Improving Transactional Processing in AIS

Improving Transactional Processing in AIS

Mubarak Angalo
Strayer University
ACC564
March 2013
Instructor: Dr. Daniel Acheampong

A fundamental task in any AIS is to process transactions affecting the organization.

Transaction processing systems involve three stages:
Data entry
Data and file processing
Output preparation
The benefits of understanding transaction processing systems include:
1. Recognizing limitations in currently installed transaction processing systems such as:
Inadequate data controls
Inefficient processing
Out-of-date files
stored data that cannot be accessed quickly
Data that is poorly classified and coded
2. Recommending new or improved processing approaches and storage methods
Propose two (2) innovative technology changes that would be appropriate for a firms:
o Revenue (sales to cash collection) cycle;

Improving Transactional Processing in AIS

o Expenditure (purchase to cash disbursements) cycle;

o Human resources / payroll cycle; and
o Financial reporting / general ledger system.
It is important to look forward for the changing trends in technology which can have an
impact on the firms practices. Understanding these changes will help smart managers to adapt
and flourish. Having a keen understanding of these changes will give the firm an advantage in
the market. The wide ranges of impact of technology include:
Recruitment
Training & development
Performance management
Payroll & attendance records
Employee benefits
One innovative technology change is E-recruitment. E-recruitment is the use of technology
or web based tools to support the recruitment process. The major ways of E-recruitment, which
companies commonly use are by displaying the career opportunities on their websites, depending
on the job portals for making the potential hires and using social networking sites (SNS) for
getting the database. The major advantages of this e-recruitment are:
Economical way to publish job openings
Greater reach
An easy tool to get connected to people with niche skills
Speeds up the recruitment process (faster posting of jobs, quicker applicant response, and
rapid hiring).
24/7 access to the online resumes.
E-recruitment also has its pitfalls. Even though e-recruitment helps in speeding up the
whole recruitment process, there is danger of short listing stage becoming a lengthy one. As large
volume of resumes are posted online, screening and short listing of resumes takes a long time for
the HR department. Also if the screening is not done properly, the firm might lose the right
candidate. Another innovative technology change is Online W-2s. It is a fact that the Internal
Revenue Service still requires a paper copy of the W-2 form. At first glance, that would seem to
defeat any benefit to an online, automated process. But the current trend with many companies is
to include an online W-2 with the employee and manager web based self-service functionality.

Improving Transactional Processing in AIS

The reason is that the paper forms are often lost or misplaced. By capturing the W-2 form online,
employees can access it whenever they like, and payroll administration will always have a
permanent copy on file to print and send to the IRS. Computer technology and electronic
transactions have changed how information is recorded in the general ledger. The general ledger
can receive automatic updates on decreases and increases to inventory, changes to the inventory
quantity on hand balance and transfers of inventory between store locations. When inventory is
immediately updated, management always has access to current information about product
inventory levels. In addition to inventory, other general ledger asset and revenue accounts can
also be updated automatically. Setting up automatic updates can reduce the posting of certain
repetitive journal entries and employees can focus on other responsibilities that add more value
to the business. Transactions that automatically affect cash create a need for better planning and
analysis of monthly cash needs to avoid cash shortages. When cash receipts or accounts
receivable are updated automatically, management can record and recognize revenues more
quickly and make faster decisions on how the cash received will be used. Automatic transactions
also affect liabilities and expenses. When an automatic payment is posted to a liabilitys or
expenses general ledger account, this can ensure that a companys debt or expense is paid on
time and management has up-to-date access to the companys debt and expense information.
This arrangement can enhance the companys relationship with creditors so that access to
financing is more readily available. Immediate updates to the general ledger can simplify
financial reporting at the end of the fiscal year. Automatic transaction posting can reduce account
errors associated with manual transaction posting. It can also reduce the time it takes to gather
and analyze the information presented in the financial statements by reducing the need for
correcting or adjusting entries.

