Accounting & information Technology Essay

How the process of computerising accounting information systems (AIS) and telecommunicating accounting information over the web actually help the accounting functions in an organisation operating globally? However, the counter-claim is that the breaching of the security of such systems will be a great risk that needs to be properly managed in various ways. The purpose of the essay is to identify how the process of computerising accounting information and telecommunication accounting information over the web can help the accounting functions in an organisation operating globally and to find out how large firm can protect their system and information by using different methods. Also, in this assignment the main function of computerizing accounting information system (AIS) and telecommunicating accounting information over the web will be discussed along with successful examples and failure examples. Also, it will link and explain why these functions will help the accounting functions to operate globally. Also, in this assignment it will explain the main threats of using such system and will point out how large organisations able to manage these potential threats. See more: Strategic Management Process Essay Accounting Information System is vital to all organisations (Borthick and Clark, 1990). The process of computerizing accounting information systems (AIS) is a system of collection, storage and processing of financial and accounting data that is used by decision makers. The result can be used internally by management or externally by other interested parties including investors and creditors. Organisations depend on information systems to stay competitive, they see information as important as a resource such as plant and machines. Therefore, in order to stay competitive, organisations may have to computerising their AIS, to make the process automatic in order to; reduce effort, save time, improve efficiency and reduce labor cost. However, many organisations are not enjoying the benefit of computerization of accounting system as they have continued to be inaccurate due to increased number of interruptions due to system failure or breakdown and untimeliness with its reliability left in the question. So how computerising accounting information system helps the accounting functions in an organisation operating globally? In a computer system, processing is carried out electronically, usually with little or no intervention from a human user. The components of a computer system include hardware and software. Hardware describes the physical components of a computer system. Example: Monitor, bar-code reader, Web camera and speakers. And software is a series of detailed instructions that control the operation of a computer system. Software exists as programs that are developed by computer programmers. Example: systems software and applications software. (Khaled Abdala, Financial accounting & information technology, p.510). But how they actually help the accounting functions in an organisation operate globally? When a firm has grown globally, they then have to deal with billions of information per day from many different countries, and the only way they can process the information is by using computer system, today’s computer system come in variety of sizes, shapes and computing capabilities. Categories such as mainframe, midrange and microcomputer systems are still used to help an organisation which operates globally, such as IBM, to express the relative processing power and number of end users that can highlight the major uses of particular types of computers. Telecommunications is on a national or global scare, in order to allow telecommunications to operate it consist both software and hardware to set up these links. Hardware include; satellite and microwave transmissions. Telecommunications help the accounting functions in an organisation operating globally by enable a business that operating from different locations to run as a single unit. . (Khaled Abdala, Financial accounting & information technology, page. 571). This means that the information can be managed centrally and control maintained from a central location. Also, an organisation can use telecommunications to collaborate with other companies such as their suppliers by using electronic data interchange or web-based e-procurement with partners. One of the main advantages of using telecommunication is improving the communications within and outside a business. Due to poor communication, diseconomies of scale maybe appear where there is too much information to deal with at the same time and leading to some information are being ignore. This will then increase the cost per unit and may pull down the shareholder’s interest and may lead to a business failure. Also Electronic business (e-business) and Electronic commerce (e-commerce) are also included in the telecommunication, where the term e-business is credited by the former IBM CEO Lou Gerstner. E-business involves several key activities: improving business processes, enhancing communications and providing the means to carry out business transactions securely. And e-commerce is not only a type of industry where buying and selling of product or service is conducted over electronic systems such as the internet and other computer networks also e-commerce encompasses the entire online process of developing, marketing, selling, delivering, servicing, and paying for products and services transacted on internetworked, global marketplaces of customers, with the support of a worldwide network of business partners. (James A.O’Brien, management information systems. P.284). A great example of e-business and e-commerce is ASOS.com, ASOS is the UK’s largest online-only fashion and beauty store. ASOS is a global online fashion and beauty retailer and offers over 50000 branded and own label product lines across women wear, menswear footwear, accessories and jewelry. ASOS has websites targeting the UK, USA, France, Germany, Spain, Italy and Australia and also ships to over 190 other countries from its central distribution in the UK. (Online, Available at: http://www.asosannualreport2008.com/Doc/pdf/AnnualReport2008.pdf). Without a single shop, they able to automating many of the administrative tasks associated with ordering, supplying and delivering goods, therefore the cost of a typical business transaction can be reduced significantly. Also, due to operating their business through internet, they are able to operating at any time of the year, this then lead them to have an advantage of having a much flexible time and place to sell their products than the tradition international organisation such as Topshop. However, is there only advantage of using AIS and telecommunicating accounting information for organisation to operate globally? Is there anything stopping organisations using it? Yes, is the answer. There is no question that the uses of information technology in an organisation presents major security challenges, poses serious ethical questions, and affect society in significant ways. (James A.O’Brien, Management information systems, p.439). Computer crime is a growing threat to society caused by the criminal or irresponsible actions of individuals who are taking advantage of the widespread use and vulnerability of computers and the internet and other networks. Also, natural disasters can also be a great risk to a system. All information systems are susceptible to damage caused by natural phenomena, such as storm, lighting strikes, floods and earthquakes. For example, in Japan and the United States took the great care to protect critical information system from the effect of earthquakes. There are five major categories of controls that can be applied to information systems. There are: physical protection, biometric controls, telecommunications controls, failure controls and auditing. (khaled Abdala, Financial accounting & information technology, page. 627) Physical protection is simple, this involves the use of physical barriers intended to protect against theft and unauthorized access. Lock, barriers and security chains are examples of this form of control. Secondly, biometric controls, these type of controls make use of the unique characteristics of individuals in order to restrict access to sensitive information or equipment, this can be achieve by using scanners that can check finger-prints, voice prints or even retinal patterns. Thirdly, the telecommunications controls, this type of control involve identity of a particular user. Common type of communications controls includes passwords and user validation routines. As an example, when a new network account is created for a given user, they may be asked to supply several pieces of personal information. The fourth control is failure control, failure controls attempt to limit or avoid damage by the failture of an information system. Typical examples include recovery procedures and regular backups of data. The last type of control is auditing, Auditing involves taking stock of procedures, hardware, software and data at regular intervals. With regard to software and data, audits can be carried out automatically with an appropriate program. Auditing software works by scanning the hard disk drives of any computers, terminals and servers attached to a network system. In conclusion, we can see that organisation have to be carefully managed with their AIS and information due to natural disasters and individuals who are taking advantage of the widespread use and vulnerability of computers, because if you don’t take care of your accounting information system, others will take care of it for you. But if can be carefully manage, we can say that computerising accounting information systems (AIS) and telecommunicating accounting information over the web can actually help the accounting functions in an organisation operating globally, with great example of ASOS. References: 1. Borthick, A.F.; Clark, R.L. (1990). Making accounting information systems work: An empirical investigation of the creative thinking paradigm. Journal of information System, p. 48-62 2. Khaled Abdala, Financial accounting & information technology. Page. 284) 3. (Khaled Abdala, Financial accounting & information technology, page. 571) 4. (Online, Available at: http://www.asosannualreport2008.com/Doc/pdf/AnnualReport2008.pdf) 5. (James A.O’Brien, Seventh edition, Management information systems, p.439) 6. (Khaled Abdala, Financial accounting & information technology, page. 627)