Accounting Information Systems: Business Process Analysis

This report analyzes the current business process of GAAM, a manufacturing company, and proposes the development of an accounting information system to address flaws and improve functionality.

Running head: ACCOUNTING INFRMATION SYSTEMS
Assessment 2: Business Process Analysis
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Purpose............................................................................................................................................2
Participants, Inputs and Outputs to Current System........................................................................3
Process Flow / Activity Descriptions..............................................................................................4
Exceptions........................................................................................................................................5
Business Process Model..................................................................................................................6
Process Strengths.............................................................................................................................6
Process Inefficiencies......................................................................................................................7
Information Technology Usage.......................................................................................................8
Business Process Reengineering......................................................................................................9
Proposed Workflow Diagram........................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

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Introduction
GAAM is a manufacturing company and has global existence for manufacturing
hydraulic systems, metal products and building systems. The hydraulic equipment’s that are
manufactured by GAAM mainly includes motors and gear pumps, control valves and telescopic
cylinders. The company has it’s headquarter in South Australia and has an employee strength of
3800 across the globe. The company provides 27 facility for 7 countries and for its competitive
growth and to gain leading position in the market it needs to conduct an analysis of the current
business process.
The report is prepared for the development of an accounting information system for
GAAM after analyzing the purpose, participants, inputs and outputs of the current system. The
current business process of the organization is analyzed and the processes that can be adopted for
the improvement of the business and inefficiencies are applied for the development of the new
information system.
Purpose
The main purpose of the report is to identify the flaws in the business process of GAAM
and reengineer the process for addressing the problems in current business policy and improve
the functionality. The responsibility of each of the department is evaluated and the roles and
responsibility of the employees working in the department is evaluated for the development of
the business process model. The business process that can be reengineered for gaining
competitive position in the global market is identified by analyzing the changes that is needed to
be made in the departments (Libby, 2017). The strength and inefficiencies of the current business
is identified and a workflow diagram is proposed that can help in increasing the efficiency of the

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business. The company manufactures products that are used in heavy duty vehicles and sold to
domestic and foreign manufactures and thus has scope for expansion of the business. The
maintenance, repair and operations in the business is needed to be improved for improving the
customer satisfaction level and automating the user query (Schaltegger & Burritt, 2017). The
purchase requisition and emergency is needed to be handled and the information system is
needed to be designed such that it can increase the response to customer request.
Participants, Inputs and Outputs to Current System
Participants Input Output
The participants who are
needed to be included for
analyzing the performance
and operation of the current
information system of
GAAM are the purchasing
manager, Customer and
secretary (Collier, 2015). The
participants in the current
system can be found from the
operation of Purchasing
department.
The main input of the current
information system are the
request made by the customer
and the other 36 individuals
working in the organization.
The organization uses a
requisition form for the
submission of the request and
the individuals working
executes purchasing with the
help of the requisition form
(Prasetya & Utama, 2019).
The requisition form is
returned to purchasing
department after the
The generation of the
purchasing order is available
for any type of equipment or
items needed for purchasing
in the company. For the
condition if the purchasing is
made with the use of card the
card is forwarded to the
department and the requesting
process is completed
(Maskell, Baggaley &
Grasso, 2016). For any of the
situation the request is made
by the customer the card or
the requisition is forwarded to

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completion of the purchasing
process in the organization
(Uyar, Gungormus & Kuzey,
2017). The MRO buyer is
associated with signing and
reviewing the purchase made
by the organization.
the respective department for
the completion of the
purchasing process and
successfully placing the
order. In case of the form the
purchasing department needs
to fill the form with the
necessary details of the
product (Asatiani et al.,
2019). For the urgent orders a
number is generated for each
of the order purchased for the
completion of the purchasing
process with referencing the
purchasing order.
Process Flow / Activity Descriptions
The purchasing department procures the inventory of hydraulic pumps as well as the
maintenance, repair and supply operations. The department needs tooling and supplementary
material for the management of the orders such that it can meet the needs of the customers and
services and products of the organization. The MRO supplier requests to the purchasing
department and there are 36 different individuals in the company. The requests are made with the
use of purchase requisition or MRO card and the cards are used for purchasing regular purchase

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and the new items are purchased with the use of requisitions (Alewine, Allport & Shen, 2016).
The limit for each of the individual ranges in-between $500 - $1000 and on exceeding the limit
the card or requisition is needed to be permitted by the higher ranking employee of the
purchasing authority. Thus a chain of command is used for the authorization of MRO purchases.
When the purchasing department receives the card or requisition the MRO buyer receives
and verifies the card. The purchase order is generated for the order being purchased and if card is
used for the purchase it is returned to the department making the request of purchase. The
records of each of the purchase is kept in the purchase order program and in some of the cases
the purchase are made by the individuals instead of the MRO buyers (Gillett, 2016). The
emergency situations for delivering an item immediately a purchase number is needed to be
assigned that should be differ from sequentially based numbers and completing the purchase
process. For the old and outdated replacement parts of an item a research is needed to be made
for the vendor and pricing. The research time is needed to be reduced such that the product item
can be delivered on time.
Exceptions
For the improvement of the current business process an analysis is needed to be made on
the exceptions such that it can be handled for improving the performance of the system. The
following exceptions that are identified and described below:
Credit limit – The credit limit for the 36 individuals working within the company ranges in
between $500 to $1000 AU. If the product that is needed to be purchased cost more than the
limit the card or the requisition form is needed to be permitted by the higher authority working in
the purchasing department (Laudon & Laudon, 2016). The MRO purchases works with the chain

