Accounting Information System for Woolworths: Challenges and Recommendations

This report discusses an accounting software implementation for a company which is facing operational problems due to its current organizational structure. Woolworths Australia has been chosen as the organization for this report. The report has mentioned the organizational structure of the company in detail and has mentioned the operational problems that it is facing. The system acquisition methods by which the company can resolve these issues have been discussed and evaluated. A flowchart of the sales procedure of the mentioned company has been given. The possible control problems due to the new implemented system and the possible frauds associated with it has been mentioned.

Running head: ACCOUNTING INFORMATION SYSTEM
ACCOUNTING INFORMATION SYSTEM
Name of the University
Name of the student
Author Note

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Organizational structure of Woolworths................................................................................2
Operational problems due to the organisational structure......................................................4
Examples of system acquisition methods and the favourable method...................................4
Sales procedure system flowchart of Woolworths.................................................................6
Problems and frauds with the ERP system............................................................................6
Accounting software package adoption and development.....................................................7
Current market size................................................................................................................8
Leaders in the market and reason for their competitive advantage........................................8
Challenges of accounting software implementation..............................................................9
Recommendations..................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
This report discusses an accounting software implementation for a company which is
facing operational problems due to its current organizational structure. Woolworths
Australia has been chosen as the organization for this report. The report has mentioned the
organizational structure of the company in detail and has mentioned the operational problems
that it is facing. The system acquisition methods by which the company can resolve these
issues have been discussed and evaluated. A flowchart of the sales procedure of the
mentioned company has been given. The possible control problems due to the new
implemented system and the possible frauds associated with it has been mentioned.
The report further discusses how the accounting software packages were adopted and
developed in detail. The present market size of the software packages have been evaluated
and the market leader has ben identified. The challenges associated with the accounting
software packages have been identified and recommendations are provided for each of the
challenges.
Discussion
Organizational structure of Woolworths
Increasing and maintain the shareholder value is the main objective of the Board of
Directors. In Woolworths Australia, the Board of Directors is at the top of the organizational
structure where they check and maintain the business objectives of the organization. The
Board of Directors are responsible for serving the best interests of the stakeholders and
evaluate the policies, performance and strategy of the Group (A brief history of Woolworths,
2018). The directors of the Board has to comply with the Board of Charter where all the rules

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are outlined. The responsibilities and power of every board member are mentioned in The
Board Charter as well as how they represent the interest of the shareholders.
Since 2013, Goardon Cains have been the chairman of Woolworths Australia. The
managing director and Chief executive officer is Brad Banducci. Holly Karmer, Jillian
Broadbent, Richard Dammery, Siobhan Mckenna, Michael Ulmer and Scott Perkins are the
other members of the group.
The group executive committee comes just around the Board of Directors. These
members are responsible for carrying out the organizational goals of Woolworths. They carry
out the administrative tasks and evaluate if proper services are provided to the employees in
the organization as well as prospective customers. By analysing the management operations
and decisions, their duty is to report the Board of Directors about the project (Woolworths
Group: Quality Brands and Trusted Retailing, 2018).
Figure 1: Details of the membership of the committee
(Source: Woolworths.co.za, 2018)
For assisting the Board of Directors, four permanent committees have been set up to
carry out certain responsibilities. The responsibilities are Audit, risk management and

4ACCOUNTING INFORMATION SYSTEM
compliance, People performance, Sustainability and Nomination (Woolworths.co.za,
2018).
Operational problems due to the organisational structure
Woolworths Australia is facing some serious problems due to this organizational
structure. As four separate committees are maintained by the Board of Directors, reporting
back to several bosses becomes very cumbersome for the employees. Several messages and
queries are provided by the Board of Directors. The variety of messages can become very
difficult for the employees to understand. Moreover, there are often conflicting information in
the messages which becomes confusing for the employees (Woolworths checkout shutdown,
2018). For huge organizations like Woolworths, it is common to have separate departments
for different business operations. But due to this structure, the customer service of the
company suffers as for proper customer service, a good collaboration between several
departments are necessary (Hyvönen 2013). The customers can be transferred to different
departments as no one really knows whose responsibility it is to manage the query. This can
lead to the loss of business for the company. Separate departments can also lead to lack of
cooperation between the members of the departments unless they are told by the supervisor.
The lack of teamwork increases inefficiencies in business processes (Харакоз and Kharakoz
2015).
The separate departments can result in another operational problem for Woolworths
which is lack of communication. The problem normally occurs between supervisors and
managers where in some cases, one of them takes up an authoritative role for the team. This
confuses the members of the team and leads to wastage of time and resources for the
organization (Woolworths: the rise and fall of the department store, 2018).

