Impact Of Accounting Software And Accounting Information System On Employment In Accounting Profession

HI 6008 Business Research

Project Objectives

Accounting information systems (AIS) and accounting software (AS) refer to the use of computers and technologies in collecting, recording and disseminating data related to the financial position of an organization or firm (Galliers and Leidner 2014). Accounting can be classified into two systems namely manual accounting system and computerized accounting system. Earlier, the accounting job was managed manually by skilled and trained accounting professionals whereas; with the advancement of information systems and software relating to accounting, the entire job is done by the computers. This has created huge impact on the rate of employment in the accounting profession. This research proposal explains the impact of accounting software and accounting information system on the rate of employment in the accounting profession.

The following are the project objectives:

• To understand what is accounting information system and accounting software
• To identify the advantages and disadvantages of accounting information system and accounting software
• To scrutinize the effect of the above mentioned information systems and software on the rate of employment in the accounting profession

The project shall help in understanding what is accounting information system and accounting software. The project shall help the readers to understand the advantages and disadvantages of using accounting information system and accounting software within the organization. The project shall clearly mention the impacts of accounting information systems and accounting software on the rate of employment in accounting profession. The project shall act as a good source of secondary information, which would help the researchers in their further research study.

According to Laudon and Laudon (2016), accounting refers to the measurement, processing and communication of the financial information of some business or corporation. Accounting has several branches such as tax accounting, financial accounting, cost accounting, management accounting, and external auditing.  Financial accounting involves reporting on the financial information of an organization or firm and preparation of financial statements. Management refers to the measurement, analysis and use of the information for internal use by the management of an organization or firm (Galliers and Leidner 2014). Accounting is an integral part of organizational activities as it helps the organizations to know its financial position and take measures accordingly. It also enables the investors and the shareholders to know the position of the companies in which they invest so that they can easily determine the companies in which they must invest and the companies in which they must not invest.  

According to Ismail and King (2014), information technology refers to the application or utilization of computers and telecommunication equipments for storing, retrieving, transmitting and manipulating data. Information technology is anything that renders data or perceived knowledge in some visual format via any multimedia distribution mechanism. Nowadays, businesses use information technologies in order to remain competitive and enhance their operations. Earlier, businesses used manual ways of handling business activities, which were time consuming and led to several errors. However, information technology has been designed in order to help the management in improving their efficiency in daily activities and decision making. The machines to help accounting systems were first invented in the late 1800’s. Later on, with the advancement of information technology, the accounting systems and the processes involved were entirely transformed.

According to Uyar, Gungormus and Kuzey (2017), accounting information system refers to the group of interrelated sub- systems that function together for collecting, processing, storing, transforming and distributing information for designing appropriate plans, taking decisions and exercising proper control. Using computers in the information systems have the capability of organizations in collecting the information, processing, storing, transforming and distributing the data and information. The use of information technology in accounting processes is known as accounting information system. AIS has become a fundamental part of every commercial entities. The system helps in generating error free and reliable financial information.

Project Scope

On the contrary, Lipi, Rama and Agaraj (2015) stated that there are several types of accounting information systems that affect the manner in which the data is collected and reported. Therefore, it is necessary for the organizations to choose the appropriate accounting information systems as the decisions taken by the management shall be entirely dependent upon the way in which the data is processed by the AIS (Galliers and Leidner 2014). The design of the said systems are highly dependent upon the size of the organization, volume of data to be transacted, type of operations, structure of the organization and the form of business.

Figure 1 depicts a general model of AIS. The major components of the accounting information system are end users, sources of data, data compilation, data processing, database organization, generation of information and feedback respectively.

Figure 1: General model of accounting information system

(Source: Simkin, Norman and Rose 2014)

Initial stage is the data collection process. The chief aim of the system is to ensure that the data entered are authentic and error free. The system ensures the relevancy and efficiency of the data compilation system. Afterwards, the data are stored into the database management from where the data is further processed into information. The final information is then passed on to the external and internal end users. The external users comprise of the shareholders, suppliers, customers, investors and creditors whereas; the internal users comprise of the management. Finally, the feedbacks are forwarded to the body with the purpose to aware them about the things that will help them to assist whether to retain to improve (Kanellou and Spathis 2013).

According to Dumitru and Matei (2014), accounting is a vital function of every organization whether small or large. Accounting systems can be divided into two main parts namely labor-intensive accounting system and automated accounting system. Earlier, the accounting functions were carried out by trained professionals however; today there are several accounting software and accounting information systems available, which perform the accounting operations more efficiently and accurately. Accounting information systems and accounting software help the organizations in saving money as it allows the organizations to view the financial position of the organizations in real time and formulate business strategies accordingly. It provides instant reports related to profit and loss, stock evaluation, customer accounts and sales figure so that the organizations can make faster adjustments.

On the other hand, Chapman (2016) mentioned that the system also helps in saving the time of the organizations by enabling faster data entry operations as compared to the manual accounting system. The systems are easy to use and help in improving the control over accounting and enhancing the accounting activities. This is because the computerized systems record transactions automatically and keep them updated without taking much time. Accounting information system and accounting software help in faster and efficient information processing by automatically generating accounting documents such as statement of account, invoices, etc. It is relatively cheaper to maintain an accounting information system that maintaining manual accounting system. The data gets automatically posted in respective ledgers and accounts in an accounting information system and several useful reports can be easily generated that help the management in taking important decisions (Galliers and Leidner 2014).

