Details

Transcription

Details

Topic A05: ICT Applications in Accounting
Topic Overview P.1
Topic Overview
Topic
Level
Duration
BAFS Elective Part – Accounting Module – Financial Accounting
A05: ICT Applications in Accounting
S5 / S6
3 lessons (40 minutes per lesson)
Learning Objectives:
1. To understand the advantages and disadvantages of using computerised accounting
systems;
2. To understand possible solutions to minimise the disadvantages;
3. To understand the impacts on different implementation methods of computerised
accounting systems; and
4. To understand how Accounting Information System (AIS) assists management
decision-making.
Overview of Contents:
Lesson 1
Lesson 2
Lesson 3
Advantages and Disadvantages of AIS - Part 1
Advantages and Disadvantages of AIS - Part 2
How AIS Assists Management Decision-making?
Resources:

Topic Overview, Teaching Plan and Answers to Student Worksheet
PowerPoint Presentation
Student Worksheet
Suggested Activities:

Case Studies
Group Discussion
Role play
Decision-making Game
BAFS Learning and Teaching Example
As at April 2009
Topic Overview P.2
Lesson 1
Theme
Advantages and Disadvantages AIS - Part 1
Duration
40 minutes
Expected Learning Outcomes:
Upon completion of this lesson, students will be able to identify the advantages and
disadvantages of using a computerised accounting system.
Teaching Sequence and Time Allocation:
Activities
Reference
Part I: Introduction
Teacher begins lesson by emphasising the business
PPT#1-3
trend of using computerised accounting information
system (AIS).
Part II: Content
A Case Study
Teacher briefs students on the case before starting PPT #4-5
the role play.
Student
Activity 1: Role play
Students are divided into five groups, each group Worksheet
represents one party.
p.1
Groups will discuss and identify the advantages
and disadvantages of using the computerised AIS
PPT #6-7
from their roles’ viewpoints.
Each group nominates one representative to role
Student
play.
Worksheet
Teacher chairs the meeting.
pp.2-6
Each representative presents an opinion.
Teacher concludes meeting.
PPT #8-13
Part III: Conclusion
Teacher reviews the key points and briefs students to
PPT #14-28
prepare them for the next lesson.
Time
Allocation
2 minutes
5 minutes
15 minutes
10 minutes
8 minutes
Preparation for the next lesson:
Students will collect data concerning the impact of using different implementation
methods of the computerised accounting systems and possible solutions to minimise the
disadvantages.
As at April 2009
Topic Overview P.3
Lesson 2
Theme
Advantages and Disadvantages AIS - Part 2
Duration
40 minutes
Upon completion of this lesson, students will be able to:
1.
2.
Find out possible solutions in minimising the disadvantages; and
Distinguish the impacts on different implementation methods of a computerised
accounting system.
Activities
Reference
Teacher begins by recalling the case and key points of
last lesson.
Time
Allocation
PPT #29-31 3 minutes
Part II: Content

Activity 2: Group Discussion
Students are divided into five groups.
Groups will discuss and identify solutions to
minimise problems with the computerised AIS.
Each group presents their findings.
Teacher reviews the key points and ask students
to vote on group findings.
PPT #32
15 minutes
Student
Worksheet
pp.7-8
PPT#42-43 10 minutes
Activity 3: Role play
Students remain in the same groups from Activity
2.
Student
Groups will identify the advantages of the election Worksheet
method on their role, and the disadvantages of the
P.9-13
other two methods.
Each group nominates one representative to role
play.
PPT#44-45 5 minutes
Teacher chairs the meeting.
Each representative presents an opinion.
Teacher concludes meeting.
Teacher reviews the key points and briefs students in
preparation for the next lesson.
As at April 2009
Topic Overview P.4
Preparation for the next lesson:
Students are required to review the following accounting ratios:
• Gross Profit Ratio;
• Net Profit Ratio;
• Current Ratio;
• Quick Ratio; and
• Sales to Capital Employed.
For the group discussion in lesson 3 Students will make investment decisions using the
AIS reports and analysis.
As at April 2009
Topic Overview P.5
Lesson 3
Theme
How AIS Assists the Management Decision-making?
Duration
40 minutes
Prior knowledge required: Ratio analysis
Upon completion of this lesson, students will be able to:
1.
2.
Describe the ICT applications in accounting
Explain how AIS assists management decision-making
Activities
Reference
¾ Teacher begins by recalling the last lesson case work.
The Olympics faced another problem on how AIS assists
management decision-making.
¾ Teacher illustrates ICT applications in accounting.
Part II: Content
Case Study
Teacher briefs students on the case.
Activity 4: Group Discussion
Students are divided into five groups.
Groups will discuss and comment on the
company’s performance based on the ratios
provided.
Teacher checks answer with the class.
Activity 5: Decision-making Game
Students remain in the five groups.
Students will make two decisions:
z Analysis NOT using AIS reports.
z Analysis USING AIS reports.
Students compare their investment decision results
to illustrate the importance of AIS reports and
analysis in decision making.
Teacher concludes by highlighting the key points.
Time
Allocation
PPT #62
Student
Worksheet
pp.14-15
Student
Worksheet
pp.16-17
PPT #73
3 minutes
As at April 2009
Topic Overview P.6
Answer for Activity 2
Disadvantages
Work flow is controlled by the system.
Suggested Solutions
1. System requirements must be clearly
investigated and defined before
system selection process; choose a
system best fit for the current
company work flow;
2. Thorough system analysis for
possible unexpected events before
system selection process, and
3. Develop possible manual override
procedures to handle unexpected
events.
System breakdowns will affect company
operations
1. Arrange regular system
maintenance ;
2. Use fault-tolerant / fault-safe
systems;
3. Install suitable anti-virus software to
avoid breakdowns due to viruses;
4. Check for and install security
updates regularly; and
5. Do not allow staff to install
unauthorised backup system
software.
Hackers may breach the system to steal
valuable information
1. Install suitable anti-virus software to
handle virus attacks;
2. Regularly check for and install
security updates;
3. Do not allow staff to install
unauthorised software; and
4. Train staff to eliminate possible
security pitfalls.
Employees may be fired due to a lack of
required technology skills
1. Train unskilled workers to
competently operate the system; and
2. Schedule regular training to keep
workers abreast of latest technology
changes.
