Role of Accounting Information System in Enhancing Business Processes

This essay analyzes the role of accounting information system in promoting company operations. It evaluates GAAM company's operations and suggests the application of AIS for development. The report proposes automation of operations and business process reengineering for efficiency.

ACCOUNTING INFORMATION SYSTEM
Student’s Name
Course Studied
Accounting Information System
Course Code
Professor’s Name
Institutional Affiliation
Department
Date

Accounting Information System
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 essay focusses
primarily on the role of accounting information system in promoting company operations.
Accounting information system, in this case, involves communication with information
technology professionals, information system user groups and stakeholders. For a clear
understanding of the concepts brought forth, this report made use of GAAM company as a case
in which the business operations are evaluated, and the application of accounting information
system for development is displayed. Therefore, this essay has been set primarily to analyze and
articulate business operations in GAAM company and suggest the application of accounting
information system in enhancing business processes.
Purpose
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.
Activity Flow
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/O 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.
Exceptions
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.

Business Process Model
Exceptions
36
different
people
within the
company
Request
Purchasing
department
(Manager,
two buyers
and one
secretary
cards
Purchase
requisition
Signed Purchase Requisition
Form Returned as
Feedback
Card Returned as
Feedback after
review
manual
manual
manual
manual

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 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 AU$500
and AU$1000 above which the requisition/card reimbursement must be endorsed by an
individual higher in ranking following the purchasing authority.
Inefficiencies
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 unideal 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 stakeholder's communications and purchasing processes
thus enhancing accuracy and efficiency in the fulfilment 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 fulfilment 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.
Proposed Workflow Diagram
36
different
people
within the
company
Request
Purchasing
department
(Manager,
two buyers
and one
secretary
cards
Purchase
requisition
Signed Purchase Requisition
Form Returned as
Feedback
Card Returned as
Feedback after
review
Automated
automated
automated
Automated

References
Bartolini, P. (2018). Five Important Advantages of Purchasing Cards [online]. Retrieved from:
http://payablesplace.ardentpartners.com/2014/12/five-important-advantages-purchasing-cards/
[Accessed on 17, October 2018].
Brain.com, (2018). Business Process Reengineering [online]. Retrieved from.
https://www.bain.com/insights/management-tools-business-process-reengineering/ [Accessed on
17, October 2018].
Cadence Bank (2018). How your company could benefit from using purchasing cards [online].
Retrieved from: https://cadencebank.com/fresh-insights/business/how-your-company-could-
benefit-using-purchasing-cards [Accessed on 17, October 2018].
Deltabid (2018). Purchase Requisitions[online]. Retrieved from:
https://www.deltabid.com/purchase-requisitions-definition/ [Accessed on 17, October 2018].
Murray, M. (2017). Maintenance, Repair, and Operating Supplies (MRO). Retrieved from:
https://www.thebalancesmb.com/maintenance-repair-and-operating-supplies-mro-2221265
[Accessed on 17, 2017].
NAPCP (2018). Why use Purchasing Cards [online]? Retrieved from:
https://www.napcp.org/page/WhyUsePCards [Accessed on 17, October 2018].
Peters, J. (2017). Improving accounts payable efficiency with purchase cards [online]. Retrieved
from: https://www.omep.org/improving-accounts-payable-efficiency-with-purchase-cards/
[Accessed on 17, October 2018].
Romero, J. (2018). Effects of Information Technology on Business Performance and the Use of
Accounting Measures[online]. Retrieved from: https://www.igi-global.com/chapter/effects-of-
information-technology-on-business-performance-and-the-use-of-accounting-measures/116971
[Accessed on 17, October 2018].
Slingshotsoftware.com, (2018). Requisition Management [online]. Retrieved from:
http://www.slingshotsoftware.com/content/products/requisition-management [Accessed on 17,

October 2018].
Thompson, S. (2016). Purchasing cards: improving the purchasing process for your
organization [online]. Retrieved from: https://vision.visaeurope.com/blogs/purchasing-cards-
improving-the-purchasing-process-for-your-organisation [Accessed on 17, October 2018].