Reference no: EM133140536
Question - Finn Brothers, wholesalers of boutique beers, has been trading profitably for a number of years using a manual accounting system. However, the company has experienced, every six months or so, severe cash-flow problems caused by a number of factors including the excessive purchase of 'special price' stock from suppliers, inappropriate timing of stock purchases relative to sales, inadequate control of accounts receivable and mis-timed marketing drives.
Finn Brothers management believes that many of these problems are caused by inadequate and untimely feedback from the accounting department. For example, purchasing department staff maintain that they are given inadequate financial information by the accounting department, and that the sales department consistently misrepresents expected sales. sales department staff consider that management has unrealistic expectations of their performance and that the accounting department does not keep them sufficiently informed about the collectability of outstanding accounts receivable.
Additionally, accounting department staff maintain that they are not consulted with regard to expenditure on purchases or given sufficient information about the credit history of customers. management believes that the implementation of a computerised accounting and reporting system would obviate most of these problems.
Required -
1. Explain why the management function is important to Finn Brothers.
2. What type of accounting and reporting information system should be designed for Finn Brothers?.
3. What benefits would such a system offer to the business and how might the information produced be incorporated into the planning process.
4. Suggest how Finn Brothers might best evaluate the cost against the benefit of implementing a new system.
5. Are there any ethical considerations to be considered?
6. Who do you think should be involved in the design and development of operating specifications for the new system?
7. Do you think that an examination and evaluation of the approaches used by the firm's competitors would be of benefit to Finn Brothers?