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Examples of system acquisition methods and the favourable method
Commercial accounting software- Small and medium sized organizations normally
use this accounting software to create customized functions for their business operations.
These softwares have the ability to summarize the data and display them in reports and
graphs. A wide range of commercial accounting softwares are available in the market which
have their own share of advantages and disadvantages such as Quickbooks, Freshbooks and
Turbocash. These softwares have a number of error detection layers to spot the entry of
wrong information (ENTERPRISE RESOURCE PLANNING 2016). These softwares require
a maintenance team on site and takes some time to implement.
Custom accounting software- These softwares are custom made for a particular
business. Occasionally, these softwares are made by accident when the employees are told to
make a particular software to handle some company- specific accounting problems. These
softwares slowly grow in capability over the year and are marketed as a complete custom
accounting software by the organization. Another reason of adopting a custom accounting
software is when the company is unable to find a proper accounting software that can take
care of its specific business requirements (Kohler 2013). These softwares often require
periodic maintenance and contain a lot of bugs.
Enterprise Resource Planning or ERP software- ERP softwares are customised to
integrate data from various parts of the business to a central database. The problems that arise
with independent departments in an organization such as Woolworths can be eliminated with
the integration of this technology. Unlike the other two options, the cost of implementing this
technology is substantial. Separate modules need to be purchased for this software in general.
These modules focus on a single business operation such as Accounting, HR, finance,

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inventory and distribution control (ENTERPRISE RESOURCE PLANNING 2016). The
software can help in eliminating several problems that are associated with supply chain
management, distribution management, accounting applications, customer services and
redundant tasks.
The most likely acquisition method for Woolworths is the ERP system as it can help
the Board of Directors to manage four independent departments efficiently (Arli et al. 2013).
The company is capable of affording this expensive system and in the long run, it will be
beneficial for the organization.
Sales procedure system flowchart of Woolworths
Woolworth’s sales procedure flowchart has been mentioned in the following diagram:-

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Problems and frauds with the ERP system
Several control problems associated with the ERP are written as follows:-
 Including the solutions that are industry specific to the decision making process
 Abundant features can divert the organization from its organizational goals
 Implementing the ERP system without analysing the business conditions
 Ignoring management system changes (Харакоз and Kharakoz 2015)
 Investing little on the implementation team
 Improper communication between the independent departments
 Absence of a maintenance plan (King and Thobela 2014)
The possible frauds associated with the system are written as follows:-

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 Misuse of the accounting system
 Taking the wrong advantage of the system by employees for gaining insight into the
confidential business processes
 Document misplacement
 Employees using unauthorized access to business and financial procedures
Accounting software package adoption and development
The adoption and development of the accounting softwares are very tedious due to
their high adoption costs. To prevent exposure to business risks, the conversion process takes
a lot of time and resources for the company (ENTERPRISE RESOURCE PLANNING 2016).
Due to technological innovation, organizations face a lot of pressure to shift from their
traditional ways of doing business accounting. The organizations are tempted to try different
alternatives of the new software packages. Several software packages involve time
consuming activities and cumbersome processes. Moreover the adoption process and module
development process needs to be conducted in parallel to the daily activities of the
organization. The process needs to be conducted while running both the old as well as the
new business activities to guarantee improved results (Харакоз and Kharakoz 2015). The
adoption process can also involves human errors that might creep into the system which
results in immense pressure from stakeholders for ensuring proper accuracy of the new
system. Inconsistency of data is a common factor during this phase due to the minimal
knowledge about the data structures that the company is working with.
Current market size

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The market size of the accounting software packages varies from country to country
as well as from time to time. For example, in Australia, Xero has taken up more than 66% of
the market share. Sage has taken up almost 50% of the market share and 20% of the market
share has been taken up by Inuit (Knox 2015). Inuit however has 56% market share in USA.
Sage has taken up 33% of the market share and other vendors have taken up the rest of the
market share. SOHO recently released a recent study which showed that Sage has taken up
25% of the market share all around the world followed by Inuit which has around 33%. In the
case of mid-range companies, Sage has taken up around 42% of the total market share
followed by Inuit which has around 22% market share (Monk and Wagner 2013).
Leaders in the market and reason for their competitive advantage
The most renowned accounting software currently present in the market is
Freshbooks. Several features are present in the software package to give it a competitive
advantage. Recurring voices and subscriptions are provided by the software. Various vendors
of Credit cards and PayPal are supported by the software for online payments (Hyvönen,
2013). The process of integration with other applications is hassle-free. The software comes
as a package which negates the need for buying other applications. Entire business processes
can be checked from a single dashboard. The software also assures data security by making
proper backups from time to time. The cost of the software is also flexible depending on the
business requirements. Moreover, the software can be accessed from mobile devices.
Challenges of accounting software implementation
Challenges faced by Accounting softwares are written as follows:-

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 Lack of testing
 Lack of budgeting
 Not enough training for accessing the software properly
 Top managerial level commitment levels
Recommendations
The recommendations for the mentioned challenges are written as follows:-
 Proper analysis of the budgeting costs before the implementation of the ERP
 During the implementation phase, proper testing needs to be done to highlight
issues
 Proper training for the organizational staff
 The personnel needs to communicate among the other members properly. For
increasing the commitment level, they need to be involved in the decision-
making process (ENTERPRISE RESOURCE PLANNING 2016)
 Before choosing the proper software, the needs and challenges of the company
need to be evaluated
Conclusion
To conclude the report, it can be stated that to counteract the operational problems
that Woolworths is facing the company needs to incorporate ERP system into its business
processes. The Organizational structure of Woolworths have been evaluated in the report.
The inconsistencies and inefficiencies due to the present organizational structure has been
discussed. Three system acquisition methods have been discussed and the proper option has
been chosen as ERP for the proposed company. A sales procedure flowchart has been
provided for the report. The adoption and development of various accounting softwares have

11ACCOUNTING INFORMATION SYSTEM
been discussed and their market size has been assessed. The current challenges faced by the
accounting software has been mentioned and recommendations have been provided
accordingly.

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References
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Woolworths Group: Quality Brands and Trusted Retailing, 2018. [online] Available at:
https://www.woolworthsgroup.com.au/ [Accessed 2018].
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