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Internal Systems > Chapter 8: Changes To The Accounting System > Flashcards

Chapter 8: Changes To The Accounting System Flashcards

1
Q

An example of the accounts department and what it is connected to:

A
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2
Q

Why are standard procedures eg office manuals useful? (8)

A
  1. They prescribe the most efficient way of doing a job.
  2. There’s no need to use judgment for a routine task.
  3. Staff find it easier when familiar with established procedures.
  4. Procedures ensure tasks will be performed consistently.
  5. The work will be performed consistently even when a new employee joins.
  6. A written record mean people can learn quickly and easily by referring to it.
  7. Procedures reduce the chance of departmental friction and responsibility disagreements.
  8. They can be reviewed for weaknesses and areas of improvement.
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3
Q

Why might an accounting system be forced to change? (6)

A
  1. Regulations= system must be updated to comply with the law eg VAT rate changes.
  2. Growth= the system can be overloaded if business increases too quickly.
  3. New information flow= a new flow could connect with the accounts team and the system would need to be updated eg start monitoring CO2.
  4. Identified weaknesses= errors reveal weaknesses that are addressed by updating the system eg authorisation.
  5. Environment= business environment influences system eg customers wanting more environmentally friendly practices.
  6. New products= require new general ledger codes and a change to overheads.
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4
Q

What should all changes to the accounting system be? (1)

A

Cost beneficial, benefit outweighs expected cost.

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5
Q

What are the types of tangible costs associated with developing and running a system? (2)

A
  1. One off costs eg development, buying new equipment.
  2. Ongoing costs eg maintenance, consumables.
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6
Q

What intangible costs are associated with developing and running a system? (4)

A
  1. Staff dissatisfaction= from poorly implemented systems.
  2. Cost of staff mistakes and reduced performance from learning a new system.
  3. Opportunity costs= money is invested in 1 area so the opportunity to invest in another is lost.
  4. Lock in costs= purchasing from a supplier ties you to them reducing the chance to do business with other providers.
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7
Q

What are the tangible benefits of information system changes? (4)

A
  1. Savings in salaries, maintenance and consumable costs.
  2. Greater efficiency= a new system could increase processing speed.
  3. Benefits from improved management information eg reduce inventory levels due to better inventory control.
  4. Gaining a competitive advantage eg better delivery system could reduce costs so the company can price goods competitively.
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8
Q

What are the intangible benefits of information system changes? (4)

A
  1. Better informed/ quicker decision making.
  2. Improved customer service leading to more customer satisfaction.
  3. Automation of routine activities resulting in more strategic planning and information.
  4. Better understanding of customer needs through improved data analysis.
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9
Q

What are the types of cost benefit analysis? (1)

A

Payback and net present value.

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10
Q

What is payback? (3)

A

Payback calculated the time taken for project cash inflow to equal the outflow.

Payback is used as an initial project filtering tool to exclude projects that pay back too slowly.

More sophisticated methods are used on the remaining projects.

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11
Q

What is the advantage and disadvantage with payback? (2)

A

As the project with the quickest payback is accepted it is less risky.

However it doesn’t consider the overall return as cash flows after payback are ignored.

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12
Q

An example of payback:

A

The project with the quickest payback is always accepted.

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13
Q

What is the net present value? (3)

A

It calculated the net present value of all project cash flows.

If NPV is equal or, greater than or 0 the project should be considered.

If the NPV is positive it means the cash inflows are worth more than the outflows and the project should be accepted.

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14
Q

An example of net book value:

A
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15
Q

What is the problem with estimating costs? (1)

A

Estimates can be understated or overstated depending on the individual.

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16
Q

What can improve the accuracy of estimates? (4)

A
  1. Learning from previous mistakes.
  2. Having sufficient design information.
  3. Obtaining a detailed specification.
  4. Breaking the project down into smaller jobs detailing each part.
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17
Q

What are supervisors responsible for? (2)

A

They are responsible for activities that incur costs and must manage them within specified parameters.

Responsibilities may include reducing or eliminating system costs.

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18
Q

What did effective supervision lead to? (1)

A

Increased staff efficiency and adherence to proper working convictions.