As at April 2009
Topic Overview P.7
Additional financial support is required
to install and maintain the system
1. Select a proper system to increase
the efficiency in order to compensate
for additional costs; and
2. Hidden profits may also compensate
for additional costs: company image,
increased efficiency, rapid response
to external events, improved clarity
of current financial situation,
accurate cost estimation, etc.
Special skills required to operate the
system
1. Ask system supplier to provide
system operations training;
2. Ask system supplier to provide
thorough documentation;
3. Arrange in-house training to instruct
staff on system operation; and
4. Auditor will seek assistance from
system experts about how to conduct
auditing with the system.
As at April 2009
Topic Overview P.8
Mark Sheet:
(Tick 1 box for 1 mark)
Manager of Super Systems Limited
Advantages (1 mark for each point, maximum 4 marks)
Sub-total
Disadvantages (1 mark for each point, maximum 4 marks)
Presentation skill (Maximum 2 marks)
Total
Manager of IT Department
Sub-total
Total
As at April 2009
Topic Overview P.9
Manager of Professional Limited
Sub-total
Total
As at April 2009
BAFS Elective Part
Accounting Module –
Financial Accounting
Lesson 1
Advantages and Disadvantages of the
AIS - Part 1
Topic A05:
ICT Applications in Accounting
Technology Education Section
Curriculum Development Institute
Education Bureau, HKSARG
April 2009
Topic A05
Introduction
Lesson 1
This session aims to introduce ICT Accounting applications to students.
Students will gain a solid understanding through active participation in
debate and case study.
Pre-lesson preparation:
2
BAFS Elective Part
Learning and Teaching Example
Students will collect information about using the computerised accounting
information system (AIS) such as: efficiency, cost, workflow, control, skills,
competence, etc.
Duration
Three 40-minute lessons
Contents
Lesson 1 – Advantages and Disadvantages of AIS - Part 1
Lesson 2 – Advantages and Disadvantages of AIS - Part 2
Lesson 3 – How AIS Assists in Management Decision-making?
1
2
Activity 1: Role Play
Learning Objective
Identify the advantages and disadvantages
of using AIS
Topic A05
3
BAFS Elective Part
Topic A05
4
BAFS Elective Part
Students read worksheet P.1 before the lesson and prepare for role-play activities.
Students will identify the advantages and disadvantages of using the AIS
through a role plays with other members of a pseudo company.
Teacher introduces the case in P.1 of student worksheet.
After discussing the advantages and disadvantages in role play, teacher will
summarise their findings by highlighting that the advantages outweigh the
disadvantages generally.
This case study explores the advantages and disadvantages when using the
computerised accounting system under different company roles.
Students are divided into 5 groups with different roles:
1. Financial Controller – Internal financial control, responsible to maintain the financial
health of the company
2. Auditor – external party to audit the company financial reports
3. Shareholder/Owner – owner of the company, responsible to provide required capital
4. Customer – customer of the company
5. Employee – responsible for daily company operations
To enhance group discussions keep groups to 6 students as there may be more than
one group for each role. Teacher can assign role to the groups.
Each group will nominate a secretary, who is responsible to jot down discussions, and a
presenter. The presenter will present the group discussions. The secretary will provide
clear written details of group discussions to teacher.
3
4
Directions for discussion
z
z
z
z
z
z
Meetings Begin
Efficiency
Cost
Work flow
Control
Skills
Competence
Topic A05
5
BAFS Elective Part
Topic A05
6
BAFS Elective Part
Teacher may give some directions to students for discussion.
Meeting begins
For each role, students may consider how computerisation may affect their
role in the following aspects:
Teacher acts as director and chairs the meeting. Each group will form a
circle to facilitate the discussions. Each group nominates a secretary and a
presenter. The discussion starts.
1. Efficiency – How the efficiency of their daily work be affected?
Students have 5-8 minutes for discussions. They can also use worksheet
P.2-6 to jot down the main points of their discussions.
2. Cost – How the operation cost of the company be affected? Is there any
hidden cost?
3. Work flow – How the daily work flow be affected?
4. Control – Is there any possible system breakdown?
5. Skills – What are the education background / training received by the
parties?
6. Competence – Is the role able to control/operate the new system?
5
6
Discussion in progress
Presentation
The Director invites the 5 parties to present
their findings on using a computerised
system.
Topic A05
7
BAFS Elective Part
Topic A05
Teacher tours around during the discussions to provide input and assistance
as required.
8
BAFS Elective Part
Teacher asks students to stop discussions and prepare for presentations.
Each group will present their findings.
Teacher reminds groups to think of how the advantages of other roles may
benefit their role, and how to solve/minimise the impact of disadvantages.
Teacher collects copy of discussions from secretary to review ideas
maintaining a neutral position to guide students in presenting their viewpoint.
7
8
Financial controller
Auditor
Financial controller illustrates
how a computerised system
improves efficiency. Also
explaining the possible
limitations of using such a
system.
Auditor explains how the audit process is
affected / improved by the new system.
Topic A05
9
BAFS Elective Part
Topic A05
The Financial controller group will present first.
10
BAFS Elective Part
The auditor group presents the advantages and disadvantages of
computerisation.
9
10
Shareholder/Owner
Customer
Shareholder/Owner explains how the new
system brings improvement / drawbacks to
the company.
Customer explains if the new system has
any improvement / drawback on their
relationship with the company.
Topic A05
Topic A05
11
BAFS Elective Part
The shareholder / owner group presents the advantages and disadvantages
of computerisation.
12
BAFS Elective Part
The customer group presents the advantages and disadvantages of
computerisation.
11
12
Employee
Employee explains how the system
improves / affects their work.
Topic A05
13
BAFS Elective Part
Topic A05
The last presenter is the employee group. They are affected most by
computerisation. They have to learn new skills and they may be laid off due
to the reduction of manpower.
14
BAFS Elective Part
Teacher summarises the advantages and disadvantages in the following
slides.
Teacher also makes comments on the students’ findings
13
14
Financial Controller
z
Advantages
z
z
z
z
z
z
z
z
Simplified transaction postings
Easier transaction retrievals
Readily available financial data
Shorter time to prepare reports
Different aspects of reports available
More information for budgeting
Higher overall operations efficiency
Topic A05
15
Disadvantages
z
z
z
BAFS Elective Part
Work flow may be limited / controlled by the
program – a change of work flow may require
a change of program
Knowledge on how to operate the system is
required
Possible system breakdown may affect
company operation, or even a disaster
Topic A05
Teacher summarises the advantages from financial controller’s view point.
