Essay: Exploring an Accounting Information System forCompany



CHAPTER II

Review of Related Literature and Systems

This chapter is going to discuss the related local and foreign literatures about the usage of information technology in various sectors.

2.1 Foreign Literature

Expense management is the set of practices organizations utilize in order to monitor, pay, reimburse, and audit business-related expenses incurred by employees. Traditionally encompassing expenses related to travel and entertainment, this process now includes the array of costs employees incur on the job, either with a corporate credit card or personal spending. For nonprofits this can include travel to sites, purchase of program supplies, and many other important expenses. The conventional expense management process can be laborious, paper-heavy, time consuming, and error prone. Expense management software improves and streamlines the process of monitoring costs by simplifying coding, automating approval workflow, improving compliance with corporate expense policies, and providing greater visibility into spend analytics, all with the added benefit of reducing operating and expense processing costs [1].

Accounting information systems (AIS) aim to store and collect accounting and financial data and make it available for use by internal users of the enterprise; facilitate the decision-making process to make proper planning. The accounting information system is designed for monitoring, treatment of data based advanced systematic technology; to eliminate the use of traditional accounting methods; and provide users with a set of financial information, helps them manage everything accurately [2].

The application of information technology significantly affects the operations of the organization. Consequently, organization needs to understand the role of technology inside the organization and its influences on the organizational processes [3].

  An accounting information system supported by a proper information technology is a requirement for management in modern business conditions. The quality of accounting information depends   on the integrity of accounting information system as well as its relationship with other business areas. Integrated business application (IBA) helps accounting to add value to business. As a result, an entity uses reliable, timely and accurate information. Accounting data processing supported by appropriate IT causes a decrease in cost of accounting information production, the increase of confidence in accounting information and becomes time and energy saving [4].

2.2 Local Literature

Due to globalization, business opportunities can be established in new countries more than ever before. Settling down in new emerging markets requires from foreign investors or managers in addition to determining a market entry strategy, locating, and organizing the business units, to be also aware of the influences and interrelations of the external forces that affect and occur in the workplace, primarily cultural differences. Managers must have a well understanding of the foreign culture in an international environment [5].

The Arab countries are gaining more attention as emerging markets in global business. Applying managerial accounting on a global basis requires an understanding of the cultural aspects of the countries. Arabic culture has a long history on the one hand and contradicts the Western cultures sharply on the other hand.  Research on comparative management accounting (CMA) emerged in the early 1990s. CMA research investigated the management accounting and control systems in many countries and nations thus far, such as the US, Japan, Canada, the UK, China, Taiwan, India, European countries, South Africa, Singapore, Malaysia, and Egypt. The MASs in Anglo-American and European countries have been widely studied and the MAS of Japanese firms had been deeply examined It is notable that very little research had been investigating into the Arab management accounting and control systems. Therefore, this research is fulfilling the literature gap by studying and examining the MASs in the Arab World. [6].

 The results reveal that the finance department in Arab companies carries out financial and managerial accounting tasks. Arab companies can be also characterized by short-term budgeting. In addition, Arab companies use traditional instruments in management accounting and performance evaluation. The empirical results show the limited role of management accounting in Arab companies, especially in terms of strategic decisions. The findings affirm that culture is an ultimate factor shaping Arab MASs. Furthermore, the findings indicate that Arab management accounting practice is influenced by the Anglo-American MA knowledge and institutions. The study also points to the influence of organizational culture on MASs in Arab companies. Importing international knowledge and improving the education and training in field of MA will help Arab companies in developing their MASs [7].

