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View with images and charts A Report on Accounting Information System of Excel Real Estate And Development Limited Introduction: An accounting information system is system that keeps record for a business to maintain its accounting system. Accounting information systems combine the study and practice of accounting with the design, implementation and monitoring of information systems. The use of such systems uses modern information technology resources together with traditional accounting methods to provide the users with the necessary information to manage their Organization. Accounting information systems has its strengths and weaknesses also, but strengths more so than weaknesses in some cases. Basic accounting information systems include entering customers' records, billing customers, collecting customer payments, keeping track of inventory, purchasing new stock and materials, paying employees' etc. users of this accounting information can include internal and external parties. Internal users of accounting information include managers and owners. They would use special purpose reports which are prepared weekly, monthly, quarterly and are prepared for their specific needs, and what they need to know about business. External users include investors, customers, clients, government agencies and employees. They would use general purpose reports which are prepared half-yearly or annually. It provides general information for general users. Accounting records - Records other than reports that are kept for accounting systems include purchases, sales and nominal ledgers, and cash books of the business. Whilst all these records would have previously recorded using a paper based process, now information technology has made it more efficient for businesses to prepare all the reports using computerized accounting systems. Real sector is the growth centre for the development of an economy. Bangladesh, being one of the densely populated nations in the world has been experiencing severe inadequacy of housing shortage for its citizens. Although majority of the population are segmented into the middle and low income groups, still the housing for all has been a fallacy in Bangladesh. The private sector housing real estate developers have contributed a small proportion in the national housing demand and supply gap for the last more than twenty years. Despite inadequate policy preparations, these real estate developers have been successfully making business although the middle and low income households are still untapped. With the larger


proportion of people living in this income group, the private housing real estate sector has a huge scope to grow in this country. The positive notion is supported by many key indicators such as increasing house rent, inadequate and costly land, easier financing availability and more. To pave the way for the organic development of the industry, the problem of long existent inadequate financing availability at flexible terms and costs must have to be removed immediately. Chapter 1 provides a review and analysis of the study background & expression of the study. Define what is the objective of the study is & the methodology used to conduct the survey to prepare the report. Define the limitation hindrances to make the report are. Chapter 2 provides a complete literature review of the study on the Theoretical Aspects of AIS, that covered the following topics- AIS Technology, development of AIS, Traditional & Computerized Accounting Information System, Functions of Accounting & Information System, Role of AIS in the Value Chain, The AIS and Corporate Strategy, Designing an Accounting System & Accounting System for an Organization. Chapter 3 provides Background of EXCEL Real Estate & Development Limited. This chapter expresses the following topics Company Profile, Mission & Vision, Functional Departments of EXCEL, and Business Conduct Ethics of EXCE & Real Estate Trends in Bangladesh. Chapter 4 provide Evaluation of Accounting Information System that covered by Significance of Information Technology in Business, The Technology for Accounting Information System, The Impact of Information Technology on Accounting, The Emergence of Accounting Information Systems Programs & Using Electronic Data Interchange (EDI) To Improve The Efficiency Of Accounting Transactions, Financial Accounting Information, Corporate Governance Transparency, Accounting Information Systems Security Issues & Internal Controls of an Accounting Information System Chapters 5 express the application of Accounting Systems of Excel Real Estate & Development Limited. Chapters 6 this chapter provides finding of the study that is found from the analysis covered various essential issues & recommend the action should take to establish the application of report for “The Accounting Information Systems of Excel Real Estate & Development Limited�. The basic focus of the report is to explain the accounting system of EXCEL Real Estate & Development Limited and the different problem of this system and some recommendation for those problems


General Objectives  To gain practical job experiences and view the application of theoretical knowledge in the real life.  To further expand my knowledge, improve my skills and build on my work experiences.  To ultimately develop and advance my career. Report Topics Objectives  To know the accounting system of EXCEL Real Estate & Development Limited.  To know all the sub-division of accounting division of EXCEL Real Estate & Development Limited.  To identify the problems of its accounting system.  To suggest ways of improving the present procedures of accounting systems. Scope of the Study This report will cover all the accounting systems of Excel Real Estate & Development Limited. Over the years, the activities of Excel Real Estate & Development Limited have expanded to a great extent. To manage these activities, EXCEL Real Estate & Development Limited performs specific operations. Accounts & Finance section of Excel Real Estate & Development Limited is divided into 6 sub-sections. They are  Management accounting section  Fund accounts section  Operations & IT section  Payroll section  Bill Section  General section. This study will explain how those sub-sections are Maintaining their accounts and how general section accounts is merging all the activities of others sub-sections. This report is written from practical work experiences and consulting with the related division officers.


Theoretical Aspects of AIS 2.01 Overview of Accounting Information System:Accounting is an information system that identifies, records, communicates, analyze, and interpret the economic events of any business entity to interested users for decision making. Identifying economic events involves selecting the economic activities relevant to a particular organization. Once identified, economic events are recorded to provide a history of the organization’s financial activities. Recording consists of keeping a systematic chronological diary of events, measured in monetary terms. The identifying and recording activities are of little use unless the information is communicated to interested users. Financial information is communicated through accounting reports, commonly known as financial statements. A vital element in communicating economic events is the ability to analyze the reported information. Analysis involves the use of ratios, percentages, graphs, and charts to highlight significant financial trends and relationships. Interpretation involves explaining the uses, meaning, and limitations of reported data An Accounting information system is the system of records a business keeps maintaining its accounting system. This includes the purchase, sales, and other financial processes of the business. The purpose of AIS is to accumulate data and provide decision makers (investors, creditors, and managers) with information. While a paper-based process, most businesses now use accounting software. In an electronic financial accounting system, the steps in the accounting cycle are dependent upon the system itself. For example, some systems allow direct journal posting to the various ledgers and others do not. An accounting information system that produces timely and accurate financial information is a necessity for a company. Synopsis of An accounting information system process are listed below1. Analyze the effects of transactions on the accounting equation. Each business transaction has a dual effect on the accounting equation. For example, if an individual asset is increased, there must be a corresponding decrease in another asset, or increase in a specific liability, or increase in shareholders' equity.


2. Define debits and credits and explain how they are used to record transactions. The terms debit and credit are synonymous with left and right. Assets, dividends, and expenses are increased by debits and decreased by credits. The normal balance of these accounts is a debit balance. Liabilities, common shares, retained earnings, and revenues are increased by credits and decreased by debits. The normal balance of these accounts is a credit balance.

3. Identify the basic steps in the recording process. The basic steps in the recording process are a. Analyzing each transaction for its effect on the accounts, b. Entering the transaction information in a general journal, and c. Transferring the information in the general journal to the appropriate accounts in the general ledger. 4. Prepare a trial balance. A trial balance is a list of accounts and their balances at a specific time. The main purpose of the trial balance is to prove the mathematical equality of debits and credits after posting. A trial balance also uncovers errors in journalizing and posting and is useful in preparing financial statements. 2.01.1 Accounting Transactions: The system of collecting and processing transaction data and communicating financial information to decision-makers is known as the accounting information system. Accounting information systems vary widely. Some factors that shape these systems are the type of business and its transactions, the size of the company, the amount of data, and the information that management and others need. However, as the business and the number and type of transactions grew, an organized accounting information system became essential. An accounting information system begins with determining what relevant transaction data should


be collected and processed. Not all events are recorded and reported as accounting transactions. An accounting transaction occurs when assets, liabilities, or shareholders' equity items change as a result of some economic event. Analyzing Transactions- Means analyze the effects of transactions on the accounting equation, effect on each component of the accounting equation—assets, liabilities, and shareholders' equity.

Summary of Transactions- The cumulative effect on the basic accounting equation, the transaction number, the specific effects of the transaction, and the final balances are indicated. 1. Each transaction must be analyzed for its effect on the three primary components of the accounting equation (assets, liabilities, and shareholders' equity) and 2. The two sides of the equation must always be equal. 2.01.2 The Account: An account is an individual accounting record of increases and decreases in a specific asset, liability, or shareholders' equity item. Define debits and credits and explain how they are used to record transactions. In simplest form, an account consists of three parts: (1) the title of the account, (2) a left or debit side, and (3) a right or credit side. Debits and Credits - The term debit means left, and the term credit means right. These terms are commonly abbreviated as Dr. for debit and Cr. for credit. Debits and credits are merely directional signals used in the recording process to describe where entries are made in the accounts. For example, the act of entering an amount on the left side of an account is called debiting the account, and making an entry on the right side is crediting the account. When the totals of the accounting system, in which the dual (two-sided) effect of each transaction is recorded in appropriate accounts. This system provides a logical method for recording transactions and ensuring that amounts are recorded accurately. If every transaction is recorded with equal debits and credits, then the sum of all the debits to the accounts must equal the sum of all the credits.


Expanded Accounting Equation- Expands the basic accounting equation to show the types of accounts that make up shareholders' equity. Assets (on the left-hand side of the accounting equation) are increased by debits. Liabilities and shareholders' equity, on the other side of the equation, are increased by credits. Increases to accounts have to be of like signs, which is a way of saying that a debit will increase a debit account and a credit will increase a credit account. Thus, the equality of the accounting equation is preserved and debits always equal credits. 2.01.3 Steps in the Recording Process: Although it is possible to enter transaction information directly into the accounts, few businesses do so. Almost every business uses these basic steps in the recording process: 1. Analyze each transaction for its effect on the accounts. 2. Enter the transaction information in a general journal. 3. Transfer the journal information to the appropriate accounts in the general ledger The actual sequence of events begins with the transaction. Evidence of the transaction comes from a source document, such as a sales slip, cheque, bill, or cash register tape. This evidence is analyzed to determine the effect of the transaction on specific accounts. The transaction is then entered in the general journal. Finally, the journal entry is transferred to the designated accounts in the general ledger. The Recording Process Illustrated- A basic analysis and a debit-credit analysis are done before the journalizing and posting of each transaction. The purpose of transaction analysis is first to identify the type of account involved and then to determine whether a debit or a credit to the account is required. It is always need to perform this type of analysis before preparing a journal entry. Doing so will help to understand the journal entries. ďƒź Understand which events should be recorded. ďƒź Analyze the transactions. Determine which accounts are affected and whether the transaction increases or decreases the account.


 Record the transactions in the general journal, which provides a chronological record of the transactions.  Posting involves transferring the journalized debits and credits to specific T accounts in the general ledger.  Ledger accounts should be arranged in statement order.  Determine the ending balances of each ledger account by the total debits and credits. 2.01.4 The Trial Balance:A trial balance is a list of general ledger accounts and their balances at a specific time. A trial balance is normally prepared monthly and at least at the end of each accounting period. The accounts are listed in the order in which they appear in the ledger, with debit balances listed in the left column and credit balances in the right column. The totals of the two columns must be equal. The main purpose of a trial balance is to prove the mathematical equality of debits and credits after posting. Under the double-entry system, this equality will occur when the sum of the debit account balances equals the sum of the credit account balances. A trial balance also uncovers errors in journalizing and posting. A trial balance is also useful in the preparation of financial statements. The procedure for preparing a trial balance is as follows: 1. List the account titles and their balances. 2. Total the debit column and the credit column. 3. Verify the equality of the two columns. Accounts with zero balances, such as Accounts Receivable, are normally not included in the trial balance. Limitations of a Trial Balance- A trial balance do not prove that all transactions have been recorded or that the ledger is correct. Errors may exist even though the trial balance columns agree. For example, the trial balance may balance even when 1. A transaction is not journalized, 2. A correct journal entry is not posted, 3. A journal entry is posted twice,


4. Incorrect accounts are used in journalizing or posting, or 5. Errors that cancel each other's effect are made in recording the amount of a transaction. In other words, as long as equal debits and credits are posted, even to the wrong account or in the wrong amount, the total debits will equal the total credits. Nevertheless, despite its limitations, the trial balance is a useful screen for finding errors.  Reorder the accounts as they would normally appear in the general ledger—balance sheet accounts are listed first (assets, liabilities, and equity), and then statement of earnings accounts (revenues and expenses).  Determine whether each account has a normal debit or credit balance  List the amounts in the appropriate debit or credit column  Total the trial balance columns. Total debits must equal total credits or a mistake has been made. AIS Technology:Combine the study and practice of accounting with the design, implementation, and monitoring of information systems. Such systems use modern information technology resources together with traditional accounting controls and methods to provide users the financial information necessary to manage their organizations. Input: - The input devices commonly associated with AIS include: standard personal computers or workstations running applications; scanning devices for standardized data entry; electronic communication devices for electronic data interchange (EDI) and e-commerce. In addition, many financial systems come "Web-enabled" to allow devices to connect to the World Wide Web. Process: - Basic processing is achieved through computer systems ranging from individual personal computers to large-scale enterprise servers. However, conceptually, the underlying processing model is still the "double-entry" accounting system initially introduced in the fifteenth century. Output: - Output devices used include computer displays, impact and nonimpact printers, and electronic communication devices for EDI and e-commerce. The output content may


encompass almost any type of financial reports from budgets and tax reports to multinational financial statements. Development of AIS: The development of AIS includes five basic phases: planning, analysis, design, implementation, and support. The time period associated with each of these phases can be as short as a few weeks or as long as several years. Planning-project management objectives and techniques: - The first phase of systems development is the planning of the project. This entails determination of the scope and objectives of the project, the definition of project responsibilities, control requirements, project phases, project budgets, and project deliverables. Analysis- The analysis phase is used to both determine and document the accounting and business processes used by the organization. Such processes are redesigned to take advantage of best practices or of the operating characteristics of modern system solutions. Data analysis is a thorough review of the accounting information that is currently being collected by an organization. Current data are then compared to the data that the organization should be using for managerial purposes. This method is used primarily when designing accounting transaction processing systems. Decision analysis is a thorough review of the decisions a manager is responsible for making. The primary decisions that managers are responsible for are identified on an individual basis. Then models are created to support the manager in gathering financial and related information to develop and design alternatives, and to make actionable choices. This method is valuable when decision support is the system's primary objective. Process analysis is a thorough review of the organization's business processes. Organizational processes are identified and segmented into a series of events that either add or change data. These processes can then be modified or reengineered to improve the organization's operations in terms of lowering cost, improving service, improving quality, or improving management information. This method is appropriate when automation or reengineering is the system's primary objective. Design- The design phase takes the conceptual results of the analysis phase and develops detailed, specific designs that can be implemented in subsequent phases. It involves the


