Literature Review of Accounting Software Packages for Commonwealth Bank

This literature review focuses on the importance of strategic information systems in business strategies and the development of accounting software’s and their effectiveness in enhancing business efficiency and competitiveness in the market. The review is focused on the Commonwealth Bank in Australia and the impact of accounting software in their business model.

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BUSINESS: LITERATURE REVIEW OF ACCOUNTING SOFTWARE PACKAGES FOR
COMMONWEALTH BANK
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Introduction
The modern corporate world has embraced the use of strategic information systems to improve
their efficiencies and meet their business objectives. Vital information systems are business
systems which have been developed to fit specific business functions and are used by most
businesses to merge technology with the organizations or strategic business planning (Pearlson et
al. 2016, p. 28). They are therefore developed by most firms to help them in developing generic
business strategies and increase the business competitiveness in the market by giving the
company a competitive advantage. Among the many information systems designed to improve
the competitiveness of most organizations are the accounting software systems.
Competition has rapidly increased among the Australian accounting software companies in the
provision of accounting softwares for small, middle-sized as well as large corporations (Galliers
& Leidner, 2014, p. 117). This literature review will, therefore, focus on understanding the
importance of strategic information systems in business strategies. It will also focus on the
understanding of the development of accounting software’s and their effectiveness in enhancing
business efficiency and competitiveness in the market. The literature review will be focused on
the Commonwealth Bank in Australia and the impact of accounting software in their business
model.
It is essential for any business to have an understanding of its business models and accounting
systems in order before adopting the accounting systems. The development of these accounting
systems is based on the nature of business as well as the size of the organizations. The small-
scale industry has increasingly adopted the use of accounting software’s globally and therefore
increasing their competitiveness with the medium-sized companies as well as the significant

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forms or corporations (Altameem et al. 2014, p. 103). Over 70 percent of businesses in Australia
have adopted the use of accounting software in their business models with the commercial banks
or the banking industry forming the largest consumers of the software while the small-scale
business is increasingly incorporating the systems into their business models.
Companies have started investing their resources in the development of accounting systems
which meet their business needs or requirements. The primary critical players in the Australian
accounting software market include; MYOB, Intuit and Xero accounting software providers with
the most significant player in the market being Xero Accounting Software providers. These three
major players have increased competition in the Australian Accounting Software Market having
taken the into cloud accounting with the development of cloud accounting software
(Yigitbasioglu, 2015, p. 54). The cloud computing software’s have increasing being adopted in
both small and middle-sized businesses. However, identifying the best system to incorporate in
your business is very critical in determining the success of the entire organization. We focus on
the analysis of how Xero accounting systems have impacted the growth and development of the
Commonwealth Bank in Australian.
Current organizational structure of Common Wealth Bank
CommonWealth bank is a leading Australian Multinational bank with their operations and
businesses running across New Zealand and other parts such as the United States. The bank was
founded in the year 1911 and started its operations in 1912 as a government bank offering saving
and general banking services to her customers (Ferguson et al. 2013, p. 27). The bank forms one
of the Australians driving commercial organizations which has enabled the bank to boost their
customer's confidence with the bank. The bank is a leading provider of integrated financial

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services and has contributed significantly to offering retail banking services, insurance, and
investment services as well as superannuation services.
Every organization has developed its organizational structure which enables it to achieve its
objectives and deliver their services. The success of an organization and especially in
management decision making is determined by the organization structure. An organizational
structure can either be hierarchical or flat organizational structure (Ma, 2015, p. 14). The
collective wealth bank of Australia has developed within itself hierarchical organizational
structure characterized by different departments, headed by a different line of managers who
manage a specific group of people within the organization. The bank, therefore, has different
layers of management which have become a significant challenge to the organizations regarding
management decision making. The communication with the bank is slow due to the
communication structure, and this has dramatically impacted the implementation and adoption of
new technologies in the bank for an extended period (Dimitriu & Matei, 2014, p. 842).
Consultations processes within the organization have increased the time taken before making any
investment decision for the bank. The structure is subject to increased inefficiencies and financial
errors within the company through loss of information and delay in responding to customers
concerns or complaints.
Operational Problems that Commonwealth may be Facing
The bank has however encountered operational issues which most of them can be attributed to
the organizational structure. As a result, the bank has experienced systematic failures in
delivering services to their customers and also in meeting their business objectives. Some of the
reported concerns or problems with the bank system were on the selling line of insurance which

