Computer Based Accounting

Topics: Accounting information system, Management accounting, Change management Pages: 5 (1745 words) Published: April 17, 2011
Grasim Industries Limited, a flagship and private sector company of the Aditya Birla Group which was incorporated on 25 August 1947, just 10 days after India became independent, manufacturing textiles made from imported raw materials with consolidated net revenues of Rs.141 billion and a consolidated net profit of Rs.20 billion. Grasim has a strong presence in fabrics and synthetic yarns and is well known for its branded suitings, mainly in the polyester - cellulosic branded menswear. Its textile plants are located at Bhiwani (Haryana) and Malanpur (Madhya Pradesh). They have recently acquired VSF Plants in Canada and China respectively ( Currently, Viscose Staple Fiber factory, they maintain an accounting system that doesn’t allow them to have sufficient information in exact manner about inventory costs (raw materials, work in process, cotton yarn, pledged inventory etc.), current banks’ balance, updated accounts receivables & payables, Bank loans, payrolls etc. Therefore, this becomes a problem for the Head office to maintain financial and accounting records for managerial decisions to make overall financial positions and for product costing. Today manufacturing firms are facing mounting global competition, and concurrent pressures on both cost and quality of their products. Over the past two decades, manufacturing firms have taken actions to these pressures by investing in process and information technologies to rationalize the operations (Bardhan, I., Whitaker, J. & Mithas, S). As recent development in manufacturing technology and advances in the information processing capabilities of organizations boost the importance of designing the proper information system that provide support for these required competencies (Nicolaou, A. I. (2003). As information is a conceptual resource that represents physical resources such as machinery, equipment, and labor etc. Therefore, there is a need to build up an information system that provides timely information used for production schedules, inventory costing, and financial matters which would lead to make better informed decisions, enhance the production capabilities, competing with others and increase the organizational performance. (Xu, L., 2000) Discussion

There is a need to develop computerized information system that integrates all business functions of a firm. (Li & Li, 2000) It helps providing relevant information to company’s managers to find out the problems and does assist in solving problems (Lucas Jr., H. C. 1975) and we found that “….many firms have made substantial investments in information systems to improve the quality of information available to decision-makers”. (Hinss, S., Kunz, A. & Pfeiffer, T. 2005) Implementing this new computer-based information system requires considerable time, energy, costs in the short run. But we believe that company needs to consider all positive and negative aspects before implementation of new information system. As new system would lead to drastic changes in the existing manual accounting system as it keeps maintain all daily accounting transactions with minimum time and human errors with high level of accuracy and data security.

It fulfills the valuable financial information needs in a timely manner to help managers to make operational decisions like purchasing raw materials, product costing, production schedules, tracking internal purchase orders etc. as well as short-term financial decisions such as managing working capital problems like inventory, accounts receivables, accounts payables, short-term financing, cash flow and sales issues etc. to keep daily operations smooth and meet sales objectives. (Li et al, 2001) It also provides quality information regarding analysis of financial statements for strategic decisions. Furthermore, the study found that “….the financial reporting system was the most frequently used module (99% of the surveyed organization)…” (Zhou,...
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