2.3 Foreign Systems

Accounting Information Systems (AIS) are a tool which, when incorporated into the field of Information and Technology systems (IT), were designed to help in the management and control of topics related to firms’ economic-financial area. But the stunning advance in technology has opened the possibility of generating and using accounting information from a strategic viewpoint. Since this is important for all firms, it is more important even for medium-sized and small ones which need this information to deal with a higher degree of uncertainty in the competitive market. [8]

  Accounting Information System (AIS) as a standout amongst the most basic frameworks in the association has additionally changed its method for capturing, processing, storing and distributing information. These days, more advanced and on-line data is used in the accounting information system. Management is locked in with various sorts of exercises which require great quality and dependable data. Quality data is one of the upper hands for an association [9].

Data usually refer to the input of an Accounting Information System. As data are processed in the Accounting Information System, information is generated for decision making. Users can retrieve input data through the application software and produce information as output. There is no unique definition of data. Data refer to quantitative and qualitative attributes of a variable or set of variables. It exists in a variety of forms – as numbers or text on pieces of papers, as bits and bytes stored in electronic memory or as facts stored in a personal mind. It can be defined as raw fact. Turban et al [10]

 At the same time, using financial performance as a measure of the success or failure of IS has various advantages. Among these, the fact that performance measurement is vital to the success of the company because it creates understanding, forms behavior, and improves competitiveness. Furthermore, financial performance reflects a common objective of all the company's IS and/or management processes, which makes it simpler to access their service. Lastly, despite their limitations, financial data has the advantage of being accurate and objective, while intermediary, non-financial aims are often subjective, since they rely on personal opinions. [11].

Expense report types specify which expense categories are visible to employees when they enter their expense report data. Expense report types also specify how an expense report is processed. For example, a Travel and Entertainment expense report might be sent directly to the Accounting Department for reimbursement, but a Relocation Expenses report might be sent to the Human Resources Department first, and then to the Accounting Department so that the expensed amount is included in the taxable income for the employee. Expense report type codes are not hard-coded, so you can add, revise, and remove codes to correspond to your business needs [12].

2.4 Local Systems

A conceptual framework for accounting information systems for the process did not specify the strategy so far has researched many of the academics that the information obtained from the traditional cost accounting system is not enough to take strategic decisions. As a result, has developed different methods of the literature of accounting recently for the purpose of integration with the attributes of management accounting (such as value chain analysis, properties of the cost, product cycle time) as well as the practices of professionals and researchers since have made clear that management accounting is still focused mainly on the costs to help control the activities by knowing the costs. In the late eighties increased controversy and criticism about the accounting practices the traditional administrative widely been provided new approaches in line with the competitive business environment at present and despite the proliferation of the management accounting, but that there is no comprehensive conceptual framework of what is meant the management accounting strategy [13].

The implemented accounting systems in the Arab companies impact their budgeting, reporting and information systems. Hence, the examination of the accounting standards provides an idea about the financial and managerial accounting systems in Arab companies. In cross-country analysis, the analysis of the results shows the higher proportion of utilization of IFRS among Emiratis companies and lowest among Egyptian companies. According to the cross-sectional analysis, studied companies operating in certain economic sectors such as manufacturers and banks confirmed using IFRS rather than their local accounting system. Hence, the economic development of these countries and level of liberalization of the markets in these Arab countries can explain this result. In addition, this difference in the implemented accounting systems of these Arab companies can be explained by considering the field of activity (economic sector) and level of internationalization, according to the size of the company [14].

While there are certainly expenses that may be easy targets to reduce cost, an effective expense management system should be viewed in a larger context of all organizational expenses. This would lead to a more integrated and holistic strategy whereby all facets of the business operate at maximum cost efficiency. The operative words are “cost efficiency”. An effective expense management system does not consist of cutting costs to an extent where strategic capabilities or customer service are negatively impacted. Rather, the process focuses efforts on ensuring that each dollar spent is somehow generating revenue or creating competitive advantage. Yet, because organizations have limited time, resources and budgets, they need a clear strategy to implement the process in an effective and efficient manner using the tools and software available to expedite the process [15].