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was not supposed to be paid out. There were problems of over-insurance reported for the home
loan customers; there were also problems related to the underpayment of superannuation
payments to employees (Hossack, 2015, p. 256). In addition to these failures, there were also
increasing concerns over the decreasing bank assets and lack of reconciliation of charges for
certain card transactions among other issues under investigations which have been leveled
against the bank.
These problems can be attributed to the hierarchical structure of the financial institution which
makes it easier to lose crucial financial information. The increased bureaucracies in the
organization regarding decision making and in responding to concerns from customers have
affected the image of the institution (Mageto, 2017, p. 87). The traditional structures of
organization management regarding control are largely affecting the operations of the bank. The
development of organization strategic information systems would play an important role in
integrating or merging the banking technology with the strategic planning of the bank and lead to
improved organizational efficiency in service provision. Such problems have led the
management of the bank to make technological investments regarding improving their
accounting operation by adopting the Xero accounting software systems to enable the bank to
improve its services (Singh & Kumar, 2014, p. 36). The continued problems of reconciliation of
accounts, time-consuming and increased errors, as well as inconsistency, would be improved by
the adoption of this new technology. The bank was dominated by the use of traditional banking
technology which involved the use of desktop accounting systems and data redundancy which
were the most significant contributors to the increased challenges.

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Most likely system of acquisition method for the Commonwealth bank
The most critical decision for the management to make is about identifying the best system to be
incorporated into the business model. The primary factors influencing the acquisition of
accounting software’s include the effectiveness and efficacy of the software. Many businesses,
therefore, make their acquisition decision based on these two factors as it is possible to acquire
accounting software which may not fit the business model or even help in achieving the desired
objectives (Mcleod et al. 2015, p. 198). With the increased competition in the Australia
accounting software market, three is a great need for the management to be careful on the
method of acquisition as this will determine the effectiveness of the software in meeting their
customers’ demands and business objectives.
The management of the Commonwealth bank can, therefore, acquire commercial software, a
custom accounting software or even use the ERP method. The custom software is created by the
company as the company goes on with its operations. The decision to have custom software is
based on the inability of the commercial software to meet the needs of the business. The
acquisition of commercial accounting software involves acquiring already designed accounting
software existing in the market and has been the most widely used method for many companies
(Flaherty, 2018, p. 71). This software works for almost all businesses and allows for the
customization of the system or software to specific business needs. The commercial accounting
software is composed of graphs which summarize all the financial activities of the company,
provides reports for the operations showing the financial health of the business as well as
provision of the taxes forms for the industry. An example of this accounting system is the Xero
Accounting software (Oates & Dias, 2016, p. 106). On the other hand, the Enterprise Resource
Planning acquisition method or software supports all business in all sectors including

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manufacturing, marketing, financial as well as human resource businesses Includes software
such as the Sage ER X3, Microsoft Dynamic AX 2012 among others.
According to the above information on the different acquisition methods for accounting
software’s, the management of Commonwealth Bank will be more likely to use the Commercial
software acquisition method. The reason for their decision will be based on the nature of their
business and organization structure which is comprised of different management levels (Cohan,
2017, p. 156). The commercial accounting software will provide the bank with an opportunity to
customize the software to meet the various business needs. It will also offer the opportunity to
the management of the bank to analyze the performance of the bank through the reports and
address any errors or any challenges resulting from their operations.
System Flowchart of the Sales Procedure for Commonwealth Bank
The system flow chart for the sales of the shows how sales transactions are processed and how
the information is stored in the accounting software. The bank adoption of the Xero Accounting
software has enabled it through the use of information technology develop a systematic sales
procedure for bank transactions or activities. The company sales transactions are recorded in the
company sales ledger before being posted into the general ledger. Below is the standard system
flow chart used by Commonwealth bank for its sale transactions.

