ACC3101 Accounting Info Systems: Xero Software and MSC Controls

This project solution provides a comprehensive review of Xero accounting software, including its key features, advantages, and disadvantages, illustrated with screenshots. It also evaluates the change controls at Mining Support Services (MSC), identifying weaknesses in their backup and Disaster Recovery Planning (DRP) procedures. Recommendations for improved data security, backup strategies, and change management processes are provided, emphasizing the importance of written change requests, regular data backups, and secure data center locations. The analysis covers aspects like GST reconciliation, financial reporting, and the need for robust internal controls to protect critical data, offering valuable insights for accounting information systems and risk management.

Accounting
Information System
Assignment

1
By student name
Professor
University
Date: 25 April 2018.
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Contents
Background and Abstract............................................................................................................................2
Question 1...................................................................................................................................................3
Overview of Xero Software......................................................................................................................3
Key Features with screenshots................................................................................................................3
Advantages and Disadvantages...............................................................................................................8
Question 2...................................................................................................................................................9
Evaluation of change controls at MSC...................................................................................................10
References.................................................................................................................................................12
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Background and Abstract
A report has been prepared on the xero software and a brief overview of the same has been
given. The advantages and disadvantages of using the same as an accounting software has been
using the screenshots and how the same is being used in the given business scenario. The second
case study is on Mining Support Services (MSC), which is one of the specialist in software
designing for the mining industry. Since it has many critical data, back up and software so the
requisite internal control processes has been discussed. Along with the same, the disaster
recovery planning (DRP) procedure of the company has been discussed along and
recommendations have been given for what are the changes in control that are required.
Question 1
Overview of Xero Software
Xero is one of the widely used web based accounting software in the industry for accounting and
financial report preparation and book keeping purposes. All the given transactions of the
business for the given period can be recorded in the software and various reports can be
generated through it for the decision-making by the users of financial statements (Belton, 2017).
It was established in 2006 and is generally being used by small businesses. It helps in connecting
with the partners and give the financial overview and visibility of the given business in a
consolidated manner. Even the people with no accounting knowledge find it easy to operate the
software as it converts some of the most complex and standardised transactions into the easiest
transactions and in a user-friendly manner. More than 475000 businesses are using it as of now
(Boccia & Leonardi, 2016).
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Key Features with screenshots
There are a number of number of features that the software has to offer to the user, some of
which are mentioned below:
1. It is an effective tool in giving multiple types of dashboards and summary to the
management, which helps them in decision-making. This is real time and the dashboard
can be seen as and when the input data is being entered (Alexander, 2016).
2. It is helpful in the way that no manual activity and efforts are required for bank
reconciliation and it helps in tracking the bankbooks and the cashbooks simultaneously.
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3. It is one of the effective tool of inventory management and no separate set of skills of
software is required for inventory tracking and inventory management. It gives an overall
view of opening inventory, purchases, sales, closing inventory both in units as well as
prices, thus helping in avoiding confusion and fuss (Werner, 2017).
Item Code Item Name Opening Balance Purchases COGS Adjustm ents Closing Balance Sales
C1001 Milk Frogs 1kg box 0.00 7,750.00 7,625.00 0.00 125.00 30,805.00
L1003 Snakes 1.3kg bag 0.00 3,600.00 3,600.00 0.00 0.00 4,500.00
C1003 Clinkers 1kg bag 0.00 3,885.00 3,255.00 0.00 630.00 13,020.00
C1002 White Frog 1kg box 0.00 5,640.00 2,820.00 0.00 2,820.00 11,280.00
D1001 Lime Spider Fizzz 10 Lt case 0.00 1,800.00 1,440.00 0.00 360.00 4,320.00
L1001 Bananas 1.2kg bag 0.00 6,000.00 4,900.00 0.00 1,100.00 6,125.00
L1002 Jelly Beans 1.2kg bag 0.00 5,500.00 1,980.00 0.00 3,520.00 2,475.00
L1004 Sour Straps 1.5kg bag 0.00 5,500.00 1,540.00 0.00 3,960.00 1,925.00
Total Tracked 0.00 39,675.00 27,160.00 0.00 12,515.00 74,450.00
Total 0.00 39,675.00 27,160.00 0.00 12,515.00 74,450.00
Inventory Item Summary
For the period 1 August 2018 to 31 August 2018
Tracked
Sugariffic
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4. In the modern era and with Goods and Service tax going global, it has become inevitable
for the businesses to take care of GST payments and reconciliation and abide by the GST
laws and regulations. This is one of the additional features, which has been introduced
some while ago, thus helping businesses in GST reconciliation.
