CHANGE THE AIS

Changing the AIS

Professor Daniel Acheampong
ACC 564 Accounting Information Systems
December 16, 2013

CHANGE THE AIS

Change the AIS

An efficient accounting information system can help an organization create an advantage
among competitors. As technology and information security techniques advance, an accounting
information system may need updating. For an organization to protect their assets and financial
information, their accounting information system will need to improve also. Adequate
accounting information system which is reliable can eliminate risk and provide information
security. When an organization has better internal controls, it makes them lower risks and have
more opportunity for lower borrowing with creditors. Great internal control sets up good
corporate governance in an organization.
If an organization makes the decision to change or develop a new accounting information
system, it may incur issues or even fail. According to Romney & Steinbart, companies have
experienced the following difficulties when developing an AIS:

Development requests are so numerous that projects are backlogged for years.
Users discover that the new AIS does not meet their needs.
Development takes so long the system no longer meets company needs.
Users do not adequately specify their needs because they do not know what they

need or they cannot communicate the needs to systems developers.

Changes are difficult to make after requirements are frozen.

The failure of an accounting information system can be detrimental to a business and

costly. Blue Cross Blue Shield spent $200 million dollars on a software development for a new
system. The system failed to work properly including sending checks to a nonexistent town and
over paid $60 million for duplicate billing. From what I have researched, the system failed for
the following reasons:

Poor implementation planning

Lack of user acceptance testing
Inadequate employee training

CHANGE THE AIS

An implementation plan consists of implementation tasks, expected completion dates,

cost estimates, and who is responsible for each task (Romney & Steinbart, 2012). When an
organization decides a new accounting system is needed, a plan should be developed. The plan
should start with what the organization needs from the system, what internal controls are
required, and proper maintenance once system is implemented. Every organization has
constraints on what an accounting information system will be able to handle when implemented.
A strategy with the implementation including the examination of the existing system should
alleviate some of those constraints. End users should be engaged and have input in the
implementation process to ensure the end product is usable.
Management must set a standard for employees in an organization on the importance of
an accounting information system and its maintenance. The human element, which is often the
most significant problem a company encounters in implementing a system, can be improved by
observing the following guidelines (Romney & Steinbart, 2012):

Obtain management support.

Meet user needs
Involve users
Allay fears, and stress new opportunities
Avoid emotionalism
Provide training
Reexamine performance evaluation
Keep communication lines open
Test the system
Keep the system simple, and humanize it
Control users expectations

Many of the users will find these items time consuming but it will be cost effective for the
organization in the long run.
Employees should be trained on the system, monitored while using the system, and
expected to report any errors or issues with its operation. Proper training of employees on a

CHANGE THE AIS

new system reduces chaos and frustration. When users are not adequately trained, the company
will not achieve the expected benefits and return on its investment (Romney & Steinbart, 2012).
Blue Cross Blue Shield experienced user input error which contributed to the hundreds of
checks that were mailed to a town that did not exist. Prior to implementing the new system, any
users should have been trained on the system and also utilized in the testing. The users could
have identified the issues with incomplete data being entered and helped developed a control
which would have required valid information.
Any new system must be tested prior to being placed in production and available for use.
Testing all software to ensure that the new software is compatible with existing hardware or
software and determine whether the hardware and software can handle the needed volume of
transactions (Arens el al., 2010). With Blue Cross Blue Shield, their system was released
without being tested due to the developers promise of delivering the system within 18 months.
Documents, and reports, user input, controls, operating and processing procedures, capacity
limits, recovery procedures, and computer programs should all be tested in realistic
circumstances (Romney & Steinbart, 2012).
The task of implementing a new system can be daunting and it requires preparation and
time. I understand this because in my employment with a previous company, new accounting
system was implemented. The planning of the design, implementation and operation of the
system was an almost 15 month process. With this system, the developers spent time with each
user that would use a different section of the system to fully understand how they used the
system. Their understanding created a better product and when the system was tested by users,
at that time any issues or fixes were found and handled prior to the system going live. It was the
third system the company had implemented because their previous attempts were not successful.