detailed design of all inputs, processing, storage, and outputs of the proposed accounting system. Inputs may be defined using screen layout tools and application generators. Processing can be shown through the use of flowcharts or business process maps that define the system logic, operations, and work flow. Logical data storage designs are identified by modeling the relationships among the organization's resources, events, and agents through diagrams. Also, entity relationship diagram (ERD) modeling is used to document large-scale database relationships. Output designs are documented through the use of a variety of reporting tools such as report writers, data extraction tools, query tools, and on-line analytical processing tools. Reporting is the driving force behind an AIS development. If the system analysis and design are successful, the reporting process provides the information that helps drive management decision making. Accounting systems make use of a variety of scheduled and on-demand reports. The reports can be tabular, showing data in a table or tables; graphic, using images to convey information in a picture format; or matrices, to show complex relationships in multiple dimensions. There are numerous characteristics to consider when defining reporting requirements. The reports must be accessible through the system's interface. They should convey information in a proactive manner. They must be relevant. Accuracy must be maintained. Lastly, reports must meet the information processing (cognitive) style of the audience they are to inform. Reports are of three basic types: A filter report that separates select data from a database, such as a monthly check register; a responsibility report to meet the needs of a specific user, such as a weekly sales report for a regional sales manager; a comparative report to show period differences, percentage breakdowns and variances between actual and budgeted expenditures. An example would be the financial statement analytics showing the expenses from the current year and prior year as a percentage of sales. Screen designs and system interfaces are the primary data capture devices of AISs and are developed through a variety of tools. Storage is achieved through the use of normalized databases that assure functionality and flexibility. Business process maps and flowcharts are used to document the operations of the systems. Modern AISs use specialized databases and processing designed specifically for accounting operations. This means that much of the base processing capabilities come delivered with the accounting or enterprise software. Implementation- The implementation phase consists of two primary parts: construction and delivery. Construction includes the selection of hardware, software and vendors for the


implementation; building and testing the network communication systems; building and testing the databases; writing and testing the new program modifications; and installing and testing the total system from a technical standpoint. Delivery is the process of conducting final system and user acceptance testing; preparing the conversion plan; installing the production database; training the users; and converting all operations to the new system. Tool sets are a variety of application development aids that are vendor-specific and used for customization of delivered systems. They allow the addition of fields and tables to the database, along with ability to create screen and other interfaces for data capture. In addition, they help set accessibility and security levels for adequate internal control within the accounting applications. Security exists in several forms. Physical security of the system must be addressed. In typical AISs the equipment is located in a locked room with access granted only to technicians. Software access controls are set at several levels, depending on the size of the AIS. The first level of security occurs at the network level, which protects the organization's communication systems. Next is the operating system level security, which protects the computing environment. Then, database security is enabled to protect organizational data from theft, corruption, or other forms of damage. Lastly, application security is used to keep unauthorized persons from performing operations within the AIS. Testing is performed at four levels. Stub or unit testing is used to insure the proper operation of individual modifications. Program testing involves the interaction between the individual modification and the program it enhances. System testing is used to determine that the program modifications work within the AIS as a whole. Acceptance testing ensures that the modifications meet user expectations and that the entire AIS perform as designed. Conversion entails the method used to change from old AIS to new AIS. There are several methods for achieving this goal. One is to run the new and old systems in parallel for a specified period. A second method is to directly cut over to the new system at a specified point. A third is to phase in the system, either by location or system function. A fourth is to pilot the new system at a specific site before converting the rest of the organization. Support- The support phase has two objectives. The first is to update and maintain the AIS. This includes fixing problems and updating the system for business and environmental changes. For example, changes in generally accepted accounting principles (GAAP) or tax laws might necessitate changes to conversion or reference tables used for financial reporting.


The second objective of support is to continue development by continuously improving the business through adjustments to the AIS caused by business and environmental changes. These changes might result in future problems, new opportunities, or management or governmental directives requiring additional system modifications. Assurance, Audit, and Attestation: - Quality control of AISs involves many activities, including the services of both external auditors (public accountants) and internal auditors. External auditors can provide a variety of services, including providing assurance that the controls over external financial reporting are adequate and attestations that the external financial statement are "fairly presented" in accordance with GAAP. Internal auditors focus on providing assurance that AISs are effective and efficient in providing information to assist managerial decision making. Continuous improvement of AISs changes the way internal controls are implemented and the types of audit trails that exist within a modern organization. The lack of traditional forensic evidence, such as paper, necessitates the involvement of accounting and auditing professionals in the design of such systems. After the implementation, the focus of attestation is the review and verification of system operation. Enterprise resource planning (ERP): - ERP systems are large-scale information systems that impact an organization's AIS. These systems permeate all aspects of the organization and require technologies such as client/server and relational databases. Other system types that currently impact AISs are supply chain management (SCM) and customer relationship management (CRM). Traditional AISs recorded financial information and produced financial statements on a periodic basis according to GAAP pronouncements. Modern ERP systems provide a broader view of organizational information, enabling the use of advanced accounting techniques, such as activity-based costing (ABC) and improved managerial reporting using a variety of Analytical Techniques. 2.04 Strategic Management Accounting Information Systems: Strategic management accounting information systems involve linking long-term or strategic goals of an organization with performance evaluation outcomes. An organization through strategic planning makes decisions on the types of business and the markets it operates in. This process also involves the financing aspects of the activities. The management accounting and control systems in turn, processes information on the various activities through the data collection, information processing and communicates such information to higher management through internal reports.


2.04.1 Cost Accounting System: - A cost accounting system includes in general two steps, the cost accumulation by classifying costs into categories and the assignment of costs to cost objects. The first one refers to the collection of costs by using classification criteria, like the relevance of costs or the cost behavior. Different decisions require the consideration of different types of costs. Hence, as a first step, it is very helpful for decision-making to categorize costs as fixed or variable, relevant or irrelevant and direct or indirect. For example, the make-or-buy decisions should focus on relevant costs in a particular decision situation. The classification method of direct and indirect costs, in particular, is important for the cost accounting system, which becomes apparent in the latter step that deals with the assignment and allocation of costs to its cost objectives. Cost allocation deals only with indirect costs that are allocated to a cost object. On the contrary, the assignment of direct costs to a cost driver is called cost tracing. In general, two main methods of allocating indirect costs can be identified. This is wide-spread Traditional Accounting System, which is rather old, and Activity Based Costing (ABC). The first one is based on the idea of arbitrary allocation, for example direct labor hours are used as a foundation to allocate costs of materials to a cost object. Thus, the proportion of total indirect resource costs that is assigned to a cost object depends on the proportion of a volume-based cost driver. Often only one cost-driver is used, like e.g. machine hours. It is common to treat this difference as periodic cost and to add or delete it from the profit or loss of the period.

Organizations that are occupied with lots of similar activities and

repetitive production steps frequently use these standard costs. The function of both allocation systems can be described by using a two-step framework as proposed by Drury. 2.04.2 Information Systems in Context: - AISs cover all business functions from backbone accounting transaction processing systems to sophisticated financial management planning and processing systems. Financial reporting starts at the operational levels of the organization where the transaction processing systems capture important business events such as normal production, purchasing, and selling activities. These events (transactions) are classified and summarized for internal decision making and for external financial reporting. Cost accounting systems are used in manufacturing and service environments. These allow organizations to track the costs associated with the production of goods and/or performance of services. In addition, the AIS can provide advanced analyses for improved resource allocation and performance tracking.


Management accounting systems are used to allow organizational planning, monitoring, and control for a variety of activities. This allows managerial-level employees to have access to advanced reporting and statistical analysis. The systems can be used to gather information, to develop various scenarios, and to choose an optimal answer among alternative scenarios. 2.05 Traditional & Computarized Accounting Information System:2.05.1 Accounting Information Systems:Accounting Information Systems (AIS) are systems that are used to record the financial transactions of a business or organization. The system combines the methodologies, controls and accounting techniques with the technology of the IT industry: computers, software and the user interface. The software used to track transactions provides internal reporting data, external reporting data, financial statements, and trend analysis capabilities. This information is essential to decision makers and top executives AIS: - The ledger book and pencil have been replaced by a computer and keyboard. Since the data is entered by people, errors in the data do still occur. The software records the data into accounts that track to the proper places within the assets, liabilities and equity columns. This information can be queried, combined, sorted, and reproduced to create many different evaluative tools or reports. Input Devises: - The input devices are computers, clone workstations, fax machines, and scanners. The secondary input tolls are the keyboard and mouse. All of these tools are available to help get the information into the storage drive of the computer system. The software that the user interfaces with can be either server or we based. Software loaded onto a company server is much more secure than information downloaded to a web based software package. It is important to remember to back up oner material twice every day. Output Devises: - When one wants to create a statement or report one will need to extract the information from the accounting information system through an output devise. These kinds of devises include printers, electronic transfer methods or PDAs. The information entered goes through a process of being coded by the software. This way, the computer generates the financial reports, and the user does not have to spend her time creating one. As long as the data was entered properly, the data that comes out will be accurate. The Effects of AIS: - Accounting information systems come in all sizes. The software that a large company uses will be very different from a small business. Large corporations have complex accounting issues like: derivatives, real estate, stocks, bonds, investments and


multiple divisions, locations, and products. Smaller companies often do not have as many of these complex issues. Therefore, the software has to be much more robust as does the AIS itself. The enterprise resource planning system (ERP System) is large-scale AIS that are used for such companies. They use high end technology that is present throughout the organization. These large systems also have applications in the supply chain management and financial reporting arenas. The accounting regulation and code is built into the software. Software: - Accounting information systems have made the job of bookkeeping and accounting much easier. The knowledge needed to be an accountant is still necessary. However, much of the time intense work can now be done with fewer employees in a shorter time period. Accounting information systems have revolutionized the industry of accounting, tax compliance and attestation. 2.05.2 Computerized Accounting: Accounting information systems are very popular with businesses. They are not that expensive, providing useful and timely information to management. Accounting information systems can be used to book account payables, receivables, cash transactions and all other accounting functions in a systematic manner. Accounting departments handle high volume of transactions and having an effective information system is a must. Computerized accounting is a beneficial use of current technological advances. Not only has it revolutionized the traditional paper methods of accounting, but it has also created new types of accounting applications for business. Companies now create entire accounting information systems that integrate all business operations, including external suppliers and vendors in the value chain. Computerized: - When dealing with accounting information systems nowadays, the assumption is that we are dealing with a computerized system, not pencil and paper. The accounting system does the same processes as a manual system; the principles are the same, but a computer performs the functions. Many computerized systems take advantage of batch processing, where many similar transactions are processed together. This is the case in processing accounts payable, where many bills are paid at once, saving time. Modules: - Accounting information systems are often made up of modules, also known as sub-systems, such as: the General Ledger module, which contains most of accounting information on a detail level; the Accounts Receivable module which contains customers or client's information with details; Accounts Payable module which contains information on vendors and usually allows for checks to be printed out for payment; and Inventory which controls inventory transactions and usually linked with sales information.


Each module has its own functionality, such as an aging report in the accounts receivable module, showing who owes the business what and for how long. Many times all these modules are integrated, providing firms with a very efficient accounting information system. Reports: - Ease of report is a major feature of an accounting system, which is capable of summarizing and compiling financial reports. Most systems have standard reports, such as balance sheet and income statement embedded in the system. All one need to do is to select a period for the reports and press a button. Reports can be customized as well, increasing the versatility of a system in creating reports. Because it is so easy to run reports, they can help in identifying errors, increasing accuracy and efficiency of accounting operations. Warnings: - An accounting information system can contain errors. Numbers could be mistyped, journal entries may contain wrong accounts, and transactions could be misclassified. Because of the high volume of transactions going through an accounting department, errors can be expected. To help to identify and correct these errors, usually reconciliations are done and should be part of the systematic way of processing transactions in accounting. Cash reconciliation is a standard process done once a month comparing numbers in bank statement and in general ledger. As these numbers are compared, issues are found and resolved. Many systems provide help in this area. Cloud: - Cloud computing is the latest trend in the accounting information system world. Instead of dealing with servers and locally stored software and files, the place where software files reside are off-site, in the cloud. Intuit, for instance, started offering tax and accounting software on its cloud- using its own machines to process and save data. If something happens to one computer, the data and system are off-site and safe. Enterprise Systems: - Enterprise resource systems are a relatively new type of computer management system that includes several functions of traditional accounting software. An enterprise resource system has every major business operation linked into one software system that accountants can use to retrieve pertinent financial information and input into the accounting module. This type of management software is used in large organizations to increase the speed and availability of financial information. Value Chain: - Computerized value chains allow the traditional enterprise resource system to import and export certain types of financial information to outside suppliers and vendors. Value chains are extensively used in manufacturing operations to plan for materials purchase


and finished goods transport to wholesalers and retailers. Computerized accounting software will transmit order information and purchase orders to suppliers for production materials as orders come into the system from wholesalers and retailers. This shortens the lead time between production and sales, increasing the company's profitability. Web-Based: - With all the information being transmitted through the enterprise resource system and external suppliers and vendors, many computerized accounting programs are Internet-based. This allows companies to use pre-existing fiber-optic communication lines for accessing accounting software information. Internet-based programs also allow companies to use instant-messaging and email communication methods to transmit purchasing information. Additionally, companies are now using online money transfers to pay for goods, cutting down on payment processing delays. Networking: - Another important feature of computerized accounting is the ability to have several accountants access the system internally to review and process the financial information. Companies usually set up an intranet, which allows users to access information on their personal computer through a server-based system. These intranets, called local-area networks, are extremely reliable and cost-efficient for companies to install. They improve employee productivity, communication and financial integrity through the various safety controls employed by company management. Functionality: - The most important part of a computerized accounting system is the improved functionality it provides to internal accountants. Most accounting software can have financial information imported from external enterprise resource or value chain systems, allowing accountant to simply review and correct and problems. These programs also have internal calculation checks that look for value errors, printing an exception report for accountants to review these problems. Financial information can also be exported into financial statements for final review by accounting management 2.05.3 Computerized Accounting Systems: Computerized accounting systems are complex software programs developed to enhance traditional accounting methods. These systems are implemented company-wide, allowing accountants to collect and analyze data from all parts of the company. Types: - Several different types of computerized accounting systems are available in the software market. Companies can choose low-price standard software or have a special system custom-made for a higher price.


