Assessment Title Analysing an Accounting Information System

Need before 4 pm

ACCOUNTING
INFORMATION SYSTEM

EXECUTIVE SUMMARY
Along with the growth and expansion of organisation the need for having well organised
accounting information system is required which enables the business to have proper record of
all the transactions carried out. It helps to have accurate and reliable financial information of the
company. Report provides the strengths of internal accounting control systems records the sales
transactions accurately and avoids opportunities for fraud in organisation. Effective accounting
information system helps management to present true and fair position of the firm.

TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................................................................................................1
INTRODUCTION ..........................................................................................................................1
REPORT..........................................................................................................................................1
Six strengths that controls sales transactions in HARDA...........................................................1
Problems that HARDA fashion has avoided by incorporating strengths in the systems for sales
transactions..................................................................................................................................3
Situational Pressures that would increase likelihood of fraud.....................................................4
Company choosing distributed computer system instead of centralised one .............................5
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Accounting information system refers to the structure which businesses uses to store,
collect process, manage, report and retrieve the financial data so that it could used by the
accountants, business analysts, consultants, auditors, chief financial officers, managers and
regulators. Accounting professionals work in depth with the AIS for ensuring highest level of the
accuracy in the financial transactions as well as record keeping and for also making financial
data easily to users who require access keeping the data secure and intact. It helps different
departments of organisation to work together. Effective AIS uses software and hardware for
effectively retrieving and storing data. External and internal controls of the AIS are critical to
protect sensitive data for the company. Reports reveals about the effectiveness of accounting
information system in HARDA Fashion. It sells fashion clothes of teenagers and have chain of
20 stores concentrated in north east part of USA. Report will review the strengths of HARDA in
controlling sales transactions and problems that have been avoided due to controls.
REPORT
Six strengths that controls sales transactions in HARDA
Company is having 20 stores chain and every store is having full time staff consisting of
manager and assistant manager. Fixed salary is paid to full time staff. Full time staff of the
stores is assisted by cashier and sales assistant having less experience. Sales assistant and cashier
are paid hourly wages and commission on sales. The accounting information system helps the
company in controlling the sales transaction and avoiding the errors and mistakes.
Preparing sales invoice
Sales transactions are recorded by the sales assistant and it is the starting point of
recording the sales transactions. Sales invoices are filled manually by the sales assistant. It
records employee number, transaction details such as description, item number, unit price and
quantity, total of sales invoice, manual counting of discounts, sales tax and finalising sales
invoice (Trofimova and et.al., 2019). The initial recording of sales invoices is done by sales
assistant by checking all the information of the customers and the sales transaction.
Review by Cashier
The sales invoice forwarded by the sales assistant is reviewed by the cashier before
entering in cash register. After reviewing and ensuring it is free from errors and mistakes
invoices are recorded in the cash register. Cash register maintained by cashier validates invoices
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mechanically, automatically assigning the consecutive numbers to transactions. Cashier have the
responsibility of getting the credit approval over charge sales and also approving the sales which
are paid by the cheque. All the requirements are checked by the cashier before recording the
sales invoice and to approve the sales which are paid by cheque. Triplicate of sales are generated
one for customer, one as store copy and the third for bank card. Returns are also handled by the
cashier which is having experience and skills to have proper records of the transactions.
Sequentially ordering sales invoices
After the sales invoices are properly reviewed by the cashier and getting proper approval of
charge sales and cheque sales recording process is completed by cashier. Automatic cash register
generates invoice number and validates invoice. After all the invoices for the sales transactions
are complete the cashier orders sales invoices sequentially. Cash total after propely arranging and
ordering sales invoices takes total of cash register for bankcard, cash, cheque sales and cash &
credit card returns.
Check by Assistant manager
The totals of cash register measured by the cashier are reconciled by assistant managers.
It reconciles cash register tape, totals of consecutive sales invoices and return slips. It ensures
that the totals are accurate and errors if any are identified by the assistant manager before they
are forwarded for finalisation (Uyar, Gungormus and Kuzey, 2017). The totals are reconciled
with the sales invoices generated by the cashier. Daily reconciliation reports is prepared by the
assistant manager for store manager.
Check by Store Manager
After all the totals of cash and credit sales and bankcards are reviewed by the assistant
manager the reconciliation report prepared is sent for review by store manager. It reviews all the
cheque, cash and the credit card sales. It makes the final review of the cash and credit sales
transactions carried out in the company. It prepares daily bank deposits based on the sales done
and makes the deposit in bank on daily basis and files valid deposit slip obtained from bank.
Central Processing
The sales invoices, cash registers and the return slips related to sales transactions are
forwarded on daily basis to central data processing unit. Processing department after recording
the data generates and forwards weekly sales and the commission report to manager for
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reviewing. It makes the data of company to be accessed by all authorised users from any of the
stores.
Problems that HARDA fashion has avoided by incorporating strengths in the systems for sales
transactions.
The strengths of accounting information systems enable the management of the entity to
keep proper records of all the financial information and ensuring that the transaction recorded is
free from errors and mistakes. It also helps in preventing as well as detecting the frauds in
organisation. The effectiveness of accounting information could be achieved by establishing
proper control systems at various levels ensuring that the transaction in the company are
recorded properly and represents true and fair view. The strengths of accounting system in sales
transaction has helped the company in avoiding various issues that could be faced in absence of
the system.
Preparing sales invoice
The sales invoices are prepared by sales assistant who is appointed for sales. The sales
invoices are prepared manually by the assistant ensuring that all the requirements and details of
