Research proposal writers
2.0 Introduction
This chapter presents an overview of the existing literature based on other writers’ opinions, findings, and viewpoints on the influence of technology on the efficiency of accounting practices in an organization.
2.1 Benefits of computer systems in accounting
Time: Paper works are involved in manual accounting; all the accounting activities are carried out on paper manually and obviously, it takes much time and resources for the average business organization and most especially, a financial institution that still uses the manual system. Computerized accounting saves a lot of time where in, the employee has to record the transactions and all the other calculations would be carried out by the software either automatically or by a request. Magdalene M, (2010)
Accuracy: I also agree with Magdalene M, (2010) again, that computerized accounting is not only speedy but also accurate. With a computer being used to collect data and change it into meaningful information that is used by management to make timely and effective decisions, the computer carries out the entire data processing through classifying, sorting, calculating, summarizing the data and production of reports, as stated by Birungi (2011). This entire process helps to minimize the risk of miscalculations and other human errors that could have emerged as a result of manual data processing.
Security: With the manual accounting system, every record is on paper and in case of any uncertainties such as heavy floods, landslides and fire outbreaks, the useful data may all be lost, and yet with the computerized accounting system and the introduction of internet and networks in the information technology world, an easy backup and restoration system as well as the use of passwords to avoid unauthorized parties from accessing the data, keeps the information secure Birungi (2011)..
Cost : Some arguments may stress that manual accounting can be handled with cheap work force and resources and that it is reliable as it is done manually with minutes of observations Van weele ,2005). However, the level of competition in the business world of today is tight and even growing tighter day by day and if a business with an aim of being successful does not consider the aspect of time especially as far as decision making is concerned, then that business stands to lose. Computerized accounting in this case may be more costly than manual accounting in terms of cheap work force but its output actually overweighs its cost.
Level of output : Magdalene M, (2010) also argues that computerized accounting can actually handle thousands of calculations simultaneously and accurately as compared to manual accounting where by transactions are handled one at a time and even needs much time to do that as well as being characterized by human errors and mistakes in calculations which may eventually affect the final output of information and hinder effective decision making.
2.2 Various forms of computers system being employed
Electronic Data Interchange; This is an exciting development in the 1980s. EDI is a technique based on agreed standards which facilitates business transactions in a standardized electronic form in an automated manner directly from a computer application in one organization to an application in another organization. The growth of microcomputer usage in accounting systems is to direct electronic transmission of data and standard business forms between the buying organization and its suppliers.. Electronic Data Interchange and the internet have made flow and exchange of information once an EDI system is in place and functioning properly, it produces a number of clear-cut operating benefits for the buying firm. An obvious reduction in paperwork and related administrative contributes noticeably to increased productivity. Because data is transmitted directly between computers, accuracy of the data throughout the process typically increased. For the same reason, more complete and faster feedback of order status information is possible, (Chaffey, 2012).
According to Bialy et al, 2006 technological progression necessitates that organizations should have formulated plans to handle development for example in the development of EDI as one of the information technologies used in supporting accounting activities. It is imperative that purchasing has an appropriate supplier who can jointly develop and use this technology.
In addition to the above, there has been different views concerning the integration of materials and information flows, both internally and externally for example; MRP, MRP II and integrated information systems such as EDI and supply chain concepts such as value streams.
At the same time, organizations can successfully run a home shopping and delivery systems for consumers over the internet. Within these businesses, intranets are put in place to enable information be shared between stores and this facilitates communication across the business making the internal operations become much more efficient as a result. For example, by capturing customer demand data sooner, better utilization of production and transport capacity achieved through proper planning and scheduling, (Baily, 2011).
According to Preben Koch, head of ICT development at vital, Forsaking USA, explains “We needed to ensure cost-effective growth of the business by making our processes fast and accurate, using technology to save duplication of effort. Our administration system was out-dated. The long and complex forms required several steps of validation and this slowed up the process of handling cases.”
Koch still explains that by use of TIBCOS BPM suite that TIBCO software developed for vital paper mark and staff have been reduced by 25% and 35% while maintaining its level of service and also that case handlers now have instant access to client data on screen including all contact details and the current status of applications and claims. As a result, customers can be kept well informed about their affairs and human mistakes can be avoided.
Electronic Data Interchange (EDI) EDI is a technique based on agreed standards, which enables computers in different organizations to successfully send business information of transaction from one to another. They emphasize that EDI reduces on the lead-time simply because transactions are faster and more accurate (Lysons et al, 2006).
EDI involves business transactions like, placing orders, invoices, delivery and payment transactions. EDI works according to standards implying that the organizations using it have to agree on the systems and the software that they are to use (Chaffey, 2007).
