University Accounting Systems and Processes Case Study - BFA504

This case study analyzes the accounting systems and processes of Tilly Pet Supplies, a small to medium-sized business facing challenges with its existing accounting software. The analysis explores the advantages and disadvantages of upgrading or replacing the current system, considering factors such as cost, efficiency, and security risks. The study also examines the potential benefits of a new system, including increased profitability and capital preservation, while acknowledging the associated costs and complexities. Furthermore, the case study assesses the security risks associated with both options and proposes mitigation strategies. Finally, the document evaluates a claim made by Sam Potter regarding the financial implications of a system upgrade and provides recommendations for Tilly's Pet Supplies, emphasizing the importance of balancing financial considerations with long-term benefits. The analysis is supported by relevant references to academic literature.

Running head : ACCOUNTING SYSTEMS AND PROCESSES
ACCOUNTING SYSTEMS AND PROCESSES
Name of the Student
Name of the University
Author Note

1ACCOUNTING SYSTEMS AND PROCESSES
a) Advantages and Disadvantages of making a new system
Advantages of buying a new system
The introduction of the new system along with the Information technology specialist
to this small to medium business enterprise Tilly Pet Supplies that has been made is because
the former system was not performing up to the desired standards. The computer that runs the
program is also fast approaching its capacity. It has not been upgraded. Therefore, the
decision to introduce the new system has been taken.
The advantages of making the new system would be that it would help the
organisation to get back to its former position. The profitability of the firm will also increase,
which in turn would lead to the minimisation of losses (Smith 2017). It would lead to the
preserving of the capital. The diversification in the system by way of introducing a new
system can help in the protection of savings. As per the claim of Sam, it would lead to the
involvement of a lump sum capital. However, any investment which would generate better
revenue is worth the investment (Maskell, Baggaley and Grasso 2017).
Disadvantages of buying a new system
The new system has been introduced to this small to medium business enterprise Tilly
Pet Supplies that has been made is because the former system was not performing up to the
desired standards. The computer that runs the program is also fast approaching its capacity. It
has not been upgraded. Therefore, the decision to introduce the new system along with the
Information technology specialist, has been taken (Kranacher and Riley 2019). It is
commonly said that everything comes with a cost. Therefore, the prime demerit to it would
be enhancement in the cost of the company. When the cost of the operations increase the cost
of the products concerned will also increase. It may also lead to the reduction in the quality of
the products of the enterprise (Li and Sloan 2017). When the products of the business are

2ACCOUNTING SYSTEMS AND PROCESSES
being compromised on quality, the sales of the firm will also reduce. This in turn will lead to
the reduction in the revenue and also may lead to the reduction of the profitability of the
company (Vardon, May, Keith, Burnett and Lindenmayer 2019).
Another important demerit to the introduction of the system would be that it will lead
to complications which are not so necessary. When a portfolio becomes complicated, it
becomes difficult to carry on the operations of the business. This has an utmost negative
impact on the business (Morrison 2019).
When there are too many assets in a portfolio or a new system is introduced, it
becomes an index fund. If an index fund is at all needed, it is always better to buy an index
fund. But wasting the transaction fees on the purchase of numerous assets that morph in to an
index fund is not right.
b) Security risks that are associated with both making or buying a new system
The security risk that would be associated with making as well as buying the new
system would be categorised in to internal risks, external risks.
The internal risks associated to the new set up are mentioned as under
There are various risks like risks relating to fire. The help of the automatic fire detectors and
extinguishers could prevent it. Usage of air condition can also reduce the amount of moisture
in the air, which may be useful to control humidity. The unstable power cuts would also be a
threat, which could be prevented with the help of the Voltage controllers.
The external risks associated with the set up are mentioned as under
There might be lightning attacks, which would hamper the overall production of the
company. There are various other threats which include, loss and corruption of data of the
system, disruption of the operations of the business that rely on the computer systems, loss of

