ACCOUNTING INFORMATION SYSTEMS
Introduction to real time reporting in accounting
Accounting information systems (AIS) is a tool incorporated into the field of information and technology, designed to help in the management of the firm’s financial matters [ CITATION Gra14 l 1033 ].
Accounting is “the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information” according to American Accounting Association. Whereas accounting reporting is the delivery of relevant information covering quarterly and annual periods which supports subsequent financial decisions [ CITATION Bel15 l 1033 ]. This report is usually presented to different stakeholders such as potential investors, creditors, suppliers and customers. This offers a different perspective on accounting operations, external reporting, management accounting, the management support, the staff management, training, scrutiny of capital projects, emphasis on customers and products, reports about debtor and creditor ageing, auditing, internal controls implementation, risk management, error or fraud detection and accountability [ CITATION Bel15 l 1033 ][ CITATION Bel14 l 1033 ].
Real-time reporting helps business enterprises to react rapidly to changes in its business as they are able to analyze the information more timely and accurately thus early detection of market and product changes [ CITATION Vas14 l 1033 ]. Also, real-time reporting allows investors to understand the performance of a venture and thus make quick decisions.
Roles played by Data in developing real time reporting in accounting
Real time reporting occurs when input data is processed within millisecond and availed immediately as feedback to the process it is coming[ CITATION Tri14 l 1033 ]. Large computing power and data storage capacity allows production of reports using different views of the organization, increasing its competitiveness. Therefore, for effective reporting, there has to be adequate data to which the AIS analyses and produces real-time report to the specific processes. With advancement in technology, mobile phone functions have been extended as they are not only used to make and receive calls but also very extensively used in data collection, storage, transmission and data recovery [ CITATION Bel15 l 1033 ]. Mobiles respond to unexpected circumstances with helpful for new opportunities based on real time information such as user time, calendar and user’s past actions [ CITATION Chi14 l 1033 ]. Contribution of mobile real-time reporting is through receiving of financial reports from the mobile about the organization when the user is not at the organization at that time. Also, mobiles may provide users with real time data about the number of firms they are managing [ CITATION Bar14 l 1033 ]. Mobiles help in delivery of report to any place regardless of location or time through internet connection. Notifications about the organizations’ progress can be transmitted in different formats used in real time reporting which enables management to make to determine their position and quick decisions.
Cloud computing enables business organizations to minimize data storage space but the date stored can be accessed with much ease as it is kept in the internet. This process saves on time spent to analyze the data and also makes it more effective to address all the issues affecting the business since data from all the areas can be accessed [ CITATION Arm14 l 1033 ].
Role of business process management (BPM) in establishing internal control
Business process management focuses on real time issue to enable management to monitor and optimize business processes [ CITATION Tri14 l 1033 ]. It enables management to react promptly on matters affecting the enterprise through continuous assessment of the business processes thourgh Business activity monitoring (BAM). BAM in an enterprise provides a real time summary of business activities to the operations manager and upper management.
A BPM that is effective enables an enterprise to stop business processes so as to make modification and re-execute them later. By doing this, the organization I s kept on track and it can easily tolerate unfavorable changes brought about by the changes in the market forces. The greater control and agility brought about by the BPM enables organizations to change workflows and customize them. This makes business processes to be more responsive though precise documentation of the steps involved in a certain process [ CITATION Fin16 l 1033 ]. The impact of change on business processes can easily be understood by the organization when there is defined knowledge as it is able to know the effects of process modification on the business outcome thus explores the possible options that are beneficial to it.
Through execution of the right BPM, an organization is able to control the costs involved in process execution[ CITATION ACC14 l 1033 ]. This can be through removal of some practices that are not contributing to the enterprise’s profitability. This can be through modification of the production process by adapting new methods to increase the produce thus increasing the output. More sales may be made thus an increase in revenue.
Employing BPM enables an organization to allocate its resources effectively and also tracking is easy as it prevents wastage of the resources. Evaluations can be carried out and this gives the organization an opportunity to do adjustments on areas that are not in line with the objectives of the business thus contributing to its efficiency. Integration of business processes in an organization alerts those running the processes when duties are handed over by its members [ CITATION Hon14 l 1033 ]. This act provides good monitoring of its staff and changes may be made if there are delays in the business process.
Automation of processes show how processes are working without employing monitoring techniques. This enhances transparency and allows organizations to understand their processes. These allows modification of its structures and processes so as to ensure it operations are in line with the set objectives.
BPM practices enables organizations to adjust its practices so as to comply with the regulations; both internal and external. These can be financial reports, compliance to labour laws and compliance to various government regulation which may easily be violated when a proper reporting system is not employed.
Documenting processes and facilitating compliance promotes security and safety in an organization. This ensures procedures are conducted in a prescribed way that is verified to be less harmful and safety procedures are easily adhered to since cases of forgetting are minimized.
Internal control in an organization encourages staff to safeguard organization’s assets, which include private information and prevention of loss of physical resources from theft and misuse [ CITATION lor14 l 1033 ].
Periodic reporting allows businesses to adapt faster to market changes and this reduces the chances of business failure associated with lack of information on the business’ progress. Elimination of wastage of resources can be detected early and possible solutions implemented as quickly as possible thus ensuring effectiveness of business operations.
Business process management and business activity monitoring is a new technological advancement in accounting information system that business need to adapt so as to avoid challenges associated with traditional reporting which was ineffective in addressing all the business shortcomings.
The business operations will face little external interference as it will be operating under the stipulated rules and regulations thus all the organization’s guidelines, labour organization’s requirements and government legislation will be adhered to hence smooth running of the entreprise will be guaranteed by real-time reporting.
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