Networking: - Computerized accounting software can be networking using the Internet, allowing a single accounting office to perform accounting functions for several locations. Some companies outsource accounting functions globally using their accounting software. Functions: - Accounting software has the ability to complete a vast array of functions, including general ledger, fixed assets, and payroll and reconciliation tasks. Most functions calculate and present data electronically, allowing accountants the ability to review and correct the information as needed. Storage: - Most companies utilize electronic storage options when implementing computerized accounting systems. Using data servers or other electronic storage limits the amount of paper a company needs to physically store in their files. Careers: - Many new career options are available in the computerized accounting field. Database administrators, network managers and technical consultants are all valuable positions for maintaining a computerized accounting system. 2.06 Manual vs. Computerized Accounting Systems:Accounting for the financial transactions of a business is an important function of daily operations. Developing and using a proper accounting system will ensure that all transactions are recorded correctly and accurately on the company's general ledger. Technological advances ease the accounting process for many businesses. Manual Accounting: - Manual accounting systems utilize several paper ledgers to record financial transactions. Companies have separate ledgers for each part of the accounting system, such as accounts payable, accounts receivable and sales. Accountants then consolidate these ledgers into one general ledger, providing the balance for each ledger. The general ledger notebook assists in creating financial statements. Manual Accounting Benefits: - While tedious and time consuming, manual accounting systems offers some benefits. The ledgers are easy to review, and accountants can make simple changes if necessary; individual accounts are easily reconciled because information is in systematic order through each ledger. Accountants also have the benefit of physically handling each ledger and creating notes in customer accounts regarding any issues that need clarification or corrections. Computerized Accounting: - Spreadsheets and accounting information systems require accountants to enter financial data into them, and then mathematical algorithms compute the information into the necessary ledgers and financial statements. Computerized systems also


allow accountants to create trending analysis and report any variances quickly and accurately. Additionally, transactions from all company divisions are accessible through computerized accounting systems, giving accountants better access to financial information. Computerized Accounting Benefits: - Computerized accounting offers several more benefits than manual accounting; accountants process more information quicker, formulas verify calculated totals and errors are less common. Accounting systems also are customizable by industry, allowing accountants the opportunity to use preset templates for their general ledger. Accountants also can store several years of financial information with relative ease, giving them the opportunity to review previous year's information without sorting through stacks of paper ledgers. Best Method: - Most companies will use a computerized accounting system for recording and presenting their financial information. This system allows companies to record business transactions accurately and generate financial reports quickly for management review. While the functions of manual accounting have changed, it will never go away completely. Accountants must review the information presented on financial reports from the accounting system and ensure that it is accurate and valid. Accountants must also ensure that all financial information follows the Generally Accepted Accounting Principles and any other guidelines from regulatory agencies. 2.07 The Advantages of a Computerized Accounting System: Companies often use a computerized accounting system to process and maintain accounting transactions and records. The system absorbs and stores this data by using modules such as accounts payables, accounts receivables, trial balance and payroll. A computerized accounting system is either specifically designed for a certain company or it is purchased from a third-party. A computerized accounting system is a valuable tool for many companies. Speed: - The system processes data rapidly. Once the information is keyed into the related module such as payroll or accounts payable, the system processes and stores it instantly. Automatic Generation: - The majority of computerized accounting systems have features such as order-entry and generation of associated invoices. The employer can create accounts for their clients, storing their names, addresses, orders and invoices for as long as necessary. A computerized system also allows the employer to make and print account statements. Further, many accounting systems have a payroll feature, which enables complete payroll processing, including the generation and printing of checks and reports.


Timeliness: - The employer is able to print and reprint customer orders, invoices, and all other accounting transactions as required. He can also easily find employees' payroll data such as current address and pay amount without having to search through filing cabinets to locate personnel files. Eradicates Manual Processing: - A computerized accounting system eliminates manual processing. The latter involves processing and recording the company's incomes, expenses, profits, losses, and reconciliation by hand, creating much room for error. Payroll transactions and the business' tax transactions are also recorded manually. With a computerized accounting system, the employer has a smoother record-keeping and balancing process. Staff Motivation: - A computerized accounting system often requires the staff to undergo training to learn new skills, making them feel motivated. Further, the employer can outsource training to a representative from the software company, creating less pressure on staff members to administer the training themselves. Simplifies Audits: - If the federal or state government decides to audit the company, a computerized accounting system simplifies the process. Normally, before the audit takes place, the auditor notifies the employer by mail about the specific documents required for the audit. Depending on the nature of the audit, documents may include tax statements, payroll registers and chart of accounts. A computerized accounting system can store many years of information. If the audit requires it, the employer can access information dating from many years back. If, during the audit, the auditor spontaneously requests an accounting document, the employer can quickly retrieve it from the system instead of rummaging through storage boxes to locate hard copies. Reduces Embezzlement: - Computerized accounting software makes it difficult for employees to steal money from the company. For example, if a payroll employee tries to pay herself more than the allowed amount, her theft will most likely be discovered because the accounting system stores all saved transactions. 2.08 Functions of Accounting & Information System: Collect and store data about events, resources, and agents. Transform that data into information that management can use to make decisions about events, resources, and agents. Provide adequate controls to ensure that the entity’s resources (including data) are: ďƒ˜ Available when needed


 Accurate and reliable The Basic Functions of an Accounting Information System: An accounting information system (AIS) provides financial information about a business. This information helps managers plan and control operations and provides reports to outside parties such as stockholders, creditors and government agencies. Parts of an accounting information system might include financial reporting, cost accounting, management accounting and enterprise resource planning (ERP). Well-designed AIS gives a business a consistent way to view and analyze financial information and has three basic functions. Collect and Store Data: - One function of an accounting information system is to efficiently and effectively collect and store data about business activities and transactions. The system must capture transaction data on source documents, record transaction data in journals to present a chronological record of transactions, and post data from journals to ledgers that sort the data by account type. Provide Information: - The second function of an accounting information system is to provide information useful for making decisions. This information usually involves reports in the form of financial statements and managerial reports. Provide Controls: - The third function of an accounting information system is to incorporate controls to ensure the accurate recording and processing of data. The system must make certain that the information that comes out of the system is reliable, ensure that business activities are efficient and in line with management's objectives and keep business assets safe. Traditionally, bookkeepers and accountants did the work of accounting systems by hand on paper, but today much of the work is automated with computers. Setting up an accounting information system requires knowledge of topics such as database design and development, business process analysis, accounting applications, internal control requirements, information technology (IT) auditing and accounting requirements. 2.9 Role of AIS in the Value Chain:  The objective of most organizations is to provide value to their customers.  While “adding value” is a commonly used buzzword, in its genuine sense, it means making the value of the finished component greater than the sum of its parts.  It may mean:  Making it faster


 Making it more reliable  Providing better service or advice  Providing something in limited supply (like O-negative blood or rare gems)  Providing enhanced features  Customizing it  Value is provided by performing a series of activities referred to as the value chain. These include: o Primary activities o Support activities  Primary activities include: – Inbound logistics- Receiving, storing, and distributing the materials that are inputs to the organization’s product or service. For a pharmaceutical company, this activity might involve handling incoming chemicals and elements that will be used to make their drugs. Operations- Transforming those inputs into products or services. For the pharmaceutical company, this step involves combining the raw chemicals and elements with the work of people and equipment to produce the finished drug product that will be sold to customers. Outbound logistics- Distributing products or services to customers. For the pharmaceutical company, this step involves packaging and shipping the goods to drug stores, doctors, and hospitals. Marketing and sales- Helping customers to buy the organization’s products or services. A pharmacy rep may visit with drug stores, doctors, etc. to inform them about their products and take orders. Service- Post-sale support provided to customers such as repair and maintenance functions. A pharmaceutical firm will typically not be repairing its product (though the product may be periodically reformulated). The pharmaceutical company is more likely to be providing advisory services to pharmacists, etc.


 Support activities Firm infrastructure- Accountants, lawyers, and administration Includes the company’s accounting information system. Human resources- Involves recruiting and hiring new employees, training employees, paying employees, and handling employee benefits. Technology- Activities to improve the products or services (e.g., R&D, website development). For the pharmaceutical company, these activities would include research and development to create new drugs and modify existing ones. Purchasing- Buying the resources (e.g., materials, inventory, and fixed assets) needed to carry out the entity’s primary activities. In the pharmaceutical company, the purchasing folks are trying to get the best combination of cost and quality in buying chemicals, supplies, and other assets the company needs to run its operations.  Information technology can significantly impact the efficiency and effectiveness with which the preceding activities are carried out.  An organization’s value chain can be connected with the value chains of its customers, suppliers, and distributors.  There is variation in the degree of structure used to make decisions: Structured decision

Repetitive and routine

Can be delegated to lower-level employees

Example: Deciding whether to write an auto insurance policy for a customer with a clean driving history.

Semi structured decision

Incomplete rules

Require subjective assessments

Example: Deciding whether to sell auto insurance to a customer with a tainted driving history.

Structured decisions-


Non-recurring and non-routine

Require a great deal of subjective assessment

Example: Deciding whether to begin selling a new type of insurance policy

 There is also variation in the scope of a decision’s effect: Occupational control decisions

Relate to performance of specific tasks

Often of a day-to-day nature

Example: Deciding whether to order inventory

Management control decisions

Relate to utilizing resources to accomplish organizational objectives

Example: Budgeting

Strategic planning decisions

The “what do we want to be when we grow up” types of questions

Involves establishing

Organizational objectives

Policies to achieve those objectives

Example: Deciding whether to diversify the company into other product lines.

 In general, the higher a manager is in the organization, the more likely he/she is to be engaging in: 

Less structured decisions

Broader scope / strategic planning decisions

2.10 The AIS and Corporate Strategy:  Corporations have: 

Unlimited opportunities to invest in technology


Limited resources to invest in technology

 Consequently, they must identify the improvements likely to yield the highest return.  This decision requires an understanding of the entity’s overall business strategy.  Michael Porter suggests that there are two basic business strategies companies can follow: Product-differentiation strategyA product differentiation strategy involves setting your product apart from those of your competitors, i.e., building a “better” mousetrap by offering one that’s faster, has enhanced features, etc. Low-cost strategyA low-cost strategy involves offering a cheaper mousetrap than your competitors. The low cost is made possible by operating more efficiently.  Porter also argues that companies must choose a strategic position among three choices: Variety-based strategic position

Offer a subset of the industry’s products or services.

Example: An insurance company that only offers life insurance as opposed to life, health, property-casualty, etc.

Needs-based strategic position

Serve most or all of the needs of a particular group of customers in a target market.

Example:

The original Farm Bureau-based insurance companies provided a

portfolio of insurance and financial services tailored to the specific needs of farmers. Access-based strategic position

Serve a subset of customers who differ from others in terms of factors such as geographic location or size.

Example: Satellite Internet services are intended primarily for customers in rural areas who cannot get DSL or cable services.


 These strategic positions are not mutually exclusive and can overlap.  Choosing a strategic position is important because it helps a company focus its efforts as opposed to trying to be everything to everybody.  It’s critical to design the organization’s activities so they reinforce one another in achieving the selected strategic position. The result is synergy, which is difficult for competitors to imitate.  The growth of the Internet has profoundly affected the way value chain activities are performed:  Inbound and outbound logistics can be streamlined for products that can be digitized, like books and music.  The Internet allows companies to cut costs, which impacts strategy and strategic position.  Because the Internet is available to everyone, intense price competition can result. The outcome may be that many companies shift from low-cost to productdifferentiation strategies.  The Internet may impede access-based strategic positions.  The AIS should help a company adopt and maintain its strategic position.  Requires that data be collected about each activity.  Requires the collection and integration of both financial and no financial data. Accounting and information systems should be closely integrated. The AIS should be the primary information system to provide users with information they need to perform their jobs. 2.11 Designing an Accounting System:  Businesses engage in a variety of activities, including: 

Acquiring capital

Buying buildings and equipment

Hiring and training employees


Purchasing inventory

Doing advertising and marketing

Selling goods or services

Collecting payment from customers

Paying employees

Paying taxes

Paying vendors

 Types of information needed for decisions: 

Some is financial

Some is no financial

Some comes from internal sources

Some comes from external sources

 An effective AIS needs to be able to integrate information of different types and from different sources.  The interaction is typically two-way, in that the AIS sends information to and receives information from these parties. 2.12 Accounting System for an Organization: Computer based accounting system and its basics:  Many accounting software packages implement the different transaction cycles as separate modules. 