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Figure 1: System flow chart for common wealth bank sales procedure (Schlagwein et al. 2014)
The system flowchart above therefore shows the different stages through which the sales of the
company follow. The first step involves the reporting of the sales transaction through recording;
the trade then undergoes various periodic processing before the information is analyzed and
reconciled in the different sales ledgers. The information is then stored in the master data system
where it can be retrieved or posted into the company general ledger. The master data contained
all the reports and analyzed information about the sales.
Control problems and possible fraud in this system
The major challenge facing the effectiveness of accounting systems is the internal control. The
control of information and operations in the company is determined by the organizational
structure, and therefore the system needs to provide information that will be satisfactory to the
company board of directors, to the management as well as those under them (Pearson, 2016, p.
185). Risk assessment in this system is very minimal, and therefore it will be difficult for the

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management to control the risks associated with the system. Because of lack of legitimate
authority and controlled access, the system is likely to be a victim of unauthorized access.
The system is also subject to financial frauds however these are minimal as compared to the use
of manual methods. Unauthorized access can interfere with the financial information in the
system as an individual may enter data with his manipulative agenda. Unfamiliarity with the
system may lead to financial fraud by introducing incorrect information.
Development and adoption of the accounting software packages
It is therefore essential for the Commonwealth bank to develop a strategic information system
that will help the organization merge technology with strategic business planning and improve its
efficiency. In its efforts to improve the operations of the bank and its effectiveness and efficacy
of their financial services, the bank has adopted the Xero cloud computing systems which have
developed in serving the small business customers for the bank (Wickramasinghe et al. 2017, p.
367). Before the adoption of the Xero accounting software, the small business customers were
required to manually apply for data feed which took almost more than a week to receive.
However, with the adoption and development of the Xero accounting software which uses the
cloud computing technology, the small business customers can secure data feed between the
organization Netbank and the Xero cloud computing accounting software. This has enabled them
to save time and money as they can be able to reconcile their transactions automatically on a
daily basis.
The current market size for accounting software in Australia

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The current market for accounting software’s in Australia has increased with the increased
adoption of accounting software in the modern small and medium-sized businesses. The leading
players in the industry include; MYOB accounting software providers, Intuit Quick Books
accounting software as well as the Xero accounting software providers. Over 70 percent of small
and medium-sized business has adopted the use of accounting systems with competition
increasing in the industry (Warren et al. 2015, p. 402). The industry in the year 2016 recorded
annual revenue of over 3 billion US dollars. The companies are competing for supremacy battle
for cloud accounting and increased dominance in the vast market.
Identify the leaders in the market and what gives them the competitive advantages
There is increased supremacy battle for the companies in Australia software accounting market
with some providers having a competitive edge over the others. MYOB accounting software
providers had existed as the leaders in the market due to their supremacy in desktop legacy. They
had more customers who adopted their desktop accounting software. However, with the
introduction of cloud computing accounting technologies, the industry has experienced a
dramatic shift with Xero accounting software providers leading the market due to their ability to
offer cloud accounting which has enhanced their effectiveness and improved their service
provision (Tayeh et al. 2015, p. 96). Their ability to use cloud computing technology which is
faster regarding speed and reliability has given them a competitive advantage in the market, and
now every other company is seeking to adopt the cloud computing technology.
Current Gaps and Challenges Encountered to users of Accounting Software
Despite the increased adoption and installation of accounting software systems, the user of the
systems has met several difficulties. One of the challenges has to be an incompatibility with the