References

[1]. FMA, (2015).” Expense Management Solution Selection”. page 1-13,

Retrieved from  https://fmaonline.net/wp-content/uploads/2015/11/Solution-Selection-Guide-Final-2015.pdf

[2]. OUDAH, A. (2014). “Accounting as an Information System “. Page 73-92,

Retrieved from http://shodhganga.inflibnet.ac.in/bitstream/10603/54419/11/11_%20chapter%20-%203.pdf

[3]. Hellens, L. A. (1997).” Information systems quality versus software quality A discussion from a managerial, an organisational and an engineering viewpoint”. Information and Software Technology 39, page801-808.

[4]. SaÅ¡er, I. & Oluis, A. (2013). “Information Technology and Accounting Information Systems’ Quality in Croatian Middle and Large Companies”.  page 117-126, Retrieved from  https://hrcak.srce.hr/file/164977

[5]. Lichtenberger, B., Domsch, M. E., Scholtz, G. J., & Sticksel, P. (1998). “Managing in a Global World: case studies in intercultural Human Resource Management. Wiesbaden: Gabler”, page 15-336.

[6]. Chapman, C., Hopwood, A. G., & Shields, M. (2007). “Handbook of Management Accounting Research”. Oxford: Elsevier.

[7]. Dik, R. (2010) “Arab Management Accounting Systems”.  Page 4-336,

Retrieved from  https://d-nb.info/1011569566/34

[8]. EL-LOUADI, M. (1998): “The relationship among organization structure, information technology and information processing in small Canadian firms”, Canadian Journal of Administrative Science, vol. 15, n. 2: 99-180.

[9]. Grande, E. (2011). “The impact of Accounting Information Systems (AIS)”. page 26-43,Retrieved from  https://pdfs.semanticscholar.org/39ac/c8c7392f1be9775b00101530676297292a26.pdf

[10] Turban, E., Mclean, E. and Wetherbe, J., “Information Technology for Management: Transforming Business in the Digital Economy”. 3rd ed. New Jersey: Prentice Hall.

[11].  Al-dmour, A. Al-Fawaz, K. Al-dmour, R. & Allozi, N. (2017). page 82-87. “Accounting Information System and Its Role on Business Performance: A Theoretical Study”. Retrieved from  http://www.sciedu.ca/journal/index.php/jms/article/download/12136/7445

[12]. Edwards, JD. (2015). “EnterpriseOne Applications Expense Management Implementation Guide”. Page 20-148,

Retrieved from  https://docs.oracle.com/cd/E64610_01/EOAEM/E63910-01.pdf

[13]. OUDAH, A. (2014). “Accounting as an Information System”. Page 81-92, Retrieved from  http://shodhganga.inflibnet.ac.in/bitstream/10603/54419/11/11_%20chapter%20-%203.pdf  

[14]. Dik, R. (2010). “Arab Management Accounting Systems”. Page 237-336,

Retrieved from  https://d-nb.info/1011569566/34

[15]. Raymond, B. (2009). “AscendCFO Expense Management”. Page 1-5,

Retrieved from  http://ascendcfo.com/pdfFiles/Expense%20Management%20Article.pdf

• Finals Result

The objective of the project is very versatile keeping into considerations of the accounting system management basically for the small & medium scale industries, which usually cannot maintain their expense management due to certain reasons, as a result they gone through huge losses, hence cannot survive in the market very longer. So, we applied this system for Wells-lady Textiles Company and these are some test results:

• To provide an expense management system and method which can calculate a total sum of a purchase requisition of a department of an organization, compare the total sum with a surplus budget of the department.

• To provide an expense management system and method for controlling operations of a purchase and thereby decreasing total expenses and overheads of Wells-lady Textiles Company.

• Reduce the employees & manual work.

• Avoid manipulations and reduce risk.

• Provide specific reports of company liability expenses.

• Ease of use of the system by the employees resulting in increased productivity of the company.

 This study has been concentrated upon the development of web-based expense management. At the end of the study, the researcher acquires extensive knowledge on the developing of software and working on the extensive programming environment.