The Accountant’s Role in Computer Acquisition Process
The role of an accountant in the acquisition process of computer has been detailed here-in-below:
- Accountant are users of computers and of accounting information system and they are the first person to lead the show. Further, under many an organisation accounting function is the largest user of information technology. In the end user, accountant provides a clear picture of requirement in the system to be met while designing the software and computer.(Academy for Environment and Life Sciences, India, 2015)
- Accountant are responsible for maintain internal controls over processing of data in the organisation. Thus, they shall play a key role in identifying the key accounting packages, designs etc;
- Accountant plays a crucial role in determining the cost of the computer and other allied products and plays a crucial role in comparing different product available in market and help in deciding the cheapest and effective system available;(Anon., 2016)
- In addition to above, an accountant plays a crucial role in aligning the utility of computer with other software available in the organisation;
- The accountant generally function in team with other experts like system analyst, manager, production personnel etc;
- Further accountant are major designer of the system which supply data to the computer unit;
Thus, on the basis of above it may be concluded that the accountant play a very significant role in the acquisition of computer as majority of computer task are financial in nature which shall be in ease with its user i.e an accountant. Further, an accountant ensures that the payment made for such acquisition is within the limit and in terms of utility of the project.
The useful contribution that an accountant can make in the acquisition process is in alignment with its role and has been detailed here-in-below:
- The account can provide valuable input while purchasing the computer in terms of defining the utility of the computer, type and required benefits;
- The accountant being the major user can define the role and objective of the computer and help in the designing of the system accordingly;(Anon., 2014)
- Helps in the analysis of prices and comparing the same from different competitors;
- Aligning of other ancillary system with the computer;
- Detailing the needs of computer and required process and functions;(B.V., 2018)
- Establishing of internal controls over data processing in the organisation.
Outsourcing of various Accounting Information System function shall pose the following threat to an organisation:
- Hoarding of Knowledge;
- Intellectual Property (IP) losses;
- Internal Know-How losses;
- Loss of Core Capability;
- Loss of Competitive Edge;
- Difference in negotiated and actually delivery;
- Increase of cost;
- Breach of confidentiality;(Isosceles Finance Limited, 2018)
- Providing of legacy technology by vendors;
- Risk in operations on account of location of vendor;
- Risk that is on account of environmental, culture and legal differences;
- Incompatible Development tools;
- Standards conflict;
- Outdated communication infrastructure;
- Improper communication of requirements;
- Complexity in codes.
One of the risk that shall be prominent to discuss is data hacking/ confidentiality/ security protection which have become much more prominent now-a days. The example described here-in-below shall highlight the same:
In terms of magnitude, about 10 million cards accounts were hacked held in disposal of an independent sales organisation and further worst ever hit under financial service was the breach of data of more than 3.7 million accounts in 2000 from egghead.com.
Thus, increase use of internet globally has called to question the practice of using third party outsourcing that has been prevalent for years.
Further, the outsourced data puts a high level of pressure on outsourcing information system as it requires a huge amount of encryption. This encoding and decoding of data generally prevents the outsourcer or results in insertion of virus introduced by outsourcer as commented by Holland of charlotte.
In addition to above, the confidential data of the company may get leaked on account of negligence of vendor or lack of adequate safety measures at the end of the vendor resulting in breach of confidentiality. It may also happen that the secret formula or recipe of the company may get leaked making today’s vendor tomorrow’s competitor. Also, the company shall always be held accountable for maintaining the privacy of data and has to pay penalty to government and third parties on account of breach of confidentiality and privacy.
Cost Saving Risk: Outsourcing of Accounting Information System to lower wages country does not guarantee overall reduction in cost or increase in savings as poor estimation, in capacity of provider, wrong selection of provider are some of the factors that may result in increase of over all cost instead of reduction. Further other ancillary cost like distance, communication, travel, training expenses must also be factored for cost computation. (AccountingDepartment.com, 2018)
Geopolitical Risk: If the outsourcing of Accounting Information System is undertaken to a country which is politically unstable, experience labour unrest, shortage of power, weak infrastructure, the same shall result in failure/ logjam of accounting information system.