Not every module is needed in every organization, e.g., retail companies don’t have a production cycle.

Some companies may need extra modules.

The implementation of each transaction cycle can differ significantly across companies.

 However the cycles are implemented, it is critical that the AIS be able to:


Accommodate the information needs of managers

Integrate financial and no financial data.

 Accountants play an important role in data processing. They answer questions such as: 

What data should be entered and stored?

Who should be able to access the data?

How should the data be organized, updated, stored, accessed, and retrieved?

How can schedule and unanticipated information needs be met? To answer these questions, they must understand data processing concepts.

2.13 Transaction Processing: The Data Processing Cycle An important function of the AIS is to efficiently and effectively process the data about a company’s transactions o In manual systems, data is entered into paper journals and ledgers. o In computer-based systems, the series of operations performed on data is referred to as the data processing cycle. The data processing cycle consists of four steps:

Data input

Data storage

Data processing

Information output

Data input:  The first step in data processing is to capture the data.  Usually triggered by a business activity.  Data is captured about: 

The event that occurred

The resources affected by the event


The agents who participated

 A number of actions can be taken to improve the accuracy and efficiency of data input  Turnaround documents Example: The stub on your telephone bill that you tear off and return with your check when you pay the bill.  The customer account number is coded on the document, usually in machine-readable form, which reduces the probability of human error in applying the check to the correct account.  Source data automation Capture data with minimal human intervention. Examples: ATMs for banking, point of sale (POS) scanners retail stores, automated gas pumps that accept your credit card  Well-designed source documents and data entry screens  How do these improve the accuracy and efficiency of data input?  Using pre-numbered documents or having the system automatically assign sequential numbers to transactions  What does it mean if a document number is missing in the sequence?  Verify transactions Example: Check for inventory availability before completing an online sales transaction. •

Data storage: Data needs to be organized for easy and efficient access. Let’s start with some vocabulary terms with respect to data storage.

 Ledger A ledger is a file used to store cumulative information about resources and agents. We typically use the word ledger to describe the set of t-accounts. The t-account is where we


keep track of the beginning balance, increases, decreases, and ending balance for each asset, liability, owners’ equity, revenue, expense, gain, loss, and dividend account. General ledger- The general ledger is the summary level information for all accounts. Detail information is not kept in this account. Subsidiary ledger- The subsidiary ledgers contain the detail accounts associated with the related general ledger account.  The related general ledger account is often called a “control” account.  The sum of the subsidiary account balances should equal the balance in the control account.  Coding techniques Coding is a method of systematically assigning numbers or letters to data items to help classify and organize them. There are many types of codes including:  Sequence codes  Block codes  Group codes  With sequence codes, items (such as checks or invoices) are numbered consecutively to ensure no gaps in the sequence. The numbering helps ensure that: 

All items are accounted for

There are no duplicated numbers, which would suggest errors or fraud

 When block codes are used, blocks of numbers within a numerical sequence are reserved for a particular category.  When group codes are used, two or more subgroups of digits are used to code an item. Group coding schemes are often used in assigning general ledger account numbers. The following guidelines should be observed: 

The code should be consistent with its intended use, so make sure you know what users need.

Provide enough digits to allow room for growth.


 Keep it simple in order to: 

Minimize costs

Facilitate memorization

Ensure employee acceptance

 Make sure it’s consistent with: 

The company’s organization structure

Other divisions of the organization

 Chart of accounts  The chart of accounts is a list of all general ledger accounts an organization uses.  Group coding is often used for these numbers, e.g. 

The first section identifies the major account categories, such as asset, liability, revenue, etc.

The second section identifies the primary sub-account, such as current asset or long-term investment.

The third section identifies the specific account, such as accounts receivable or inventory.

The fourth section identifies the subsidiary account, e.g., the specific customer code for an account receivable.

The structure of this chart is an important AIS issue, as it must contain sufficient detail to meet the organization’s needs.

 Journals In manual systems and some accounting packages, the first place that transactions are entered is the journal.  A general journal is used to record:  Non-routine transactions, such as loan payments  Summaries of routine transactions


 Adjusting entries  Closing entries  A special journal is used to record routine transactions. The most common special journals are:  Cash receipts  Cash disbursements  Credit sales  Credit purchases  Audit trail  An audit trail exists when there is sufficient documentation to allow the tracing of a transaction from beginning to end or from the end back to the beginning.  The inclusion of posting references and document numbers enable the tracing of transactions through the journals and ledgers and therefore facilitate the audit trail.  Other thinks about data storage  A journal entry is made for each transaction showing the accounts and amounts to be credited.  Journal entries will be written in the following ways:  Entries are originally made in the general journal only for 

Non-routine transactions.

Summaries of routine transactions

 Routine transactions are originally entered in special journals. The most common special journals are:  Credit sales  Cash receipts  Credit purchases  Cash disbursements


Computer -based data storage: - Computer based data storage includes: o Entity o Attribute o Record o Data Value o Field o File o Master File o Transaction File o Database

 Entity- An entity is something about which information is stored.  Attribute- Attributes are characteristics of interest with respect to the entity. Some attributes that a student information system typically stores about the student entity are:  ID number  Phone number  Address  Field- A field is the physical space where an attribute is stored.  Record- A record is the set of attributes stored for a particular instance of an entity.  Data value- A data value is the intersection of the row and column.  File- A file is a group of related records.  Master file- A master file is a file that stores cumulative information about an organization’s entities. It is conceptually similar to a ledger in manual AIS in that:  The file is permanent


 The file exists across fiscal periods  Changes are made to the file to reflect the effects of new transactions.  Transaction file- A transaction file is a file that contains records of individual transactions (events) that occur during a fiscal period. It is conceptually similar to a journal in manual AIS in that:  The files are temporary  The files are usually maintained for one fiscal period  Data base- A database is a set of interrelated, centrally-coordinated files. •

Data processing: -

Data processing (DP) a term used predominantly in the context of industrial, business, governmental, and other organizations: within that context it refers  To a class of computer applications  To a function within the organization While it is hard to generalize, data-processing applications may be characterized as those that store and process large quantities of data on a routine basis, in order to be able to produce information that is predictably needed by an organization's employees, by its customers or suppliers, by government, or by any other organization. They are often referred to broadly as commercial applications. Typical applications within this category include financial accounting, cost and management accounting, market research and sales forecasting, order processing, investment analysis, financial modeling, stock control, production planning and control, transport planning and control, payroll, and personnel records. The most commonly used language for data processing, though it has progressively been usurped by more modern high-level languages and by fourth-generation languages. The data-processing function within an organization is that department responsible for the development and operation of application systems on behalf of other parts of the organization. Its tasks normally include systems analysis and design, program development and maintenance, database administration, computer operation, data preparation, data control, and network management. The data-processing department may not, however, be responsible


for all data-processing applications within an organization, especially in the face of the widespread use of individual desktop computers, and conversely it may have responsibility for some applications that are not usually thought of as data processing. The term data processing is used in contexts other than the one described above: for instance, scientific data processing means the fairly straightforward processing of large quantities of experimental results, and personal data processing means an individual's use of a microcomputer to keep personal records Once data about a business activity has been collected and entered into a system, it must be processed. There are four different types of file processing:  Updating data to record the occurrence of an event, the resources affected by the event, and the agents who participated, Example: - recording a sale to a customer.  Changing data, Example:- a customer address  Adding data, Example: - a new customer.  Deleting data, Example: - removing an old customer that has not purchased anything in 5 years.  Updating can be done through several approaches:  Batch processing Source documents are grouped into batches, and control totals are calculated. Periodically, the batches are entered into the computer system, edited, sorted, and stored in a temporary file. The temporary transaction file is run against the master file to update the master file. Output is printed or displayed, along with error reports, transaction reports, and control totals.  On-line Batch Processing Transactions are entered into a computer system as they occur and stored in a temporary file. Periodically, the temporary transaction file is run against the master file to update the master file. The output is printed or displayed.  On-line, Real-time Processing Transactions are entered into a computer system as they occur. The master file is immediately updated with the data from the transaction. Output is printed or displayed.


Information output:The final step in the information process is information output. This output can be in the form of:

 Documents  Documents are records of transactions or other company data. Example: Employee paychecks or purchase orders for merchandise  Documents generated at the end of the transaction processing activities are known as operational documents (as opposed to source documents).  They can be printed or stored as electronic images.  Reports  Reports are used by employees to control operational activities and by managers to make decisions and design strategies. They may be produced: 

on a regular basis

on an exception basis

on demand

 Organizations should periodically reassess whether each report is needed.  Queries  Queries are user requests for specific pieces of information. They may be requested: 

Periodically

One time

 They can be displayed: 

On the monitor, called soft copy

On the screen, called hard copy

Background of EXCEL Real Estate & Development Limited 3.01 Overview: -


EXCEL Real Estate & Development Limited Acquiring an apartment a home or an office is a person's life-long dream becoming a reality. This dream drives him into accumulating the required finance slowly and gradually which is the start of shaping dreams into reality. This relentless pursuit of turning one's dream into reality flows from generation to generation. How much of this is ensured; has any one thought about it? EXCEL Real Estate & Development Limited has a powerful portfolio of countries most distinctive and select developments, an excellent reputation in the Real Estate market, and enviable relationships that give EXCEL client’s exclusive access to the ultimate in luxury apartments and Commercial complexes in the all prime destinations. EXCEL promise remains to develop a portfolio of luxury properties and offer investors and home buyers an upmost quality of service matchless by its competitors. It is this commitment to both impeccably high standards and attention to detail that is the driving forces behind EXCEL success. Believing that construction is not only building a structure but is an art, EXCEL Real Estate & Development Limited has emerged as the fastest growing real estate developer with the mission of changing the lifestyle of the city dwellers by providing functional and aesthetic living and working space that can only be compared to the developed world. EXCEL Real Estate & Development Limited feels social responsibilities to serve the people with quality and commitment. With this end in view the company is working with a dynamic set of management personnel and skilled work force. We look forward to see a better future. 3.02 Company Profile: It is known to everybody either in home or abroad that Dhaka will turn into one of the megacities of the world within the first decade of the new millennium. In comparison with the city's population which surpasses the 15 million mark, the numbers of Residential Apartments are not at all sufficient. Everybody wants and apartment which is a fundamental demand of human beings. Keeping this in mind EXCEL Real Estate & Development Limited started its mission in the Real Estate Sector fulfilling clients dream home within the shortest possible time, while maintain great architectural aestheticism and the highest standard of construction and offering the best quality apartments for the valued customers. EXCEL Real Estate & Development Limited is one of the leading real estate companies in Bangladesh. It specializes in developing luxury apartment complexes in prime locations of the city.


EXCEL Real Estate & Development Limited is a proud active member of Real Estate and Housing Association of Bangladesh. EXCEL Real Estate & Development Limited has become a trusted name in the real estate sector in Bangladesh. From its very inception, the company has won the confidence and goodwill of its client's achieving a yearly turnover of taka 400 million with a compound growth of sixty percent. Within a short span of time, EXCEL Real Estate & Development Limited has grown into a renowned and dependable organization, building elegant, aesthetically pleasing structures that grace Dhaka's finest neighborhoods. EXCEL Real Estate & Development Limited uses the highest quality building materials and finishing products to ensure durability and customer satisfaction EXCEL Real Estate & Development Limited’s main concentration has been in the prime, attractive locations of Gulshan, Banani, Baridhara, Dhanmondi and Uttara of Dhaka city, the emphasis being on sound construction and aesthetic design. In addition, EXCEL Real Estate & Development Limited has tried to provide accommodations suitable for small families while creating scope for development of residential lands in the vicinity of the capital city. Efforts are underway to cater to the needs of clients in every market segment. The success of such a large construction company requires specialized labors and highly qualified professional backup and EXCEL Real Estate & Development Limited has developed a strong team of such highly skilled, experienced professionals to work under its competent management. The company currently has one hundred fifty (150) employees working, most of them being very qualified and experienced in their respective fields. At present, EXCEL Real Estate & Development Limited has Twenty (10) apartment building projects at hand in the most prestigious areas of the city such as Gulshan, Banani, Baridhara, Dhanmondi and Uttara. Three (3) completed apartment buildings have already been handed over to its clients. Another Five (5) apartment buildings will be handed over very soon. 3.02.1 EXCEL Mission & Vision: At EXCEL Real Estate & Development Limited, it has forever been EXCEL endeavor to become the most progressive name in the real estate industry. A vision fueled by EXCEL ability to deliver quality, professionalism and value to match the best from across the globe. A vision, that works towards developing Bangladesh into a fully developed nation, for the benefit of the beloved countrymen. EXCEL Mission is to:


