Information System for Accounting

This article discusses the benefits of using an information system for accounting and the options available for automation. It also talks about the failure of internal controls in Toshiba Corporation. The article highlights the advantages and disadvantages of traditional accounting systems and suggests various accounting software that can be used for automation. The importance of technology in the accounting profession is also discussed.

Running Head: INFORMATION SYSTEM FOR ACCOUNTING 1
INFORMATION SYSTEM FOR ACCOUNTING
Name
Institutional Affiliation

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Introduction
Modern organizations are increasingly adopting the use of technology in their operations.
Information system for accounting is a system used to collect process and store accounting and
financial data. The use of the computer-based Accounting information system allows
organizations to track accounting activities with the help of IT Resources. The use of accounting
information system has increasingly enhanced efficiency in the processes of collection, storage,
and processing of financial data. The fact that they can be used on various devices such as tablets
and smartphones makes them more adaptable and accessible. The emergence of the accounting
software industry which is currently estimated to be worth billions of dollars has led to the
introduction of multiple AIS Systems for organizations desiring to benefit from the advantages
of computer-based systems. Walton Brothers Auto solutions run by Sam and Walton which has
in the past few years experienced massive growth. However, their organization relies heavily on
paper-based reporting mechanisms and traditional reporting means. With this kind of growth,
however, the organization is faced with numerous challenges in meeting its reporting
requirements. Journalizing transactions and maintaining books which are done by the
organization’s bookkeeper using traditional method consumes a considerable amount of time. As
a result of this, inconveniences such as delayed payments from customers and delayed payments
to suppliers are experiences from time to time. The reliance on traditional means of reporting
also makes it quite hard to have debts from customers paid on time. With the organization
recording an 80% growth in revenue, several other challenges are being experienced in the
organization, all attributed to reliance on traditional means of reporting.

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Task one.
Traditional accounting system and its strengths and weaknesses
Traditional accounting systems rely on manual processing of accounting information
whereby transactions are recorded in columnar paper and kept in huge binders. Unlike modern
accounting programs in which transitions are recorded on computer programs, in the traditional
method transactions are recorded on paper. These accounting systems use books, paper and
physical records where transactions are entered by hand in multiple rows and in at least four
columns divided to accommodate information such as amounts and dates (Chapman &
Kihn,2009).
Strengths of Traditional accounting system
Despite the increased adoption of computer-based accounting systems, the traditional
system can also be perceived as a suitable alternative because of its various advantages outlined
below.
Accessibility
Accessibility is one of the key benefits of manual accounting systems. Unlike computer-based
accounting which is likely to be unavailable in case of power shortage and low internet hindering
accessibility, this can be accessed at any time. It is therefore not affected by the absence of
power or internet connection challenges (Dandago & Rufai, 2014).
Not prone to file corruption and Data systems errors.

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This is one of the characteristics of computer-based accounting systems. In case digital
errors occur on any of the files, or a user opens the wrong file containing old data, the validity of
the whole data is likely to be affected. Such errors are however not present in manual accounting
systems (Grabski, Leech & Schmidt, 2011). The fact that manual systems also use ledgers for
each account means that there is no possibility of confusing different sets of data.
Ease of correcting errors
The traditional accounting system naturally guides against number transpositions and
errors in data entry. With all transactions being debited in one account and credited in another
any errors can be identified and solved with ease. The trial balance is used in making a
comparison between credited and debited transactions. Any mismatch would, therefore, mean
that a certain error has been encountered somewhere (Laudon & Laudon, 2016).
Continued attention to tasks
Manual accounting ensures that all accounting tasks are monitored on a continuous basis. This
continuous monitoring can be advantageous in that any losses can be identified with ease and
corrective actions taken. This is unlike automated accounting systems where organizations have
to wait for a certain period to add up losses and profits (Kuperman, Gardner & Pryor, 2013).
Easy to explain
The use of traditional accounting systems in preparing financial statements for
organizations makes more explainable to people outside the organization that would have
difficulties in understanding the complex computer-based accounting systems (Sori,2009).
Weaknesses