sales invoice are correct. Proper description of purchase items, totalling of sales invoice,
discounting and tax calculation is done by the assistant. It has prevented the problems of wrong
tax calculation, problems of discounting as customers are given discount on different basis
(Fitrios, 2016). It avoids the chances of errors. Also retains copy of sales invoice for future cross
reference at any stage.
Review by Cashier
The sales invoice prepared by the cashier is reviewed by the cashier. The review by
cashier is carried out for identifying the errors and mistakes if any existing in the sales invoice
prepared by the sales assistant. This removes the chances of carrying mistakes forward to further
processes. The frauds if any conducted by the assistant could also be checked by the cashier
before recording transaction by checking the discount given and rate fixed. The invoices are
validated mechanically which avoids human interruptions and also generates consecutive number
to the transaction so that no transaction is missed. Any missed out transaction could be checked
by cashier. It also gets credit approval for charge sales and sale paid by cheque so hat parties
who have bas credit history are not given credit.
Sequential order
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By sequentially ordering the invoices cashier identifies that all the invoices are in place at
end of day. Missed up sales invoices many of times leads to non recording of sales invoices.
Proper copies of sales invoice are maintained for the future cross reference at any stage by
seniors. End of the day totalling enable to identify the errors or issues on same day before they
are spread further (Ali, Omar and Bakar, 2016). If any transaction is missed out cashier could
identify from sequential order.
Check by Assistant Manager
The work of sales assistant and cashier is checked by the assistant managers who
prepares daily reconciliation report of the transactions and totals of sales and cash credit
invoices. It also reviews that returns are properly recorded and accounted. This has ensured that
the sales invoice are not generated falsely for increasing the commission income of assistant and
cashier. Work of both is cross checked with totals of cash register.
Check by store manager
The reconciliation statement prepared by the assistant manager is checked by store
manager for identifying mistake if any missed by the assistant manager. Daily bank deposit is
prepared after verifying cash, credit and cheque sales. Manager is also required to file the deposit
slip for the amount deposited in bank. It prevents the manager from making use of money for
personal use as deposit slip is filed daily.
Central processing of data
The finalised and data reviewed by the manager is sent for central processing. It makes
the data to be accessed from anywhere. It allows the sales manager to have information about all
the stores from central processing department. If data of any store is corrupted the central
processing unit could have the information. Also the report is reviewed by the manager again so
that error if any in recording could be identified.
Situational Pressures that would increase likelihood of fraud
Frauds in company are committed by intentionally manipulating financial records for
representing false accounting figures. They are conducted for making personal benefits. There
are also situational pressures that leads to the fraudulent activities in organisations.
 An employee having immediate financial problem that requires immediate need of funds
dealing with situation.
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 When the remunerations are lower than the work and are not enough for meeting the
living expenses.
Above are the two situational pressures that will would cause likelihood of fraud in the
company. Studies shows that the frauds are more motivated by the financial situations than the
opportunities are intently (Napitupulu, 2018). The company is required to establish effective
internal controls for preventing the frauds reducing the opportunities for fraud. Management can
also have good communication with employees where the problems are shared and to the extent
possible resolved so that they are not motivated to commit fraud.
Company choosing distributed computer system instead of centralised one
Distributed computing refers to system having multiple components which are located on
the different machines which coordinates and communicates actions for appearing as single
coherent system for the end user. Centralised computing systems on the other use architecture of
client/ server where one or more computers are connected to central server. It is commonly used
computing system by the organisations where data is stored over central server and the
information about company could be accessed from anywhere.
Shift from centralised computing is made towards distributed system as it is more
resilient and redundant. Company serving online through distributed server rather than single
server, it would be standing even if one of the server fails. As the data is distributed among
various servers and system failure will not cause data loss. Distributed systems works faster as
compared with centralised systems. In this system queries could be routed to server with
particular user information instead of all requests going to single machine which could be
overloaded (Mandala and Astika, 2019). Distributed systems could be easily scalable once they
are set up for distributing data among servers involved. They could also be designed for the
parallelism. This computing system is more tolerant to fault than the single machines.
CONCLUSION
It could be concluded from the above report that the business has to establish effective
accounting information system management in the organisation for recording all the transactions
adequately. It reduces the errors and mistakes in recording the financial transactions of the
business. The strengths of Accounting information system of HARDA has helped it to avoid
various problems that it might have faced in the absence of these systems. Frauds are motivated
in employees due to situational pressures where employees are in emergent need of funds and
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sees opportunities in organisation. Distributed system due to data protection, speed and easy
access is being increasing adopted by companies.
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REFERENCES
Books and Journals
Trofimova, L.B. and et.al., 2019. Public sector entities reporting and Accounting information
system. Journal of Advanced Research in Dynamical and Control Systems.11(S8). pp.416-
424.
Uyar, A., Gungormus, A.H. and Kuzey, C., 2017. Impact of the accounting information system
on corporate governance: Evidence from Turkish non-listed companies. Australasian
Accounting, Business and Finance Journal.11(1). pp.9-27.
Fitrios, R., 2016. Factors that influence accounting information system implementation and
accounting information quality. International Journal Of Scientific & Technology
Research.5(4). pp.192-198.
Ali, B.J., Omar, W.A.W. and Bakar, R., 2016. Accounting Information System (AIS) and
organizational performance: Moderating effect of organizational culture. International
Journal of Economics, Commerce and Management.4(4). pp.138-158.
Napitupulu, I.H., 2018. Organizational culture in management accounting information system:
Survey on state-owned enterprises (SOEs) Indonesia. Global Business
Review.19(3).pp.556-571.
Mandala, I.G.N.A.K. and Astika, I.B.P., 2019. Effect of work environment, quality of system
and work culture on satisfaction of accounting information system user. International
research journal of management, IT and social sciences.6(4). pp.37-43.
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