 An unshakeable commitment to quality, integrity and the creation of value for all customers and stakeholders,  Building international-standard integrated townships, group housing, commercial complexes, hotels, service apartments, IT and bio-tech parks that differently from others,  Continuously delighting EXCEL customers with innovative concepts, quality construction and on-time delivery, & EXCEL resolve to provide a work environment that assures the complete safety of all employees,  Building on EXCEL reputation of being a premier organization in the field of housing, institutional, commercial and industrial construction,  Making EXCEL Real Estate & Development Limited a dynamic organization that is relentlessly in pursuit of excellence by the successful adoption and implementation of professional and innovative policies, planning & methods. EXCEL Vision is to:  Create a progressive organization matching international standards in integrity, ethics and transparency, Nurture an environment of professionalism, competence, teamwork and service excellence,  Develop projects conforming to international Environmental Impact Assessment (EIA) Norms,  Implement innovative cost-effective techniques for quality construction resulting in wealth creation for EXCEL customers and stakeholders,  Provide quality residential real estate within the reach of all 3.03 Functional Departments of EXCEL: Departments at EXCEL Real Estate & Development Limited have reputation as a reliable real estate company that gives high priority to customer's desire and needs has been created through the hard work and dedication of its work force. Instead of just stressing on good academic qualification which is compulsory for the executive level employees, EXCEL Real Estate & Development Limited has selected its staff based on their intelligence, creativity and innovation! 1) Administration and Logistic - EXCEL Real Estate & Development Limited has a professional & highly skilled Administration team to co-ordinate all departments of


the company. Adequate number of security guards working round the clock to ensure the security of the residents of each apartment building. Logistical services include repair maintenance facilities such as plumbing and prompt troubleshooting. Permanent maintenance personnel ensure that the apartments are in good condition. 2) Accounts and Finance - EXCEL Real Estate & Development Limited has an experienced team in this department headed by senior most cost and management accounting professionals of Bangladesh. 2) Engineering & Design - EXCEL Real Estate & Development Limited has developed in house design team for architectural, structural, planning & electrical design. EXCEL Real Estate & Development Limited has thirty engineers in construction and development team in addition to its Quality Control, Monitoring & Evaluation and Construction management personnel with many senior level professionals, engineers, architects, planners trained at home and abroad and eminent personalities of the country. 4) Sales, Marketing and Customer Service - One of the strongest point of EXCEL Real Estate & Development Limited is it efficient Customer Service Department. This department gives personal attention to each client and is known for the prompt, effective action. A warm, friendly atmosphere is created for the client who can make purchase decisions at his/her pace without feeling pressurized. In the light of this modern concept, EXCEL Real Estate & Development Limited as a partner of nation-building has embark upon massive planning to construct excellent buildings with built-in safety system in prime locations The first preference of trendy people intending to own a house in Dhaka City is Uttara being the latest Model Town of the country. So, most of the apartments of the Group have been concentrated in Uttara. Meanwhile, EXCEL Real Estate & Development Limited has become the symbol of trust, confidence and dependability to the landowners as well as the customers thanks to the workmanship, precision planning, and aesthetic architectural design and lastly the honor to commitment of the Company. The immeasurable confidence the fashionable people have on the EXCEL Real Estate & Development Limited is amply substantiated when EXCEL stalls in REHAB fair at home and abroad are seen jam-packed with visitors coupled with instant booking for flats and plots. 3.04 Business Conduct Ethics of EXCEL: Philosophy


The Company is committed to the adoption of best corporate governance practices which ensure accountability of management and maximization of stakeholders value. EXCEL shall strive to put in place process, system, control and governance structures for protecting and furthering the interest of EXCEL stakeholders. Stakeholders The Board of Directors of the Company shall duly and fairly inform its stakeholders about all relevant aspects of the Company's business, and disclose such information in accordance with the respective regulations and agreements. Ethical Conduct Every employee of the Company, which shall include a whole-time director and the managing director, shall deal on behalf of the company with professionalism, honesty and integrity, as well as high moral and ethical standards. Such conduct shall be fair and transparent and be perceived to be as such by third parties. Transparency and Accountability All Company employees shall ensure that their actions in the conduct of business are totally transparent except where the need of business security dictates otherwise. Such transparency shall be brought through appropriate policies, systems and processes, including appropriate involvement of more than one manager in recording decision logic and maintaining supporting records. All managers shall voluntarily ensure that their areas of operation are open to audit and the conduct of their activities are totally auditable. Conflict of Interest All Company employees must avoid situations in which their personal interest could be in conflict with the interest of the Company. The guiding principle is that any conflict or potential conflict must be disclosed to higher management for guidance and appropriate action Financial Reporting and Records The Company shall prepare and maintain its accounts truly and fairly in accordance with the accounting and financial reporting standards which represent the generally accepted guidelines, principles, laws and regulations of the country in which the Company conducts its business affairs.


Internal accounting and audit procedures shall fairly and accurately reflect all of the Company's business transactions and disposition of assets. All required information shall be accessible to Company’s auditors and other authorized parties and government agencies. There shall be no willful omissions of any company transactions from the books and records. Any willful material misrepresentation of and/or misinformation on the financial accounts and reports shall be regarded as a violation of this code, apart from inviting appropriate civil or criminal action under the relevant laws. Regulatory Compliance Every employee of the Company shall, in his or her business conduct, comply with all applicable laws and regulations, both in letter and in spirit, in all the territories in which he or she operates. If the ethical and professional standards set out in the applicable laws and regulations are below that of the code, then the standards of the code shall prevail. Protecting Company’s Assets The assets of the Company should not be misused but employed for the purpose of conducting the business for which they are procured. These include tangible assets such as equipment and machinery, systems, facilities, materials, resources as well as intangible assets such as proprietary information, relationship with customers and suppliers, etc. Selecting Suppliers The Company’s suppliers make significant contributions to EXCEL success. To create an environment where EXCEL suppliers have an incentive to work with the Company, they must be confident that they will be treated lawfully and in an ethical manner. Selection of suppliers is to be made on the basis of merit, price, quality and performance. The Company’s policy is to select significant suppliers or enter into significant supplier agreements through a competitive bid process where ever possible. Under no circumstances should any Company employee, agent or contractor attempt to coerce suppliers in any way. The confidential information of a supplier is entitled to the same protection as that of any other third party. Intellectual Property Policy EXCEL have an utmost obligation to identify and protect the intellectual properties, trade secrets and other confidential information owned by the Company and its clients or associates because it is critical to EXCEL success. By “Intellectual Property Rights (IPR)”, EXCEL mean generally patented or potentially patentable inventions, trademarks, service marks,


trade names, copyrightable subject matter and trade secrets. EXCEL has an obligation to protect the Company’s IPR and Client IPR at all times. Confidential Information/Publicity No employee shall disclose or use any confidential information gained in the course of employment with the Company for personal profit or for the advantage of any other person. No employee shall provide any information either formally or informally to the press or to any other publicity media unless specifically authorized to do so. Disciplinary Actions The Company will take appropriate action against any employee, agent, contractor or consultant whose actions are found to violate these policies or any other policy of the Company. Disciplinary actions may include immediate suspension/ termination of employment or business relationship at the Company’s sole discretion. Where the Company has suffered a loss, it may pursue its remedies against the individuals or entities responsible. Where laws have been violated, the Company will cooperate fully with the appropriate authorities. Every employee shall be responsible for the implementation of and compliance with this code in his professional environment. Failure to adhere to the code could attract the most severe consequences, including termination of employment. Every employee of the Company shall promptly report to the management any actual or possible violation of this code, or an event he or she becomes aware of that could affect the business or reputation of his/her or any other group Company. Accountability The Board of Directors (BOD) shall oversee the Company’s adherence to ethical and legal standards. All employees and the members of the BOD shall undertake to stop or prevent actions that could harm customers, the system or reputation of the Company. 3.05 Real Estate Trends in Bangladesh: The size of the real estate sector and its contribution to the economy in terms of employment generation, accrual of investment, contribution to exchequer, output trends and linkage contribution of this sector. Employment Generation: - The real estate sector is at present creating employment for about 10 lac people who are directly or indirectly involved in the sector. According to the


LFS, in 1999-2000, 2.1 per cent of the labor force was engaged in construction whereas for 1995-1996 the figure was 1.8 per cent. These figures include workers engaged in brick chipping and working in delivery trucks to architects, engineers and entrepreneurs. Some 5,000 engineers and 6,000 management staff are engaged in this sector. Investment: - Recent information concerning investment in the housing sector shows steady growth both in absolute terms and as a percentage of total private investment and GDP. Private investment in housing and construction has more than doubled during the Fourth Five Year Plan period, from Tk.700 crore in 1989-1990 to Tk 1589 crore in 1994-1995. During the first three years of the Fifth Five Year Plan period the average investment in housing and construction was Tk 7,642 crore. As a share of total private investment, private investment in housing and construction in the 1997-1998 to 1998-1999 period accounted for 47.3 per cent which far exceeded the target of 16.35 per cent for this period. The proportion of investment in housing and construction in the national GDP increased from 3.4 percent in FY 1997 to 4.1 per cent in 1999. Contribution to Exchequer: - The contribution of the real estate sector to the exchequer is a substantial one. Various revenues like VAT, registration fees, utility connection fees etc. generated in the real estate sector amount to about Tk 36 crore per year. Linkage Contribution: - The real estate sector has also made substantial contributions to the growth of a host of backward and forward linkage sectors which include paints, ceramics, aluminum, furniture, consultancy and many others. In this context, we provided examples of catalytic influence of the real estate and housing sector in development of linkage industries whereby the sector is immensely contributing to employment and the GDP. Market Structure: - Nineteen per cent of the dwelling units are located in urban areas. Per capita floor space in urban areas is only 62.3 sq ft. About 46.4 per cent of urban dwellings are made of brick/cement. About the market concentration in the real estate sector we can say that Real Estate business, especially apartment projects, took off in the Dhaka City in the late 1970s. From the early 1980s the business started to flourish and showed robust growth. At present, more than 550 companies are active in the real estate business in the country. About 95 per cent of this business is still dominated by the top 10 companies. We also observed that the market is highly segmented, primarily based on location, price of the land and size of the apartments. The main reasons for the development of real estate business in Dhaka city were: a) Scarcity of open spaces in important parts of the city. b) Hazards of purchasing land.


c) Rapid increase in the population of Dhaka. D) Fiscal-Financial incentives such as the decrease in the rate of bank interest. e) De-restriction of remittance flows which financed the sector. Rent of apartments had been relatively high compared to the opportunity cost of privately constructed flats. Service facilities which are enjoyed collectively, such as garbage disposal facilities, central satellite connection, security, roof top facilities and lift, save time and reduce costs. Financing the Housing Sector: - Financial intermediation in the housing sector is not found adequate because of high interest rates and limited sources of funds. This is true both for the financing of the developers and the purchasers. The state-owned House Building Finance Corporation (HBFC) is burdened with bad loans, and loan disbursement has tended to be low in recent years. Delta-BRAC Housing came into this market as private-NGO collaboration, but their interest rates are as high as 16 per cent which is higher than even that of the HBFC by one per cent. The major financing organizations for housing are the HBFC and the Commercial Banks while financing by other organizations like Delta-BRAC, National Housing and Micro credit lenders are insignificant. Budgetary Measures in FY2003 Budget Unlike the past fiscal budgets, the government through the FY 2002 - 2003 budget provided a number of incentives to boost the real estate sector of the country. Evaluation of Accounting Information System 4.01 Significance of Information Technology in Business: Information technology has a significant role in almost all areas of business. In fact, nowadays, almost every kind of business has IT as one of its main components-- in office applications, account software and other applications used in specific sectors. 1. Communication: - Most businesses use emailing as one of their primary modes of communication. IT also provides means of instant messaging through Internet. 2. Organization: - The Internet has enabled business executives to hold conferences in realtime environment. Different IT tools are also used for sharing documents and managing spreadsheets. 3. Research: - A number of organizations and companies use information technology to facilitate research and surveys.


4. Software Technology: - For most of the business companies, applications like MS Word, Power Point, Excel and Project and graphic applications such as Photoshop play a key role in executing different tasks. Additionally, software programs such as ERP (enterprise resource planning) allow firms to integrate different business operations such as resource management, supply forecasting and so on. 5. Databases: - Many companies collect and store data, which can be accessed and processed anytime. Some of the popular databases include MS SQL Server and Oracle Database. 6. Online Training: - Training remained a key concern of many businesses. With the help of IT, businesses have managed to reduce their training costs significantly with the introduction of online training systems. 4.02 The Technology for Accounting Information System:Accounting information systems (AIS) range from PC (personal computer) based accounting systems to mainframe systems used by large corporations with intricate accounting operations. Accounting information systems can use various operating system platforms (Windows, Linux, UNIX, OS2 and Open Source software), but the basic components of an accounting system are created and programmed according to GAAP (Generally Accepted Accounting Principles). General Ledger Automation: - General ledger accounting is the heart of an accounting information system. The general ledger is classified as the "item" record or main data file of the system. All transactions in an accounting system revolve around the general ledger. The general ledger also reflects changes to accounts when transactions are initiated. Technology for Mainframe Systems: - Mainframe accounting systems are configured for distributed processing over a large environment of users which may have to access item or detailed accounting records as end user, programmers or mid level management. Mainframe accounting systems can allow remote processing terminals access through a data network or via satellite. Software at this level for an accounting information system can be customized by in-house program developers or a specialized package designed by a company, such as IBM-bundled with the purchase of an IBM server dedicated to accounting functions. Technology for Mid-Range Systems: - Mid-range accounting information systems use server based technologies. An example of a server base technology operating system is a UNIX or Windows 7 configuration with 64-bit processing. The server acts as the main unit or


