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Accounting Information Systems in an ERP Environment

ERP is a single kit of computer applications that aggregates the processes within the organization. The system allows furnishing a holistic view of the business where the database is unified and integrated. The AIS has developed into a profound and extensive system with the help of the ERP. Moreover, the application of the new accounting methods facilitates furnishing the inside necessities of the organization.

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Thus, information systems furnish the anticipation based on the existing intelligence, which spans the financial accounting, administration maintenance, and fiscal breakdown, as well as contributing to the efficiency of the business.

AIS supported by ERP

The introduction of the ERP technology has greatly influenced the accounting practices in the financial and management accounting, audit, and taxation. Many companies that have implemented the ERP in their work started to use the sophisticated accounting methods (for instance, the ABC method, the analysis of financial results, budgeting, and other) (Chowdhury, 2011). In addition, this technology makes it possible to calculate the profit and, in general, analyse the firm’s profitability.

It is worth mentioning that the ABC method has allowed companies to show better results in terms of the targeted cost and other variables (Daoud & Triki, 2013). Further, the indicators of the balanced scorecard were higher in the organizations that started utilizing the ERP technology. Therefore, the AIS uses several accounting practices, in particular, the financial management and management control. Apart from that, the AIS has some of the characteristics attributed to financial information, which is obtained by the data information systems (for example, timeliness, integration, and aggregation).

The accounting information systems shall not be limited to the classical orientation as they can be applied more broadly. The frame shall comprise of the non-fiscal arrangements that are beyond the scope of the company’s internal processes. However, it should be ensured that the probability of the upcoming events is anticipated. Among other things, the accounting information system should provide the timely data in real time.

It should also allow the data about the most crucial happenings and provide the prompt feedback. The next point is that the quality control system should presuppose the technical characteristics and should be flexible, easy to use, reliable, and integrated (Daoud & Triki, 2013). The fineness of the data in the accounting proceedings facilitates the decrease in time and periodicity of fiscal reporting (monthly, quarterly and annual financial statements) as well.

Accordingly, the complex integrated AIS improves the accounting performance and practices of the organization. It should be mentioned that an ERP system is a reliable and convenient source of information for the majority of the accounting methods (Ray, 2011). The accounting information should be useful for managers since it enables them to react and reflect quickly to the changes in the environment and to the market requirements. In this sense, the more relevant data is obtained from the system, the better assistance it provides for the determination of the operational reserves.

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Information for Adopting Theoretical Foundation in the Study

Generalizing, the research is based on the two levels, which are both theoretical and practical. Theoretically, it is an effort to elucidate corporate performance from the AIS point of view putting it into the ERP context (Daoud & Triki, 2013). The authors represent accounting practices as a feature of the AIS to the model of Delone and McLean.

Practical part consists of study, which examines a moderating effect caused by accounting staff competency. It is mentioned that the top management commitment coupled with the external expertise are the key factors in determining the AIS. Continuing the managerial aspect, the authors claim that managers must support and pay close attention to the usage of the latest technologies in order to succeed in the AIS (Daoud & Triki, 2013). The research also suggests that in order to overcome the lack of the AIS, the external technical expert with the technical expertise is needed. Furthermore, the authors state that the accounting department personnel will require preparation on the renewed IT systems.

Important Hypotheses Proposed by the Authors

The authors put forward a number of hypotheses allowing the in-depth research on the issue. The first hypothesis is that the quality of the information obtained from AIS will affect the accounting practices. The introduction of the contemporary multi-functional information technology, such as ERP, implies changes in the accounting management practices (Hurt, 2015). In this regard, the technical support of this technology is perceived as the capabilities of all of its designed specifications (Daoud & Triki, 2013).

The second hypothesis suggests that ERP quality control system affects the accounting practice utilized in the firm. This hypothesis dwells upon the informational influence of the factors on the contingency, upon the impact of the external examination of the quality of AIS, as well as upon the external examination of the quality of the information.

The next assumption is concerned with the level of the outside competence, which influences the relevance of the data offered by the AIS. It is worth noting that the system provider is one of the key factors in maintaining the quality system. Good external expertise will allow achieving the organizational goals faster. In addition, the authors hypothesize that the quality of the external expertise affects the quality of the ERP system.