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existing organization structure which has made it difficult for the networks to deliver the
expected results. Secondly, the systems have not been user-friendly with the development of
complicated accounting software without training the organization staff or the users on their
usage (Brewer et al. 2014, p.33). The users have expressed their concerns over the efficiency of
some accounting software’s as well as lack of enough speed and lack of security for the financial
data or information.
Possible suggestion or recommendations
The leading accounting software producers such as MYOB, Xero, and Intuit should focus on the
development of accounting software which is easier to use and is more user-friendly. It is also
essential for the companies to develop software’s which offer more speed to the users and can be
more effective and reliable regarding producing relevant financial reports (Schlagwein et al.
2014, p. 4). Lastly, the accounting software’s developed should be more compatible or should be
customized to fit into the existing business or organizational structures.
Conclusion
Strategic information systems play a vital role in helping the businesses merger the current
technology with the organizational strategic plans to achieve their goals and improve their
efficiency in service provision. The development and adoption of accounting software’s have
impacted most business globally. However, it is crucial for the management of the different
company to ensure that they adopt systems which are compatible to their business models and
will help them improve their effectiveness and gain a competitive advantage in the market.

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List of references
Altameem, A.A., Aldrees, A.I. and Alsaeed, N.A., 2014, October. Strategic information
systems planning (SISP). In Proceedings of the World Congress on Engineering and
Computer Science (Vol. 1).pp. 103.
Brewer, P.C., Sorensen, J.E. and Stout, D.E., 2014. The future of accounting education:
Addressing the competency crisis. Strategic Finance, 96(2), pp.29-38.
Cohan, P.S., 2017. Growth via Culture. In Disciplined Growth Strategies (pp. 165-186).
Apress, Berkeley, CA.
Dimitriu, O. and Matei, M., 2014. A new paradigm for accounting through cloud
computing. Procedia economics and finance, 15, pp.840-846.
Ferguson, A., Butler, B. and Williams, R., 2013. Scrutinising ASIC: Is it a watchdog or a
dog with no teeth?. The Age. pp. 21-34.
Flaherty, S., 2018. Bookkeeping in the Cloud: Advancements in Accounting Software
(Doctoral dissertation, Appalachian State University).pp.64-74.
Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management:
challenges and strategies in managing information systems. Routledge.pp. 117
Hossack, S., 2015. Cloud-based accounting and productivity tools for practitioners and
taxpayers. Taxation in Australia, 50(5), p.265.
Ma, X., 2015. The adoption of cloud computing for small and medium accounting
firms.pp. 12-18.

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Mageto, J., 2017. Accounting Softwares in Australia. An Overview. GRIN Publishing.pp.
87.
Mcleod, S. and Freeman, J., XERO Ltd, 2015. Systems and methods of automatic
accounting of leave liability. U.S. Patent Application 14/693,198.
Oates, G. and Dias, R., 2016. Including ethics in banking and finance programs: teaching
“we shouldn’t win at any cost”. Education+ Training, 58(1), pp.94-111.
Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2016. Managing and Using Information
Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons. pp. 24-36.
Pearson, G., 2016. Failure in corporate governance: financial planning and greed.
Handbook on Corporate Governance in Financial Institutions, p.185.
Schlagwein, D., Thorogood, A. and Willcocks, L.P., 2014. How Commonwealth Bank of
Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS
Quarterly Executive, 13(4).
Singh, J. and Kumar, V., 2014. Multi-disciplinary research issues in cloud computing.
Journal of Information Technology Research (JITR), 7(3), pp.32-53.
Tayeh, M., Al-Jarrah, I.M. and Tarhini, A., 2015. Accounting vs. market-based measures
of firm performance related to information technology investments.pp. 96.
Warren Jr, J.D., Moffitt, K.C. and Byrnes, P., 2015. How Big Data will change
accounting. Accounting Horizons, 29(2), pp.397-407.

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Wickramasinghe, M., Cooray, N.H.K. and Dissanayake, S., 2017. Impact of accounting
software for Business Performance.pp. 367.
Yigitbasioglu, O.M., 2015. External auditors' perceptions of cloud computing adoption in
Australia. International Journal of Accounting Information Systems, 18, pp.46-62.