"mainframe," but at a smaller capacity. On this type of accounting network, there can be up to three servers providing resources for users on the network to access accounting applications. The procurement of software for the system is usually from a software vendor that specializes in accounting packages for this type of configuration and offers an annual maintenance contract. Mid-range accounting information systems can provide processing capabilities for 50 users. Technology for LAN or PC Based Systems: - For small accounting information system needs, a Local Area Network (LAN) or PC-based configuration is sufficient for a small organization or businesses, which use accounting applications. LAN and PC based systems support sharing of data and resources over a dedicated network between end users and managers. LAN and PC based systems are excellent configurations for "turnkey software" (software which is pre-programmed and packaged) such as QuickBooks Pro Enterprise Version and Peachtree Accounting. The only drawback to this type of accounting information systems is there is no customization of programming with the exception of creating reports. This accounting information system can be effective for up to 20 users and cost wise, is the cheapest to implement. Software Integration Modules: - Accounting information systems at the mainframe level can have specialized third party programs written or implemented into the system. For example, an accounting system designed for retail management can have a catalog on programs on the system for inventory and stock management. 4.03 The Impact of Information Technology on Accounting: Information technology (IT) has created significant benefits for accounting departments. IT networks and computer systems have shortened the lead time needed by accountants to prepare and present financial information to management and stakeholders. Not only has IT shortened the lead time required to present financial information, but it also has improved the overall efficiency and accuracy of the information. Computerized Accounting Systems: - The biggest impact IT has made on accounting is the ability of companies to develop and use computerized systems to track and record financial transactions. Paper ledgers, manual spreadsheets and hand-written financial statements have


all been translated into computer systems that can quickly present individual transactions into financial reports. Most of the popular accounting systems can also be tailored to specific industries or companies. This allows companies to create individual reports quickly and easily for management decision making. Additionally, changes can be made relatively easy to reflect any economic changes in business operations. Increased Functionality: - Computerized accounting systems have also improved the functionality of accounting departments by increasing the timeliness of accounting information. By improving the timeliness of financial information, accountants can prepare reports and operations analyses that give management an accurate picture of current operations. The number of financial reports has also been improved by computerized systems; cash flow statements, departmental profit and loss, and market share reports are now more accessible with computerized systems. Improved Accuracy: - Most computerized accounting systems have internal check and balance measures to ensure that all transactions and accounts are properly balanced before financial statements are prepared. Computerized systems will also not allow journal entries to be out of balance when posting, ensuring that individual transactions are properly recorded. Accuracy is also improved by limiting the number of accountants that have access to financial information. Less access by accountants ensures that financial information is adjusted only by qualified supervisors. Faster Processing: - Computerized accounting systems allow accountants to process large amounts of financial information and process it quickly through the accounting system. Quicker processing times for individual transactions has also lessened the amount of time needed to close out each accounting period. Month- or year-end closing periods can be especially taxing on accounting departments, resulting in longer hours and higher labor expense. Shortening this time period aids companies in cost control, which increases overall company efficiency. Better External Reporting: - Reports issued to outside investors and stakeholders have been improved by computerized accounting systems. Improved reporting allows investors to determine if a company is a good investment for growth opportunities and has the potential to be a high-value company. Companies can utilize these investors for equity financing, which they use for expanding business operations.


4.04 The Emergence of Accounting Information Systems Programs:The emergence of accounting information systems programs: as more and more companies seek out accounting professionals with IT skills, some universities now are offering a major in accounting information systems, which mixes topics from each area to provide students with the requisite skills employers want. As we begin the 21st century, business organizations are facing an explosion of global competition and innovation. Facilitating this explosion is the increasing ability of organizations to make good business decisions based on the large amounts of information their enterprise produces. Economists predict that by 2010 the majority of American workers will be knowledge workers--those who make their living working with information. (1) In this environment, it is necessary for a successful business to integrate information technology into its basic processes, and, to do that, it needs qualified, skilled information technology employees. In addition, these organizations need executive management and other functional workers who have IT skills. (2) In fact, a company needs all its workers--accountants and financial executives included-to have a high level of computer and technical skills. Organizations are now attempting to hire college graduates who have this level of technical skill, but universities are struggling to determine the appropriateness of their curricula to meet this growing need. 4.04.1 The Need for Information Technology:Recognizing these worker trends and economic conditions, the Institute of Management Accountants (IMA) and the American Institute of Certified Public Accountants (AICPA) report the need for computer and information technology concepts to be a part of the knowledge, skills, and abilities of accounting professionals. Both say accounting professionals should be able to apply productivity improvement software, such as spreadsheets and accounting-specific software, and be able to interpret, integrate, and implement information technology. In its report, the AICPA cites five core competencies to guide its members: 1) Communication and leadership, 2) Strategic and critical thinking, 3) Customer focus, 4) Interpretation of converging information, and


5) Technological skills. IMA's 1999 Practice Analysis identified four work activities that are now expected to consume more of an internal accountant's time: (1) Long-term strategic planning, (2) Internal consulting, (3) Computer systems and operations, and (4) Process improvement. (5) It also identified the most important knowledge, skills, and abilities accountants had developed in the prior five years: computer skills, technology and networks, accounting software, teaching or mentoring, speaking and communications, and project management. In the last 15 years, accounting information technology has transformed from an environment dominated by expensive mainframe computers that were programmed by specialized information system staff to user-friendly, integrated Internet-based systems. (6) The knowledge, skills, and abilities necessary for the entry-level accountant now include the application and integration of information technology into the accounting process, as well as financial and managerial accounting principles. Organizations rely on the new generation of accountants to be familiar with today's systems and to prepare for those of tomorrow. To accomplish this, they must have technical skills and conceptual knowledge of accounting information systems. (7) Accounting Education Programs- In 1990, the Accounting Education Change Commission, a committee of business leaders appointed by the American Accounting Association (AAA), recommended to accounting educators that students learn and understand more about accounting systems. (8) The faculty of leading undergraduate accounting programs in the United States responded to the Commission's recommendations by initiating one or more of the following changes: # Significantly increasing the amount of information systems coverage in graduate and undergraduate accounting classes; # creating undergraduate and graduate "accounting systems" courses that cover topics such as transaction cycles, information technology, databases, the systems development life cycle, internal controls, and fraud detection and deterrence;


(9) Shifting graduate program coursework in the direction of accounting information systems (AIS); and # incorporating a significant amount of cross-disciplinary content that combines courses from both accounting and information systems departments. (10) It is this fourth call for change that has resulted in today's new undergraduate curricula, or major, in AIS. (11) The AIS concentration, track, or major--whatever it is called--offers an opportunity for students to go beyond elementary exposure to accounting information systems. In an AIS program, students master today's technology tools and develop a conceptual basis for understanding and evaluating the information technology tools of tomorrow. For an AIS program (graduate or undergraduate) to be successful, it must have characteristics that blend accounting and information systems. (12) Students in such a program will graduate with stronger IT qualifications and will be in greater demand by the profession. (13) Because undergraduate AIS programs are new and there are a variety of definitions of them, we are defining them as "an integration of cross-discipline content of both accounting and information systems courses." Examples of some goals and objectives of AIS programs: # The Accounting Information Systems (AIS) joins together the skill sets of two areas experiencing rapid growth and change, accounting and information technology. Electronic commerce, direct business-to-business communication, paperless work processes, and many other technology-intensive innovations have created new challenges and opportunities for accountants who also have expertise in information systems. Many traditional accounting functions are now embodied in systems that require a different combination of technical and financial knowledge. The AIS is designed to provide this combination of knowledge and skill sets to meet the new challenges and opportunities of the information technology world."

# The information systems auditing and control (ISAC) specialization blends accounting with management information systems and computer science to provide graduates with the knowledge and skills required to assess the control and audit requirements of complex computer-based information systemsďƒ˜ Analyze an organization's informational system,


ďƒ˜ Determine the controls and audit processes required to provide assurance that the information produced is reliable, and that the ďƒ˜ System and data contained therein are secure." # The Accounting Information Systems concentration is intended to provide with additional background, conceptual knowledge, and hands-on experience to meet the need for accounting professionals who are trained and comfortable with advanced information technology." AIS programs are meeting the challenges of business trends and economic conditions. They are beginning to fill employers' needs: Accountants now better understand computer and information technology concepts and issues. With the proper curriculum content, AIS programs will continue to prepare students to interpret, integrate, and implement information technology, a necessary professional skill for 21st century accountants. 4.05 Using Electronic Data Interchange (EDI) To Improve The Efficiency Of Accounting Transactions:Electronic data interchange is an accounting information technology that reduces key entry and standardizes information exchange between firms and their customers or suppliers. Although EDI reduces total key-entry time, it places greater demands on the customer or supplier to specify orders properly. Electronic data interchange (EDI) is an information technology that standardizes the exchange of information between two parties to a transaction. EDI as a "transactional" accounting information system that reduces the cost of transactions between firms and provides timely information for decision making. Respondents to an AICPA survey judged EDI to be the most important information technology for the accounting profession, in terms of both organizational productivity and projected impact on the work of the professional accountant. (1) However, there is little evidence that EDI improves the performance of administrative work. This study evaluates the performance effects of EDI in various firms. The firm adopted EDI primarily to improve the efficiency of accounting transactions with many of the licensed dealers who order its products (e.g., to expedite acknowledgment of customer orders and to reduce order and billing errors). (2) We evaluate whether EDI reduces order-processing time (the time from order receipt to order scheduling), and whether this improvement is greater for more complex orders. Our measure of complexity reflects the mix of different products the dealer orders as well as features and options the dealer selects for each product in the order. Data limitations prevent us from determining whether EDI reduced the level of order errors as compared to


conventional order submission methods. However, we are able to investigate whether dealers who adopt EDI submit fewer orders with errors over time and with experience (i.e., learning), whether feedback from the EDI system on the dealer's prior errors stimulates their learning, and whether order complexity impedes learning.. Our findings have several implications for accounting research and practice. First, research in the operations and the information technology literatures documents benefits of EDI in manufacturing (e.g., reduced inventory holding and spoilage, faster delivery). However, there is no evidence on how EDI affects its primary users--back office, accounting functions of the firm and its transaction partners. We provide evidence that EDI improves performance of administrative work in the adopting firm; however, evidence on how EDI affects the back office operations of transacting partners is still needed. Second, evidence that order complexity impairs performance in an administrative setting (e.g., slower order completion by the furniture manufacturer and increased errors by dealers) is consistent with earlier evidence that product and process complexity impair manufacturing performance. Our findings suggest that research that focuses on the effect of these characteristics only on manufacturing efficiency underestimates the effects of product and process complexity on firm performance. Third, evidence that performance improvements associated with EDI increase with order complexity has implications for investment justification. Our results indicate that in addition to making the traditional order-entry process more efficient, EDI also mitigates the negative effect of order complexity on order-entry time. The implication for accountants is that, as with advanced manufacturing technologies, information technologies that enhance flexibility and reduce economies of scale in administrative work may require different evaluation approaches than other capital investments. Finally, evidence that dealers learn, with time and experience, to submit error-free orders through EDI and that feedback about prior errors helps dealers learn, has implications for the design and implementation of new accounting information systems. An implication for accounting system designers is that feedback is an important feature that may reduce the payback period for information technology investments. Moreover, although the furniture manufacturer did not train its dealers to use the EDI system, the negative performance effects associated with errors suggests that dealer training may have further enhanced returns to this investment. 4.06 Financial Accounting Information, Corporate Governance Transparency:-


Vibrant public securities markets rely on complex systems of supporting institutions that promote the governance of publicly traded companies. Corporate governance structures serve: ďƒ˜ To ensure that minority shareholders receive reliable information about the value of firms and that a company's managers and large shareholders do not cheat them out of the value of their investments, and ďƒ˜ To motivate managers to maximize firm value instead of pursuing personal objectives. # Institutions promoting the governance of firms include reputational intermediaries such as investment banks and audit firms, securities laws and regulators such as the Securities and Exchange Commission (SEC), and disclosure regimes that produce credible firm-specific information about publicly traded firms. In this paper, economics-based research focused primarily on the governance role of publicly reported financial accounting information is discussed. Financial accounting information is the product of corporate accounting and external reporting systems that measure and routinely disclose audited, quantitative data concerning the financial position and performance of publicly held firms. Audited balance sheets, income statements, and cash-flow statements, along with supporting disclosures, form the foundation of the firm-specific information set available to investors and regulators. Developing and maintaining a sophisticated financial disclosure regime is not cheap. Countries with highly developed securities markets devote substantial resources to producing and regulating the use of extensive accounting and disclosure rules that publicly traded firms must follow. Resources expended are not only financial, but also include opportunity costs associated with deployment of highly educated human capital, including accountants, lawyers, academicians, and politicians. # The premise behind governance research in accounting is that a significant portion of the return on investment in accounting regimes derives from enhanced governance of firms, which in turn facilitates the operation of securities markets and the efficient flow of scarce human and financial capital to promising investment opportunities. Designing a system that provides governance value involves difficult trade-offs between the reliability and relevance of reported accounting information. While the judgments and expectations of firms' managers are an inextricable part of any serious financial reporting model, the governance value of financial accounting information derives in large part from an emphasis on the reporting of objective, verifiable outcomes of firms. An emphasis on verifiable outcomes produces a rich


set of variables that can support a wide range of enforceable contractual arrangements and that form a basis for outsiders to monitor and discipline the actions and statements of insiders. # A fundamental objective of governance research in accounting is to investigate the properties of accounting systems and the surrounding institutional environment important to the effective governance of firms. In this paper, we synthesize major research findings in the accounting governance literature and extend Bushman and Smith to consider corporate transparency more generally, which includes financial accounting information as one element of a complex information infrastructure. 1. The direct use of financial accounting information in specific corporate governance mechanisms. The largest body of governance research in accounting examines the use of financial accounting information in the incentive contracts of top executives of publicly traded firms in the United States. This emphasis derives from the ready availability of top executive compensation data in the United States as a result of existing disclosure requirements, and from the success of contracting theory in supplying testable predictions of relations between performance measures and optimal compensation contracts. Researchers also have examined the role of accounting information in the operation of other governance mechanisms. Examples include takeovers, proxy contests, and board of director composition, shareholder litigation, and debt contracts, among others. We distill major research findings and suggest ideas for future research. # 1.00 Direct Use of Accounting Information in Specific Governance Mechanisms The roots of corporate governance research can be traced; the effective control over publicly traded corporations was not being exercised by the legal owners of equity, the shareholders, but by hired, professional managers. Given widespread existence of firms characterized by this separation of control over capital from ownership of capital, corporate governance research generally focuses on understanding mechanisms designed to mitigate agency problems and support this form of economic organization. There are of course a number of pure market forces that discipline managers to act in the interests of firms' owners. These include product market competition, the market for corporate control, and labor market pressure. However, despite the existence of these powerful disciplining forces, there evidently remains residual demand for governance mechanisms tailored to the specific circumstances of individual firms. This demand is documented by a large body of research examining boards of directors, compensation contracts, concentrated ownership structures,