Improving Transactional Processing in AIS

Suggest two (2) controls for each of the AIS information system applications (revenue
cycle, expenditure cycle, production cycle, human recourse / payroll cycle, and the general
ledger / financial reporting system) that will mitigate potential threats.
Revenue Cycle
1. Credit control procedures shall be designed to ensure consistent and effective credit
collection policies are applied and no unauthorized credits to be granted to customers with
doubtful credit worthiness.
2. Controls to ensure accurate recording of sales contracts and services contracts. Accurate
recording of orders received and contracts as to customer, prices, quantities and terms for use in
subsequent processing
Expenditure Cycle3. Accounts payable is reconciled on a regular basis
4. Inventory is protected and accounted for both physically and in terms of dollar value.
Production Cycle1. All production and fixed asset acquisitions should be properly authorized
2. All valid, authorized production cycle transactions are recorded.
Human Resource/payroll1. Verify hours worked
2. Compare the addresses on employee paychecks.
General Ledger/Financial Reporting System1. Control reports that lists the journal vouchers by numerical sequence, account number, or
date
2. Budgets and performance reports should be developed on the basis of responsibility
accounting.
Compose three (3) processes or procedures that will be needed to help the firm and its
employees adapt to these changes.
With the accelerating pace of technological change, many employees find themselves
rushing to keep up with new software, programs and technological processes implemented in the
workplace. By its very nature, technology evolves quickly, racing to address the new situations
and problems created by the implementation of previous technologies, so that even young
employees who enter the workplace with advanced technological skills can find themselves

Improving Transactional Processing in AIS

quickly falling behind the technological curve. One way to help employees adapt is simulations,
demonstration, or hands-on learning. Previewing change through simulated real-world
experiences, such as a virtual tour of some aspect of the change, can answer employees'
questions and help them to feel more in control, which in turn can precipitate a shift in attitude.
Another method to help employees adapt is online and classroom modulated training. Both
virtual and classroom training are suitable. Virtual, on-demand training provides access
flexibility and scheduling agility, which help employees to feel a sense of control over training
on new processes or skills. Classroom training enables them to establish or reinforce social
bonds, which can help to soothe stress and anxiety brought on by change. A third option is to
recruit a group of staff facilitators. Call on a few ambitious, interested, or tech-savvy employees
to act as project leaders for the technology change. They can sit in on the planning and
implementation meetings and convey new developments to the other employees in their
departments. Also, having a few key cheerleaders who are in favor of the project from the start
can help bolster the staffs morale during the challenge of implementation.
Assess whether firms need to be more aggressive or cautious updating or changing AIS
applications and processes considering the rapid pace technology is changing
Sooner or later, its likely that your organization will be faced with a challenge that can
strike fear into the heart of even the most intrepid of managers: implementing new technology in
the workplace. I believe that firms should be cautious in updating or changing AIS applications
and processes. Having a well-developed and maintained accounting information system that is
efficient and accurate is an indispensable component of a successful business a process that takes
time and trial and error. Companies often change their way of doing business to keep up with
the latest trends. To keep up in a demanding business world, these changes may impact an
accounting system. An accounting information system is difficult to set up because every

Improving Transactional Processing in AIS

company is unique in its own way. In order to keep up with changes, accounting information
systems must be re-evaluated often. Changes often need to be made in a system in order to
process information efficiently. This can be a disadvantage to companies because it takes time
for the re-evaluation, and it costs money. A firm should not rush or be overly aggressive in
updating or implementing new AIS applications or systems. Accounting information systems are
usually computerized. Because of this, there is always a risk of losing information through power
outages or system crashes. When this happens, there is a chance that all the information in the
system could be lost. Prior to launch, all processes should be tested from input through output,
using the documentation as a tool to ensure that all processes are thoroughly documented and
that users can easily follow the procedures so that you know it works and that the procedures will
be followed consistently by all users. Unfortunately, most organizations rush to launch systems
prior to thorough testing, adding to the end-user frustration when processes don't work. Many
organizations chose to limit the amount of time and money spent on the analysis, design,
documentation, and training, and move right into software selection and implementation.
Organizations who skip the steps necessary to ensure the system meets the needs of the
organization are often left with frustrated end users, costly support, and information that is not
current or correct.
Use at least four (4) quality academic resources in this assignment. Note: Wikipedia and
other Websites do not qualify as academic resources,

Improving Transactional Processing in AIS

References
(June 2012). Four Ways to Help Employees Adapt Quickly to Change. Retrieved August 24,
2012 from http://www.astd.org
Langbert, M. (April 2011). Human Resource Management and Technological Change. Retrieved
August 23, 2012 from http://www.aicpa.org
Rojas, E. (n. d.) The Advantages of Immediately Updating a General Ledger. Retrieved August
23, 2012 from http://smallbusiness.chron.com
Shanker, S. (n.d). How Is Information Technology Used in Accounting? Retrieved August 23,
2012 from http://smallbusiness.chron.com
DeOrio, L. (October 2010). Technology and the Revenue Cycle. Retrieved August 23, 2012
from http://www.fortherecordmag.