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19
Q

What are the different ways of measuring an estimate’s accuracy? (4)

A
  1. Definitive estimates= produced after the design work is done aim to be accurate to within 5%.
  2. Feasibility estimates= made in the early design stage accurate to within 10%.
  3. Comparative estimates= made when the project under review is similar to a previous one, accuracy depends on the similarities and conditions.
  4. Ball park estimates= made before the project starts, rough estimate usually within 25%.
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20
Q

What does cost control require? (1)

A

Realistic standards and reliable performance indicators especially for variances and deviations.

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21
Q

What should standards based on? (1)

A

A thorough analysis of job methods and performance indicators.

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22
Q

What is cost reduction (1) and what does it mean in the accounting system? (1)

A

Reducing the current or planned cost of goods/ services without impairing their sustainability.

In the accounting system it is reducing the cost per transaction or report.

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23
Q

What are the main areas considered for cost reduction? (4)

A
  1. Reducing staff levels.
  2. Reducing equipment expenditure.
  3. Changing operations to make them cheaper.
  4. Using cheaper suppliers.
24
Q

What is the SWOT method of assessing a new system? (4)

A
  1. Strengths= does the new system add to the strengths of the business and its reporting eg will it produce better or faster information.
  2. Weaknesses= will the new system reduce existing weaknesses eg if the old system was prone to errors.
  3. Opportunities= the new system may have external implications giving the business an opportunity to succeed eg more accurate pricing leading to more suppliers.
  4. Threats= new system can be temperamental, breakdowns can be costly and might give competitors an edge.
25
Q

What does a PESTLE analysis do? (2)

A

Helps organise the analysis of the business environment into broad categories.

Analysing these factors helps the organisation understand the opportunities and threats in their environment which helps with decision making.

26
Q

What does a PESTLE analysis include? (6)

A
  1. Political= legislation, government policies etc.
  2. Economic= depends on business size (national or international) could include changes in GPD, population growth, changes to customer’s income etc.
  3. Social= attitudes, values and beliefs held by people as well as changes in health, lifestyle, education.
  4. Technological= business needs to react to changes in tech eg there could changes in material supply, processing, product development etc.
  5. Legal= laws governing business eg health and safety, employee dismissals, vehicle emissions, information disclosure.
  6. Environment= the impact the organisation has on the external environment eg pollution.
27
Q

What is Corporate Social Responsibility? (1)

A

CSR is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.

28
Q

How do companies show they are conscious about the environment? (5)

A
  1. An office recycling policy.
  2. Paperless office procedures.
  3. Online meetings to rescue business travel.
  4. Cycle to work schemes with places to keep bikes.
  5. Energy saving schemes eg turning off lights and heating when not needed.
29
Q

Why do companies adopt a CSR approach? (1)

A

It’s recognised by potential and existing customers which can increase sales and business.

30
Q

How can the accounting system be made more environmentally friendly? (1)

A

Recycling, using energy efficient printers, going paperless etc.

31
Q

What is resistance? (1)

A

Any attitude or behaviour that reflects a person’s unwillingness to make or support a desired change.

32
Q

When are individuals resistant to change? (1)

A

When they perceive that a change is a threat to them.

33
Q

What forms can resistance take? (4)

A
  1. Active or passive.
  2. Overt or covert.
  3. Individual organised.
  4. Aggressive or timid.
34
Q

How can resistance be categorised? (3)

A
  1. Job factors= usually around fear eg of new tech, of change, of demotion or reduction in pay.
  2. Social factors= people may dislike the potential new social dynamic or the person driving the change or they want to be consulted beforehand.
  3. Personal factors= these will depend on the individual eg people may feel undervalued or they may refuse to relocate after the change.
35
Q

Some potential sources of resistance and how management could respond:

A
36
Q

Stronger forces make change difficult to resist.

What can be done to increase the force of change? (5)

A
  1. Allow participation in decisions, staff will be more accepting if they have been involved.
  2. Educate and communicate the reasons for change.
  3. Negotiate with staff eg offering rewards for completing objectives.
  4. Remove the old system making it impossible to use.
  5. Adopt a zero tolerance policy for use of the old system.
37
Q

What do change agents do? (2)

A

Change agents are employed to encourage and facilitate change.