16
BAFS Elective Part
Teacher summarises the disadvantages from the financial controller’s
perspective.
Most computerised systems allow users to input sales and purchases
directly. The transactions will be automatically posted (debit and credit) to
suitable accounts in the accounting system.
The company work flows will be controlled by the accounting software.
Existing work flows may have to be changed to suit the software unless a
custom software program is purchased. However, changes in work flows
(e.g. company expansion, new sales store) will require a change of program.
With the help of the system, user may retrieve transactions without
searching through bundles of accounting books or receipts.
All company personnel must be trained in operation of the software.
The system keeps up-to-date records of all transactions. The balance of
accounts are readily available for inspection producing reports in a short
time.
Company operations will be halted should the system fail.
The system produces a variety of reports such as by different class of
customers, different class of products, and different time periods.
The system tracks of data for years and provides valuable information for
budget estimations.
15
16
Auditor
z
Auditor
Advantages
z
z
z
z
z
Easier transactions retrieval
Easier data extraction – all data is stored in
system
Different aspects of report available
Shorter time for audit process
Topic A05
17
Disadvantages
z
z
BAFS Elective Part
Special system auditing skills required
More difficult data extractions – some data
may be hidden in system
Topic A05
18
BAFS Elective Part
Teacher summarises the advantages from auditor’s view point.
Teacher summarises the disadvantages from auditor’s view point.
Auditor may retrieve transactions without searching through bundles of
accounting books or receipts.
Auditor must have adequate IT skills to extract data before the audit process
can begin.
Company data stored in the system allows quick extraction and transfer to
auditing software for analysis without any manual data inputs. This
minimises data input and search time. Depending on the auditing software
used, many auditing reports can generated to assist in the auditing process.
Thus the auditing time will be reduced.
Having all data stored in the system has both advantages and
disadvantages: the data can be easier to retrieve but some may be hidden.
17
18
Shareholder / Owner
z
Shareholder / Owner
Advantages
z
z
z
z
z
z
z
Current financial situation is easily available
Data for sales budgeting is available
Easier cost control
Work flow is controlled by system – less
chance for manual override
Improved company image
Reduce staff
Topic A05
19
Disadvantages
z
z
z
BAFS Elective Part
System installation and maintenance costs
Must set-up a new IT department / employ IT
related staff
Possible system failures may affect
operations, or even a disaster
Topic A05
20
BAFS Elective Part
Teacher summarises the advantages from shareholder’s view point.
Teacher summarises the disadvantages from shareholder’s view point.
The accounting system keeps up-to-date record of all transactions. The
balance of accounts and financial situation are readily available for
inspection.
Additional costs are required to install and maintain the system. In lesson 3,
students will learn that the AIS system can be implemented in 3 ways: Buy
off-the-shelf software, in-house development, or outsource to third parties.
The first two ways involve costs to install and system maintenance.
Developing in-house is expensive and costs more than pre-built, off-the-shelf
software.
The system also keep tracks of data for years and provides valuable
information for budget estimation and cost controls.
Whether the company decides to buy off-the-shelf commercial software or
develop its own, it has to set-up a new IT department / employ IT related
staff to maintain the system, resulting in increased costs and changing the
management hierarchy.
For the owner, the work flow control is an advantage. However, it may be a
disadvantage for financial controller and employees.
The company image is improved when compared to those companies
without a computer system. Customer feels the company has enhanced it
accounting systems because it is expanding and growing.
System breakdown will impact all parties due to ceasing company
operations.
The computer system reduces inputting and recording transactions, thus
less employees are required.
19
20
Customer
z
Customer
Advantages
z
z
z
z
Fast transaction processing
More accurate transaction records
Better stock records, better shopping
experience
Topic A05
21
Disadvantages
z
BAFS Elective Part
Possible personal information (e.g. credit card
number) leakage
Topic A05
22
BAFS Elective Part
Teacher summarises the advantages from customer’s view point.
Teacher summarises the disadvantages from customer’s view point.
Fast transaction processing since manual operation is minimised. The
customer’s statement can be generated directly from the computerised AIS.
Hackers may steal personal information (e.g. credit card number) from the
system.
Accurate transaction records such as the customer’s statement.
Some systems have the capability of inventory control. It provides better
stock control and a better customer shopping experience. If a customer
order is out of stock, the AIS will indicate immediately for appropriate action.
21
22
Employee
z
Employee
Advantages
z
z
z
Less effort to record a transaction
Less time to record a transaction
Disadvantages
z
z
z
Topic A05
23
BAFS Elective Part
All steps are controlled by system – unable to
manage unexpected events
Must learn new technology skills
Possibility of unemployment – especially low
skilled workers
Topic A05
24
BAFS Elective Part
Teacher summarises the advantages from employee’s view point.
Teacher summarises the disadvantages from employee’s view point.
Most manual operations are minimised, as a result:
All working steps are controlled by system. If an unexpected event occurs
that is not covered in the system, employees may not know how to handle,
E.g. Bad debts caused by financial crisis.
- Less effort to record a transaction; and
- Less time to record a transaction.
Existing staff are familiar with manual accounting procedures. They have to
learn new skills for the computerised AIS.
There is a possibility of releasing low skilled workers who cannot manage the
computerised AIS.
23
24
Conclusion
z
Conclusion
Overall advantages
z
z
z
z
Higher efficiency
Better financial and cost control
Better company image
Overall disadvantages
z
z
z
z
Topic A05
25
BAFS Elective Part
Company work flow controlled by system
Possible system breakdown and data leakage
Possibility of unemployment
Financial cost and hidden cost
Topic A05
26
BAFS Elective Part
Teacher concludes the advantages.
Teacher summaries the overall disadvantages as shown on the slides.
Manual operations are minimised, therefore efficiency will be improved
leading to faster responses to a rapid changing market.
Teacher reminds students that the cost may include financial costs (e.g. buy
and maintain the system) and hidden costs (e.g. company image, staff
emotion, customer loyalty, etc)
As all financial data is readily available in the system, better financial and
cost control is expected. Also, a better budgeting will improve financial
controls (such as cash flow).
