Risk of N Plc and Ais

1. Introduction

This essay will discuss the risks and their coping measures of N PLC based on analysis of its accounting information system and examples.

The second part explains how N PLC is designed. The next part, which is also the main part, will explore the relationship among accounting information and relative systems. The fourth part will gather some examples of risk and offer solutions by applying the result from the second part. The last part is a conclusion.

1. N PLC

N PLC is designed as a public company with nearly 100 years history. It is a retailer company selling cloth and has about 350 stores supported by over 300 large or small suppliers. N PLC also has international business based on contemporary information and communication technology. Its internal control system and information system have been effectively founded during the 100 years operation, and recently it reconstructed them by adopt SAP system.

1. Systems and relationship

3.1 System

Boczko (2012:24) defines a system as a complex of directly and indirectly related elements which operate to attain a goal or objective. A system mainly consists of input, process, output and its inside and outside control together with their internal connection. However, this essay will narrow system by removing input and outside control as a part of a system, because they are considered to be finished by objects outside the system (but inside a larger system where this system involved). And outside generation is added to the whole picture (but not in the small system) (Figure 1-1). Understanding of accounting information system ought to be convenient by adopting this model.[pic 1]

(Figure 1-1)

In figure 1-1, the arrowheads represent effects like ‘determine’ or ‘fix’. External control, apparently, takes charge of everything. Moreover, it is clearly that Process directly affects Output, but it takes a long way to get feedback from Output. However, it is in fact not that case. Therefore, it still needs to be added to the figure which is the feedback & feedforward among controls and other elements. Afterwards, the figure becomes fairly complex by looping linear procedures (Figure 1-2).

(Figure 1-2)[pic 2]

3.2 Accounting information system

According to the definition of a system, it is consequent that accounting information system must have its own elements and objectives. Boczko (2012:7) indicates that accounting information system is a cohesive organisational structure with purposes – to provide users with information and to support decision making and facilitate control. Bodnar and Hopwood (2013:4) define that an accounting information system is a computer-based system designed to transform accounting data into information. Based on those ideas, it can be concluded that accounting information system is a subsystem aiming at producing accounting information in a company. In order to output information, especially accounting information for a company, the collection of financial and transaction data is necessary as the basis of data input. Further, by adopting concepts of data management, a general framework of accounting information system can be forged. Data management has serval stages declared by Boczko (2012:150) which are: data selection, data conversion, data capture, data input, data store & maintenance, data processing and data output (Figure 2).[pic 3]