They argue that an external expert can contribute to the introduction of the changes, and can provoke the application of the new accounting methods (Daoud & Triki, 2013). In addition, they suggest that the quality of the external expertise defines the usage of the specific accounting practices. A poor understanding of the financial information will not allow the firm’s managers of the AIS to harmonize the information requirements with its technical capabilities (Romney & Steinbart, 2015).

Another point is the level of the dedication of the managers to the ERP application and its impact on the reliability of the data provided by the system. It is assumed that senior management commitment corresponds to the easiness of the AIS utilization. In the same manner, the intensity of the dedication of the top managers to the system application has a positive impact on the capacity of the ERP system.

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Among the other things, the authors suggest that the management’s commitment to the implementation of the ERP project is important for the use of the accounting practices. In this case, the impact of the information system of the accounting and the performance are examined. The authors explore a statistically significant link between the accounting practices and company’s efficiency (Daoud & Triki, 2013). Higher efficiency will be expressed in the autonomy, an increase in the turnover, and a reduction in the costs. The authors also emphasize the influence of this aspect on the business processes that, in turn, affect the business performance. It is obvious that the technology will affect the strategy of the adoption of accounting and it may consequently result in higher performance.

It is likely that the timely and dense information assists managers in considering the lucrative possibilities and enhancing the operational capacities. The extensive frequent forecasting and information support the activities of companies operating in a competitive and volatile environment. Information offered by the system allows managers to have a better idea of the work of each department within the organization.

Thus, this information can be employed to determine the required enhancements and to help seize the market potential. Moreover, the next hypothesis is concerned with the quality of the information available to the AIS and their impact on the firm’s performance (Daoud & Triki, 2013). The ease of the technology usage is one of the major aspects of the ERP system quality. It goes without saying that it affects the performance improvement.

Another hypothesis expresses the idea that the ERP system of the quality control has an impact on the company’s performance with respect to the interaction between the AIS, the competence of personnel, and the activities of the organization (Daoud & Triki, 2013).

The knowledge and skills of the staff are the crucial agents in the advancement of the AIS. The employees are to perform a variety of tasks in the accounting sphere; their responsibilities include the financial and information systems organization. The required skills will give these professionals an ability to control the operation of the AIS, and, subsequently, affect the performance of the organization (Valverde, 2012). Finally, the relationship between AIS and business performance is crucial; the more competent the accounting staff is, the more effectively the organization will function.

In conclusion, the association of the accounting information systems and the ERP technology was inevitable and is obvious while most of the modern companies strive for improving their performance through the enhanced technological systems. Evidently, the combination of the systems provides benefits to the companies and facilitates support for their processes. The performance of a firm is highly related to its organizational and environmental peculiarities, and the integrated system provides companies with the holistic assistance in terms of these aspects.

References

Chowdhury, S. (2011). AIS in MBL. Saarbrücken, Germany: LAP Lambert Academic Publishing.

Daoud, H., & Triki, M. (2013). Accounting information systems in an ERP environment and Tunisian firm performance. The International Journal of Digital Accounting Research, 13, 1–35.

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Hurt, R. (2015). Accounting information systems. New York, NY: McGraw-Hill Education.

Ray, R. (2011). Enterprise resource planning. New York, NY: McGraw-Hill Education.

Romney, M., & Steinbart, P. (2015). Accounting information systems. New York, NY: Pearson Education Limited.

Valverde, R. (2012). Information systems reengineering for modern business systems. Derry Township, PA: IGI Global.

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StudyCorgi. (2021, February 20). Accounting Information Systems in an ERP Environment. Retrieved from https://studycorgi.com/accounting-information-systems-in-an-erp-environment/

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1. StudyCorgi. "Accounting Information Systems in an ERP Environment." February 20, 2021. https://studycorgi.com/accounting-information-systems-in-an-erp-environment/.


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StudyCorgi. "Accounting Information Systems in an ERP Environment." February 20, 2021. https://studycorgi.com/accounting-information-systems-in-an-erp-environment/.

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StudyCorgi. 2021. "Accounting Information Systems in an ERP Environment." February 20, 2021. https://studycorgi.com/accounting-information-systems-in-an-erp-environment/.

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StudyCorgi. (2021) 'Accounting Information Systems in an ERP Environment'. 20 February.

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