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Prone to loss
There is a high possibility of losing physical copies. If a fire breaks out in an organization
or crucial documents are stolen, this would mean that the accounting data of an organization is
lost. With computerized accounting systems, however, data can be backed up in cloud servers.
Making duplicates of physical data copies would be a cumbersome task. In manual accounting,
therefore, there is a high possibility of loss of physical copies (Eldenburg, Soderstrom, Willis &
Wu,2010).
They are cumbersome and prone to frequent data entry errors.
Manual accounting systems require that all data is entered twice. This can be quite
cumbersome. It is prone to errors in that it cannot prevent a wrong number from being entered
and cannot eliminate any inconsistency between the first and second entry.
Various options that Walton Brothers have if they want to have automation in their
Accounting techniques
To fulfill their automation objectives, the two have two options at their disposal
Purchasing and adopting various Accounting software in their operations
Various options are available in their market for meeting their automation objectives. The
two brothers can identify the automation needs of their organization and consider the most
suitable option among the Accounting software offered in the market (Sajady, Dastgir & Nejad,
2012). The choice of accounting software will depend on the price of the various options as well
as supported features.
Outsourcing Automated accounting services

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The two can also outsource the services of an accounting outsourcing company. These
companies a wide range of bookkeeping services. Outsourcing accounting services will help the
organization to streamline its operations (Domeika, 2008).
Accounting software that they can use
The choice of accounting software is dependent on several factors including the price and
type of data. The two have various accounting software’s to choose from.
Fresh books
They can use Fresh books to computerize their company’s daily accounting activities
such as financial reporting, tracking billable time, tracking expenses, accepting payments and
creating invoices. These are therefore some of the problems the software will solve. Some of the
advantages include unlimited data access, tracking expenses and working times (Hall, 2012). Its
disadvantages include lack of enterprise-grade capacity, lack of automatic transfer of invoices to
other systems and occasional minor bugs and glitches. Its prices are $50, $25, $15 per month for
premium, Plus and Lite plans respectively.
Zoho Books
They can also use Zoho books software to manage expenses and money flowing into the
organization. The organization may use Zoho books to check expenses, manage invoices and
customers. Zoho books would also help the organization in making informed decisions. It can
also be used in reconciling transactions and bank accounts. Some of its advantages include ease
of use availability of phone-based and computer applications, numerous features for running
daily business operations and low prices compared to other alternatives (Rahayu, 2012). Some

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disadvantages include the poor quality of its mobile Application, it only an on-demand software
without an on-premise version. Its prices range from $10 to $29
Sage Intacct
With the exponential rate of growth at the organization, Sage Intacct would be an ideal
choice for the organization. It offers an advanced cloud-based accounting system. However, the
adoption and use of this software must be preceded by advanced training of the organization’s
staff due to its advanced nature. This software supports features such as general ledger, accounts
receivable, accounts payable, order entry, cash management, purchasing, and employee
expenses. It can, therefore, help the organization to solve problems related to such features
(Onaolapo & Odetayo, 2012). Some of its advantages include ease of use and the ability of new
users to quickly pick up the new functionalities, ability to handle inter-company and multi-entity
transactions; it’s accommodative of most needs of a growing company like Walton Brothers
Auto Solutions. The cost of Sage Intacct ranges from $400 to $10000 per month.
Using accounting software will present the organization with various benefits including a
reduction of accounting errors, simplified data entry, task automation and efficiency in processes
(Komala, 2012).
Task 2
Apple Inc is currently ranked as the most innovative company in the world. The
organization has since its inception recorded tremendous growth from being a small organization
to being the multinational organization it currently is. The organization has relied on its technical
abilities to come up with new products and services as opposed to reliance on forces of demand

