CHAPTER ONE
1.0 Introduction
This chapter provides the background to the study. It details the problem statement, research objectives and research questions.
1.1: Background of the Study
As businesses grow out of the start-up period and expand their capital and operation, size and product or service offerings, their accounting based informational needs some changes (Bodnar, 2010). Most small business start-ups begin with an off-the-rack accounting based package for instance Peachtree or QuickBooks and run the basic accounting reports from them. However, there comes a time when the environment, government, accounting rules and standard and other technological based factors force the business to adopt some new accounting systems. Migrating to a new accounting information system is not an easy task because many businesses have struggled with this process. Some companies have decided to come with own accounting based practices aimed at easing the implementation process of accounting information or packages in their accounts department. The companies or businesses have faced a lot of challenges with some of the applied recommendation and accounting guidelines fail for instance in the case of IBM company in USA.
The aim of this paper is to look into the factors that contributed to the accounting information system failure within the Coca Cola Company, which engages in food and beverages businesses. Secondly, the researcher investigates the impact to the business before providing a vivid based rationale in support of adopting appropriate accounting systems. Moreover, the paper addresses the accounting system information failure by assessing the senior management responsibility for the failure and specifying what the senior management could have done differently to avoid them. Besides, the researcher provides support for his rationale. In addition to the above, evaluation on how to implement best practices would have reduced the chances for failure will also be assessed. A list of between four (4) and six (6) best practices that organizations should use today to reduce the chances for failure will be developed. Furthermore, the information provided by IBM and others, indicating which principles designed to provide insight into effective and efficient strategies will be used to address the company’s problem. The principles help to look into how best deployed financial management systems, outlined within the related article, should serve as an example of what not to do when establishing the foundation for a firm. All the above measures are accompanied by a concise rationale that supports proper adoption of accounting information system before providing conclusion remarks.
1.3 Research Questions
1.0: What are the factors that contributed to the accounting information system failure within the business Coca Cola Company under food and beverage industry?
2.0: What was the senior management responsibility for the failure in the coca cola company food and beverage business? What could have been done by the senior management differently to avoid the failure?
3.0: How does good implemented accounting best practices would have reduced the chances for failure?
4.0: What are best accounting information system practices that organizations should use today to reduce the chances for failure?
5.0: Using the information provided by IBM and others, which of the principles were designed to provide insight into effective and efficient strategies and on how to best deploy financial management systems?
1.3: Hypothesis Testing
1.0: There are factors contributing to the accounting information system failure within the business Coca Cola Company under food and beverage industry.
2.0: The senior management was responsible for the failure of the coca cola company food and beverage business.
3.0: Implemented of good accounting best practices would have reduced the chances for failure.
4.0: There are accounting information system practices that organizations should use today to reduce the chances for failure
5.0: Using the information provided by IBM and others, there are principles designed to provide insight into effective and efficient strategies and on how to best deploy financial management systems
CHAPTER TWO
2.0: Discussion
2.1: Factors that Contributed to the Accounting Information System Failure Within Coca Cola Company Under Food and Beverage Industry Business
2.1.1: Misunderstanding of the Accounting Practices
Within food and beverage industry, accounting principles and regulation were found to be misunderstood. Some of the concepts such as historical, accrual basis and realization rules confused accountants. Some items such as depreciation and goodwill treatment were misunderstood leading to wrong accounting decisions made.
2.1.2: Resistance of Accounting Concepts
Accounting concepts found to provide accounting information are regularly changed and therefore businesses must adopt the necessary International Accounting Standard for comparability and consistency in financial statement preparation. However, the management of some of the coca cola branches was resisted adoption and implementation of the ever changing accounting policies. The results of this were failure in the accounting information system. Resistance in adoption of new information system and accounting policies can be attributed to limited accounting knowledge among the management staff or even lack of necessary accounting tools such as software in the company.
2.1.3: The Integration of Technology and Accounting System of the Organization
The introduction of computerized accounting system and computer based packages and software saw several changes in accounting environment (Gelinas et. al, 2009). Manual accounting system, found to be slow and erroneous got replaced. However, most of the companies such as coca cola faced challenges in integrating the computerized accounting information system because it requires a lot of expertise and highly trained staff to use the software. Secondly, the acquisition of the software was not easy and therefore accounting information system failed. Currently, new accounting systems and concepts continue to be harnessed through the modern technology and therefore companies must be quick to adopt modern accounting system technology into the business.
2.1.4: It is Costly to Implement Some of the Modern Accounting Information Systems
Accounting information systems changes requires new computer software, new staff and other expensive based equipment. Inadequate financial capacity may lead an organization to fail in implementing some of the computerized accounting systems and therefore the entire system not succeeding. This is what happened in Coca Cola Company in food and beverage business. Some branches had migrated to digital accounting while others relied on manual accounting yet the statements must be reconciled in head office.
