"ACCOUNTING INFORMATION SYSTEM:A CASE STUDYON MAJU JAYA SDN BHD 1 Table of contents1. Introduction: ......................................................................................................... 32.0. Evaluate the implications of an effective accounting information system on thesuccess of business in future. .................................................................................... 33.0. Analysis of the characteristics of useful accounting information within Maju JayaSdn. Bhd. ................................................................................................................... 74.0. Conclusion: ....................................................................................................... 105.0. Reference lists:.................................................................................................. 12 2 1. Introduction: This whole assignment concentrates upon two facts. Firstly the usefulness of theaccounting information system and secondly the characteristics of an effectiveaccounting information system. In order to do so, all the answers have beenpresented addressing the Board of directors of Maju Jaya Sdn. Bhd. the advantagesand disadvantages of the accounting information system are told and how they willaffect the company’s future success is presented. In the second question thecharacteristics of a useful accounting information system is analysed keepingcontext with the present accounting information system of the company. It has beenassumed that presently the company accounting information system is not ofeffective. 2.0. Evaluate the implications of an effective accounting information system on thesuccess of business in future:This question encompasses the advantages and disadvantages of an effectiveaccounting information system and for what this system is perceived as the base offuture success of any organization.Below, the main advantages and disadvantagesof the accounting information system are told. Advantages:2.1. It helps to reach the goal of the organization: An effective accounting informationsystem provides the companies the opportunity to reach their goal or fulfil their3 objectives. Hall (2012) has stated that a good accounting information system givesall of the stakeholders of a company the most relevant information or the informationthey find their interests in. In addition to it, Gelinas et al. (2011) has stated that as aneffective accounting information system considers all the financial works of acompany, it becomes easy to understand the position of the company. As told abovethat an effective accounting information system provides all of the stakeholders of acompany, it is bound to help the internal users as well as the external users of it.Internal users are the owners, management, shareholders and company’semployees. The external users are the investors, governments andenvironmentalists. An effective accounting information system will give the externalusers a clear view of the results of their performance. This is because, that thissystem provides the scope to compare with previous years’ results. Therefore it willbe easy to understand for them that where they are lacking and what are the faults intheir parts.For example, an effective accounting information system will show thepresent year’s revenue as well as previous year’s revenues. Viewing this, managersof the company will be able to know whether their sales and marketing teams areeffective or not. 2.2. It helps to reduce costs: Kirchmer (2012) has stated that an effective accountinginformation system gives companies scopes to reduce its costs in two ways. One, ithelps identify the irrelevant costs or the costs that are not yielding enough and two,costs to keep records. As an effective accounting information system usescomputers to keep records or presenting information, the company can curtail the4 use of papers, thereby reducing costs. Kirchmer (2012) has stated that an effectiveinformation system helps companies to identify the costs that do generate profits.Thus the company can cease these kinds of operations or try to improve them. Forexample, if the company increases its advertisement expenses but finds that it hasnot affected its sales, it can reduce its advertisement expenses and expense itsomewhere else like in sales.2.3. It helps to maintain accuracy and increase efficiency: As an effective accountinginformation system requires computer based technologies to maintain, keep andpresent data and information, it is bound to have the accuracy characteristic in all. Inthis context Stair and Reynolds (2013) have corroborated that an effectiveaccounting information system is much more reliable than the traditional paperworks. In addition to it Drury (2013) has stated that if any mistake happens inkeeping or processing the data, it can easily be detected and changed. It is also lesstime consuming. Therefore an effective accounting information system will help theMaju Jaya Sdn. Bhd. to maintain the accuracy in its information. For example, if anyinformation is wrongly recorded and all other information are correctly input, then itwill be easy to find the fault and change instantly. For the cascading effect, all theother data will change automatically.2.4. It helps in reducing risks arising from legal issues:An effective informationsystem always complies with the rules and regulations prescribed by the regulatorybodies. Therefore it will be easy for the Maju Jaya Sdn. Bhd. to reduce its cost5 arising from penalties and fines. This will be achieved by effectively working withlocal authorities. For example, an appropriate record maintaining system will help inreducing the document disposal obligations of the company. Disadvantages:2.5. Its maintenance costs are high and nature of complexity: Along with theadvantages some disadvantages are also there for an effective accountinginformation system. In this context, Maskell et al. (2011) has stated that, in orderkeep a high standard, an effective accounting information system seeks a higherlevel of cognizance and brilliance. In other words it needs skilled labours, who seekhigher remunerations. Therefore the cost will be higher. An effective accountinginformation system depends upon technologies. Nowadays, many software arebeing developed to normalise the hectic task that the system requires. Thecompanies have to buy this software; therefore the cost to the company ultimatelyincreases. Another setback of the system is that it considers all the information anddata related to a company thereby increase the volume of the data to be analysed. Itrequires more efficiency and alertness, so it is indeed a hectic task. Viewing all the major advantages and disadvantages, in overall it can be said thatadvantages of the system have the upper hand. Therefore, Maju Jaya Sdn. Bhd.should follow the modern accounting information system for the success of thebusiness in future. As the company will be able to reduce its cost and maximize the6 profit, it will surely attract the investors towards it. This will increase the value of thecompany by increasing the market capitalization of the company.3.0. Analysis of the characteristics of useful accounting information within Maju JayaSdn. Bhd.Hereunder, the characteristics of effective accounting information for the Maju JayaSdn. Bhd. are described. Rainer et al. (2013) has stated that useful accountinginformation needs to have