Risk of Intellectual Property Loss: If the company outsource its activity, its Intellectual Property might get stolen on account of contracting and subcontracting and shall result in service provider becoming competitor. Further, some countries have strong tax laws relating to IP Protection while in some countries laws are stringent for data and software piracy but are not easily enforceable.
Useful Contribution of an Accountant in the Acquisition Process
Management Complexity: It is extremely difficult for management to manage activities with multiple centres operating in different countries with different time zone. Hence outsourcing of work impacts the functioning of management.
International data sharing: In case of outsourcing of activities data are shared globally and are used and accessed from different locations. Therefore, the same requires a well-defined and highly standard global data standard which is generally missing and disputes are arising on account of lax and primitive data sharing policies in many countries. (Anon., 2011)
Global Cultural Environment: Cultural differences exist with basic difference in communication style, language, customs, habitual activities etc. Language problems in international collaboration, cultural differences in employer-employee relationships, seniority and personal relationship with authority and socialist/capitalist principles cannot be ignored.
Contractual Conflicts: It is one of the most significant risk in outsourcing which generally occurs on account of conflict of interest of vendor and the client. The same generally arise on account of difference in objectives, incomplete or poor designed contracts which does not make provision for future contingencies ambiguous terms and different interpretation of the contract, technological changes, change in the business need, change in requirement of client etc shall generally leads to contractual conflict and termination of contracts creating issues to clients. (Anon., n.d.)
This are some of the risks posed by outsourcing of accounting information systems and other have not been detailed.
Queensland’s Bedrooms Furniture QBF has experienced tremendous growth which has given the company a serious problem. Customers would often wait months for QBF to fill orders and process invoices. Repeated attempts by QBF’s understaffed IS department to solve these problems met with failure. Finally, QBF hired a consulting firm to solve its revenue tracking problems and expedite prompt receipt of payments. The 18-month project turned into a doubly long nightmare. After three years and $10 million, the consultants were dismissed from the unfinished project.
The project failed for many reasons. The systems development process was so dynamic that the failure to complete the project quickly became self-defeating as modifications took over the original design. Second, management did not have a clear vision of the new AIS and lacked a strong support staff. As a result, a number of incompatible tracking systems sprang from the company’s distributed computer system. Third, the project was too large and complex for the consulting firm, who had little experience with the complex database at the heart of the new system. Finally, the project had too many applications. Interdependencies among subprograms left consultants with few completed programs. Every program was linked to several subprograms, which in turn were linked to several other programs. Programmers eventually found themselves lost in a morass of subroutines with no completed program.
Identify the organisational issues that management must address in the future.
The organisational issues that must be addressed by the management in the nearby future has been detailed here-in-below:
- Improper selection of Vendor for allocation of Job : As given in the excerpt above that the company in itself was not competent to solve the issue of revenue tracking and expedite payment and has outsource to an entity which was equally not capable to do the same as even after 36 months the problem was not solved and has resulted in additional burden on the company by $ 10 Million;
- Understaffing of Information System department: The second step that company can take is to solve the issue of understaffing which shall lead to proper management of account of debtor and quick receipt of payment. Further, the same shall also result in marinating of confidential data of the company with in organisation and may not be breached on account of outsourcing;
- No proper planning for future: The Company has witnessed tremendous growth in the recent years but it did not manage its resources accordingly leading to bottleneck in customers tracking and receipts. Thus, management shall be agile to respond to business needs;
- Dynamic System development process: The information system that was outsourced to be developed was very flexible without any boundation and restriction. Thus excessive flexibility became the pacman for the company project and took over the original design. Thus, a clear consultation as to the needs and planning should be done. Post such design shall be made and achieved. (Anon., 2011)
- Lack of vison: Lack of clear vision on the part of the management has curtailed the program and has delayed it. Further, no concrete solution has been achieved as various wires have been entwined with each wire leading nowhere;(Anon., n.d.)