Bar codes and scanners
This system of Bar code and scanners represents a series of alphanumerical characters, bar code readers to interpret bar code zymology, and bar code printers to reliably and accurately print bar codes on labels, cartons, and/or picking /shipping documents. The review is included here because bar code systems are the foundation for many paperless warehousing systems, but the review is meant only as a brief introduction to bar code system, This helps in quick and accurate data entry, faster checking and clearing of shipments, automatic tracking of the shipments throughout the accounting practice, (Bailey, 2006).
Electronic- catalogs E-catalogs are web pages that provide information on products and services offered and sold by the vendors and they mainly include; sell side catalogs; buy side catalogs and third party catalogs, E-catalogs support online transactions especially ordering and payment capabilities (Farrington et al, 2006).
E-Catalogs, reduces procurement fraud by providing easy communication and the real product in the market. (Accenture (2006),
The advantages of e-catalogs includes; facilitation of real time communication between buyers and sellers; Allows room for the development of closer buyer-supplier relationship due to improved vendor services. Enables suppliers, respond quickly to market conditions by adjusting repackaging (Lysons, 2006).
Smart Cards. Smart cards are integrated circuit chips used to store customer specific information including electronic money. They have ability to provide intelligence and store significant amount of information of up to 20 pages of text. Smart cards will be used to purchase goods or services, store information, and above all, they can be availed to all potential users, (Enslow, 2006)
Satellite
This is a technology that allows communication across a very wide geographical area. Satellite communication provides a fast and high volume channel for information movements. Satellite technology facilitates real time interaction which provides up to date information about location and delivery information about the products in transit. The satellite devices can also be used in tracking and tracing the materials both in ware houses and in transit this also enables an organization to have an accurate data regarding organization materials therefore creating efficiency in accounting systems, (Deo Mc Obrien and P.S Corbett, 2008).
Image processing
This uses fax and optical scanning technology to transmit and store freight bill information and supporting documents such as POD or BOL. Through image processing, the buying company is in position to get timely customer shipment information which is transmitted through the central Data base therefore, providing improved customer service in the form of more timely and accurate delivery, quick shipments, tracing and quicker transfer of sales and inventory information.
Internet
The strategic importance of information is recognized by most people and organizations. The internet thus far is primarily a tool for information sharing between the buying company and the selling company with the potential for electronic commerce being explored. Some companies are setting up private internet used to share data with workers and provide access to the larger internet. In logistics, the internet is used in order to enhance efficient, effective and timely communication between the buying and selling organization, tracking and tracing of the cargo during the actual process of accounting, (Zsidisin, G. and Papadakis 2003),.
Enterprise resource planning:
Enterprises Resource Planning is the English term for a business system. Again, another term that is used for business system is Enterprises System (ES). To describe an ES in a simple way one could say that ES is an information system that manages all the resources available in a company. It is a common term for a co-operating software that manages and co-ordinates much of a company’s resources, assets and activities (Boyle, 2004). Gartner Group developed the ERP concept under the 90’s. The term ERP is defined by them as: “ERP is a planning and communication system that affects all the resources of a company.” Boyle (2004) defines it as: “not a system, but a framework that includes administrative (finance, accounting), human resources (payroll, benefits), and Manufacturing Resources Planning (MRP) (procurement production planning). ERP units’ major business processes- order processing general ledger, payroll, and production within a single family of software modules.” There can be numerous benefits of using enterprises systems and according to Davenport (2002.) the most significant
Include’:
Customer order cycle: The customer order cycle: occurs at the customer/retailer interface and includes all process directly involved in receiving and filling the customer’s order. Typically, the customer initiates this cycle at a retailer site, and the cycle primarily involves filling customer demand. The retailer’s interaction with the customer starts when the customer arrives or contact is initiated and ends when the customer receives the order.
2.3 Relationship between computer systems and accounting efficiency
Standardized accounting process, including faster tracking of errors, improved quality control, efficiency in record keeping, greater efficiency through the use of information and communication components like internets, satellites among others that enables tracking and tracing of the goods in transit, during shipment as well as giving up to date information to the accountants about the quantity of goods in storage so that the accountants are able to reconcile the books of accounts with the physical stock in the store, (Kotler 2000).
Simplified accounting process; The introduction of technology has not only simplified the accounting process but has also improved on the business process including control over suppliers, improved process cycle time, close cooperation relationships, improved supply chain efficiency, accuracy of shared information, (Kenneth Lysons 2006).
Process Automation. With the use of technologically components such as Bar coding, Satellite, internets and Image processing among others in the process of managing accounting efficiency, there has been reduction on paper work thereby leading to a substantial reduction of errors, as well as increased capability to obtaining and exchanging real time information. This is possible through the use of information technology systems such as Bar code and scanners which represents a series of alphanumerical characters, bar code readers to interpret bar code symbology, and bar code printers to reliably and accurately print bar codes on labels, cartons, and/or picking /shipping documents Aberdeen group 2005)..
