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Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 6.1
Chapter 6
DEVELOPING AND IMPLEMENTING EFFECTIVE
ACCOUNTING INFORMATION SYSTEMS
Discussion Questions
6-1. Although some tasks in systems studies overlap, there are major differences between
the planning, analysis, and design phases of such studies. The analysis phase involves organizing
for improving it. The systems analysis work includes understanding the goals of the current
system, performing one or more surveys to acquire information about the company's present
system, and generating possible solutions.
detailed design work for system development work. The major purpose of the design phase is to
develop specific changes for a company's current system so that weak points can be minimized, if
6-2. Top managers appoint steering committees to oversee the work of an analysis and
design team when it performs a systems study. Thus, a steering committee should be
between an organization’s managers and its study team(s).
solutions recommended by its team members for solving current system problems.
6-3. Student responses on this question are usually mixed, and it is possible to argue for
any one of the three levels here. Some students feel that "general systems goals" are the most
important to the effective operation of an organization's information system because such goals
as “cost awareness,” “relevant output,” “simplistic structure,” and “flexible structure” are global
SM 6.2
in scope and create a framework for an organization’s entire information systems work. Without
It is also possible to argue that "top management systems goals" are the most important to the
effective operation of an organization's information systems because top managers are ultimately
the individuals whom the systems must satisfy. This line of thinking in effect says that what is
most important is what the top bosses say is most important. Then too, top managers also play an
Unless the study team gives careful thought and consideration to top management's systems
goals, the likelihood of an effective information system will be small. In addition, the systems
effectively developed.
Finally, it is possible to argue that the most important goals to satisfy are “operating management
system goals.” This argument rests on the notion that only operational goals are meaningful. For
example, “providing managers with the right information” is a strategic objective which only
Monday morning.”
6-4. The purpose of a feasibility evaluation is to determine whether or not a specific new
the data for this report comes from the findings of the feasibility evaluation work (as well as the
schedule, legal, and economic feasible.
6-5. This question requires students to imagine what cash benefits and costs an
organization might incur when creating an online ordering system. We outline potential benefits
and costs below.
Potential cash benefits:
a) Reduced clerical errors
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 6.3
e) Round-the-clock customer ordering capabilities
f) Reduced lost sales and inconvenience caused by stock-outs
g) Increased sales to both new and existing customers
6-6. Prototyping involves developing a skeletal software model, or prototype, of an
accounting information system. Thus, the prototype is a scaled-down, experimental version of
“trial use and modification” continues until the users are satisfied that the proposed system
adequately meets their needs.
in misunderstandings between users and designers, (5) design mistakes are costly, or (6) the risks
associated with developing and implementing the wrong system are high.
evaluate the model(s), or (4) the application itself, although large, is itself well understood—for
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 6.4
already deployed in existing software packages.
6-7. A system’s specifications report contains detailed information about each design
proposal that meets the feasibility requirements of the company's system. The purpose of this
specification report provides this information.
Regarding the second question, the data included in the systems specifications report differs
system proposal. This detailed work is unnecessary because the purpose of the feasibility
evaluation is to ascertain whether or not a new system is "totally feasible" for the client company.
b) Detailed information about the problems in the client company's present data processing
system
proposals to the client company
e) Request for a time schedule from vendors or system developers concerning their
implementation of a new system into the client company
6-8. When establishing controls, an implementation team should also design effective
converting accounting data files to alternate formats.
6-9. Under direct conversion, the organization immediately discontinues using its old
system as soon as the new system is installed. Direct conversion may be appropriate when (1)
there are many weaknesses in the old system and almost any change is likely to be an
improvement, (2) there are only minor or simple revisions to the company's current system, (3)
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 6.5
and even fatal.
Under parallel conversion, an organization operates both its old system and its new system
simultaneously for a certain period of time in order to test the new system and compare outputs.
The implementation team will investigate differences and either request or make revisions in the
overtime work and other extra costs.
Under modular conversion, an implementation team decomposes an AIS into smaller units or
“modules.” The implementation team then installs the new system "piecemeal" for the specific
units associated with the activity. As individual modules are successfully tested and installed,
costs.
6-10. Both Gantt charts and PERT network diagrams are useful tools for scheduling,
monitoring, and managing the activities required to implement a new accounting information
others. Gantt charts are simpler and easier to understand, but they do not indicate the precedence
relationships between the various activities as do PERT network diagrams. For this reason,
6-11. When an organization installs a new accounting system, its managers hope that it will
eliminate all the old problems and not create new ones. However, as the new system operates on
a day-to-day basis, some of the company's original systems problems may reoccur or new
problems may develop. The purpose of the follow-up phase of a systems study is to evaluate the
A new system should help a company achieve its general systems goals, top management systems
goals, and operating management systems goals. Through follow-up analysis work, an
implementation team attempts to identify those goals that the new system does not help
management achieve. Systems revisions will then be required in these areas. Similarly, new
SM 6.6
revisions may be needed due to internal and/or external environmental changes, or because the
Some specific examples of follow-up work are:
1) Determine whether top management and operating management are satisfied with both
the content and the timeliness of the output reports received from the information
processing subsystem
their assigned job functions effectively
4) Determine whether processing functions are performed adequately, and also if output
schedules for both internal and external reports under the new system are met
5) Talk with local area network users to determine these users’ satisfaction with the
information they are accessing from the network
The implementation team will prepare a follow-up review report at the end of its follow-up work,
which it then submits to the company’s steering committee. It is up to the steering committee to
decide what to do next.