- Complex System: The system that was proposed to be developed is complex instead of simple and easy to operate. Further, the company entrusted to do the same was equally non competent and has never handled such project resulting in total failure of Accounting Information System.
- The last issue identified is in linking of every program and subprogram together in one go. It should have been beneficial for the management to have linked the same slowly with completion of programs one by one. Queensland’s Bedrooms Furniture QBF has experienced tremendous growth which has given the company a serious problem. Customers would often wait months for QBF to fill orders and process invoices. Repeated attempts by QBF’s understaffed IS department to solve these problems met with failure. Finally, QBF hired a consulting firm to solve its revenue tracking problems and expedite prompt receipt of payments. The 18-month project turned into a doubly long nightmare. After three years and $10 million, the consultants were dismissed from the unfinished project.
The project failed for many reasons. The systems development process was so dynamic that the failure to complete the project quickly became self-defeating as modifications took over the original design. Second, management did not have a clear vision of the new AIS and lacked a strong support staff. As a result, a number of incompatible tracking systems sprang from the company’s distributed computer system. Third, the project was too large and complex for the consulting firm, who had little experience with the complex database at the heart of the new system. Finally, the project had too many applications. Interdependencies among subprograms left consultants with few completed programs. Every program was linked to several subprograms, which in turn were linked to several other programs. Programmers eventually found themselves lost in a morass of subroutines with no completed program.
Recommend steps the company could take to guarantee consulting service quality.
The steps that can be taken by the company to ensure the consulting service quality has been detailed here-in-below:
- Creating a clear vision as to what is required from the Accounting Information System;
- Involving Accountants, experts and other professionals to advise on the issue;
- Hiring a trained consulting service who can handle large and complex matters;
- Staffing the Information System department of the company;
- Going for step by step linking of programs and subprograms instead of making the same haphazard;
- Hiring equipped professional to deal with the said matter;
- Making the project simple and removing unnecessary steps to make it simple and small;
- Reducing the extent of dynamism in the project.
References:
Academy for Environment and Life Sciences, India, 2015. COMPONENTS OF Accounting Information system. [Online]
Available at: https://bepls.com/beplsoctober2015/19.pdf
[Accessed 06 October 2018].
AccountingDepartment.com, 2018. Security Concerns in Outsourcing Accounting Information. [Online]
Available at: https://www.accountingdepartment.com/blog/security-concerns-in-outsourcing-accounting-information
[Accessed 6 October 2018].
Anon., 2011. Managing Relational Risks in Accounting Outsourcing: Experiences of Small Firm. [Online]
Available at: https://pdfs.semanticscholar.org/c964/bc99330afa9a95b5e352c74703f3ad86e043.pdf
[Accessed 6 October 2018].
Anon., 2014. The Role of Accountants in E-accounting Information Systems’ Lifecycle at the Jordanian Banking Sector. [Online]
Available at: https://www.researchgate.net/publication/306092653_The_Role_of_Accountants_in_E-accounting_Information_Systems%27_Lifecycle_at_the_Jordanian_Banking_Sector
[Accessed 6 October 2018].
Anon., 2016. Accountant Role in Accounting Information System. [Online]
Available at: https://www.accountantnextdoor.com/accountants%E2%80%99-role-in-the-accounting-information-system/
[Accessed 06 October 2018].
Anon., n.d. Risks of Outsourcing. [Online]
Available at: https://cdn.ttgtmedia.com/searchSecurity/downloads/Axelrod.pdf
[Accessed 6 October 2018].
B.V., E., 2018. The roles of accounting information systems in an organization experiencing financial crisis. [Online]
Available at: https://www.sciencedirect.com/science/article/pii/036136829090025P
[Accessed 6 October 2018].
Isosceles Finance Limited, 2018. Advantages (and risks) of Outsourcing Your Accounting. [Online]
Available at: https://www.isoscelesfinance.co.uk/advantages-and-risks-of-outsource-accounting/
[Accessed 6 October 2018].
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