3ACCOUNTING SYSTEMS AND PROCESSES
sensitive information, illegal monitoring of the activities on the computer systems and
various other security breaches.
Ways to mitigate the risks
It is always said that an installation of a new system always has some kind of risk
factor associated with it (Hopkin 2018). The computer that runs the program is also fast
approaching its capacity. It has not been upgraded. Therefore, the decision to introduce the
new system has been taken (Loughran and McDonald 2016).
The risk that are involved in the system can be prevented by the help of the automatic
fire detectors and extinguishers, usage of air conditions which can help in the reduction of the
moisture content in the rooms (Scott and O'Brien 2015). The unstable power cuts are also a
threat, which could be prevented with the help of the Voltage controllers.
c) Recommendation
Keeping all the advantages and disadvantages at place, the recommendation to Tilly’s Pet
Supplies as to whether making or buying a new system is most appropriate for their business,
could be that the new system would lead to the enhancement of the profitability of the firm,
which in turn would lead to the minimisation of losses. It would lead to the preservation of
the capital. The diversification in the system by way of introducing a new system can help in
the protection of savings. If there are too many assets in a portfolio or a new system is
introduced, it becomes an index fund. If an index fund is at all needed, it is always better to
buy an index fund. But wasting the transaction fees on the purchase of numerous assets that
morph in to an index fund is not right. Therefore, it is recommended that the company should
not utilise its funds to the extent that it leads to the reduction in the profits or a compromise in
the quality of the products concerned.
d) Evaluation of Sam’s Claim

4ACCOUNTING SYSTEMS AND PROCESSES
The claim that is put forward by Sam Potter, ‘Once the system is acquired then the
business can get back to normal and do what it does best — make great pet products —
without having to spend money on IT’. The introduction of the new system to this small to
medium business enterprise Tilly Pet Supplies that has been made is because the former
system was not performing up to the desired standards. The computer that runs the program is
also fast approaching its capacity. It has not been upgraded. Therefore, the decision to
introduce the new system has been taken.
As per the claim of Sam Potter, the argument is that Sam Potter is ready to bear the
costs that are associated with the installation of the new system along with the Information
technology specialist. However, the new system, would help the company to regain its
goodwill as it used to have before. The company as of now has been into a stable position. It
is because of the reason that it has to go through the costs of installation of the new system
along with the Information technology specialist, as it did not go through proper up
gradations, when it was needed. Therefore, Sam Potter has to bear the costs that are involved
in the process of installing the new system in the company (Kaplan and Atkinson 2015).
Every system needs to go through proper up gradations. The computer that runs the program
is also fast approaching its capacity. It has not been upgraded yet. Therefore, the decision to
introduce the new system has been taken. So now if it installs a new system along with the
Information technology specialist, it will lead to the increase in the fixed cost as well as the
operating cost, as they have pay salary to the Information technology specialist (Libby 2017).
However, if someone takes in charge of the up gradation of the technology, it will lead to the
benefit of the company on a long-term basis (Kieso, Weygandt and Warfield 2016).
References

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Hopkin, P., 2018. Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2016. Intermediate Accounting, Binder
Ready Version. John Wiley & Sons.
Kranacher, M.J. and Riley, R., 2019. Forensic accounting and fraud examination. John
Wiley & Sons.
Li, K.K. and Sloan, R.G., 2017. Has goodwill accounting gone bad?. Review of Accounting
Studies, 22(2), pp.964-1003.
Libby, R., 2017. Accounting and human information processing. In The Routledge
Companion to Behavioural Accounting Research (pp. 42-54). Routledge.
Loughran, T. and McDonald, B., 2016. Textual analysis in accounting and finance: A
survey. Journal of Accounting Research, 54(4), pp.1187-1230.
Maskell, B.H., Baggaley, B. and Grasso, L., 2017. Practical lean accounting: a proven
system for measuring and managing the lean enterprise. Productivity Press.
Morrison, M., 2019. Risk Management in Automation of the Accounting Process. In Multiple
Perspectives in Risk and Risk Management (pp. 231-239). Springer, Cham.
Scott, W.R. and O'Brien, P.C., 2015. Financial accounting theory (Vol. 3). Toronto: Prentice
Hall.
Smith, M., 2017. Research methods in accounting. Sage.

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Vardon, M., May, S., Keith, H., Burnett, P. and Lindenmayer, D., 2019. Accounting for
ecosystem services–Lessons from Australia for its application and use in Oceania to achieve
sustainable development. Ecosystem Services, 39, p.100986.