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Effects of Technology on Accounting Information Systems

James King

University of Phoenix:

ACC/340 Accounting Information Systems I

Instructor: Ray Dahmer

June 27, 2011

Effects of Technology on Accounting Information Systems

The information age and the resulting technological advances have made an impact on every

functional area of the accounting industry including auditing, taxation, financial, and managerial

accounting (Bagranoff, Simkin, & Norman, 2008). Information systems consist of data input and

processing devices, applications, personnel, and procedures, all of which produce information

that management uses to make crucial business decisions (Bagranoff, Simkin, & Norman, 2008).

This paper contains a discussion of modern accounting information systems and the influence of

those systems in the changing landscape of the accounting profession.

New Technology and Its Effect on Business

The introduction of modern information technology into the accounting profession has produced

advances in the industry and in the design of accounting information systems. All but gone are

the days of spiral bound ledgers and adding machines. Accounting applications running on

computer systems with two-gigahertz processors and gigabytes worth of memory perform

accounting tasks in modern organizations.

The information generated by modern accounting information systems from the data gathered by

the input terminals within the system, informs managers about the situation in every functional

area of the firm. The real-time consolidation of this information into one convenient access point

empowers managers with the ability to make decisions based on information as it is gathered and

processed. The companies who can quickly process raw data and display the information

managers require gain a competitive advantage over companies that lack to ability to move data

efficiently through the organization.

Faster access to pertinent information equates to quicker and more effective responses in the face

of changing conditions. The technology implemented in the infrastructure of a modern

accounting information system includes a variety of devices. According to Bagranoff, Simkin,

and Norman (2008) “In summary, it is convenient to conceptualize an accounting information

system as a set of components that collect accounting data, store it for future uses, and process it

for end users” (Bagranoff et al., 2008, p. 8).

New Technology and Its Effect on Accounting Processes

In the past, accountants based overhead cost calculations on direct labor hours, but modern

accounting information systems have brought about changes in the cost accounting process with

activity-based costing (ABC) systems. Automation has decreased direct labor costs blurring the

relationship between labor and indirect operating expenses (Bagranoff, Simkin, & Norman,

2008). According to Bagranoff, Simkin, and Norman (2008) “Managers in a variety of

manufacturing and service industries now identify specific activities involved in a manufacturing

or service task, and then assign overhead costs based on the resources directly consumed by each

activity” (Bagranoff et al., 2008, p. 16).

Detailed accounting of the cost associated with each value-adding step of the production process

provides managers with the information they need to aid in cutting the cost of production.

Cutting cost is key to business success and ABC systems, Bagranoff, Simkin, and Norman

(2008) state “ABC systems can also play a strategic role in building and maintaining a successful

e-commerce business because they can answer questions about production costs and help

managers allocate resources more effectively” (Bagranoff et al., 2008, p. 16).

Auditing accounting has changed with the introduction of knowledge-sharing applications and

auditing software, which replace labor and change the composition of audit teams (Banker,

Chang, & Kao, 2002). Auditing procedures for companies have become increasingly stringent in

light of the collapse of companies such as Enron. Sarbanes-Oxley requires businesses to

following guidelines for securing data and providing better auditing procedures. Auditing firms

must now employ experts in information technology to design and assist companies in

implementing the best system for the company’s needs.

Point of sale (POS) technology has evolved since the days of cashiers ringing up the price of an

item on a cash register. Modern POS systems implement many types of devices to input sales

transaction data. Data captured from RFID tags or barcodes, gathered by the information system,

and made available to applications such as accounting, reporting, and inventory control

applications provide management and shareholders information to use when making decisions

concerning the company.

Software and hardware technology has advanced in the last two decades. The hardware offers

faster and more efficient methods to collect data, and the software applications provide faster and

highly adaptable interpretations of the data.

The Effect of Changing Technology in Dell Global Services

Dell Global Services implements a web-based inventory control system to track and bill for

hardware deployed to the State of Georgia under the current contract between the two parties. In

the past, technicians would log asset information for equipment they deployed into a spreadsheet,

and submit it when the job was complete. The new system requires technicians to log into a

secure website, at the beginning of the call, and run an application that gathers computer asset

information and automatically enters it into a form in the webpage, which the technician submits

to start the call. When the technician is finished, he or she logs on and completes a work-order

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Effects of Technology on Accounting Information Systems Effects of Technology on Accounting Information Systems James King University of Phoenix: ACC/340 Accounting Information Systems I Instructor: Ray Dahmer June 27, 2011 Effects of Technology on Accounting Information Systems The information age and the resulting technological advances have made an impact on every functional area of the accounting industry including auditing, taxation, financial, and managerial accounting (Bagranoff, Simkin, & Norman, 2008). Information systems consist of data input and processing devices, applications, personnel, and procedures, all of which produce information that management uses to make crucial business decisions (Bagranoff, Simkin, & Norman, 2008). This paper contains a discussion of modern accounting information systems and the influence of those systems in the changing landscape of th ...
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