Improved accounting process; Accounting process involves management of an organizations record with a view of minimizing organizational information in a cost effective way. Accounting information enables suppliers and buyers to get related information from the point of origin to the point of consumption Lysons and Farrington (2006). The introduction of technology has brought in tremendous improvements in the keeping of organizations records from the point of origin to the point of consumption including reduced arrangement costs and handling times, shortened response time for purchasing, improved order process speed and reduced labour costs.
Improved warehousing facilities. Warehousing is the primary link between the producers and the consumers; it is used for storing products (raw materials, in process inventory and finished goods) before they are finally worked upon or delivered to the ultimate consumers. Through the implementation of technology, ware house efficiency and effectiveness has improved greatly through using opportunities such as e- warehousing, e- receipts and e- issuing. These have brought about accurate operations in the warehouse hence complementing accounting management efficiency (R.J Carter et al, 2007)
Reduce product delivery time. Through the implementation of technological system in organizations like Spedag Interfreight Company the organizations’ processes of making payments to their suppliers have improved greatly including faster payment systems like using ATMS, credit cards among others. This reduces among others interest rate, credit risk among others (Aberdeen group 2005).
Improved distribution process. According to Dobler and Burt (2001) With improved tracking and tracing as a result of using internet, satellites among others, the company that is to say the distributing company is assured of efficiency and effectiveness in the distribution process as their trucks are properly tracked and traced so that in case the deliveries are made to a different location, the mistake can easily be rectified. This has therefore, improved Logistics efficiency in organizations and this has all been because of the introduction of information and communication technology. Other benefits include; delivering on time, reduced delivery enquiring time and improved distribution management.
Proper monitoring. The introduction of information and communication technology in logistics management has brought about efficient and effective monitoring of the materials during transit to their various destinations. This is done through use of technologies that allows communication across a very wide geographical area. Satellite communication provides a fast and high volume channel for information movements. Satellite technology facilitates real time interaction which provides up to date information about location and delivery information about the products in transit. The satellite devices can also be used in tracking and tracing the materials in transit. Tracking is specifically achieved through the use of internet and others, this therefore enables both the delivering organization or the supplier and the buyer to know where specifically the goods in transit is and also in case of any problem encountered say by the truck being used for the transportation purposes, it can easily be recognised by the parties concerned (Kenneth Lysons 2003)
Better communication and connection links. According to Nair N.K (2006), the introduction of information communication technology, communication between the buyers and the suppliers has been eased. Logistics is an old age industry that has been one of the greatest holdouts against the waves of computerization that has swept the world. Until recently, most organizations were still using traditional systems like fax and letter writing among others as a means of communication. However with the introduction of information and communication technologies such as telephones, internets and satellites among others, communication has not only been eased but also made efficient and effective.
Faster information transfer. Information and communication technology equipment like internet, satellite and telephones enables a speedy transfer of information between the supplier and the buyer. Therefore, all the necessary information that the supplier needs to give to the buyer regarding how the goods in transit should be handled, stored and packed are given to the buyer prior to delivery so that special attention is taken by the buyer where necessary, According to Dave chffey (2010), information transfers in the basis of survival for an organization.
Reduce inventory levels. According to (Thomson and Singh 2001) technology helps the buying organisation to order the needed items at the right time and once the need arises then an order will be placed. This helps the organisation to do away with bulk stock levels hence solving the problem of inventory costs like obsolescence and dampness leading to losses this leads to efficiency and effectiveness in the logistics operations.
In conclusion, a number of key factors that inhibit the widespread adoption and use of computers, include the cost of technology, uncertainty over the business benefits and impacts, and the lack of relevant internal computers expertise. The computers technology use in accounting has been observed to be of great benefit to the organization including saving of organizational time this is because Paper works are involved in manual accounting, Accuracy in doing work , ensuring security of the organizational information, reduction of organizational cost and improvement Level of output.
Promotion of technological upgrading is critical in order to encourage organizations achieve various objectives Policy in this area should aim to support training and capacity building via skill development programmes; promote partnerships between manufacturing companies and organizations overseas that can develop or transfer technology, products, processes or management practices; and to facilitate the technological upgrading through various financial schemes, such as credit lines for upgrading.
Facilitation of compliance procedures through adoption of product and process standards has several well-known benefits for firms. It enables them to introduce new technology and integrate business practices that ameliorate their overall performance.
However, different and concurrent standards can become barriers to achievement of accuracy in accounting this is because computers has challenges including loss of privacy by organization, increased risk of being hacked by computers Hackers.