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and supply. Some of the business processes responsible for its growth include the creation of
products with the simplicity of use feature, staying ahead of its competitors by at least two years,
offering good customer service and in-house experience and keeping things simple approach
(Kogan, Papanikolaou, Seru & Stoffman, 2017).
Benefits in using the Technology driven approach
Staying ahead of competitors
This is perhaps the most important goal of any organization. The technology-based approach
enables the organization to adopt new and more efficient approaches and processes which enable
them to always remain ahead of their competitors (Salehi & Abdipour, 2011).
Unmatched quality of products and services
This approach also enables organizations to offer high-quality products and services than those
already available in the market
Satisfying the needs of their customers
Consumer tastes and preferences keep changing from time to time. Reliance on technology-
based approach means that an organization changes with its customers to ensure that products
and services offered are those that satisfy the needs of their customers (Gelinas, Dull & Wheeler,
2011).
Importance of Technology on the accounting profession
Accuracy

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Accounting is one of the most critical function I organizations. Any slight mistake made
by an accountant can easily affect the entire organization. With the detailed nature of accounting
work, accuracy in the reporting and recording functions is therefore highly valued. Technology
plays an important role in enhancing accuracy in the accounting function. Computer-based
calculations, for example, contains fewer errors as compared to manual calculations (Eldenburg,
Soderstrom, Willis & Wu, 2010). Invoices with multiple items developed manually are likely to
have more errors as compared to those developed through the use of technology.
Instant Access
Accountants require different types of information on a day to day basis. Technology
ensures that such information is secured in a cloud-based internet server. Cloud-based
technology makes information more accessible to the accountant or the management (Hurt &
Zhen, 2008). With increased accessibility information can be reviewed at any time and location.
How the use of Information systems eliminate data error possibilities
Generally, computers are considered to be more accurate than human beings. While the
human memory can get tired and make the wrong calculations, a computer can work for longer
hours without making any substantial errors (O'Leary,2008). For them to be as accurate as
possible, however, these information systems must be configured properly
Importance of today’s accounting profession to focus on paper fewer work processes?
Contemporary organizations operate in environments that are quite competitive. Focus on
consumer satisfaction is one of the areas that organizations prioritize. With the large volumes
that data that accountants have to record and analyze on daily basis paperwork processes would
make their work more tedious. Today’s accounting profession should, therefore, focus on

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paperless work processes to improve efficiency and accuracy which are important aspects of
their profession (Gable, Sedera & Chan,2008).
Task Three
Toshiba corporation internal control failure presents a classic example of a case study
where internal controls failed to operate effectively
Factors leading to the Failure of
(a) What factors led to the failure of these controls?
Several factors have been attributed to the failure of Toshiba’s internal control function. One of
these has been described as the organization’s attempt to run before walking. The adopted audit
function was too modern for the organization. Also, the internal audit function in the
organization put its focus on consultation services instead of focusing on assurance role
(Bhattacharyya, 2015). The audit division was tasked with the responsibility of auditing
Toshiba’s corporate divisions. On the contrary, this department provided consultation services
and failed to act as an accounting audit division.
(b) Could the failure have been avoided? If so, how?
Yes, the problem could have been avoided. It could have been avoided if the internal audit
department in addition to focusing on consultation services had played its accounting audit role.
It could also have been avoided if the organization had adopted a less complex audit
system(Bhattacharyya, 2015).
Conclusion

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In conclusion, the reliance on paper-based mechanisms by Walton Brothers Auto
solutions can be attributed to the problems that the organization is facing. The organization has,
for example, failed to meet its reporting requirements due to this fact. Several other
inconveniences have arisen as a result of the wrong choice of accounting systems. However,
apart from some of the disadvantages of traditional accounting system such as easy loss of data
and high frequency of data entry errors, the some have some advantages. These advantages
include the fact that it is easy to explain, makes it easy to identify and correct errors, easily
accessible and finally it is not prone to corruption and data systems errors. Two alternatives are
at the disposal of the management in their attempts to automate the organization’s function. They
can either hire the services of an external accounting service provider or purchase any of the
available accounting software available in the market. Some of the available accounting options
which the organization can adopt include Fresh Books, Zoho Books, and Sage Intacct. The use of
technology in the accounting profession improves accuracy and efficiency and enables instant
access. The use of technology-based approach enables organizations to stay ahead of their
competitors, satisfy the needs and wants of their customers and helps them to maintain a high
quality of products and services.

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