ACC 315 Module 4 Project One Example

Two Systems That Never Meet: Evaluating the Accounting Information System of a Composite Propane Distributor

[Student Name]

Southern New Hampshire University

ACC 315: Accounting Information Systems

Project One

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Two Systems That Never Meet: Evaluating the Accounting Information System of a Composite Propane Distributor

Introduction

The dealer studied here, a composite family business selling propane and heating oil in the Vermont hills, serves about 5,400 accounts; its office staff of five handles billing for nine trucks. Its revenue has grown by a third in eight years, mainly through acquiring two smaller dealers, but its accounting information system has not changed. The owner has asked whether the system is holding the business back. This project evaluates the current system, measures its main problems, traces each to its cause and sets out requirements that any improved system must meet. Project Two will compare options against these requirements.

The Current System

An AIS, in the definition used by Romney et al. (2021), is more than software: it includes the staff who use it, their routines, the data and the controls around it. At this company the software alone is scattered across five places, and the routines that connect them live in people's heads.

Table 1. Current Applications and Data

Customer data exists in two systems that are maintained separately. When a customer moves, the dispatcher updates the route software and a billing clerk updates the accounting package, if someone remembers to tell her.

Problems and Their Causes

Problem 1: a slow monthly close. The close takes twelve working days, mainly because the last week's tickets must be keyed, card settlements typed in and budget plan balances recalculated by hand. The owner sees results nearly halfway through the next month. Cause: no automated link from delivery to invoice.

Problem 2: billing corrections. The office issued about 1,100 credit memos and rebills last year, roughly 4 percent of invoices, for misread gallons, wrong price codes or deliveries billed to the wrong account. Each takes about fifteen minutes, or about 275 hours a year. Cause: manual re-entry of handwritten tickets and price codes typed instead of pulled from the customer record.

Problem 3: budget billing errors. About 1,900 customers pay a fixed monthly amount based on estimated annual use. The controller recalculates estimates once a year in a spreadsheet. Last spring, true-up bills revealed $41,000 of under-collected balances, about $22 per budget customer, because estimates had not been updated after a cold winter. Cause: usage data in the route software never reaches the spreadsheet.

Problem 4: no gallons reconciliation. As Module Three showed, about 2.6 percent of gallons purchased cannot be explained, and no report compares purchases, inventory and sales. Cause: purchase, inventory and sales data sit in three places.

Problem 5: no timely usage reporting. The owner cannot see gallons sold by route, customer type or town without asking the controller to build a spreadsheet, which takes a day. Cause: sales data stored without the delivery attributes held in the route software.

What the Evidence Suggests

The common thread in all five problems is that operational data and accounting data are captured separately and joined by hand. Chapman and Kihn (2009) found that integrated information systems were associated with better business unit performance, largely because they made information more flexible and available to managers rather than because they enforced tighter control. Grabski et al. (2011), reviewing research on enterprise systems, note both benefits and well-documented risks of implementation, especially for organizations with limited resources. Kanellou and Spathis (2013) found that accounting staff in firms using integrated systems reported benefits in the speed and quality of information, though satisfaction depended on how well the system fit the organization. These findings argue for integration but warn against assuming that any new system will deliver it.

The evaluation also points to risks the requirements must cover. A small office has no information technology staff, so any new system must be supported by a vendor and must not depend on one employee's knowledge. Data conversion is a second risk: customer tank records in the route software and balances in the accounting package disagree for some accounts, and they must be cleaned before any migration. Finally, drivers will need to enter deliveries on a tablet rather than paper, a change in daily routine for nine people who have used carbon tickets for decades. Requirements that ignore these human and data risks would produce a system that meets the list and fails in practice.

Requirements

Table 2. Prioritized Requirements

Conclusion

The distributor's system is not failing; it is costing time, money and control every month in ways nobody has added up. The five problems measured here share one cause, two systems that never meet. Requirements R1 through R8 address that cause directly and form the core against which Project Two will compare options.

References

Chapman, C. S., & Kihn, L.-A. (2009). Information system integration, enabling control and performance. Accounting, Organizations and Society, 34(2), 151-169. https://doi.org/10.1016/j.aos.2008.07.003

Grabski, S. V., Leech, S. A., & Schmidt, P. J. (2011). A review of ERP research: A future agenda for accounting information systems. Journal of Information Systems, 25(1), 37-78. https://doi.org/10.2308/jis.2011.25.1.37

Kanellou, A., & Spathis, C. (2013). Accounting benefits and satisfaction in an ERP environment. International Journal of Accounting Information Systems, 14(3), 209-234. https://doi.org/10.1016/j.accinf.2012.12.002

Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A. (2021). Accounting information systems (15th ed.). Pearson.