CHANGE THE AIS

Finally with this last attempt and proper testing, an efficient accounting system was developed
and the company increased productivity. Several employees commended the success of the new
system was because of the numerous hours spent testing and making sure the system was
adequate for the business needs.
Management has the responsibility of making the proper decisions pertaining to the
controls of their organization and its accounting information systems. In the case of a system
failure, senior management has a high level of responsibility. With this responsibility, some
managers may place pressure on developers to expedite the system. It is important for managers
to be present and accountable for the system project from the beginning. But added pressure can
set the system for failure so, they need to be clear and concise on what the system needs are and
have realistic expectations. A new accounting system will have problems and setbacks when in
the design, implementation and operation phase, but if management is supporting each section,
there will be success.
Most managers are not going to understand the technical development of the system but
it is important to keep them inform of what is happening in each phase of the system. If the
developers in the Blue Cross Blue Shield case would have fully understand how the system was
going to be used, they could have possibly prevented the system failure. The poor design of the
system was the most significant failure. Blue Cross could have asked for a realistic time line for
the system to be tested and implemented. If they had they may not have lost 35,000
policyholders who were frustrated with the inadequate system.
An organization can implement best practices to prevent or reduce system failure. Best
practices are described as anything which increases efficiency levels. It can also lead to
improved levels of reporting for use by other parts of the company, such as activity based

CHANGE THE AIS

costing, target costing or direct costing reports in the costing function (Bragg, 2007). Best
practices can help an organization to align themselves properly with their strategic plans. They
can also help eliminate transaction errors within an accounting system to further increase
efficiencies. The reason is that best practices have such a large impact on overall efficiencies,
they unleash a large number of excess people who can then work on other strategic issues, as
well as reduce a company's cash requirements, releasing more cash for investment in strategic
targets (Bragg, 2007).
I have identified the following four practices an organization can use to assist in success
of a system implementation:

user involvement
executive management support
clear statement of requirements
realistic expectations

As I mentioned earlier, management has thoroughly support the new system and its
implementation. Managers will need to be involved in design, implementation, and operation of
the accounting information system. Their presence will reassure everyone in the organization that
the system will increase productivity and employees will be more willing to adapt to the change.
User involvement is a vital section of the testing of the system and also its operation. The users
will have the responsibility of reporting and identifying any issues with the system after
implementation. Over the life of a typical system, 30% of the work takes place during
development, and 70% is spent on software modifications and updates (Romney & Steinbart
2012).
As the organization grows, updates to the accounting information system may need to
occur. Also new efficiencies in other areas of the organization may need to be developed and
using an accounting information system to accomplish this will be easy. Once an effective

CHANGE THE AIS

accounting system is in place with the proper controls, it will typically identify inefficiencies of
other departments. Identifying inefficiencies within a business and helps a company to reduce
them while increasing profits. A well-developed accounting system allows an organization to
adapt to consumer, market and regulatory demands.
Organizations need to be resourceful in developing and implementing a reliable
accounting system. In order to fully accomplish this, a foundation of principles will need to be
established. IBM developed 10 principles; organizations can utilize in order to successfully
implement a financial management system. From those principles, I choose three that will help
a company in their efforts to have an effective accounting information system.
The first is to simplify processes in your organization by streamlining business
processes. Excessive business processes can create a complicated and convoluted system that is
more difficult to use than your previous system. If a more complicated system is created, it
could waste time and decrease efficiencies. A decrease in efficiency will always lead to costs
which diminish profits. Next, commit resources to the entire process of changing or
implementing a new system. The last thing an organization wants to do is run out of money or
people. Changing an accounting information system can be costly but having the appropriate
human resources on the project is just as important. A large amount of time will spent on the
project and you want people who can be fully immersed into the task of implementing the
system. It is imperative to have the right individuals in place to assist with the project which
will include developers, accountants and employees to test the system. Finally, an organization
needs to conduct reviews regarding the success of the system. If you do not ask, how will you
know the system was successful? An in-depth review of the system by the users is a great way

CHANGE THE AIS

of identifying how the system has impacted the organization and their duties. The review could
also find other areas of the system which need further modification.
In addition to the review by the users, a review of the specifications provided by the
developers will help ensure the required work was completed. The full process of designing
and implementing a new system takes months if not years. It is wise to go back and review what
the organization requested and compare those specifications to the end product.

CHANGE THE AIS

References
Arens, A., Elder, R. J., & Beasley, M. 2010. Auditing and assurance services: 2010 custom
edition (13th ed.). Upper Saddle River, NJ: Pearson
Bragg, Steven M. 2007. Accounting Best Practices. 5th ed. Hoboken, NJ: John Wiley & Sons
Inc.
Romney, M.B., Steinbart, P.J. 2012. Accounting Information Systems. 12th ed. Upper Saddle
River, NJ: Pearson.