the following characteristics.3.1. Completeness:Effective accounting information should give an overall view onthe company’s transactions. It means that this information should cover all thetransactions, be it monetary or non-monetary, in presenting the reports. Thereforethe stakeholders of the company will be able to understand better the position of thecompany. Based on the reports they will be able to assume the company’s futureposition. In addition to it Shapiro and Varian (2013) has stated that incompletenessinformation will reduce the relevance of the reports. As the accounting information isused by a distinct group of stakeholders, incompleteness in the information will fail tomeet the interests of these stakeholders. For example accounting informationprovides audit reports of the auditors to give the shareholders knowledge overcompany’s any kind of misconduct. The main aim from the company’s side is toassure the shareholders that it is not misusing the money of them and it is notindulged in any kind of malpractices (tutor2u.net 2016).7 3.2. Reliability:A useful accounting information system should be reliable from everystance. According to Collier (2015) the data should be input correctly to get thecorrect output. In this context Collier (2015) has also stated that the company shouldcheck its reports by the due authorities like auditors to make it reliable. Therefore itcan be said that useful accounting information indeed has the reliable characteristic.Different users use this information to devise their future actions. Stair and Reynolds(2013).has stated that any kind of unrealistic or wrong information is bound tomislead the stakeholders of the company. For example the global crisis in year 2008can be presented. The misconduct of the Lehman Brothers showed history’sgreatest economic downturn. Therefore it is mandatory for the information to bereliable. 3.3. Easy to comprehend: Useful accounting information should check upon the factthat it should be easy enough to get comprehended by all the users of it. Collier(2015) has stated that it is not necessary for all the users to be of same skilled as theaccountant. Therefore the accountant must present this information as simple aspossible. The accountant should also check that the information bear this featurethroughout the whole body. In addition to it, Drury (2013) has stated that informationshould be in that way, where a glimpse on one part provides a minimumunderstanding on what that part tells or what that part covers. For example asaccounting information covers all the transaction of a company, it is presented bysegmenting. All the segments cover the interests of different groups of stakeholders.Thereby the stakeholders easily access their parts and make use of them.8 It can also be stated that accounting information presents the most relevantinformation for its stakeholders. Therefore, the users can rely on this information andeasily comprehend the position of the business. 3.4. Comparability: Effective accounting information bears the comparability featurein all grounds. It is one of the main points of attraction of the accounting information,as the users are enabled to comprehend the company’s current year’s performance.Stair and Reynolds (2013) has stated that in general the best accounting informationholds the details of the previous year’s information and the current year’sinformation. Stair and Reynolds (2013) also told that this information gives the usersto justify the company’s performance. For example profit and loss account can bepresented. The profit and loss account displays the revenue figure of the company.Viewing this, the share holders and managers of the company can understandwhether the sales figure has improved or not. Using this they can also measure theirperformance and the performances of any expenses occurred aiming to increasesales.3.5. Technology based task: Effective information system is presented usingsoftware. This software is innovated to reduce the work pressure of the accountants.Therefore it is another and one of the major characteristics of accountinginformation. This software is used to record the daily transaction, to maintain themand to calculate them to get the optimum result. Rainer et al. (2013) has stated thatthe usage of these software help the companies generate more accurate figures with9 less time consumed. For example, Tally, SAP, MS Excel and Word can bepresented. Tally is the most frequently used software to maintain the records. It isuser friendly. From data recording to printing all the tasks can be performed easily.Hence it can be said that the modern accounting information indeed have thedependence on software.Overall it can be said that these are the five major characteristics of the modernaccounting information. Along with this the feature of accessibility is also there. Theaccessibility feature tells about that the accounting information are easily accessibleand at any time the information are gettable. 4.0. Conclusion:In concluding the assignment it can be said that all the answers are given in contextwith the reality. At first, in order to state the advantages of an effective informationsystem, its goal orientation feature is told. Secondly how a proper accountinginformation system reduces the overall cost to the company is showed as anadvantage. Here it has been told that it curbs out any irrelevant information. It hasalso been told that it reduces the recording cost. Thirdly its accuracy and efficiencytendency is reflected. It has been told that it will help the organization to produce themost relevant and accurate information for its stakeholders. Lastly how it decreasesany chances of penalties is also told. For the disadvantage the complex nature of thetask is mentioned. In the second question the main characteristics of the accounting10 information is provided with appropriate examples. For this, features likecompleteness, reliability, comprehend, comparability and use of software is told. 11 5.0. Reference lists:Books:Hall, J., (2012).“Accounting information systems.” Cengage Learning.Gelinas, U., Dull, R. and Wheeler, P., (2011).“Accounting information systems.”Cengage learning.Kirchmer, M., (2012).“Business process oriented implementation of standardsoftware: how to achieve competitive advantage efficiently and effectively.” SpringerScience & Business Media.Stair, R. and Reynolds, G., (2013).“Principles of information systems.” CengageLearning.DRURY, C.M., (2013).“Management and cost accounting.” Springer.Maskell, B.H., Baggaley, B. and Grasso, L., (2011).“Practical lean accounting: aproven system for measuring and managing the lean enterprise.” CRC Press.Rainer, R.K., Cegielski, C.G., Splettstoesser-Hogeterp, I. and Sanchez-Rodriguez,C., (2013).“Introduction to information systems: Supporting and transformingbusiness.” John Wiley & Sons.Shapiro, C. and Varian, H.R., (2013).“Information rules: a strategic guide to thenetwork economy.” Harvard Business Press.12 Collier, P.M., (2015).“Accounting for managers: Interpreting accounting informationfor decision making.” John Wiley & Sons.Stair, R. and Reynolds, G., (2013).“Principles of information systems.” CengageLearning.Websites:tutor2u.net (2016). Accounting Information - Characteristics | Business | tutor2u.net[online] Tutor2u.net. Available at:http://www.tutor2u.net/business/reference/accounting-information-characteristics[Accessed 1 Mar. 2016].13 "