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of command and it can cause a significant delay in the purchasing process and thus causing a
negative impact on the business process.
Emergencies – In case an MRO buyer requesting for a purchase that is immediately required for
higher urgency a purchasing number is assigned to the product that differs from the normal
purchase number. The management of the emergency orders is a difficult task as the order is
needed to be reassigned by breaking the schedule and a new purchase order is needed to be
created such that it can be delivered with the top most priority (Mirzaey, Jamshidi & Hojatpour,
2017). This can cause delay in the delivery of the assigned orders and thus create a problem in
business process of the organization.
Business Process Model
Process Strengths
The business process strength of GAAM is analyzed and list below:
 The purchase orders and the information of the stocks and the inventory is readily
available to the management and the purchasing department that helps in eliminating the
risk of restriction and availability of the materials and equipment’s.

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 The customer and the information about the inventory is stored in an distributed
environment and thus it is secure and redundant helping preventing breaches of data.
Since the purchasing department handles most of the operation it causes easy
management of information and sharing of information between the employees
(Esmeray, 2016).
 The communication between the employees is also good since a single department is
working for the management of purchase and roles and responsibility can be distributed
evenly for managing the business operation.
 The manual storage and management of data helps to maintain backup of the files and
information in an individual register and organize the data of the organization.
 The business has an employee strength of 3800 employees and operates globally and thus
has the potential to gain the competitive position in the current market.
Process Inefficiencies
There are some strength of the current business process but there are some inefficiencies
that are needed to be eliminated and the business process is needed to be reengineered such that
the efficiency of the business process improves. The inefficiencies discovered from the current
information system are listed below:
 Handling the purchasing order manually and with the help of single department causes
delay in processing order and thus increases the waiting time for the MRO buyers to
receive the product (Kieso, Weygandt & Warfield, 2016). This causes the workload on
the department and reduces the efficiency of the organization and hampers the
organizational growth.

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 The response time for the customer increases with the increase in the requisition list and
thus have a negative impact on the customer base. The inefficiency of the organizational
business process gets highlighted and may result in loss of customer or increases in the
dissatisfaction level of the customer.
 The organization has lack of risk response plan and disaster recovery plan which can
cause loss of data and information in case of any network attack or natural disaster. The
business procedure is needed to be integrated with the information system such that it
provides a solution for managing the different business operation and generating
automated notification for the responsible employees for improving interaction between
the business and the information system ()Sledgianowski, Gomaa & Tan, 2017).
 The increase in workload between the employees can cause increase in dissatisfaction
level and since major business processes are manually handled the manual error can
cause high loss in the business and hamper the productivity and growth of the
organization.
Information Technology Usage
A research is needed to be done on the emerging technology that cam be implemented in
the current business process for increasing the efficiency of the business process of the
organization. With the integration of the information technology the major business processes
can be automated such that the workload on the employees can be reduced and they can be
involved in improving the business operations and other activities (Zakaria, Ilias & Wahab,
2017). A data center is needed to be developed and connected with a secured organizational
network framework such that the organizational data and information can be stored and shared
with the branches for allowing remote management of the data. An account management system

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is needed to be implemented in the current business such that the inventory information can be
recorded and the order management system can be automated for eliminating the manual errors
in the business process of the organization. The data storing facility in the organization is needed
to be improved and security is needed to be improved such that that the data cannot be accessed
by the unauthorized users. The data is needed to be stored redundantly in remote location such
that no information is lost during data recovery (Susanto, 2017). The duplicated data residing in
the information system is needed to be eliminated such that the update of the data takes minimal
time for its reflection. For the management of emergency orders the information system is
needed to increase the priority and a search option is needed to be implemented for searching old
data from the database in a minimal time frame.
Business Process Reengineering

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Proposed Workflow Diagram
Conclusion
From the above report it can be concluded that with the development of the information
system for GAAM the current problems faced by the organization can be eliminated. The
purchasing department requests a large number of order and the authorization is needed to be
maintained and this can be easily done with the help of the information system. The information
system can also help in keeping track on the inventory and sales of the products and maintaining

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cards and requisition of the purchase orders. The implementation of the information system helps
in sharing of information between the individual working in the department and reduces the
response time and efficiency of the business process of GAAM. The purchase orders are needed
to be kept in the database of the information system such that it can be used in future for future
reference and eliminate any risk or change in requirement of the order purchased.

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References
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accounting information system evaluation mode influence environmental performance
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Asatiani, A., Apte, U., Penttinen, E., Rönkkö, M., & Saarinen, T. (2019). Impact of accounting
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Information Systems, 1-50.
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decision making. John Wiley & Sons.
Esmeray, A. (2016). The Impact of Accounting Information Systems (AIS) on Firm
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Gillett, P. R. (2016). Accounting Information Systems. John Wiley & Sons, Incorporated.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Intermediate Accounting, Binder Ready
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Maskell, B. H., Baggaley, B., & Grasso, L. (2016). Practical lean accounting: a proven system
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