Accounting Information Systems Accounting Masters Program Case Study

Excerpt from Case Study :

agree with accountant B's philosophy in regards to oversight and auditing. Accountant B. expressed concerns regarding timely and effective systems control. These controls are very important in regards to business operations. In addition, tight system controls have implications for society at large. This is particularly true for institutions that are vital to the global and domestic economic health of society. Accountant A seems to favor the ability of accountant to discover mistakes after they have occurred. I believe accountant A has errors in his logic in regards to accounting. This is particularly true because inventory recognition directly impacts the firms financial statements and balance sheet (Friedlob, 1996)

In many instances, society depends, in large part, on the accuracy and confidence of accounting information. The financial markets, in particular, depend heavily on the trust and confidence of financial information. Accountant A seems to believe that society has benefited from his firm realizing the business error. To a certain extent, he is indeed correct. However, due to this error, confidence in the CBU's inventory and financial statements has been eroded. This has extreme implications on the firm overall. For one, its stock price may decline as investors have lost confidence in both the accounting firm auditing the financial statements as well as the business overall (Singh, 1999). The lower stock price may have grave consequences for the firm as moral may decline. In addition, insiders within the company, due to the negative sentiments regarding the company, may depart to competing firms. The departure of key executives will cause still further decline in the stock price, as the cycle continues. As such, accountants must be proactive in regards to their duties and responsibilities to the investing public, the corporations that hire them, and society at large. Finding an error after the fact is beneficial, however, it pails in comparison to a more proactive approach to accounting.

Accountant B, on the other hand, believes system controls will allow accountants to be more proactive in regards to their overall inventory account.…

Sources Used in Document:


1. Lo and Fisher: Intermediate Accounting, 2nd edition, Pearson, Toronto 2013, ISBN 978-0-13-296588-0, p. 2-102,

2. Goodyear, Lloyd Earnest: Principles of Accountancy, Goodyear-Marshall Publishing Co., Cedar Rapids, Iowa, 1913, p.7-76

3. Singh Wahla, Ramnik. AICPA committee on Terminology. 1999 Accounting Terminology Bulletin No. 1 Review and Resume.

4. Friedlob, G. Thomas & Plewa, Franklin James, Understanding balance sheets, John Wiley & Sons, NYC, 1996, ISBN 0-471-13075-3, p.1-26

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