Though the advantages of the computerised AIS outweigh its disadvantages,
teacher should highlight that management must consider the possible
solutions to minimise the disadvantages before implementing a
computerised AIS.
25
26
Conclusion
z
z
Preparation for next lesson
The impact of the disadvantages should
be minimised by implementing effective
measures.
z
z
Advantages of computerised accounting
outweigh the disadvantages.
Topic A05
27
You are required to discuss:
z
BAFS Elective Part
Possible solutions to minimise disadvantages
of using computerised accounting systems;
and
The impacts of different computerised
accounting systems implementation methods
Topic A05
Teacher informs students that a second meeting will held to discuss how to
minimise the disadvantages.
28
BAFS Elective Part
Teacher asks students to prepare for discussions in next lesson.
End of lesson 1.
Teacher concludes that the advantages outweigh the disadvantages if the
impact can be minimised. For example, install suitable anti-virus software to
avoid breakdowns due to virus inflections and train un-skilled workers to
effectively operate the system.
27
28
Learning Objectives
Lesson 2
z
Advantages and Disadvantages of
AIS - Part 2
z
Identify possible solutions in minimising
impact of disadvantages
Identify impacts on different
implementation methods of computerised
accounting systems
Topic A05
Lesson 2
30
BAFS Elective Part
As a continuation of lesson 1, students will identify possible solutions in
minimising the disadvantages and impacts on different implementation
methods of computerised accounting systems in this lesson.
In this lesson, students will continue to work on the cases from lesson 1.
Group discussions and role-plays will be conducted.
29
30
Activity 2: Open forum
discussion
Recap of last lesson
z
z
Impacts of disadvantages of AIS must be
minimised!
Disadvantages include:
z
z
z
z
z
Affect company work flow
System breakdown
Data leakage
Unemployment
Financial cost and hidden cost
Topic A05
31
BAFS Elective Part
Topic A05
32
BAFS Elective Part
Teacher recap the conclusion from last lesson.
Teacher introduces activity 2 by referring to p.7 of student worksheet.
Teacher can refer to slide #26 for details.
The objective of this activity is to explore the possible solutions in minimising
the impacts of disadvantages of AIS as discussed in lesson one.
Students are divided into 5 groups and are required to propose solutions to
minimise the impacts. In each group, a leader and a secretary are nominated.
The leader will lead the discussion whilst the secretary will jot down the
points in the student worksheet.
In guiding the discussion, teacher may refer to the suggested answer in
appendix of overview.
Teacher tours around during their discussion and provides assistance if
required.
31
32
Impact on Work Flow
z
The system controls the work flow of the
company
z
z
Topic A05
33
BAFS Elective Part
Normal work flow
Unexpected events
Topic A05
34
BAFS Elective Part
Teacher asks students to present a short summary of their discussions.
Teacher reviews the suggested solutions in the following slides.
Teacher will cover the suggested answers with students in the following slide.
Suggested solutions:
1. System requirements must be clearly investigated and defined before a
system selection process; choose a best fit system that matches current
company work flows;
2. Thorough system analysis about possible unexpected events must be
conducted prior to system selection; and
3. Develop possible manual override procedures to manage unexpected
events.
33
34
Impact on System Breakdown
z
Impact on Data Leakage
Company operations stopped if system
fails
Topic A05
35
z
BAFS Elective Part
Hackers may invade the system to steal
valuable information
Topic A05
36
BAFS Elective Part
Arrange adequate regular system maintenance procedures
1. Install suitable anti-virus software to avoid breakdowns due to virus
inflections
1. Use fault-tolerant / fault-safe systems
2. Check for and Install security updates regularly
2. Install suitable anti-virus software to avoid breakdowns caused by viruses
3. Do not allow staff to install unauthorised software
3. Regularly check and Install security updates
4. Train staff to eliminate possible security pitfalls
4. Do not allow staff to install unauthorised programs or files
5. Backup system software
35
36
Impact on Unemployment
z
Impact on Financial Cost
Employees may be released due to
reduction in processes and lack of
technology skills to manage system
Topic A05
37
z
BAFS Elective Part
Additional cost to install and maintain the
system
Topic A05
38
BAFS Elective Part
1. Train un-skilled workers to operate the system
1. Select a proper system to increase the efficiency to compensate for
additional costs
2. Regularly update workers on new technology advances
2. Hidden profits may also compensate the financial costs: company image,
employer efficiency, rapid response to external events, understand of
current financial situation, accurate cost estimation, etc
37
38
Vote for the following
statements
Impact on Hidden Cost
z
Special skills required to manage and
operate the system
z
z
Topic A05
39
BAFS Elective Part
Disadvantages of using a computerised
accounting system can be minimised by
suggesting possible solutions.
I would support the implementation of a
computerised accounting system.
Topic A05
40
BAFS Elective Part
Teacher asks students to vote for the following statements:
1. Ask system vendor to provide training on operating the system
1.Disadvantages of using a computerised accounting system can be
minimised by the suggesting possible solutions.
2. Ask system vendor to provide thorough documentation
2.I would support the implementation of a computerised accounting system.
3. Arrange in-house training for staff on system operation
Teacher counts the no. of students for and against the statements. A
majority of students will vote for this statement after the discussion in activity
2. It would reinforce their concept that the disadvantages of using
computerised accounting systems can be minimised by the suggested
solutions.
4. Auditor to seek guidance from auditing expert to effectively use system
39
40
Activity 3: Role Play
Summary of Activity 2
z
Impacts of disadvantages may be reduced
by the suggested solutions
z
Company decides to implement the
computerised system
Topic A05
41
Meeting: Selection of Implementation
Method
BAFS Elective Part
Topic A05
Teacher declares that the company will implement the computerised system.
42
BAFS Elective Part
Teacher addresses different implementation AIS methods as listed in p.9 of
student worksheet.
The objective of the case study is to guide students’ discussions on how the
advantages of using a computerised accounting system may vary due to
using different implementation methods.
Students remain in the 5 groups as in Activity 2. Each acts as one of the 3
parties in the student worksheet, the manager of Super Systems Limited, the
manager of IT Department and the manager of Professional Limited.