2.1.5: Poor Timing
Most of the accounting information systems fail due to poor timing in integrating new accounting concepts, tools and other accounting related features. Accounting technology changes overtime and therefore, it is the duty of the management of any organization to update the accounting system with necessary accounting information about software and other required accounting items. In most companies and especially in food and beverage industry, lack of accounting expertise led the company to adopt wrong accounting information at the wrong time leading to failure of the whole accounting information systems. Businesses are required to keep in touch with the International Accounting Standard Board for up to date accounting information.
2.3: Assess senior management responsibility for the failure in question. Specify what the senior management could have done differently to avoid the failure
In most cases, failure of any accounting information system in any organization is mainly attributed to the poor management decisions. Managers may fail to perceive future accounting risks, be resistant and ignore some of the technology based accounting changes or even decide not to implement some of the approved accounting concepts and policies. The inevitable result of such matters is failure of the system. Management staffs are also responsible in ensuring that any new accounting information system got understood by all staff. User involvement and participation facilitates exchanges of ideas which transforms to early problem identification and solutions. Moreover, involving staffs in planning process, feasibility study and designing process of the system help a lot in disseminating necessary accounting information to them. In Food and Beverage Industry, coca cola company management staffs failed to adopt the new accounting system on time. Secondly, they contributed to its failure by not complying with the International Accounting Standard Board recommendations.
The recommendations advocates for expertise to implement design and evaluate the system. Secondly, the accounting information system must be conducted in phases with careful monitoring of any changes. Moreover, all the staffs must be included for easy training purposes and full system understanding. The rationale behind this was that system implementation effort offers some extraordinary challenges to any accounting information professional and the organization. Secondly, it is costly and time consuming. Any failure can drain an organization’s fund, vitality, time and even create some frustration among the employees. However, any successful implementation of the accounting information system provides a vast reward to the organization. It improves efficiency, employees’ confidence and motivational level to continue working in the system. Moreover, it saves time and unnecessary costs that would have been incurred in re-implementing or deigning a new prototype and full system. Senior management must plan for the system well, ensure all users participates and necessary accounting policies and tools used in designing, implementing and evaluating the system. Adequate financial and human resources must be diverted in feasibility study and problem identification stages so as to collect clear but concise information about the Accounting information system. All staffs must be involved and interrogated on how best to improve the system.
2.4: .Evaluate how implementing best practices would have reduced the chances for failure
Introduction of a new accounting system requires proper implementation of best practices in accounting. Some of the implementation practices such as ensuring users participation, time implementation, adequate financial diversion in all stages prior to implementation and involvement of the right best practices advisors and implementers, help to promote understanding and successful accounting information system. The implementation process facilitates senior management and other staff to participate and identify any problem in advance that may lead to the system failure. Moreover, it is through implementing the best accounting practices that the system will minimize risks associated with projects and which must be anticipated and managed carefully in order to achieve success and the way organization members interact with one another and the implementers promotes risk management. Best practices help in proper planning of the system solution in case of any failure and hence reduce frustration among staff and senior management in case of the system failing.
The main essence of involving best practices in the system implementation process is to enhance user acceptance of the new accounting system which can be facilitated when; changes are realistically anticipated through the necessary inputs and all knowledge based sources (Cushing & Romney, 2004). Secondly, contrasts are given free expression through proper system discussion among the coworkers, implementers and users., surprises are carefully minimized through realistic preview and testing and lastly, assistance is adequately provided and coaching of the experienced implementers.
However, the system implementation best practices may pose some threats of reduced system control to the users work. According to Cushing & Romney (2004), employees need some opportunities perceived to give them freedom to adapt on their own to the resultant system changes. In order to enhance their control, the system implementers are required to practice the following; first, they must offer choices to the employees, facilitate meaningful decisions during the system process. Lay necessary ground for predicting accounting changes with certainty and exposure of the users to several and advanced accounting concepts. Moreover, allowing the employees to assume some of the responsibilities during the system prior stages to implementation process make them more accountable for the results to be found and therefore encourage shared ownership of the whole accounting information system. These helps users to escape some of the information system failure stress found to be inherent among different staff in the accounting field in various businesses across the globe. In addition to that, some users believes that accounting information systems are personally relevant and therefore limited control in implementation process help them to create some positive attitudes of believing in themselves and not the implementers in case of any failure.
Currently, businesses and system implementers are argued to develop such system confidence level among the users so as to reduce frustration. However, a low level of implementers in the system development process may lead to inadequate system understanding among the users which can adversely affect the business financial capabilities. System implementers are therefore required to make adequate feasibility study on the accounting system and users before any implementation changes is imposed. The rationale behind this is to ensure that the accounting information system do not suffer failure in implementation stage.
