AIS Applications

Abstract

Technology is changing at a rapid pace. Because of these changes, AIS applications must be updated to adapt to technology's changes. Changes must be made to a firm's revenue, expenditure, human resources/payroll cycle and financial report in order to keep the firm competitive. According to Beard & Wren (2007), adoption of new technologies and new or revamped information systems is an emerging risk in today's business environment. The proliferation of computer-based information systems has had a tremendous impact on the business environment and the auditing of entities where IT has been integrated into operations and information system (p.34). Information technology like any business strategic tools can be used for the benefit of the organization. Organizations that uses IT as the basis of organizational restructuring need to understand that IT can only confer business competitive advantage to the extent that the organization integrates it into its operational standards. According to Beard & Wren (2007), with the expansion of computer technology, traditional business processes have been restructured and unique internal control techniques are required to address exposure to many new dangers. The responsibility for establishing and maintaining a system of effective internal controls resides with management. Management's responsibilities include the documentation, testing, and assessment of internal controls, including relevant general IT controls (e.g., program development, program changes, computer operations, and access to programs and data) and appropriate application-level controls designed to ensure that financial information generated from an organization's information system can be reasonably relied upon (p. 35).

1. Propose two (2) innovative technology changes that would be appropriate for a firm's:

a) Revenue (sales to cash collection cycle)- is a set of business activities and related information processing operations associated with providing goods and services to customers collecting cash in payment for those sales (Romney & Steinbart, 2012, p. 332). Romney and Steinbart identified four basic revenue cycle business activities. These are Sales order entry, shipping, billings and accounts receivable and cash collections.

1. One innovative change that would be appropriate for a firm's revenue cycle is to "allow customers to use Electronic data interchange (EDI) to submit orders electronically in a format compatible with the company's sales order processing system" (Romney & Steinbart, 2012, p. 338). EDI is "the use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically process by the recipient's information system (Romney & Steinbart, 2012, p. 672).

2. Another innovative change that would be appropriate for a firm's revenue cycle is the use of radio-frequency identification (RFID) tags to "improve the efficiency and accuracy of tracking inventory movement" (Romney & Steinbart, 2012, p. 344). Using RFID tags eliminates the need to align inventory with scanners because the tags can be read as it is moved throughout the warehouse. RFID tags can store detailed information to enable proper storage and movement of items. They increase efficiency in handling inventory by improving turnover, therefore increasing sales. RFID can cut cost by saving a company time and money. According to Thornton (2006), some of the current uses of RFID technology include:

* Point of Sale (POS)

* Restrict access to building or rooms within a building

* Asset tracking

* Warehouse management and logistics

* Product tracking in a supply chain

* Product security (p.4).

b. Expenditure (purchase to cash disbursements) cycle is a recurring set of business activities and related data processing operations associated with the purchase of and payment for goods and services (Romney & Steinbart, 2012, p. 371). The primary objective of the expenditure cycle minimize the total cost of acquiring and maintaining inventories, supplies and various services necessary for an organization to function. The three basic business activities in the expenditure cycle are ordering goods, supplies and services, receiving and storing good, supplies and services, and paying for goods, supplies and services.

1. One innovative change that would be appropriate for a firm's expenditure cycle is using the evaluated receipt settlement (ERS) approach. ERS is an invoiceless approach to accounts payable that replaces the three-way matching process of vendor invoice, receiving report, and purchase order with a two way match approach of purchase order and receiving report. ERS saves time and money by reducing the risk of mismatched documents and the time and expense of producing and tracing invoices (Romney & Steinbart, 2012, p. 672).

2. Another innovative technology change that would be appropriate for a firm's expenditure cycle is using electronic check writing including online bill payment, electronic funds transfer (ETF), and financial electronic data interchange (FEDI). ETF is the transfer of funds between two or more organizations or individuals using computers and other automated technology. This eliminates the delay associated with the time the remittance is mailed. FEDI is the combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package (Romney & Steinbart, 2012, p. 672-673). This allows a quicker processing of invoices and checks enables taking advantage of purchase discounts. They reduce costs by eliminating clerical costs for processing and mailing payments. They also reduce or eliminate paper and paper processing costs including the costs associated with paper checks.

c. Human resources/payroll cycle is a recurring set of business activities and related data processing operations associated with effectively managing the employee work force (Romney & Steinbart, 2012, p. 435). Some of the more important activities include recruiting and hiring, training, job assignment, compensation (payroll), performance evaluation and discharge of employees due to voluntary or involuntary termination. The three basic functions the AIS provide in the HRM/payroll cycle are

1. Processing transactional data about employee activities

2. Safeguarding the organization's assets

3.