
    D- Taking the demonstration from the vendor of the working of the SAP ERP Accounting System
    E- Analyse how the vendor will implement the system into the business and the stages of the implementation
    F- Check the financial analysis that is provided by the vendor for decision making
    G- Analysing the recommendations and the prices of the vendors (Libby 2017)

  • Three possible consequences of relying on a single vendor for the system are that the level of flexibility is less because the business processes for accounting are standardized.  The vendor follows a particular roadmap for marketing which is used for all clients and vendors do not deviate from their marketing blueprints it has been tested and tried and the solutions that a vendor offers are a set of solutions, which the vendor is unlikely to change such as disaster recovery, retrieval and back up data.

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Answer to Question 2

Based on performance scores the SAP ERP has received 8.5 and Xero has received 9.5 from survey data. The client experience with SAP – ERP has been 100% and with Xero it has been 97%.
For the pricing the prices for services in SAP ERP is quite- based and different for different clients because the needs are different, but with Xero it is a monthly payment of $ 9 for each service that is used.
The SAP ERP manages and supports the business processes of 25 industries in 37 languages and 45 localizations; the company has implemented over 50000 accounting information systems. Xero is a small applications package which is designed and used in small and medium companies in several different industries.

The SAP ERP features that have made the accounting information system popular are:

  • Procure – to- pay

  • Plan – to – product

  • Order – to – cash

  • Request –to – service

  • Core Human Resource management

  • Core Financial management

The features that have made Xero popular are:

  • Bank reconciliations

  • Keeping track of support services for the accounting

  • Dashboard

Customers who have small business, medium businesses and large businesses use SAP ERP. Small businesses, medium businesses and freelancers mainly use Xero.
The Sap ERP has quote based pricing and they can provide on premise applications which is what the company needs. There are various functions in the SAP solutions that will help to manage not only the accounting system but also human resources functions and information storage functions. The payments for the use of each module and not all the modules in the ERP system.
Xero provides the clients with 3 SMB, 5 invoices and quotes, 5 bills,20 bank transaction and the standard payment per month is $30.00 (Alewineet al. 2016)
Xero is a public software company based in New Zealand. It is a cloud based accounting system for small and medium businesses;It is listed in the Australian Stock Exchange. The products are based on software – as – a service platform and clients have to subscribe to the services offered by Xero. Xero products are used in 180 countries. The main features of Xero are automatic account feeds, invoicing, accounts payable, expense claim, fixed asset depreciation, purchase orders, standard businesses, management reporting and credit card statements. External applications can be integrated into the software, and it already has over 375 third party vendors who have built additional features on Xero. It has multiple tax rates and currencies payroll features and project management features for accounting. Information is given on a distributed platform. The financial data is stored on a cloud platform, and has a single ledge system work can be done on the accounting in real time. The revenue inflow for the company as at July 31st 2018 has been NZD407 million. (Laugesan,2013)

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The types of modules that are found in the SAP accounting system are:

  • Receivables

  • Payables

  • General Ledger

  • Daily Journal

  • Core functions

  • Sales data

  • Earnings

  • Payroll

  • Legal obligations

The accounting products are for all business sizes. The products are scalable. The software can be deployed on premise using the Sap Hana platform at no extra cost. Hybrid installations can also be sued to increase the flexibility of the system. AP Business One is an accounting software for small and medium businesses and it can be customized for all industries. Some of the sophisticated features of the accounting software area:

  1. Analysis of data

  2. Warehouse management

  3. Procurement costs

  4. CRM

  5. Access on mobile devices

  6. Shared distribution of information

  7. The major modules that it consists of are:

  8. Financial Accounting

  9. Controlling

  10. Asset Accounting

  11. Sales and Distribution

  12. Materials Management

  13. Product Planning

  14. Quality management expenses

  15. Plant maintenance

The implementation phases that are used are preparation of the project, creating the Business Blueprint,Realization, Final Preparation Implementation and Deployment. (Decker,2018)