They help manage any resistances.

38
Q

What methods of testing are performed when implementing a system? (4)

A
  1. Realistic data testing= new system untested with normal transactions to ensure it works as expected.
  2. Contrived testing= the system is given negative data to see how it reacts eg a negative sales invoice.
  3. Volume testing= the system is given large volumes of data to see if it crashes or slows down.
  4. User acceptance testing= the system is designed by someone experienced in IT but will be used by staff inexperienced with IT.
39
Q

When moving to a new system, what are the changeover methods? (4)

A
  1. Direct.
  2. Parallel.
  3. Pilot.
  4. Phased.
40
Q

What is the direct changeover method (1) and what is it’s disadvantage? (1)

A

The old system ceases and the new system starts on the same day.

It is very risky as the new system could fail, in some circumstances this may be the only option.

41
Q

What is the direct changeover method (1) and what is it’s disadvantage? (1)

A

The old system ceases and the new system starts on the same day.

It is very risky as the new system could fail, in some circumstances this may be the only option.

42
Q

What is the parallel changeover method? (1)

What is it’s advantage (1) and it’s disadvantages? (3)

A

The old and new systems operate at the same time.

Results can be compared in reading confidence in the new system.

  1. It is more expensive and uses more resources.
  2. It is more stressful for staff.
  3. It increases workload as data is being duplicated.
43
Q

What is the pilot changeover method? (1)

A

The new system is introduced in a particular location so operational bugs can be removed before wider implementation.

44
Q

What is the phased changeover method? (1)

What is it’s advantage (1) and it’s disadvantages? (2)

A

The system is introduced in stages or in one sub system at a time.

Introducing the whole system is disruptive, this is less stressful.

  1. This takes more time to implement.
  2. The interactions between the old and new systems may be problematic.
45
Q

Why is training necessary? (2)

A
  1. It ensures adequate staff that are technically and socially competent.
  2. Trained staff are capable of career advancement eg into management.
46
Q

What are the main steps of training? (6)

A
  1. Identify training needs eg skills needed for the job and skills the employee lacks.
  2. Design, preparation and delivery of training.
  3. Assessing the employee’s reaction to training and if it’s been learnt.
  4. Assessing whether lessons learnt are being used effectively in the job.
  5. Evaluating the effects of training on the organisation.
  6. Reinforcement of positive behaviour.
47
Q

What is the reaction and learning of training? (2)

A
  1. Reaction= the participant’s feelings towards the content, trainer and methods used (attitude).
  2. Learning= the extent to which the trainer has absorbed the content.
48
Q

What is job training analysis? (1)

A

The process of identifying the purpose of a job and it’s component parts and specifying what must be learnt in order for there to be effective work performance.

49
Q

What is a training gap? (1)

A

Any shortfall in terms of employee knowledge, understanding, skill or attitude compared to the job requirements or organisation demands.

50
Q

How do you determine an individual’s training needs? (4)

A
  1. Performance analysis.
  2. Analysis of job requirements.
  3. Organisational analysis.
  4. Departments/ individuals not performing will require additional training.
51
Q

What is performance appraisal training? (2)

A

An employee’s work is measured against the job’s objectives.

Current performance is measured and potential performance is also considered.

52
Q

What is the analysis of job requirements training? (2)

A

Uses job activity data eg job description, personnel specifications.

Employees without the specified skills are trained.

53
Q

What is the organisational analysis training? (2)

A

Uses wider organisation data eg its structure, markets, products, services.

The key success factors are identified and analysed into HR activities.

54
Q

What is department/ individual underperforming training? (2)

A

HR surveys data about individuals eg appraisals, tests.

Individuals are surveyed to establish any problems and what actions they believe to need to be taken to solve them.

55
Q

What types of employees usually require training? (3)

A
  1. New starters require induction training.
  2. Operative who require skill training in a new system.
  3. Supervisors who require supervisory training.

Internal Systems (9 decks)

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