GST Collected
GST Period GST Collected Adjustments Filed Unfiled
Opening Balance $0.00
1 Jul 18 - 31 Aug 18 $7,445.00 $7,445.00
Total $7,445.00 $0.00 $0.00 $7,445.00
GST Paid
GST Period GST Paid GST On Imports Adjustments Filed Unfiled
Opening Balance $0.00
1 Jul 18 - 31 Aug 18 $7,230.50 $0.00 $7,230.50
Total $7,230.50 $0.00 $0.00 $0.00 $7,230.50
GST Account Transactions
Date Transaction Amount
Total $0.00
GST Owing
Opening Balance $0.00
Plus GST Collected and Filed $0.00
Less GST Paid and Filed $0.00
Less Payments Made $0.00
Closing Balance $0.00
GST Account Summary
GST Owing $0.00
Unfiled GST $214.50
Balance at 31 August 2018 $214.50
GST Account Balance $214.50
GST Reconciliation
Sugariffic
From 1 July 2018 to 31 August 2018
Accruals Basis
5. Since this is an online accounting tool, the data is being automatically preserved in cloud
and no risk of loss of data is there as back up is always present (Dichev, 2017).
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6. One of the most important and critical features of the software is financial reporting. It
helps in preparing all the financial closing books of accounts like the profit and loss
account, the balance sheet, the statement of changes in equity etc.
Account Aug 2018
Sales – Chocolates 55,105.00
Sales – Drinks 4,320.00
Sales – Lollies 15,025.00
Total Trading Income 74,450.00
Cost of Sales – Chocolates 13,700.00
Cost of Sales – Drinks 1,440.00
Cost of Sales – Lollies 12,020.00
Total Cost of Sales 27,160.00
Gross Profit 47,290.00
Advertising 4,180.00
Printing & Stationery 480.00
Rent 2,200.00
Wages and Salaries 4,400.00
Total Operating Expenses 11,260.00
Net Profit 36,030.00
Profit and Loss
Operating Expenses
Cost of Sales
For the month ended 31 August 2018
Sugariffic
Trading Income
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Account 31 Aug 2018
Cash at Bank 72,570.50
Total Bank 72,570.50
Accounts Receivable 42,427.00
Inventory – Chocolates 3,575.00
Inventory – Drinks 360.00
Inventory – Lollies 8,580.00
Total Current Assets 54,942.00
Furniture and Fittings 16,200.00
Office Equipment 11,770.00
Total Fixed Assets 27,970.00
Total Assets 155,482.50
Accounts Payable 29,238.00
GST 214.50
Total Current Liabilities 29,452.50
New Business Bank Loan 35,000.00
Total Non-current Liabilities 35,000.00
Total Liabilities 64,452.50
Net Assets 91,030.00
Current Year Earnings 36,030.00
Ow ners Contribution 55,000.00
Total Equity 91,030.00
Equity
Bank
Balance Sheet
As at 31 August 2018
Current Assets
Fixed Assets
Current Liabilities
Non-current Liabilities
Sugariffic
Liabilities
Assets
Advantages and Disadvantages
Some of the major advantages of the software is mentioned below:
1. This is a one-stop tool for accounting, booking and consolidation, no additional software
is required. It helps in both the day to day operational transactions like creating and
sending invoices, attaching the files and supporting to the given journal entry, invoicing
and booking of payments as well as it helps in consolidating the final books of accounts
like that of balance sheet and the profit and loss account (Fay & Negangard, 2017).
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2. It is relatively cheap than other such software is available in the market and is used
extensively by the small businesses. It is apt and appropriate for their use, as they cannot
afford high priced software’s like those of SAP and ERP for accounting.
3. It has a painless set up and set up costs and efforts is next to zero unlike the case of SAP
where the chart of accounts are to be prepared and a lot of effort and time is required.
Furthermore, it has an editing feature, which makes it even faster, and accurate in case an
incorrect transaction has been posted and it needs to be corrected (Farmer, 2018).
Some of the major disadvantages of the accounting tool are as follows:
1. However, it is easy to use and apply but it is not suitable for large business houses
considering the complexity of transactions there.
2. Since this is a much-consolidated tool occupying less space, navigating between the tabs
and different windows is difficult in case the correction is required in the books of
accounts (Jefferson, 2017).