6-12. Three major ways that an organization can acquire software are: (1) by acquiring or
leasing it from one or more independent vendors, (2) by developing the software in-house, and
(3) by outsourcing the data processing tasks required by the system. Technically, however, this
last option more refers to accomplishing system tasks than acquiring software.
customized to meet the organization's specific processing requirements.
Because vendor software is usually written for a larger market, it may require considerable
modifications to satisfy the organization's data processing needs. The counter argument is that
Which approach is better? Depending upon their individual experiences, some students may
prefer to acquire software from an independent vendor whereas other students will favor in-house
development. Those students recommending an independent vendor for the acquisition of
software often give "lower cost" as the major reason for favoring the independent vendor over the
SM 6.7
in-house development, but this is not always so. It depends upon the specific software needs of
6-13. Business process outsourcing (BPO) means just that—outsourcing the tasks required
to perform a specific business function. An example is preparing the weekly company payroll.
specifications or performing a particular research task.
Companies outsource business processes, such as back-office accounting functions, for a variety
Other reasons mentioned in the textbook include convenience, the ability to depend upon an
outside vendor to handle large changes in processing volume, the availability of expertise not
6-14. “Outsourcing” means contracting with an external organization to perform tasks that a
company might otherwise perform internally. Accounting examples include tax preparation and
“language skills”—a particular concern when outsourcing to China or Vietnam, where labor
costs are low but “English skills” also tend to be low. A third concern is “security”— the worry
Finally, there are the political and currency risks of off-shoring. For example, unless contract
amounts are negotiated in domestic currency, there is the risk that the client company must pay
company than an offshore one.
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 6.8
Problems
6-15. The Chris Hall Company
(a) Information needs of a production plant supervisor:
1) Estimates of periodic requirements (weekly, monthly, etc.) of different types of wine in
order to develop periodic production schedules
be available to meet production schedules
5) Cost reports reflecting variances of actual production costs in comparison to budgeted
and standard production costs so that corrective action can be initiated on those
production costs that vary significantly from the budget and standard cost data
(b) Information needs of top management:
current share of the market
2) Estimates of the company's long-range market potential for each of its product lines
3) Information on the future economic outlook for the country and how the company's future
sales will be affected by inflation, unemployment, etc.
4) Projected cost and revenue data associated with wine production and sales in order that
long-range budgetary planning can be performed
internationally
6) Information on competing beverages such as beer
(c) Marketing manager:
1) Forecasts of expected sales by product line for the coming budget year
sales mix can be developed
3) Information regarding production capacities of the manufacturing plant so that managers
can determine the ability of the plant to manufacture adequate inventory quantities to
meet the anticipated sales mix in the coming budget year
4) Information regarding the effectiveness of various advertising efforts for stimulating
promotional endeavors)
5) Information comparing the actual sales to budgeted sales by both product lines and sales
personnel; this information can be reported on a management-by-exception basis
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 6.9
6-16. This problem requires students to search the Internet for companies that provide
financial and accounting outsourcing (FAO) services.
6-17. Stevenson Apparel
Note to Instructor: This problem asks students to identify four problems with the system. Here
are six of them.
Problems
Remedies
1. New cashiers are awkward in their
use of the POS system.
1. Conduct POS training for new cashiers.
2. Printing sales tickets seems to take
too long.
2. Replace the existing printers with faster
models, or speed the processing of sales
transactions leading to the printing.
3. Automatic opening of the cash
drawers is erratic.
3. Test the voltages sent to the cash drawers
under PC control and adjust them to give
predictable responses.
4. The four-digit STN is inadequate
for the number of merchandise
items, resulting in frequent dumps
of information for discontinued
items to make room for new items.
4. Add one or more digits to the STN field in
all files, reorganize databases, and/or
recompile programs (if necessary) for the
new STN size, and reload existing STN files.
Even better: use automated scanners that
eliminate manual keying.
5. Customers become impatient with
the long credit approvals.
5. Install electronic credit card verifiers that
read the customer’s credit card number and
automatically dial the credit card approval
service for authorization. Alternately, or in
addition, automatically approve credit-card
purchases under a set limit—for example,
$25.
6. All sales cease when the store
server is down.
6. Implement procedures that permits the POS
system to ring up sales independent of the
computer by:
a) Continue to accept sales for cash, but
manually record transactions for later
computer input
b) Maintaining an automated backup server
or generator
c) Creating a program disk that can be used
to restart the PCs and a data disk
containing the STN file