2.5: Best Practices that Organizations should use Today to Reduce the Chances for Failure.
2.5.1: Consider Time Factor in Developing the System
An accounting information system must provide timely information. It is of no use to find out six months after the fact that accounting software in a particular product line or geographic area have been used that it was obsolete. Managers need quick information on sales, bottom-line profit and other important metrics soon after they occur in order to make changes to avert pending problems and therefore reliance on outdated information to develop a system automatically lead to failure of the system.
2.5.2: Rely on Relevant Information in System Changes
The numbers extracted from accounting information system must be the right ones. For example, if a company sells several products in several retail outlets, the information produced should show results of not only product but location. Having combined all the numbers for products can hide individual problems. As with the needed simplicity of the accounting system, the right numbers involves aligning the reporting based system with the company's key success factors. This can be achieved by ensuring that the senior management and implementers rely on relevant information from the employees and other system analysts in imposing any accounting information system
2.5.3: Prior to Implementation and Ongoing Training and Education
Accounting information system should be as strong as the people who operate it and analyze its results. Employees should receive ongoing training in about the accounting concepts, software and the entire accounting system for instance upgrades. They should also be trained to thoroughly understand what failure means and how to identify in advance, any system brewing based problem. The system should have adequate operations guidelines so that new employees can learn the right way immediately they start working instead of relying on other staff to help them along side with accounting system changes information.
2.5.4: Integration and Participation of all users in Implementation Process
It is arguable that involving all the system development users in the system facilitates understanding, reduce unnecessary frustration and resistance and hence reduce uncertainty that eventually breeds failure. It is often recommended that the accounting system developers and software analysts involve the users so as to ease the training process. Some of the users include senior management staffs, employees and system analysts who can help the implementers to identify problem in early stages or even improve the accounting information system. Involving the user means they contribute to some of the stages in airing their comments and suggestions. It includes provision of the necessary resources for instance finance and human factors. However, the users must be fully controlled so as not to bring the implementation process into stand still through meaningless recommendations or resistance. Therefore, the rational of all these measures or practices is to ensure that failure is avoided.
2.6:Using the information provided by IBM and others, indicate which of the principles designed to provide insight into effective and efficient strategies on how to best deploy financial management systems, which were outlined within the related article, should serve as an example of what not to do when establishing the foundation for a firm to follow.
In implementing any accounting information system in a business, it is quite essential to borrow ideas of some of the principles designed by IBM on efficient and effective strategies in financial management system. Some of them include;
2.6.1: Working Together
It is essential to facilitate an open dialogue among the government, users, system based facilitators and other system changes facilitators so as to ensure that are contributions made drive the changes. It is essential for the potential vendors and accounting information users to air their proposal as this will help in ensuring no complains in the future and the system requirements are executed in harmony. The process can be improved through developing some communication channels among the various stakeholders so as to exchange information freely and adequately. Make sure that you agree on matters and especially those involving qualitative and quantitative measures of the system implementation.
2.6.2: Guide the Changes Properly
It is essential to provide stakeholders with the right information at the right time throughout the entire system life cycle process. Some of the principles that were found here is to communicate repeatedly about the direction and status of the system so as to avoid any unnecessary expectations about the system. In the process, it is essential to involve and appoint some representatives who will help in validating the implementation process. This will help to reduce some of the assumptions made on overall reception of the accounting information system.
2.6.3: Conduct Regular Reviews
It is essential to pay regular attention to all proactive and discipline based risks, communication processes and the quality of all management based activities so as to enable a success in the project. The rationale behind implementation process is to ensure verification and validation of all third party efforts in the process. In addition to that, it ensures that the accounting information system being implemented is in accordance with all established standards and measures. Note that it is essential to establishment of a robust risk based management process that tries to reduce the likelihood of some unbecoming issues found to impede successful system initiation.
Conclusion
The paper has adequately covered the factors that can lead to business failure and some of the measures that could be taken so as to reduce the failures. Currently, most of the firms are facing the problem in migration to new accounting information system. However, the principles adopted by IBM and other companies have tried to provide a light over the matter especially for the small growing firms. IBM applied lessons learned from a real-life situation and involving the failure to implement an accounting system properly and adequately to meet her accounting system standard.
References
Bodnar, G. H. (2010). Accounting information systems. Boston: Allyn and Bacon.
Gelinas, U. J., Sutton, S. G., & Oram, A. E. (2009). Accounting information systems. Cincinnati,
Ohio: South-Western College Pub.
Cushing, B. E., & Romney, M. B. (2004). Accounting information systems. Reading, Mass:
Addison-Wesley.
