The company under study for ACCOUNTING INFORMATION SYSTEM(AIS) is Geneva pharmaceuticals. They are currently using the SAP software. Geneva Pharmaceuticals, Inc., one of the world's largest generic drug manufacturers, is the North
American hub for the Generics division of Swiss pharmaceutical and life sciences company Novartis
An accounting information system (AIS). It is a system which first collects data and stores data and then processes the data into information. This information is used by decision makers .Information that is generated from an AIS can help decision makers to manage organizations more efficiently and strategically. AIS is commonly referred to as a complex computer-based system which combies the resources and capabilities of information technology with accounting methods and controls.
Accounting information systems components are:
People: users operating on the systems
Procedures and instructions: processes that are involved in collection, managing and storing data
Data: data that is related to the organization and business
Software: application which processes the data
Information technology infrastructure: the actual physical devices and systems which allow the AIS to perform its functions
Internal controls and security measures: it is implemented to secure the data
SAP is the leading Enterprise Information and Management Package worldwide. Use of this makes it possible to track and manage, in real-time finance accounting in an enterprise.
Geneva pharmaceuticals implemented the SAP R/3.
SAP R/3 Implementation, why?
Up until 1996, Geneva's information systems consisted of an array of software programs for
1)running procurement,
2) manufacturing,
3) accounting,
4) sales.
The primary
hardware platform was IBM AS/400, which was running multiple operational databases (mostly DB/2) and
connected to desktop microcomputers via (LAN). Each business unit
deployed applications in ad hoc manner to meet its immediate needs, which were incompatible across
business units. This led to higher incidence of errors,
In view of these limitations, in 1996, corporate management at Geneva initiated a search for technology
solutions that could streamline its internal processes, lower costs of operations, and strategically position
the company to take advantage of new value-added processes. More specifically, it wanted an enterprise
resource planning (ERP) .
Thus, Geneva pharmaceuticals implemented the AIS SAP R/3.
Features of SAP R/3
SAP R/3 was arranged into distinct functional modules. The widely used module was Financials and Controlling (FICO) .
Each module can handle specific tasks on its own, but is linked to the others where applicable. For eg. an invoice from the billing transaction of Sales would pass through to accounting, where it will appear as accounts receivable and the cost of goods sold.
Traditional computer information systems used by many businesses today have been developed to
accomplish some specific tasks and provide reports and analysis of events that have already taken place.
Examples are accounting general ledger systems. Occasionally, some systems operate in a "real-time"
mode that is, have up to date information in them and can be used to actually control events. A typical
company has many separate systems to manage different processes like production, sales and accounting.
Each of these systems has its own databases and seldom passes information to other systems in a timely
manner.
SAP takes a different approach. There is only one information system in an enterprise, SAP. All
applications access common data. Real events in the business initiate transactions. Accounting is done
automatically by events in sales and production. Sales can see when products can be delivered.
Production schedules are driven by sales. The whole system is designed to be real-time and not historical.
SAP structure embodies what are considered the "best business practices". A company
implementing SAP adapts it operations to it to achieve its efficiencies and power. The process of adapting
procedures to the SAP model involves "Business Process Re-engineering" which is a logical analysis of
the events and relationships that exist in an enterprise's operations.
SAP Application Modules
SAP has several layers. The Basis System is the heart of the data operations and should be not
evident to higher level or managerial users. Other customizing and implementation tools exist also. The
heart of the system from a manager's viewpoint are the application modules. These modules may not all
be implemented in a typical company but they are all related and are listed below :
• FI Financial Accounting-designed for automated management and external reporting of general
ledger, accounts receivable, accounts payable and other sub-ledger accounts with a user defined
chart of accounts. As entries are made relating to sales production and payments journal entries
are automatically posted. This connection means that the "books" are designed to reflect the real
situation.
• CO Controlling-represents the company's flow of cost and revenue . It is a management
instrument for organizational decisions. It too is automatically updated as events occur.
• AM Asset Management-designed to manage and supervise individual aspects of fixed assets
including purchase and sale of assets, depreciation and investment management.
Technology
SAP based the architecture of R/3 on a three-tier client/server model.
Presentation Server(GUI)
Application Server
Database Server .
Below are some of the solutions that are offered by this accounting software system which :
Accounts payable software:-it makes sure all the payments are made accurately and on time. Additionally, businesses can process invoices, view discounts offered for invoices and run accounts payable reports. Conduct analysis of where assets are being used and what are future cash requirements.
Accounts receivable software:-. Business can enhance customer service through instant on-screen access to all account information. Can generate effective reporting to improve cash flow management.
Bank Reconciliation software simplifies the monthly reconciliation process for businesses. This bank reconciliation software identifies unrecorded transactions and it finds differences between the bank statement and general ledger. Integrate multiple bank accounts.
Bill of Materials software gives businesses the ability to track production costs and accurately compare it to expected costs. it can tell you where materials are used, the costing reports etc.
Budget Management software:- it provides businesses with forecasting and planning tools to make the most informative decision during the budgeting. It enables businesses to create accurate currency forecasts driven by user-defined criteria. .
Consolidations software:- it offers the businesses tools to consolidate multiple ledgers . Transfer info without being on the same network.
Credit Card Process Software allows businesses to efficiently authorize and process credit card payments and capture important transaction information within the database. .
Financial Modules software helps businesses take full advantage of all the data in their financial system and view the big picture. Generate instant financial reports which have the ability to preview and perform actions against transactions
Fixed assets software simplifies the process of registering assets, managing assets, and depreciating assets. bookkeeping and accounting transactions. This has the ability to generate income statements, cash flow statements, trend reports, balance sheet, accounts receivables, accounts payable, and payroll that provide business insights.
Project accounting software allows businesses to manage all the people, processes, and costs for each individual project. Project managers have ability to store project related information like invoices, in one place.
Below is a screenshot of SAP R/3 tallying the balance sheet.
Advantages of implementing SAP R/3 to the company:-
A big advantage of this computer-based accounting information systems was that it automated and streamlined reporting.
Reporting is a major tool for organizations to perfectly see summarized & timely information that can be used for decision-making and financial reporting. The accounting information system pulled data from the centralized database, processes and transformed it and ultimately generated a summary of that data as the information that could now be easily consumed and analyzed by the analysts, managers and decision makers. These systems ensured that the reports were timely so that decision-makers did not acting on irrelevant information and were able to act effectively based on report results.
Consolidation is one of the important stages of reporting. People did not have to look through an enormous number of transactions.
For eg. at the month end, a financial accountant consolidated all the paid vouchers by running a report on the system. The system's application layer retrieved the data from the database and provided a report with the total amount paid to its vendors for that particular month. With huge corporations that generate huge volumes of transactional data, running reports with AIS can be very time conserving and hasslefree.
Some vendors of the AIS for the Geneva pharmaceuticals.
Sage ERP Accpac is the foundation for a completely integrated set of end-to-end business solutions.
Epicor Manufacturing Express Edition is a comprehensive software system for job shops and small manufacturers that is provided in the software as a service (SaaS) model. Express combines broad functionality from Epicor's latest generation software in an end-to-end solution.
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