Students will discuss within their groups and identify the advantages of their
selection method based on their role, and the disadvantages of the other two.
One student will act as the discussion leader and jot down their points from
others on the student worksheet.
41
42
Directions for discussion
z
z
z
z
z
Discussion in progress
Cost
Time
Control
Users’ requirements
Staff competence, etc.
Topic A05
43
BAFS Elective Part
Topic A05
Teacher may give some directions to students for discussion.
44
BAFS Elective Part
Teacher tours around during their discussions to provide input and guidance
as required.
For each role, students discuss how the advantages of using a computerised
accounting system may vary due to different implementation methods.
Students are asked to use worksheet p.10-12 during discussions
Directions for discussion:
Cost – What is the AIS cost due to different implementation methods?
Time – What is the time required for implementing the AIS by different
methods?
Control – What is the degree of control over the AIS by different methods?
Users’ requirements – Would the different methods meet the all users’
requirements?
Staff competence – Will staff be competent enough to use the AIS
developed by the different methods?
43
44
Meeting Begins
Topic A05
Final Director Decision
45
BAFS Elective Part
Topic A05
During the meeting, the director (teacher) should be neutral as each method
have both advantages and disadvantages. In starting the meeting, he should
invite the participants to present their views in the following order:
46
BAFS Elective Part
At the end of the meeting, teacher is convinced by the manager with the
highest marks (i.e. relevant points and presentation skill) and select their
suggested best implementation method.
1. Manager of Super Systems Limited
2. Manager of IT Department
A summary of the advantages and disadvantages of implementing different
methods is conducted by teacher in the following slides.
3. Manager of Professional Limited
Teacher should listen carefully to the points addressed by each student,
raise questions if their points are not clear and guide them to express their
viewpoints.
In the meantime, he should also fill in the mark sheet in the appendix of the
topic overview (p.8-9) on:
1. Advantages (1 mark for each point, maximum 4 marks)
2. Disadvantages (1 mark for each point, maximum 4 marks)
3. Presentation skill (maximum 2 marks)
45
46
Buy an AIS Commercial version
z
Buy an AIS
Advantages
z
z
z
z
z
Cost is cheaper when comparing with
developing in-house
Available within a short period
Updates are inexpensive
The purchased AIS are more likely to be bugfree after various testing
Topic A05
47
Disadvantages
z
z
z
z
BAFS Elective Part
Purchased AIS may not fit exact requirements
Developer may close down or cease to update
the AIS
Evaluation of the purchased AIS is timeconsuming and costly
Reduced competitive advantages
Topic A05
Teacher summarises the advantages of buying the AIS commercial version.
48
BAFS Elective Part
Teacher summarises the disadvantages of buying an AIS commercial
version.
• Cost is cheaper compared to developing in-house as the cost is shared by
other accounting package customers
• Available immediately as its off the shelf.
• The purchased AIS may not fit exact requirements as it was developed
for the general customer usage
• Updates are inexpensive as the cost of updates are shared by other
accounting package customers.
• If the developer closes down or ceases to update the AIS, the buyer
will be in trouble.
• The commercial version has been tried and tested over a period of time
and known bugs have been eliminated.
• As the AIS was not developed by the company, evaluation of the
purchased AIS by the company is time-consuming and costly.
• As the AIS can be acquired by other companies in the market, it
reduces the company’s competitive advantages.
47
48
Develop an in-house AIS
z
Develop an in-house AIS
Advantages
z
z
z
z
z
Tailored to exact user needs
System development process can be
managed and controlled
Users may have greater loyalty
Competitive advantages are built by a unique
AIS
Topic A05
49
Disadvantages
z
z
z
z
BAFS Elective Part
costly
labor intensive
takes longer
New programs contain bugs
Topic A05
50
BAFS Elective Part
Teacher summarises the advantages of developing an in-house AIS.
Teacher summarises the disadvantages of developing an AIS.
• As the AIS was developed by IT department based on the company
requirements, it can be tailored to exact users’ needs
• It is costly as all cost is borne by the company.
• It is labor intensive and the AIS is solely developed by the IT department.
It requires IT staff to monitor and support the system.
• As the AIS was developed in-house, the system development process can
be managed and controlled.
• It takes a longer time for system development and testing.
• Users may have greater loyalty of systems developed in-house by the IT
department. They can suggest some functions that are company specific.
• The developed AIS is a new program and must be tested for bugs and
repaired requiring excessive time to perfect.
• A competitive advantages are built by a unique AIS. No other company
will adopt the same software in handling their accounting tasks.
49
50
Outsourcing
z
Outsourcing
Advantages
z
z
z
z
z
less costly
Improved company cash flow when avoiding
substantial capital investment in computer
hardware and software
Development time is not required
Access to more advanced technology
Topic A05
51
Disadvantages
z
z
z
z
BAFS Elective Part
Loss of control
Reduced competitive advantages
Inflexible 5-year contract
Ineffective if communication fails between
outsourcer and client
Topic A05
52
BAFS Elective Part
Teacher summarises the advantages of outsourcing.
Teacher summarises the disadvantages of outsourcing.
• It is less costly as no cost is incurred on the hardware and software.
• Loss of control of the AIS as it is owed by the outsourcer.
• As no substantial cost is incurred in the hardware and software, it
improves the company cash flow.
• Reduced competitive advantages as the AIS is owned by the outsourcer.
Other competitors may use the same outsourcer for handling their
accounting tasks.
• As the AIS is already developed, development time is not required.
• Inflexible in 5-year contract. The company has to pay penalty for
cancellation of agreement. (The company may negotiate with the
outsourcer for shorter contract period.)
• The outsourcer will usually update with more advanced technology to
attract customers.
• If there is lack of good communications between the outsourcer and client,
the AIS will not function properly.
51
52
Preparation for next lesson
z
You are required to review the following
accounting ratios:
z
z
z
z
z
z
Lesson 3
Gross profit ratio
Net profit ratio
Current ratio
Quick ratio
Sales to capital employed
How AIS assists in management
decision-making?
Make investment decisions with AIS
reports and analysis
Topic A05
53
BAFS Elective Part
Students prepare for the discussion in next lesson.
Lesson 3
End of lesson 2.
In this lesson, students are going to discuss how AIS assists in management
decision-making. Students will conduct a group discussion to argue with
whether to use AIS when having decision-making.