  • The system requirements for Xero are:
    Mobile devices on which it runs
    Support browsers
    Internet Explorer (IE) 7
    Mozilla Firefox (FF) 3 or newer
    Safari 3 or newer
    Google Chrome.
    JavaScript activation
    Flash player

  • Minimum System requirements for SAP are:
    Hardware
    Intel Pentium III 500 Mhz
    HDD - 30 GB
    RAM - 256 MB to 512 MB

  • CDROM 
    Intel compatible Ethernet card

  • Software 
    Windows NT -Server 4.0 
    Windows NT -Server Pack 6.0
    Internet Explorer -5.0
    Microsoft SQL -Server- 7.0

  • SAP R/3 
    Report Data CD
    Export CDs
    SAP GUI
    SAP R/3 Kernel CD
    Dynamic Link -Libraries 
    Active Directory -Service Interface 
    Microsoft -Management Console (Chew,2015)

SAP ERP

  1. The advantages of SAP ARP are that it manages all types of financial transactions and product life cycles. It manages the supply chain activities. The software can analyze complex data and carry out collaborative decision making based on the analysis of the financial data. It helps to meet the complex needs of the businesses of all sizes.

  2. The disadvantages of the Sap ERP are that it is a high cost system and the employees need to be trained in the system before they can use it. There are costs attached to upgrades and maintenance periodically. The system is a complex system and each feature or functions are installed stage wise taking time for the full implementation of the system (Alewineet al. 2016).

XERO

  1. The advantages of Xero are that currency conversion is done rapidly which helps those who use it, it is an easy to use system and access is fast, it can be integrated with other legacy systems and does not take much time. The prices are reasonable.

  2. The disadvantages of the Xero system are that the report feature which could be improved, the reporting capabilities are limited, the reports run have to be taken from the General ledger and th4e customer support for the financial data is inadequate.

Training Requirement for SAP ERP

For the SAP ERP the training requirements are complex and users have to be trained to read the analytics, use the software applications, the must be trained about the SAP Hana platform and they need to be trained in SAP database and the use of the SAP technology.

Training Requirements for XERO

The training requirements for Xero are less complex and they users only need to bet rained in knowing the system and how it works, using the modules for financial management, reading the report formats, managing the expenses module and exporting the data from the general ledger to prepare the financial reports.

Answer to Question 3

William Pitt has been asked to prepare the income tax return for his client. In June he has earned more than expected. On July 2nd the client paid for advertising. The client has asked William to backdate the expense which is June 30th. In doing so there is anethical dilemma and a technical dilemma. The system will not taken an expense that has beenmade on July 2nd to be recorded on June 30th. The ethical dilemma is misrepresenting the earnings of June 30th considering that the July earnings could be higher and then the client will need the expense of July to lower the tax payments for the client (Collier 2015). He should not backdate the expense and should explain to the client the reasons why he has kept it on the original data of expense. For this he needs were prioritized, the stakeholder was prioritized and the client as kept informed because he was an important client.

References

  • Alewine, H.C., Allport, C.D. and Shen, W.C.M., 2016. How measurement framing and accounting information system evaluation mode influence environmental performance judgments. International Journal of Accounting Information Systems, 23, pp.28-44.

  • Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.

  • Hassan, H., Nasir, M.H.M. and Khairudin, N., 2017. Accounting Information Systems. In SHS Web of Conferences(Vol. 34). EDP Sciences.

  • Libby, R., 2017. Accounting and human information processing. In The Routledge Companion to Behavioural Accounting Research (pp. 42-54). Routledge.

  • Marshall, B.R. and Steinbart, P.J., 2017. ACCOUNTING INFORMATION SYSTEMS. PEARSON EDUCATION LIMITED.

  • Simkin, M.G., Norman, C.S. and Rose, J.M., 2014. Core concepts of accounting information systems. John Wiley & Sons.

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