Term Paper: Information System Holds in Accounting

Pages: 20 (7679 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Accounting  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] Digital technology has made it easier to collect the data and move it all over the world, but at the same time, this has led to the production of an enormous amount of data which is difficult to handle. The challenge is now in filtering, sorting out, analyzing and compiling this data in a manner that will ultimately add value to the organization whose data it is. In Microsoft there were 54 financial groups charged with the responsibility of organizing the financial data of 85 of their subsidiaries which provided the services of Microsoft all over the world. To solve the problem, they built up a system which they called the financial 'digital nervous system'. (Accounting -- The Digital Way)

This was responsible for sending the financial data to all parts of the organization in a coherent manner. This gave all employees access to real data on time. This network permits the employees to submit even mundane items like their travel expense statements, as also purchase goods and services, and even purchase capital assets. All this can be done from their desktops and that reduces the concerned time, paper, and costs for publishing and distribution. The system makes it possible for all employees to get the information they require even without any knowledge of programming. This has led to the addition of value to the information while spending less time in processing of information. (Accounting -- The Digital Way)

It is clear that there are changes in the role of accountants in organizations and various factors are mentioned by different people, but the reason that is being given now is the competitive situation that has existed since the 1990s and the competition is at the global level. Some feel the view of competition is rather rhetorical and not economical, but that is only a point-of-view. The most important aspect is the view of the situation in the minds of the managers and accountants and the corresponding view of the economic situation under which they are operating. When the general view is that more of competition now exists, then the mangers and the accountants are going to provide an extra emphasis on the markets and consumers. Again the view of emphasis on customers may not be really happening in practice, but when one looks at the performance of companies, there seems to be an extra emphasis that is being given to customers and the service is being provided through the market. Much of the change is taking place through the developments of information technology. The speed of this change has changed over the last 30 years and the biggest influence on the managers and accountants has been due to the advent of the PC. (The Changing Nature of Management Accounting)

Over the period of the last 5 or 10 years it has been seen that computers are stepping into companies and that has affected the work in organizations. The effects have been on clerical work and on information flows within the organization. The changes have been accelerated by the developments in information technology during the recent period. The speed and capacity of the systems have changed and along with that there has been development of data base technologies. These provide the capacity to store large amounts of data and yet keep them accessible. The change in technology has made it possible for different users to use the data at the same time, and the use does not have to be in the same way. The analysis of the information can be in different ways. Thus the information can be designed in a way so that it can meet the needs of different users requiring different parts of the information for different purposes. The same database is now providing the information for different accounting systems and the systems are then being integrated through the information systems.

The information is now not controlled only at one level of the organization and this is happening as many persons within the organization have PCs on their desks. This helps them get the information they want. In the earlier era they had to ask the accountants for the information and this was even more applicable for all financial information. This was done in spite of the fact that some managers maintained their own informal records, yet the formal maintenance of information was the responsibility of the accountant. Now it is expected that individual managers will maintain the information regarding their own area of activity, and this is maintained within their PC. Thus when the information is required, they can just pull it out, and this information is not always the information on which the organization works. This makes it clear that the role of the accountant has changed from the provider of information to a user of the new broader information system. This is affecting their roles and numbers. It was seen that in a UK-based manufacturer of healthcare products, the number of persons in the accounting department came down from 120 to 60. This is not a situation only in that organization, but was seen in all other organizations. It is clear that these are the results of computerization of records and processes and an indirect result of the advances in information technology. (The Changing Nature of Management Accounting)

There is a new system called XBRL that is supported by international bodies of accountants and individual accountants who are desirous of active involvement in the development and implementation of new systems in their area. The system is a freely available electronic language that can be used to format financial reports for sending all across the Internet and then seeing the same on computers with browsers. The persons who prepare and use financial information can use XBRL in all software and technology so that the global capital market can reach levels of greater productive efficiency. In a way, it is a method of changing the entire system of financial information being shared, used and analyzed. The name XBRL denotes for 'Extensible Business Reporting Language'. It is a development of Extensible Markup Language, also called XML. This makes it a platform independent, expandable and standardized method of exchanging information. It can be used all alone or developed into other computer applications for the purpose of sharing information. The language was developed through a special international project. (XBRL: Moving Toward a Common Language for Financial Reporting)

This language based on XML automatically and transparently 'tags' each part of computerized business information with an identification code or marker. These markers remains attached to the information in spite of all formatting or rearrangement by browsers or software applications that the information passes through. Prior to this method there was no common accepted format for preparing reports of business data. There is the possibility of errors in the labor intensive tasks of entering and reentering data into computer application during the process. The use of this method is simplifying the process with the possibility of lowering costs and ensuring the integrity and quality of the data. With the new system, once the financial information is created and formatted for the first time, the data can be transferred to any other required format. There can be preparation of a financial statement, a document in HTML. A document required by regulations for filing, credit reports or loan applications from the original information without a retyping of any data or reformatting of the data.

The system provides easier access to accurate financial data for the companies and provides for easier analysis of the data. In this manner the new system adds value for any organization which wants to use its business data. This is the way it is expected to provide benefits for all uses of such data- public and private companies, accounting professionals, regulators, analysts, investors, capital markets, lenders of funds. This also helps the persons dealing with the data like software developers and data aggregators. This provides company management to move data quickly across the board though the data may be stored at different places within the organization, so that the data can reach required persons within the company as also the shareholders. Organizations dealing with accountancy see the development of this system as a step to increased clarification and development of the purposes of business in sending the data from the business to the outside public. Of course, this is only a tool. Another benefit from the method will be to place accountants as sources of knowledge for the clients or firms to whom they render service. The method helps businesses to use emerging technologies and will thus be of help to accountants increase their professional opportunities and prices for their services. (XBRL: Moving Toward a Common Language for Financial Reporting)

The new method is being… [END OF PREVIEW]

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Information System Holds in Accounting.  (2005, July 15).  Retrieved March 18, 2019, from https://www.essaytown.com/subjects/paper/information-system-holds-accounting/908898

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"Information System Holds in Accounting."  15 July 2005.  Web.  18 March 2019. <https://www.essaytown.com/subjects/paper/information-system-holds-accounting/908898>.

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"Information System Holds in Accounting."  Essaytown.com.  July 15, 2005.  Accessed March 18, 2019.
https://www.essaytown.com/subjects/paper/information-system-holds-accounting/908898.