Accounting Information Systems and Borealis Case Study Analysis Report

This case study analyzes the accounting information systems implemented by Borealis, particularly focusing on the challenges of traditional budgeting in a volatile market environment. The analysis highlights the company's shift towards rolling financial forecasts, a balanced scorecard, activity-based costing (ABC), and benchmarking to improve performance management. The study critiques the limitations of these tools and discusses the importance of aligning them with overall strategic objectives. It also examines the financial outcomes of Borealis during 1998-2000, noting the increase in fixed assets and internal innovation but also the difficulties in maintaining profitability. The document references various academic sources to support its analysis of the case.

Running head: ACCOUNTING INFORMATION SYSTEMS
Accounting Information Systems
University Name
Student Name
Authors’ Note

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Analysis of the Borealis Case
Immediately after the occurrence of the merger, the business concern realized the fact that the
traditional annual budget essentially did not have value in a specific environment in which
there are volatile prices of oil along with highly changeable cycles of business that could
invalidate the entire budget (Hassan et al., 2017). Main concerns when considered together,
have necessarily led to the greater dissatisfaction with process of budgeting specially in cases
of difficulties in process of planning ahead that can be attributed to stratagem (Khairi &
Baridwan, 2015). Essentially, budgeting helps in promoting vertical command as well as
control, endorsing centralizations of decisions as well as responsibility. Particularly, budget
gamesmanship necessarily leads to different budgetary slack.
Together with the reengineering procedure, abandonment of budget was considered as a
specific risk that one of the corporate control team regarded as face loss. Essentially, system
of performance management delivered diverse line managers with a clear image of the
corporation’s strategic priorities as well as accountability for arriving at proper investment.
Analysis of the case study reflects the fact that budget was split into four different parts or
tools.
Rolling Financial Forecasts-These include rolling particular financial forecasts for the
purpose of financial planning and this was considered to be a simplified procedure as
compared to the budgeting process. Again, rolling forecasts assisted managers to cut loose
from annual cycle of budgeting and permitted them to arrive at decisions founded on moving
pictures of specific information regarding likely upshots of current trends (Simkin et al.,
2014).

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Balanced Scorecard- The use of the balanced scorecard for management of performance can
be considered to be very effective for Borealis primarily for both establishment of target as
well as management of performance. Essentially, benchmarks to performance of competitors
delivered the base for target levels of performance for both financial as well as non-financial
dimension (Adenike & Michael, 2016). Particularly, as the case suggests, Borealis executed
diverse factors, namely, corporate objectives poured to low level aims. Maintenance of
balance between financial as well as non-financial viewpoints is also presented in the study.
Fundamentally, the scorecard is used for the purpose of establishment of targets as well as
presentation of reports regarding progress. BSC helped in recognition of trends in comparison
to specific benchmarks on peers and identification of mainly cause as well as effect
associations across different scorecard dimensions (Guragai et al., 2015). However, BSC of
Borealis was not necessarily executed from a specific setting-session and it took relatively
long time and diverse enhancements for realization of short as well as long term advantages.
ABC (a toolbox at fixed cost) - Particularly, in a process costing environ, each and every
procedure can be illustrated as an action. Nevertheless, implementation of ABC in Borealis
was not an easy task. As such, in a complicated business scenario characterised by, huge
volume as well as deep innovation demands, a perspective is essentially valid (M Ancini et
al., 2014).
Benchmarking- The issue with evaluation of performance relative to a specific budget is that
it generates an incentive for diverse subordinates to establish a target that is comparatively
easier to attain (Khairi & Baridwan, 2015).
Management of Resource permitting project plan investment- As predicting for huge projects
of investment cannot be managed on a rolling forecast tactic. Forecasting for huge investment
projects cannot be managed on a rolling forecast advance, as nature of life cycle of majority

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of projects could possibly exceed for 5 quarters and even for more than 10 quarters.
Subsequently, a project by project as well as decentralized management of investment was
also realized by management (Hassan et al., 2017). Founded on that, Borealis prioritized
investment and intended to generate higher value.
Arguments in support of the position:
There are probable issues associated to the budgeting process of the corporation. There might
be a major limitation of rolling forecast that was not properly mentioned in the given case. It
could be of little or no value in case if they are witnessed by senior managers as an
instrument for questioning or re-examining diverse performance targets. Again, in case if the
forecasts are utilized to demand alterations or else actions, a trust as well as confidence
between diverse layers of administration could evaporate (Simkin et al., 2014). A probable
wrong tactic was to associate BSC to diverse rewards on particularly performance. Again, if
the scorecard emerges as another type of budget with annual negotiation with diverse targets
as well as resource, managers might fail to embrace the original strength. This involves
undermining any concept of empowerment as well as trust (Guragai et al., 2015).
The financial outcomes of primarily Borealis mainly during the financial year 1998, 1999 as
well as 2000 however did not reflect a success story since the case study attempted to prove
and clarify certain points. In essence, the corporation was enhancing fixed assets on
particularly intangible as well as tangible assets. In addition to this, management of the firm
was concentrating on internal innovation as the intangible assets (counting the new 80
disclosed innovations) were essentially doubled on mainly a year on year basis (Adenike &
Michael, 2016). However, as mentioned earlier, the balance between maintenance of
acquirement of diverse capabilities and the ability to pass its cost to particularly end product
price is considerably difficult in this kind of industry with fluctuating prices. Again, the fixed

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assets of specifically production plans also had enhanced between the financial year 1999 and
financial year 2000, however, the volume of sales slumped. In this case, a specific system
that detected price or else cost for every unit of activity founded on maximal usage of entire
capacity would necessarily enhance pressure on different production managers to decline the
variance.

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References
Khairi, M. S., & Baridwan, Z. (2015). An empirical study on organizational acceptance
accounting information systems in Sharia banking. The International Journal of Accounting
and Business Society, 23(1), 97-122.
Hassan, H., Nasir, M. H. M., & Khairudin, N. (2017). Accounting Information Systems.
In SHS Web of Conferences(Vol. 34). EDP Sciences.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting
information systems. John Wiley & Sons.
Adenike, A. T., & Michael, A. A. (2016). Effect of Accounting Information System Adoption
on Accounting Activities in Manufacturing Industries in Nigeria.
Guragai, B., Hunt, N. C., Neri, M. P., & Taylor, E. Z. (2015). Accounting information
systems and ethics research: Review, synthesis, and the future. Journal of Information
Systems, 31(2), 65-81.
M Ancini, D. A. A., Vaassen, E. H., & D Ameri, R. A. A. (2014). Accounting information
systems for decision making. Springer,.