Literature Review

According to Peppard and Ward (2016), despite several advantages of accounting information system and accounting software, there are several disadvantages of using them. The disadvantages involve risk of loss of data due to viruses or power failure and the risk of hackers stealing the data. The organizations are required to put a strict control on the people who can access the information. Any kind of security breach can adversely affect the confidentiality of the organizational information. Any technical error might render the entire accounting system null and void. Another major disadvantage of accounting information systems and accounting software is that the data once entered into the system automatically generates the output and cannot be altered (Wu and Lu 2013).

On the other hand, Demski (2013) mentioned that in case if the accounting information system is not properly customized according to the needs and requirements of the organization, the results generated by the system become useless for the organizations. Any hardware or software issues can also severely damage the organizations and create havoc. Computer fraud and poor security can adversely affect the accounting process of an organization.      

Accounting information system imposes huge impact on the rate of employment in accounting profession. Earlier, the entire accounting work was managed manually by the accountants and the organizations employed large number of highly skilled and qualified accountants. However, with the advancement of account-based information system and related software, the rate of employment in accounting profession has gone down as most of the job is done by the system and the software. The requirements of the skills and knowledge of the accountants have also changed as the organizations nowadays require people from accounting profession who have proper knowledge of accounting information systems and computer technologies (Galliers and Leidner 2014). The companies nowadays require employees with better knowledge of computers than accounting subject in order to manage their financial tasks. The excessive use of accounting information systems and accounting software has reduced the number of accounting professionals required by the organizations as the major job role is to enter the data in the accounting information systems while the system performs all the calculations and adjustments (Esparza-Aguilar, García-Pérez-de-Lema and Duréndez 2016). This has resulted in the reduction in the number of employees hired in the accounting profession.    

The following are the research questions:

• What are the advantages and disadvantages of said account-based information system?
• What is the effect of AIS on the rate of employment in accounting profession?

The research design and methodology involves several techniques and methods that assist the researcher in carrying out the research in an appropriate way. It is the systematic processes that allow the researcher to conduct the process in an organized method. There are basically three kinds of research design namely tentative, expressive and hypothesis. Tentative research helps the examiner about the research topic in the absence of proper idea. Expressive research study assists the researcher to conduct examination on the basis of prevailing theories and notions. On the contrary, hypothesis testing research allows the researcher to fix his or her own hypothesis and analyze the theories with respect to relevant models and principles. Here the researcher shall use descriptive research study and shall analyze the research topic on the basis of existing theories and concepts. The researcher shall use both primary and secondary data. The researcher shall obtain secondary data from books, journals, magazines and several authentic websites in order to analyze the impact of accounting information system and accounting software on the employment rate in accounting profession. The primary data collected by the researcher shall involve conducting interviews and surveys involving the accounting professionals working in some organization (Chapman 2016).

In every research process, there are certain limitations exist. In this particular case, time and budget are the main limitations of this research. The limitations can be discussed with two aspects such as Limited time frame and limited budget.

Conclusion:

The research proposal has introduced the research topic in the introduction section and has clearly stated the project scope and objectives. The researcher has clearly stated the research questions on which the entire research should be based. The literature review comprises of all the relevant theories and notions related to the topic of research. The examiner has also included the gantt chart in order to explain the entire procedure in which the research shall be conducted.  

References:

Bajdor, P. and Grabara, I., 2014. The Role of Information System Flows in Fulfilling Customers’ Individual Orders. Journal of Studies in Social Sciences, 7(2).

Chapman, P.L., 2016. Improving accounting information system performance and achieving competitive advantage through effective it governance.

Demski, J., 2013. Managerial uses of accounting information. Springer Science & Business Media.

Dumitru, A.P. and Matei, C., 2014. MANAGEMENT ACCOUNTING AT THE BOUNDARY BETWEEN CLASSICAL AND MODERN. Challenges of the Knowledge Society, p.644.

Esparza-Aguilar, J.L., García-Pérez-de-Lema, D. and Duréndez, A., 2016. The effect of accounting information systems on the performance of Mexican micro, small and medium-sized family firms: An exploratory study for the hospitality sector. Tourism Economics, 22(5), pp.1104-1120.

Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

Ismail, N.A. and King, M., 2014. Factors influencing the alignment of accounting information systems in small and medium sized Malaysian manufacturing firms. Journal of Information Systems and Small Business, 1(1-2), pp.1-20.

Kanellou, A. and Spathis, C., 2013. Accounting benefits and satisfaction in an ERP environment. International Journal of Accounting Information Systems, 14(3), pp.209-234.

Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.

Lipi, I., Rama, R. and Agaraj, X., 2015. Implications of Accounting Information System Implementation in SMEs: A Study on Retail Business in Vlore Region. Mediterranean Journal of Social Sciences, 6(3), p.553.

Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

Simkin, M.G., Norman, C.S. and Rose, J.M., 2014. Core concepts of accounting information systems. John Wiley & Sons.

Uyar, A., Gungormus, A.H. and Kuzey, C., 2017. Impact of the Accounting Information System on Corporate Governance: Evidence from Turkish Non-Listed Companies. Australasian Accounting Business & Finance Journal, 11(1), p.9.

Wu, J. and Lu, X., 2013. Effects of extrinsic and intrinsic motivators on using utilitarian, hedonic, and dual-purposed information systems: A meta-analysis. Journal of the Association for Information Systems, 14(3), p.153.

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