53
54
~ Financial Reporting ~
Learning Objectives
z
z
Describe ICT applications in accounting
Explain how AIS assists management
decision-making
z
Generate financial reports
z
z
z
z
z
Topic A05
55
BAFS Elective Part
Debtors / Creditors’ aging report
Trial balance
Profit and loss account / income statement
Balance sheet
Cash flow statement
Topic A05
Students will understand ICT application in accounting and how AIS assists
management decision-making by group discussion and decision-making
game.
56
BAFS Elective Part
Teacher briefs students on the ICT applications in financial reporting.
Generate financial reports
55
•
Debtors / Creditors’ aging report: shows details of transactions with
debtors / creditors and due days eg. Due within 0-30 days, 31 – 60 days
etc.
•
Trial balance: shows ending balance (debit / credit) of accounts on a
specific date
•
Profit and loss account / income statement: shows income and expenses
for a period
•
Balance sheet: shows assets, liabilities and on a specific date
•
Cash flow statement: shows cash inflows and cash outflows for a
specific period
56
~ Costing Analysis ~
z
z
z
z
Examples of accounting
systems and software
Perform financial result analysis in actual,
fixed budget and flexible budget
Conduct financial statement analysis
Conduct profit volume analysis
Perform discounted cash flow analysis for
financial management
Topic A05
57
z
z
z
BAFS Elective Part
MYOB
DacEasy
Microsoft Excel
Topic A05
Teacher briefs students on the ICT applications in costing analysis.
58
BAFS Elective Part
MYOB and DacEasy are international providers of computerised accounting
package for business owners and accountants.
1. Perform financial results analysis in actual, fixed budget and flexible
budget:
• e.g. Sales budget, purchase budget and cash budget etc.
MYOB provides multi-user business management software with accounting,
inventory, time billing and multiple currency transaction capability
• A fixed budget is designed to remain unchanged irrespective of
the quantity of goods produced.
The DacEasy product line includes different systems, for example,
Accounting, Payroll, Order Entry, Point of Sale and Job Costing.
• A flexible budget is designed to change in accordance with the
level of the quantity of goods produced.
2. Conduct financial statement analysis, eg. compares the result between
this year and last year and shows the difference (variance).
Microsoft Excel is an electronic spreadsheet program that can produce
professional-looking documents that perform numeric calculations. Its basic
functions are formulas and charts.
3. Conduct profit volume analysis:
• Study the relationship between costs and operating income at
different sales levels for management decision-making.
4. Perform discounted cash flow analysis for financial management:
• Compute present value and net present value for investment
decision.
57
58
Examples of ICT Applications in
Accounting
z
Examples of ICT Applications in
Accounting
Charts and graphs in Excel
z
Financial Functions in Excel:
z
z
z
Topic A05
59
BAFS Elective Part
“PMT” function is used to calculate the periodic
cash flow of annuity
“PV” function is used to calculate the monthly
contribution for a given return and expected
sum
“NPV” function is used to calculate the net
present value of a stream of cash flows based
on certain discount rate
Topic A05
An example Excel charts and graphs
60
BAFS Elective Part
Teacher briefs students on the usage of different financial functions.
“PMT” function (PMT stands for payment)
• use this function to determine the monthly payment, total interest, and
total costs for a mortgage with input of principal, interest rate and
repayment period.
“PV” function (PV stands for present value)
• use this function to calculate the present value of an investment with
input of investment amount, interest rate and repayment period.
“NPV” function (NPV stands for net present value)
• use this function to calculate the net present value of cash flow stream
by a certain interest rate.
59
60
How AIS assists the
management decision-making?
z
Activity 4 - Case Study
Step I:
z
Identify areas requiring management actions
z
Identify areas requiring
management actions
Step II:
Provide a basis for choosing among alternative
actions
Topic A05
61
BAFS Elective Part
Topic A05
Teacher briefs students on the two steps on how AIS assists the
management decision-making.
62
BAFS Elective Part
Teacher briefs the case as listed in P.14 of student worksheet.
The objective of the case study is to apply the 2 steps on how AIS assists
management decision-making by:
Step I: Identify areas requiring management action
Activity 4: identifying areas requiring management actions (accounting ratios
analysis)
E.g. The AIS generates Profit and Loss Account and Balance Sheet.
By computing the accounting ratios, the accountant can identify areas
requiring management action.
Activity 5: providing a basis for choosing among alternative actions
(evaluation of investment proposals)
Step II: Provide a basis for choosing among alternative actions
In activity 4, students are provided with an AIS report containing accounting
ratios. They are required to comment on the company’s performance in the
following aspects: profitability, liquidity and efficiency. Group discussions are
suggested using student worksheet p.15 for recording notes.
Once an area of action is identified in step I, management must
evaluate different actions to remedy the area. E.g. Evaluate the
profitability of different investment proposals by AIS.
Prior knowledge required: ratio analysis
Teacher conducts a review of accounting ratios in the next slide.
61
62
Accounting Ratios
z
z
z
z
z
Profitability
Gross profit ratio: Gross profit / Sales
Net profit ratio: Net profit / Sales
Current ratio: Current assets / Current
liabilities
Quick ratio: (Current assets – Inventory) /
Current liabilities
Sales to capital employed: Sales / Capital
employed
Topic A05
63
z
z
z
BAFS Elective Part
Both the Gross Profit Ratio and Net Profit
Ratio dropped.
It may be caused by low selling prices,
high costs, high administrative expenses
etc.
It indicates the company has poor cost
controls or marketing policies.
Topic A05
1.Gross profit ratio: Gross profit / Sales
64
BAFS Elective Part
Before going through the answer, teacher invites groups to provide
comments. Then teacher goes through the suggested answers with students.
• indicates a company’s good or bad cost controls and its marketing
policies. Low margins may be caused by relatively low selling prices,
high costs or both.
2.Net profit ratio: Net profit / Sales
• indicates the profitability generated by a company. It can be viewed as
a measurement of efficient cost controls.
3.Current ratio: Current assets / Current liabilities
• is used to measure the ability of a company to meet its current liabilities
from current assets.
4.Quick ratio: (Current assets – Inventory) / Current liabilities
• indicates a company’s ability to meet its immediate commitments.