debt contracts, and securities law in disciplining managers to act in the interests of capital suppliers. Governance research in accounting exploits the role of accounting information as a source of credible information variables that support the existence of enforceable contracts, such as compensation contracts with payoffs to managers contingent on realized measures of performance, the monitoring of managers by boards of directors and outside investors and regulators, and the exercise of investor rights granted by existing securities laws. 1.1 Prevalence of Financial Accounting Numbers in Top Executive Incentive Contracts The extensive use of accounting numbers in top executive compensation plans at publicly traded firms in is well documented. Data from a survey reports that 161 of the 177 sample firms explicitly use at least one measure of accounting profits in their annual bonus plans. Of the sixty-eight companies in the survey that use a single performance measure in their annual bonus plan, sixty-five use a measure of accounting profits. Data on actual performance measures used in the annual bonus plans of 317. Firms for the 1993-94 time period & 312 of the 317 firms report use of at least one financial measure in their annual plans. Earnings per share, net income, and operating income are the most common financial measures. They also report that the mean percentage of annual bonus determined by financial performance measures is 86.6 percent across the whole sample and 62.9 percent for the 114 firms that put nonzero weight on non financial measures. Numerous studies have also documented that both the earnings and shareholder wealth variables load positively and significantly in regressions of cash compensation on both performance measures. Poor earnings performance is also documented to increase the probability of executive turnover. Accounting performance appears to be more important than stock price performance in explaining turnover, while a significant inverse relation between both performance measures and turnover. Finally, document an important disciplining role for accounting information in private equity transactions. They examine actual financing contracts between venture capitalists and entrepreneurs. They document that VC financings allow VCs to separately allocate cash-flow rights, voting rights, board rights, and other control rights. The allocation of cash-flow rights and control rights is frequently contingent on verifiable, observable financial and nonfinancial performance measures. The financial measures appear to comprise standard measures from the financial accounting system, including earnings before interest and taxes, operating profits, net worth, and revenues. Control rights are allocated such that if the


company performs poorly, the VCs take full control, while entrepreneurs obtain control as performance improves. 1.2 Trends in the Use of Accounting Numbers for Contracting with Managers While the evidence documents significant use of accounting numbers in determining cash compensation, both the determinants of cash compensation and the importance of cash compensation in the overall incentive package exhibit significant time trends. Over the 197195 periods, firms have substituted away from accounting earnings toward other information in determining top executives' cash compensation. It has also been documented that the contribution of cash compensation to the overall intensity of top executive incentives has diminished in recent years. Recent studies construct explicit measures of the sensitivity of the value of stock and option portfolios to changes in shareholder wealth. These studies show that the overall sensitivity of compensation to shareholder wealth creation (or destruction) is dominated by changes in the value of stock and stock option holdings, and that this domination increases in recent years. Why is the market share of accounting measures shrinking, and can cross-sectional differences in the extent of shrinkage be explained? Has the information content of accounting information itself deteriorated, or should we look to more fundamental changes in the economic environment? In closing this section, we note that caution should be used in concluding from this recent shift away from explicit accounting-based incentive plans toward equity-based plans that accounting information has become less important for the governance of firms. There are a number of issues to consider in this regard. First, as discussed in our introduction and by a number of other scholars, the existence of a strong financial accounting regime is likely a precondition for the existence of a vibrant stock market and in its absence the notions of equity-based pay and diffuse ownership of firms become moot. Second, while executive wealth clearly has become more highly dependent on stock price, managerial behavior is impacted by executives' and boards' understanding of how their decisions impact stock price. Under efficient markets theory, stock price is a sufficient statistic for all available information in the economy with respect to firm value, which implies that stock price is a good mechanism for guiding investors' resource allocation decisions, as they only need to look at price to get the market's informed assessment of value. But is stock price also a sufficient statistic for operating decisions and performance assessments within firms? That is, can managers and boards rely on stock price as their sole


information source? We observe analysts pouring over the details of financial statements, such as margin analyses, expense ratios, and geographic and product line segment data. In addition, market participants expend real resources privately collecting and trading on detailed firm-specific information that is ultimately aggregated in price. Given that market participants whose trading decisions drive stock price formation are heavily influenced by detailed accounting and other performance data, why should we believe that managers and boards ignore the details and are guided solely by stock price? Lastly, stock price possesses other potential limitations as a measure of current managerial performance. In particular, the fact that stock price is forward-looking can limit its usefulness because it anticipates possible future actions. 1.3 Properties of Accounting and Choice of Governance Configurations In this section, we discuss relations between properties of financial accounting information and governance mechanism configurations. The premise behind this research is that when current accounting numbers do a relatively poor job of capturing information relevant to governance, firms substitute toward alternative, more costly governance mechanisms to compensate for inadequacies in financial accounting information. This research is based on the premise that financial accounting systems represent a primary source of effective, lowcost governance information. The research discussed next uses various proxies to capture the governance relevance of accounting numbers. Developing more refined measures of information quality is an important goal for future research. Substitution away from publicly reported accounting data likely leads to the use of performance measures in contracts that are not directly observable by the market. The relation between executive compensation and future firm performance. If firms optimally use unobservable measures of performance that are correlated with future observable measures of performance, then variation in current compensation that is not explained by variation in current observable performance measures should predict future variation in observable performance measures. Further, compensation should be more positively associated with future earnings when observable measures of performance are noisier and, hence, less useful for contracting. The governance mechanisms considered include board composition, stockholdings of inside and outside directors, ownership concentration, and the structure of executive compensation. They conjecture that to the extent that current earnings fail to incorporate current valuerelevant information, the accounting numbers are less effective in the governance setting. The


authors develop several proxies to measure earnings "timeliness" based on traditional and reverse regressions of stock prices and changes in earnings. Consistent with the hypothesis that limits to the information provided by financial accounting measures are associated with a greater demand for firm-specific information from inside directors and high-quality outside directors, a negative relation between the timeliness of earnings and the stockholdings of inside and outside directors, the extent of ownership concentration, the proportion of incentive plans granted to the top five executives that are long-term plans, and the proportion that are equity-based. They measure quality of the accounting regime with an index developed for each country by the Center for International Financial Analysis and Research (CIFAR). The CIFAR index represents the average number of ninety items included in the annual reports of a sample of domestic companies. They document that the concentration of stock ownership in a country is significantly negatively related to both the CIFAR index and an index of how powerfully the legal system "favors minority shareholders against managers or dominant shareholders in the corporate decision-making process, including the voting process", after controlling for the colonial origin of the legal system and other factors. These results are consistent with their prediction that in countries where the accounting and legal systems provide relatively poor investor protection from managerial opportunism, there is a substitution toward costly monitoring by "large" shareholders. 1.4 Financial Accounting Information and Additional Corporate Control Mechanisms In this section, we expand our discussion of the role of financial accounting information in the operation of specific governance mechanisms. An important example in this respect is the importance of accounting information during proxy fights by providing evidence of the prominent use of accounting numbers. Dissident stockholders typically cite poor earnings performance as evidence of incumbent managers' inefficiency, and that incumbent managers use their accounting discretion to portray a more favorable impression of their performance to voting shareholders. Accounting information may better reflect incumbent managerial performance during proxy fights because stock price anticipates potential benefits from removing underperforming incumbent managers. It is also important to recognize that the governance of firms is exercised through a portfolio of governance mechanisms, and so it is important to understand potential interactions between mechanisms. Consider product market competition and the use of accounting information in governance.


Finally, complex interactions can exist between incentive contracts written on objective performance measures and features of organizational design such as promotion ladders, allocation of decision rights, task allocation, divisional interdependencies, and subjective performance evaluation. Business unit managers' compensation across the hierarchy exhibits patterns consistent with both agency theory and tournament theory. 1. Effects of Financial Accounting Information on Economic Performance:The development of a country's financial sector facilitates its growth. A well-developed financial sector facilitates the allocation of resources by serving five functions:  To mobilize savings,  Facilitate risk management,  Identify investment opportunities,  Monitor and discipline managers, and  Facilitate the exchange of goods and services. At the heart of these theories is the role of the financial sector in reducing information costs and transaction costs in an economy. In spite of the central role of information in these theories, until recently little attention has been given by empirical researchers to the information environment per se in explaining cross-country differences in economic growth and efficiency. The role of a country's corporate disclosure regime in the efficient allocation of capital, Preliminary results from this literature provide encouraging evidence of a positive relation between the quality of a country's corporate disclosure regime and economic performance. Cross-country analyses are one promising way to assess the effects of corporate disclosure on economic performance for several reasons. First, there are considerable, quantifiable cross-country differences in corporate disclosure regimes. Second, there are dramatic cross-country differences in economic efficiency. Inefficient institutions can be sustained in a given country due to political agendas other than efficiency. Hence, the possibility of observing grossly inefficient financial accounting and other regimes in the cross-country sample is not ruled out. In contrast, where market forces and explicit and implicit compensation contracts powerfully discipline managers, inefficiencies are more difficult to isolate in the data.


If financial institutions help firms overcome moral hazard and adverse selection problems, thus reducing the cost of raising money from outsiders, financial development should disproportionately help firms more dependent on external finance for their growth. If capital markets relatively frictionless, this allows them to identify an industry's technological demand for external financing. Assuming that this demand carries over to other countries, they test whether industries that are more dependent on external financing grow relatively faster in countries that are more financially developed. The growth is disproportionately higher in industries with a strong exogenous demand for external financing in countries with high-quality corporate disclosure regimes, after controlling for fixed industry and country effects. 2. Corporate Transparency: A fundamental feature of the information environment is corporate transparency, defined as the widespread availability of relevant, reliable information about the periodic performance, financial position, investment opportunities, governance, value, and risk of publicly traded firms.

All measures of corporate reporting used in BPS are collected from Center for

International Financial Analysis and Research, and appear in the table. Variables Used to Measure Corporate Transparency and Data Sources (a) Corporate reporting (b) Financial accounting disclosures  Long-term investments: Research and development, capital expenditures  Segment disclosures: Product segments, geographic segments  Subsidiary disclosures  Footnote disclosures  Governance disclosures  Identity of major shareholders  Range of shareholdings  Identity of managers  Identity of board members and affiliations  Remuneration of officers and directors  Shares owned by directors and employees


 Timeliness of disclosures  Frequency of reporting  Number of specific accounting items disclosed in interim reports  Consolidation in interim reporting  Reporting of subsequent events  Accounting policies  Consolidation of subsidiaries  Use of general reserves  Credibility of disclosures A framework that isolates three channels through which financial accounting information can affect the investments, productivity, and value-added of firms. The first channel involves the use of financial accounting information by managers and investors in identifying promising investment opportunities. The second channel is the use of financial accounting information in corporate control mechanisms that discipline managers to direct resources toward projects identified as good and away from projects identified as bad. The third channel is the use of financial accounting information to reduce information asymmetries among investors. The economics-based research on the use of accounting information is in particular governance mechanisms. The cross-country research that investigates the effects of financial accounting information on economic performance and present a conceptual framework, for characterizing and measuring corporate transparency at the country level, including many ideas for future research. 4.07 Accounting Information Systems Security Issues: Accounting information systems contain confidential and private information that can become compromised if left unprotected. Unauthorized use of an accounting system can be disastrous, risking loss of information, bad data input and misuse of confidential information. Security of accounting systems is a priority in many firms. Management: - It is interesting to note that security of accounting information is a top management responsibility, not really just a bookkeeping or IT problem. Section 404 of the Sarbanes-Oxley Act (SOX) made it mandatory for management to maintain internal controls over financial reporting, and that includes accounting systems, which generate numbers for the reports.