3. The customization of the vendor and the customer report is restricted as a result of which
the businesses only need to use the reports which is only inbuilt and since there is an
option of exporting all the reports to excel the chances of manipulation increases.
Question 2
In the given case, the scenario for Mining Support Services (MCS), a mining industry software
specialist has been given as to how they keep up with their back up and the DRP plan and what
can be changes in the control.
Weaknesses in MCS’s backup and DRP procedures
Some of the major weaknesses in the MSC’s backup and DRP procedures are mentioned below:
1. The company’s data centre is installed in the basement of the building, that increase the
risk of losing all the IT data, and the backup of the companies in case there is a flooding
or any other natural calamity, the ground floor, and the basement are the main areas,
which face many consequences of natural calamities. This poses a risk on both the data
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back up as well as how the data, which is lost in a calamity, can be recovered (DeZoort &
Harrison, 2016).
2. The company’s operational staff is working for 5 days a week over two shifts and all the
programming staff, which is located in the same building, has access to the data centre
and all the critical and private data. All of them are authorised to test the new programs
and make the changes to the programs when the operational staff is not around. This
poses a huge risk on the security of the data and thus it may be modified or changed and
there might be a scenario that no one comes to know of the same and thus the business
may face the consequences as a whole (Kuhn & Morris, 2016).
3. Programmers do respond to the oral requests made by the customers and make changes to
the program accordingly. This might land MCS into legal and regulatory issues in future
if the respective businesses suffers a loss due to this and they put a legal claim on MCS.
Thus, absence of written change request is a huge risk (Raiborn, et al., 2016).
4. System and programming documentation is being done only when the time is available
and thus no proper data backup is available. This is due to huge work demands and less
capacity of the company but this shows that the company has no adequate back up of the
data and there are huge chances that the data and information once lost, might not be
available or recovered in future.
Evaluation of change controls at MSC
There are a number of changes, which are warranted in the control measures. Some of them are:
1. The company should ask for change requests in the programs and software coding in
written from the clients. This will help in having the proper supporting and thus reiterate
the same to the client in case of any issues.
2. The company should be taking the data back up every day or probably twice or thrice a
week as many important and critical client data is at disposal of the company and it needs
to be properly preserved for future (Sithole, et al., 2017).
3. The company should be planning to relocate the data centre from the basement to the first
floor or second floor of the building, as it would help the cause in case of floods or in
case of other natural calamities in the future.
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4. Lastly, the company should be making the records and maintaining the same in the
chronological manner as it would help to retrieve the information anytime in future and
should also plan of insuring the data such that the loss can be minimised (Chron, 2017).
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References
Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp.
411-431.
Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd.
Boccia, F. & Leonardi, R., 2016. The Challenge of the Digital Economy: Markets, Taxation and
Appropriate Economic Models. s.l.:Springer.
Chron, 2017. five-common-features-internal-control-system-business. [Online]
Available at: http://smallbusiness.chron.com/five-common-features-internal-control-system-business-
430.html
[Accessed 07 december 2017].
DeZoort, F. & Harrison, P., 2016. Understanding Auditors sense of Responsibility for detecting fraud
within organization. Journal of Business Ethics, pp. 1-18.
Dichev, I., 2017. On the conceptual foundations of financial reporting. Accounting and Business
Research, 47(6), pp. 617-632.
Farmer, Y., 2018. Ethical Decision Making and Reputation Management in Public Relations. Journal of
Media Ethics, pp. 1-12.
Fay, R. & Negangard, E., 2017. Manual journal entry testing : Data analytics and the risk of fraud. Journal
of Accounting Education, Volume 38, pp. 37-49.
Jefferson, M., 2017. Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland.
Technological Forecasting and Social Change, pp. 353-354.
Kuhn, J. & Morris, B., 2016. IT internal control weaknesses and the market value of firms. Journal of
Enterprise Information Management, 30(6).
Raiborn, C., Butler, J. & Martin, K., 2016. The internal audit function: A prerequisite for Good
Governance. Journal of Corporate Accounting and Finance, 28(2), pp. 10-21.
Sithole, S., Chandler, P., Abeysekera, I. & Paas, F., 2017. Benefits of guided self-management of attention
on learning accounting. Journal of Educational Psychology, 109(2), p. 220.
Werner, M., 2017. Financial process mining - Accounting data structure dependent control flow
inference. International Journal of Accounting Information Systems, Volume 25, pp. 57-80.
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