Improving Transactional Processing in Accounting Information System AIS Research Paper

Excerpt from Research Paper :

Accounting Information System

Improving Transactional Processing in Accounting Information System (AIS)

Propose two (2) innovative technology changes that would be appropriate for a firm's:

Revenue (sales to cash collection) cycle

Revenue cycle represents the description of the financial progression of a business entity in relation to the accounts receivable from the point of acquisition of products to the stage when the company or business organization receives full payment for the products (Romney, 2012). One of the innovative technological changes that can transform the revenue cycle is leverage technology. This technology would allow the company or business entity to adopt appropriate way of providing crucial information to essential parties in relation to consumers or market audience. Application or adoption of this technology would allow the company to maximize consumer relationships and production or profit levels. The other innovative technological change is automation of the management systems of the firm or organization. It is crucial to review the transfer of information within the organization and across the market or industry in order to satisfy the needs of consumers. Automation of the management would enhance the effectiveness and efficiency of the activities by the company hence satisfaction of the consumers.

Expenditure (purchase to cash disbursements) cycle

Expenditure cycle involves all the activities that take place between the points where the business organization or entity places an order for products and disburses funds to cater for the commodities (Romney, 2012). Expenditure cycle begins from the point when the organization or business entity makes the decision to procure a commodity or service up to the time of settling the payment. Innovative technological changes in relation to communication, transportation, manufacturing, and production have enormous capacity to influence the expenditure cycle of a firm or organization. The other technological innovation might include adoption of new product or production and procurement of existing products with the help of new processes. Automation of the activities within the expenditure cycle also has the opportunity to offer significant change to the production levels of the firm.

Human resources / payroll cycle

Human Resource or payroll cycle represents the recurring set of business operations and data processing activities in relation to managing the workforce effectively and efficiently (Romney, 2012). Some of the activities under this cycle include training, recruitment and selection of new employees, evaluation of performance, job design, and discharge of employees. One of the innovative technological changes that can transform an organization is the adoption of effective and efficient data entry programs. This would record information in relation to the workforce or staff members. The technological change is adoption of automation system in conducting activities in relation to the development of the workforce. This would include application of automation in hiring employees, keeping valid information on the staff, and effective transmission of resources and data across different departments within the organization or business entity.

Financial reporting / general ledger system

These programs relay the financial statements or strengths of the company (business entity). These programs are crucial to the attraction of new investors to further development of the company to a different level (Romney, 2012). The company has the opportunity to adopt any financial reporting system in order to be precise in its illustrations. The company might decide to illustrate its financial reports through revaluation technological innovative. The other technological innovative is the use of depreciation system to portray the financial reports. The company could also adopt the use of database system to illustrate crucial financial information in relation to the performance of the company. Potential and current investors have the opportunity to access the financial information within the database.

Suggest two (2) controls for each of the AIS information system applications (revenue cycle, expenditure cycle, production cycle, human resource / payroll cycle, and the general ledger / financial reporting system) that will mitigate potential threats.

Revenue Cycle

Well-designed accounting information system should ensure that all transactions enjoy proper authorization. The other control should ensure that the transactions of revenue cycle activities are valid. Valid and authorized transactions or operations must undergo reliable recording system to provide sufficient information to allow the companies make future references. The controls should also ensure that there is an enhancement in the effectiveness and efficiency of the performance of the activities (Hall, 2011).

Expenditure Cycle

One of the controls that might affect the organization or relates to expenditure cycle is the budgetary control. The organization operates on allocation of scarce resources in relation to the recurring wants. It is crucial for the company to develop valid and reliable budgetary system to satisfy the wants. The other control of the expenditure cycle is the verification of the good with the aim of determining their quantities and condition in relation to the order. The other control within the expenditure cycle is the authorization, of the activities and operations to ensure that they are in accordance with the standards (Walton, 2006).

Production Cycle

Well-designed AIS should ensure that the production operations or activities of the organization are in accordance with the applicable laws and regulations. The other control objective is to ensure that the production activities are effective and efficient thus facilitating the achievement of goals and targets of the business entity. Data entry should also be valid and reliable to enhance future referencing by the company. The company should also ensure that the disclosures in relation to production activities are full and fair (Hall, 2011).

Human Resource/Payroll Cycle

The first control in this cycle is the introduction of automation to limit the occurrence of unintentional activities. This would enhance the efficiency and effectiveness of the company in meeting the needs of consumers. The other control in the payroll cycle is the adoption of data entry programs with the aiming of using edit checks. The organization will be able to record the operations in relation to workforce such as hours, number of employees, and remuneration programs or activities (Walton, 2006).

Financial reporting / general ledger system

One of the control objectives of this cycle is the application of basic documents with precise instructions to promote accuracy and reliability of the financial reports. The organization should also ensure that there are appropriate application controls (validity and field checks). The other control is verification of the financial data that there is no error in the projections before presenting the data for public viewing (Hall, 2011).

Compose three (3) processes or procedures that will be needed to help the firm and its employees adapt to these changes.

The company will have to ensure that the transactions are within the framework of laws and regulations governing business activities within the economy. This would ensure that the company overcomes the authorization and validity threats. It is crucial for the activities or operations of the company to be valid, reliable and authoritative. This would enable the company to eliminate elements of error in the process of dealing with the consumers or other business entities. It is also essential to develop authoritative operations to obtain competitive advantage in relation to attraction of new investors to the company. Adoption of the laws and regulations enables the company to reduce elements of errors in presenting the financial reports of the business entity (Thiry et al., 2011).

The other process for adaption to changes with the organization is the adoption of effective and efficient recording system within the business entry. This would help the company future referencing. For instance, in verification of the orders and deliveries, the company would refer to relevant information to confirm if they are in accordance with the data. This would allow the organization to limit the occurrence of errors in procurement of low quality goods with different quantities to the orders. Efficient recording system also facilitates the achievement of goals and objectives of the company while utilizing the AIS changes. For instance, evaluation of the workforce would be easier with adoption of automation and data entry activities. The company would be able to gauge itself with other key performers within the industry. This would allow the company to decide on areas to make key changes in order to compete effectively and efficiently (Romney, 2011).

The other process or procedure is the adoption simple documentation methodology to reduce the elements of error with the operations of the company. This method would reduce the threat in relation to financial reports or general ledger system. It would also be easy to understand the activities of the business entity thus verification and authorization of the data. Simple data would be authoritative since most individuals have the capacity to translate or interpret its meaning. The data is also reliable thus reducing the uncertainty levels within the operations of the company. Simple documentation reduces the amount of time to execute activities of the company. This time reduction transfers to other vital aspects of the firm hence increase in the production and revenue levels. The other process to supplement these three actions toward adaption to the changes is the implementation of training programs to enable the workforce to execute…

Sources Used in Document:


Dolgui, A., & Proth, J.-M. (2010). Supply chain engineering: Useful methods and techniques. London: Springer.

Hall, J.A. (2011). Accounting information systems. Mason, OH: South-Western Cengage Learning.

Langevin, A., & Riopel, D. (2005). Logistics systems: Design and optimization. New York, NY: Springer Science+Business Media.

Romney, M.B., & Steinbart, P.J. (2012). Accounting information systems. Upper Saddle River, NJ: Prentice Hall.

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