Risks: - The risks with accounting systems are real, from booking fake transactions to having someone steal a backup tape with all financial information on it. Examples of risks:  Theft of social security numbers from employees and contractors  Payments to fake vendors  Data deletion/loss  Damage to backup tapes  Theft of servers or computers Security Measures: - Security measures are also known as controls, and they can be preventive, to prevent risks, or detective, to identify problems after the fact. Once risks are identified, the controls can be set up to protect the system. Some security measures are:  Frequent password changes  Encryption of data  Monthly supervisor review of vendor reports  Safe and protected server and computer environment  Safe and protected off-site archiving of backup tapes 4.08 Internal Controls of an Accounting Information System:In accounting systems, certain controls are needed to ensure that employees are doing their jobs properly and ensure that the system runs properly. These checks are in the best interest of the organization. These controls come in the form of internal and external controls for the system. The internal controls are the checks that are placed in the system by the company's own management and directors. Today more and more companies are moving from the manual accounting systems to computerized accounting information systems. The advantages of a computerized system are increases in the speed and accuracy of processing accounting information. However, as systems become computerized, the internal controls for that system have to be adapted accordingly. This is because computerized systems bring with them certain unique problems that can only be removed or minimized by adapting the present controls and adding new controls. These problems are-


 In a manual system there is a paper trail for the internal auditor to follow. All records and transactions are kept on paper and so an auditor has clear and documented proof of what has transpired. Computerized systems rarely have a clear paper trail to follow. Since computers do all of the sorting of the information the company rarely sorts the source documents. Also the computer does most of the calculations and processing so there would not be the amount of documentation that there would be in a manual system.  Another problem of computer systems is the fact that there can be difficulty in determining who entered the data. In a manual system the identity of the person entering the data can be identified possibly by the person's handwriting. This cannot be done in a computerized system. This makes it very difficult to determine who is responsible for errors or fraud. 4.09 Threat Levels for Accounting Information Systems:Two possible security risk levels for financial reporting- First, consider the “Severe Security Alert Level: Code Red.” At this risk level, there are serious attacks possible against our financial reporting system, financial markets, and economy. Scarce resources, including time and money, are being embezzled, misappropriated, or diverted. Investor confidence has been shaken and management has become pessimistic about the future. The government has responded with costly regulation and increased oversight of the executive management and the accounting profession. Information security is experiencing dramatically increased threats. Now, consider the lower “Guarded Security Alert Level: Code Blue”. This risk level recognizes the importance of strong corporate governance and information security in utilizing scarce resources to increase shareholder wealth and to regain the confidence of market participants. Financial decisions are based on accurate, transparent, and timely information that is both relevant and reliable. Investors, creditors, and other users can safely rely on financial reports to assist them in assessing the amounts, timing, and uncertainty of future cash flows, in identifying the resources and claims to those resources, and in evaluating performance. The appropriate “tone at the top” with respect to business and ethical conduct is being demonstrated. Management, audit committees, accountants, and auditors are working together to continuously improve internal control and strengthen information security. Certainly, there is reason to believe that the business environment has experienced many of the threats consistent with a Code Red. Many of these threats have provided challenges for


corporate governance, accountants, auditors, and academicians. One goal businesses hopefully have in common is reducing the threat level to our accounting information system closer to Code Blue. 4.09.1 Threats to Accounting Information Systems Threats to accounting information systems come from a variety of sources. If ignored, they can destroy the relevance and reliability of financial information, leading to poor decisions by various stakeholders. At the point of data collection, it is important to establish security controls that ensure that transaction or event data are valid, complete, and free from material errors. Threats to accounting information systems can also occur during the data processing phase. Creating illegal programs, accessing or deleting files, destroying or corrupting a program’s logic through viruses, or altering a program’s logic to cause the application to process data incorrectly all represent threats. Threats to database management might include unauthorized access that allows altering, deleting, corrupting, destroying, or stealing data. The failure to maintain backup files or other retrieval techniques represents a potentially devastating loss of data. Threats to the information generation and reporting phase must also be considered. For example, the theft, misdirection, or misuse of computer output could damage the competitiveness or reputation of the organization. Advances in information technology and increased use of the Internet require that management, accountants, auditors, and academicians become more knowledgeable and conversant in the design, operation, and control of accounting information systems. 4.09.2 Security Threats to Internet Commerce and Technology The growth of the Internet has been fueled by its potential for conducting business. The Internet has removed physical barriers to commerce, tapping previously uneconomical markets. The power of the Internet to facilitate business can be severely offset by users’ concern over security. The use of Internet technologies has substantially increased the vulnerability of information systems. One of the fastest-growing threats on the Internet is the theft of sensitive financial data. Failure to include basic information security unwittingly creates significant business and professional risks. For example, without effective security, a hacker may be able to access user passwords, providing entree to an array of system capabilities and information. Such breaches can have serious legal consequences. Or, trade secrets may be uncovered and disseminated, diminishing competitive advantage and profits.


Inadequate information security increases the opportunity for manipulation, falsification, or alteration of accounting records. Unauthorized or inappropriate access to the accounting information system, or the failure to establish and maintain separation of duties as part of a system of internal control, may make it difficult to ensure that valid and accurate transactions are recorded, processed, and reported. There are a number of threats to accounting information systems, especially for those systems used in conjunction with the Internet. These threats represent challenges to management, accountants, auditors, and academicians. 4.10 Understanding the Need for Security: The security of electronic information has become a critical concern. Academics, managers, accountants, and auditors must all be conversant with emerging threats and security measures that are effective in keeping accounting information systems safe. Safeguarding personal and proprietary information and ensuring the integrity of the components of the accounting information system in today’s digital environment present many challenges. Implementation of effective information system requirements should provide reasonable assurance that the accounting information system will produce relevant and reliable information to meet internal and external reporting needs. Policies and procedures should require the maintenance of records that accurately detail and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded properly; ensure that receipts and expenditures are made only in accordance with proper authorization; and provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements. Identifying, implementing, and monitoring some basic system requirements and sustainable solutions for both the general and unique security challenges that can arise in an unbounded electronic enterprise with a technologically rich environment should be undertaken. These include policies and procedures related to e-mail passwords and usage, antivirus and antispyware solutions, firewalls, authorized access, authentication, separation of duties, privacy, encryption, digital signatures and certificates, no repudiation, data integrity, storage, backup files and tapes, and other emerging threats and technologies. Finally, the establishment of the right tone at the top with respect to privacy and security, as well as the hiring of vigilant, ethical employees, is essential to securing our information system against dangerous threats.


Accounting Systems of Excel Real Estate & Development Limited Accounts division of Excel Real Estate & Development Limited is divided into five subsections. By those subsections, Excel Real Estate & Development Limited controls its overall accounting system. The activities and accounting Procedures of those five subsections are given below1. Payroll Section: In this section, company using software to calculate salary of the employees. In this section only one officer who deals all the factors relating to the employee’s salary. He prepares monthly salary of the employees by that software and sends one copy of that report to the bank and another copy to the General Accounts section. Method of calculation of salary are given belowCalculation Of Salary Basic salary Addition (+) House rent allowance Conveyance allowance Dearness allowance Field allowance Medical allowance Washing allowance Overtime-Tiffin allowance Other/scholars allowance Arrear-bonus/basic/house Rent allowance Total Addition Gross Salary Deductions (-) Association subscriptions Welfare subscriptions Union subscriptions Retirement/ death Stamp House building loan H.R 7.5% / 5% M.C loan Transportation Total Deductions Net Salary

2. Fund Accounts Section: -

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Fund section of this company is a very busy section. This section prepares all the cheque Payment vouchers and sent to the bank for payment. And this section receives the entire bill for Collection. Besides this, this section sends one copy of all payment and received vouchers to the General Account sections. After this, general accounts section posted all this to the Related ledger. This section also does some cash transaction. If any payment or receive amount is within the Limit of 250 taka to 5000 taka, then this section will pay or receive in cash. This Section Also helps others parts of this organization in purchasing things. For example, if any Employee needs a computer for his/her official needs, then this section will pay the price of that Computer for that employee after proper verification. But when the purchase amount goes beyond taka 200000, then this section will call for a tender. For purchasing anything, this section follows “Public procurement regulations (PPR)”. This section performing its activities through More Than 33 banks. Different kinds of account are using for the purpose of payment and receiving; those types of accounts are given below•

Current account

Foreign account

STD account (short term loan account)

3. Bill Section: This section accounts for bill processing and deducting Tax, VAT. When any purchase activities are occurred, then this section prepares bill in favor of that Purchase. After preparing the bill, this section sent that bill to the Fund Section for Payment. Then Fund Section will prepare a cheque payment vouchers and sent one copy to The General Accounts Section. This section deducts all kinds of taxes, vat and others related to those purchases. This section deducts taxes, vats and others after that those taxes, vats go to the national exchequer. The scope and Activities of this section are very limited. 4. Management Accounts Section This section is the busiest section among all the section. This section provides both financial & Non-financial information. This section analyzes all the financial statements of this company. Management account section is very pervasive and purposeful. It is intended to meet specific Decision needs at all levels in the company. The scope of activities of this section is very large. This section does all kinds of presentation work relating to the company. Recently, this Section did the presentation on the topics of “Flat price adjustment”. The contents of this Presentation are Excel Real Estate & Development Limited & its


activities, demand & supply situation and the price structure.

Management Accounts

Section is always busy with many kinds of Presentation like this. Management Accounts Section is doing its Activities with different types of information like, financial plus operational and physical Measurement on processes, technologies, supplies, customer, and competitors. Nature of that Information is more subjective, valid, relevant and accurate. The scope of this section is Very broad. Above all, this section does the reporting work, analytical work, presentation work and helps in decision making process. 5. General Accounts Section: This section is the most important and busiest section among the all the section. All the vouchers and others documents came from Fund Section, Payroll Section, Bill Section, and Then this section post those vouchers and others document to the relevant general ledger. At First this section write down the code number of the Relevant accounts and post those items to The Relevant ledger. All activities of this section are done by accounting software. The name of the accounting software is “Real Estate Management Software” which is developed by Advanced Software and IT Services Ltd. Real estate accounting systems provide the tools to maintain a record of the properties and developments with integrated financial information. Accounting functionalities allow track income, expenses, liabilities, and assets on a cash or accrual basis. 6.01 Findings:This study examined the effectiveness of accounting information systems (AIS) in several extents: better decision-making by managers, more effective internal control systems, enhancement of the quality of financial reports, improvement of performance measures, facilitating financial transaction processes. The findings of the research indicated that implementation of accounting information systems could lead to better decision-making by managers, more effective internal control systems, enhancement of the quality of financial reports and facilitating financial transaction processes. Finding on Bill Section:•

Only one officer has done all the tasks relating to this section

All the tasks are done manually.

No computer system is used in this section.

Work environment of this section is not as friendly as we expected.


This section prepares bill manually and send those bills to the fund section.

This section also charges vat, taxes and other thinks and send those documents to the general accounts section.

Job dissatisfaction does exist in the personnel of this section.

Finding on Fund Accounts Section:•

Three officers are maintaining all the activities of this section. One officer is deputy manager (fund); other two officers are senior officers.

All the tasks are done manually.

No computer system is used in this section.

Job dissatisfaction does exist in the personnel of this section.

This section is one of the busiest sections among all the sections.

The main duty of this section is to issue cheque payment vouchers and to receive vouchers from different parties for further processing.

After all the processing work, this section will send one copy of all the processed documents to the general accounts section for recording.

Finding on Payroll Section:•

Only one officer is doing all the activities about payroll.

Only one computer is used to calculate salary of all employees.

The computer systems and the software which are used here need to up to date.

The man, who is in-charge of the payroll section, is not well expertise about new technology

Finding on General Accounts Section:-


Three officers are maintaining all the activities of this section. One officer is deputy manager (general accounts); other two officers are senior officers.

Computer system is used in this section.

Two computers are used for the purpose of recording data.

Accounting software is used to maintain all accounting activities of this company.

The name of the accounting software is “Real Estate Management Software” which is developed by Advanced Software and IT Services Ltd.

But that accounting software is not quite up-to-date.

Most of the officers of this section are not from accounting background.

All documents and vouchers are coming in this section from different section for recording.

After getting the documents from different section, officers of this department will record those documents to the relevant general ledger.

From this general ledger, balances will be sent to related financial statements by using that accounting software.

6.02 Recommendation: Recommendation for General Accounts Section:•

More employees should be added here for better performance of this section.

Accounting software which has been used here should be updated.

More technological assistance should be added here.

Remunerations should be increased for the officers of this department.

Peoples who have accounting background should be appointed here as an officer.

Recommendation for Management Accounts Section:•

More employees should be added here for better performance of this section.


This department needs more financial and technological assistance. So, those two assistances should be added here.

Remunerations should be increased for the officers of this department.

Recommendation for Payroll Section: •

More employees should be added here for better performance of this section.

This department needs more technological assistance for better performance of this department.

Remunerations should be increased for the officers of this department.

Software which is used for salary calculation should be updated.

Recommendation for Bill Section: •

More employees should be added here for better performance of this section.

This department needs technological assistance for better performance of this department. So, a full computer system should be introduced here.

Remunerations should be increased for the officers of this department.

Recommendation for Fund Accounts Section: •

More employees should be added here for better performance of this section.

This department needs technological assistance for better performance of this department. So, a full computer system should be introduced here.

Remunerations should be increased for the officers of this department.

Manual systems of recording should be abolished from this department because this is a very important department of this corporation.

Sending processed documents to general accounts section should be speeded up.

6.03 Conclusion:In managing an organization and implementing an internal control system the role of accounting information system (AIS) is crucial. An important question in the field of


accounting and management decision-making concerns the fit of AIS with organizational requirements for information communication and control. Although the information generated from an accounting information system can be effective in decision-making process, purchase, installation and usage of such a system are beneficial when the benefits exceed its costs. Benefits of accounting information system can be evaluated by its impacts on improvement of decision-making process, quality of accounting information, performance evaluation, internal controls and facilitating company’s transactions. Regarding the above five characteristics, the effectiveness of AIS is highly important for all the firms. AIS is defined as a computer-based system that processes financial information and supports decision tasks in the context of coordination and control of organizational activities. In this study the effectiveness of accounting information systems of Excel Real estate & Development Ltd is evaluated. The results indicate that implementation of accounting information systems at these companies caused the improvement of managers’ decisionmaking process, internal controls, and the quality of the financial reports and facilitated the process of the company’s transactions. The results of this study showed that AIS improve financial statements and reporting correctness in Excel. However, the results also revealed that there is huge gap between what AIS and what should be. The major weakness of AIS in Excel as follow: in is not affected to all latest accounting standards, it is not confirms with other financial and managerial systems, it is not covers all information needs have company and financial information and it is not covers all management levels information in Excel. So, to this situation, the managers which are aware of AIS benefits should take more as well as academicals action for reducing such gaps in Excel. 6.04 Reference:Books: Accounting Information System. By –Romney & Steinbart  Intermediate Accounting. By- kieso, Weygandt & Warfield  Effective business intelligence systems. By -Robert J. Thierauf Journal & Articles: The impact of accounting information on management’s decision-making processBy Anders Jerreling, School of Management and Economics Bachelor thesis.


 A study of measuring the critical factors of quality management. International Journal of Quality and Reliability Management- By Badri, M. A., Davis, Donald and Davis, Donna (1995).

 Accounting History Research: Traditional and New Accounting History Perspectives -By Salvador Carmona , Mahmoud Ezzamel & Fernando Gutiérrez Internet:     

www.accountingweb.co.uk www.cimaglobal.com www.focusmag.com.au www.scribd.com www.allbusiness.com www.edugen.wiley.com/edugen


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