5.Sales to capital employed: Sales / Capital employed
• indicates the efficiency of using capital to generate sales.
63
64
Liquidity
z
z
Efficiency
Both the Current Ratio and Quick Ratio
dropped.
z
Poor ratios indicate company has liquidity
problems and is unable to meet its current
commitments.
Topic A05
65
BAFS Elective Part
A sales drop to capital used indicates an
inefficiency in using capital to generate
sales.
Topic A05
Teacher goes through the suggested answer with students.
66
BAFS Elective Part
Teacher goes through the suggested answer with students.
Teacher recaps that activity 4 is to identify areas requiring management
decisions. It evaluates the company’s performance by accounting ratios
generated by the AIS.
Teacher reminds students that the AIS will calculate the ratios thereby
eliminating manual calculations.
65
66
Activity 5 –
Decision-making Game
Decision 1
•Choosing among alternative actions
Which is the best proposal?
Mr. Risky
Topic A05
Ms Prudent
67
BAFS Elective Part
Topic A05
As mentioned before, the objective of the case study is to apply the 2 steps on how the
AIS assists management decision-making by:
68
BAFS Elective Part
Teacher briefs students on Decision 1 by referring to P.16 of student
• Activity 4: identifying areas requiring management actions (accounting ratios
analysis)
worksheet.
• Activity 5: providing a basis for choosing among alternative actions (evaluation of
investment proposals)
Teacher asks students to choose the best proposal for Mr. Risky. No report
would be provided to them. They are also not allowed to use a calculator in
making this decision. They have to write down their choice on the worksheet
as Mr. Risky.
The company’s performance is not good in activity 4, so the company would like to
improve profitability and liquidity by taking 2 actions:
1. Decision 1: purchase a machine by bank loan (Which bank loan is more
favourable?)
2. Decision 2: make investments (Which investment is more profitable?)
The objective of this decision-making game is to show that Ms Prudent would make better
decisions than Mr. Risky with more useful information and analysis.
Teacher briefs students on the decision game. In this game, students remain in the group
as in activity 4. In each group, they have dual roles of both Mr. Risky and Ms Prudent.
• Mr. Risky makes decisions without AIS reports and analysis but by experience.
• Ms Prudent makes decisions with AIS reports and analysis.
One student will act as discussion leader and record answers of Mr. Risky and Ms
Prudent.
At the end, students will discover the importance of the AIS in selecting alternatives
actions.
67
68
Analysis of Loan Proposals
Decision 2
Scenario Summary
Bank A
Bank B
Bank C
Bank D
$100,000
$100,000
$100,000
$100,000
7%
8%
9%
10%
7
8
9
10
$1,509
$1,414
$1,354
$1,322
$126,779
$135,712
$146,263
$158,581
Which is the best investment plan?
Changing Cells:
Loan
Interest rate
Years
Result Cells:
Monthly
payment
Total Interest
Topic A05
69
BAFS Elective Part
Topic A05
70
BAFS Elective Part
Based on the AIS report, students are required to make decisions for Ms
Prudent. They have to write down their choice on the worksheet as Ms
Prudent.
worksheet.
(This analysis is intentionally not provided in the worksheet. Otherwise,
students may refer to it in answering the question for Mr. Risky.)
Students must select the best proposal for Mr. Risky. No report would be
provided to them. They are also not allowed to use a calculator in making
this decision.
Teacher briefs students on Decision 2 by referring to P.17 of student
The correct answer is Bank C because:
1. Monthly payment is <$1,400 (i.e. Bank A and B are not feasible)
2. Total interest is $146,263 (the least comparing with Bank C and Bank D)
69
70
Analysis of Investment Plans
Activity 5: Decision Game
Plan A
Plan B
Plan C
Plan D
8%
8%
8%
8%
Interest Rate
Year 1
Initial Cost
($300,000)
($400,000)
($500,000)
($600,000)
Year 2
Returns
$95,000
$120,000
$150,000
$175,000
Year 3
Returns
$95,000
$120,000
$150,000
$175,000
Year 4
Returns
$95,000
$120,000
$150,000
$175,000
Year 5
Returns
$95,000
$120,000
$150,000
$175,000
Year 6
Returns
$95,000
$120,000
$150,000
$175,000
Net Present
Value
$79,307
$79,125
$98,907
$98,724
Topic A05
71
By comparing the answer of Mr. Risky and
Ms Prudent, whose management decisions
are better? And why?
BAFS Elective Part
Topic A05
72
BAFS Elective Part
Based on the AIS report, students are required to make decisions for Ms
Prudent. The correct answer should be Plan C, which gets the highest Net
Present Value.
The objective of this decision-making game is to show that Ms Prudent
would make better decisions than Mr. Risky due to more useful information
and analysis.
(This analysis is intentionally not provided in the worksheet. Otherwise,
students may refer to it in answering the question for Mr. Risky.)
Ms Prudent’s performance is better because the AIS provides more useful
information to make better and correct decisions. Mr. Risky’s performance is
poor due to insufficient information.
Note:
At the end of the game, students will see the importance of the AIS in
providing valuable information to choose among alternatives.
NPV of returns
End of lesson 3
Year 2: Returns / (1+8%)
Year 3: Returns /{ (1+8%) (1+8%)}
Year 4: Returns /{ (1+8%) (1+8%) (1+8%)}
Year 5: Returns /{ (1+8%) (1+8%) (1+8%) (1+8%)}
Year 6: Returns /{ (1+8%) (1+8%) (1+8%) (1+8%) (1+8%)}
NPV of investment plan:
NPV of returns – Initial cost
71
72
The End
Topic A05
73
BAFS Elective Part
Teacher concludes the lesson by highlighting the key points learned.
End of Lesson 3.
Topic A05 ICT Applications in Accounting
Student Worksheet p.1
BAFS Elective Part – Accounting Module – Financial Accounting
Activity 1 – Role Play
Olympics Limited is a sportswear trading company. Due to substantial
increases in transactions, the current ‘manual system’ cannot meet the
stakeholder requirements, especially in generating timely reports. The
financial controller proposed implementing a computerised accounting
system to improve efficiency and effectiveness of accounting.
Meeting:
Director calls a meeting with the following participants:
1.
2.
3.
4.
5.
Auditor
Shareholder/Owner
Customer
Employee
They are required to discuss the advantages and disadvantages of the
implementation of computerised accounting information systems (AIS)
from their roles’ viewpoints. (Hint: Efficiency, cost, work flow, control,
skills, competence etc.)
As at April 2009
Financial controller illustrates how a computerised system improves
efficiency. He also explains the possible limitations of using such a system.
Advantages of computerised AIS
Disadvantages of computerised AIS
As at April 2009
Auditor
Auditor explains how their audit process is affected / improved by the
new system.
As at April 2009
Shareholder / Owner
Shareholder/Owner explains how the new system brings improvements /
drawbacks to the company.
As at April 2009
Customer
Customer explains if the new system has any improvement / drawback on
their relationship with the company.
As at April 2009
Employee
Employee explains how the system improves / affects their work.
As at April 2009
Activity 2 – Open Forum Discussion
Group Discussion:
z Solutions to minimise implementation impacts of computerised AIS.
Director calls a meeting to discuss solutions to minimise the
implementation impacts of the computerised AIS.
The main areas of impact are:
Company work flow
System breakdown
Data leakage
Potential Unemployment
Costs
Students form 5 groups to discuss and propose solutions to minimise the
impact. Based on your particular role you will vote on agreeing or not with
the solutions. Students can refer to p.8 for discussion.
As at April 2009
Group Discussion
Disadvantages
Work flow is controlled by the
system.
Suggested Solutions
System breakdowns will affect
company operations.
Hackers may try to break into the
system and steal valuable
information.
Employees may be fired due to a
lack of necessary technology skills.
Additional financial support is
required to install and maintain the
system.
Special skills are required to
operate the system.
As at April 2009
Activity 3 – Role Play
Meeting : Selection of Implementation Method
After the first meeting, Olympics Limited decides to adopt a
computerised accounting information system (AIS) to enhance the
efficiency and effectiveness of accounting. There are three ways to
acquire the system:
1.
Buy an AIS
Quotation of $700,000 is received from Super Systems Limited,
a supplier of popular accounting software. Setup is immediate.
2.
Develop an AIS in-house
The company Information Technology (IT) manager advised that
the AIS could be developed in-house at $1,000,000. Setup will
take approximately 3 months.
3.
Outsourcing
All accounting data processing activities could be handled by an
outside firm, Professional Limited, for a monthly fee of $50,000
for 5 years.
Director calls a meeting to select an implementation method for Olympics
Limited with the following participants:
1.
2.
3.
As at April 2009
Quotation of $700,000 is received from Super Systems Limited, a
supplier of popular accounting software. Setup is immediate.
The manager tries to convince the Director to buy the AIS by
emphasising the advantages and the disadvantages of the other 2
methods. (Hint: Cost, time, control, user requirements, staff competence
etc.)
Advantages of buying the AIS
Disadvantages of developing the AIS in-house
Disadvantages of outsourcing
As at April 2009
The Information Technology (IT) manager advises that the AIS could be
developed in-house at $1,000,000 within 3 months.
The manager tries to convince the Director to develop the AIS by
emphasising the advantages of developing it in-house and the
disadvantages of the other 2 methods. (Hint: Cost, time, control, user
requirements, staff competence etc.)
Advantages of developing the AIS in-house
Disadvantages of buying the AIS
Disadvantages of outsourcing
As at April 2009
All accounting data processing activities could be handled by outsourcing
to Professional Limited at $50,000/month for 5 years.
The manager tries to convince the Director to outsource by emphasising
the advantages / disadvantages of outsourcing compared to the other 2
methods. (Hint: Cost, time, control, user requirements, staff competence
etc.)
Advantages of outsourcing
Disadvantages of developing the AIS in-house
Disadvantages of buying the AIS
As at April 2009
Director
The Director (teacher) invites the 3 managers to present their proposals
and then guides the discussion. After presenting their proposals, the
managers are allowed to challenge other proposals by emphasising the
disadvantages.
In conducting the meeting, the Director should fill in the mark sheet
based on relevant points made by managers and their presentation skills.
At the end of the meeting, the Director would be convinced by the
manager with the highest marks and select their proposal as the
implementation method.
As at April 2009
Activity 4 – Group Discussion
After the Lesson 2 meeting, Olympics Limited has implemented a
computerised accounting information system (AIS) to enhance the
efficiency and effectiveness of the accounting work.
The AIS generated the company’s financial statements and the following
ratios:
Ratios
1
2
3
4
5
Gross Profit Ratio
Net Profit Ratio
Current Ratio
Quick Ratio
Sales to capital employed
Current
Year
19.8%
12.9%
1.62
0.42
1.58
Previous
Year
22.7%
15.6%
1.92
0.72
1.63
Notes:
Gross profit ratio: Gross profit / Sales
Net profit ratio: Net profit / Sales
Current ratio: Current assets / Current liabilities
Quick ratio: (Current assets – Inventory) / Current liabilities
Sales to capital employed: Sales / Capital employed
As at April 2009
Based on the above ratios, comment on the company’s performance:
Profitability
Liquidity
Efficiency
As at April 2009
Activity 5 – Decision-making Game
To improve the profitability and liquidity of the company, managers are
required to make two decisions. Two managers of Olympics Limited have
different decision-making approach:
Mr. Risky makes decisions WITHOUT the AIS
reports and analysis but by experience.
Ms Prudent makes decisions WITH the AIS
reports and analysis.
Decision 1:
Olympics Limited will purchase a machine at $100,000 for upgrading the
product quality. The purchase will be financed by a bank loan. According
to the cash flow budget, the company has surplus cash $1,400 available
per month for loan repayment. The following four proposals were received
from banks:
Bank A
Bank B
Bank C
Bank D
Offer a 7-year loan at an annual interest rate of 7%
Offer an 8-year loan at an annual interest rate of 8%
Which one is the best proposal?
Mr. Risky
Ms Prudent
As at April 2009
Decision 2:
Olympics Limited would like to make investments through a fund manager.
Assuming that the annual interest rate for the coming 6 years is 8%, the
following four investment plans were received from the fund manager.
Plan A
The investment requires an initial outlay of $300,000 at
the beginning of first year. The expected returns at the
beginning of second year to sixth year are $95,000.
Plan B
Plan C
Plan D
Which one is the best investment plan?
Mr. Risky
Ms Prudent
As at April 2009