Advances in Information and communication technologies (ICT) and information systems (IS) facilitate the development of a host of potential decision-support systems at both the individual and group level. But also it reduces the role of accountant because of the advent of many expert systems. With the introduce of new automation for accounting process, a question rises ,what is the role of accountant in this process, and how they can add a value to companies, in this paper we are going to answer this question that new information system bring a what kind of issues and benefit in addition to many type of opportunities.
The purpose of this article is to explore how information and communication technologies (ICT) and information systems (IS) have forever changed many aspects of business and accounting practice and, as a result, offer new and exciting research opportunities to accounting professionals and academics. In today's computerized, interconnected, global business environment, the accounting profession must deal with a host of complex issues that never existed in the past-for instance, how to capture and record new business transactions and events, develop value-added business and information processes, create new value-chain and supply-chain opportunities, disseminate useful knowledge to a wide array of information consumers, and provide assurance services across the entire spectrum of economic activities reflect some of the more compelling topics of interest.
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Accounting researchers can add value to the profession by investigating these issues, among others, and presenting scientific results in a clear and understandable fashion to practicing accountants.
An important message of this commentary is that researchers in accounting information systems (AIS) and other areas of accounting, such as financial, auditing, tax, and managerial, should work together on projects, as each party can learn a great deal from the other. Synergistic relationships arising from such teamwork hold great potential to yield high-quality research results that can have notable impact on the accounting profession.
ACCOUNTING AND INFORMATION SYSTEMS-SIMILARITIES AND DIFFERENCES
The emergence of ICT over the past few decades led to a new business and academic discipline-information systems (IS). Given that the vast majority of business event processing in organizations deals with accounting transactions, it is no surprise that the disciplines of accounting and IS share a high degree of commonality; yet key differences exist between the two disciplines as well.
Similarities between Accounting and Information Systems
The input-process-output value chain of a business entity is a convergence between the accounting and IS disciplines.
For instance, both disciplines examine ways to maximize the efficiency and effectiveness of recording economic data, where issues such as editing and validating input data are of paramount concern.
Additionally, both disciplines investigate various approaches to automating the immediate capture of economic events at their source as they occur via computer-to-computer interactions, point-of-sale applications, self-service features, and so on. Regarding the processing of economic events, both disciplines seek to integrate ICT into business processes and ensure the security of corporate databases.
The accounting and IS disciplines also endeavour to disseminate reliable and timely information to decision makers, and advance understanding with respect to managing business knowledge throughout the organization,
The accounting and IS disciplines also seek ways to improve modelling techniques aimed at conveying semantic representations of intra- and inter-enterprise systems. Scholars who engage in intellectual pursuits of this nature categorize their research as design science. Such research is vitally important to the creation of sound "architectural drawings" and "engineering plans" for building reliable systems.
The accounting and IS disciplines further investigate issues that fall into the scope of social science. For instance, at the individual level, researchers explore various ways to involve users in systems development and implementation projects, improve decision making via decision-support and group-support systems, and create system interfaces designed to enhance the efficiency and effectiveness of human-to-computer interactions. At the organizational level, the ultimate goal is to create information systems that best leverage firm resources to maximize profitability and competitiveness, with this objective in mind, researchers strive to use ICT in ways that support business process (re)design efforts, improve intelligence gathering, such as data warehouses, data marts, and knowledge bases, and produce the new business models.
Differences between Accounting and Information Systems
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Accounting can be viewed as a specialized information system aimed at recognizing, measuring, recording, processing, and reporting economic events affecting business entities. A noticeable divergence between the accounting and IS disciplines centers on the economic implications of business events. The accounting discipline expends a great deal of effort deciding which economic events must be recognized and how they should be measured. Economic concerns of this nature are not addressed in the IS literature, as event and measurement rules are taken as given. Once these important issues are resolved and codified, qualified economic events must be recorded, processed and reported.
As mentioned earlier, both disciplines investigate similar intra-enterprise issues; however, the IS discipline is most concerned with technical aspects of incorporating ICT into organizations, whereas the accounting discipline is most interested in leveraging ICT to improve business performance while simultaneously maintaining effective internal controls. With respect to system design matters, accountants help to insure that sound internal controls are developed and integrated into information systems, such as:
(1) Editing and validating input data,
(2) Tracking the integrity of information throughout processing, storage, and retrieval activities,
(3) Maintaining reliable audit trails,
(4) Securing operating systems, networks, software applications, and databases so that only properly authorized individuals have access to financial information.
To the extent that internal controls of this nature cannot be incorporated into the system, accountants must design compensating controls around the system.
Regarding business process (re)design efforts, IS researchers again tend to focus on technical matters, such as how to build systems that are adaptable to various business process models. In contrast, the accounting discipline focuses on developing innovative ways to (re)design business and information processes to improve the reliability, relevance, and timeliness of financial and nonfinancial business reporting.
For example, accounting researchers might redesign business processes to incorporate a more comprehensive set of firm performance indicators, such as balance scorecard metrics, whereas IS researchers concentrate on how to technically capture and process such input. On the output side of the value chain, the business vs. technical distinction between the accounting and IS disciplines emerges once again. The accounting discipline takes a "decision usefulness" approach to reporting business information. Researchers in this area expend a great deal of effort identifying the nature of financial and nonfinancial information needed by decision makers, translating critical business information into knowledge, integrating knowledge bases throughout the organization, and designing individual- and group-level decision support systems. Although the IS discipline is also involved with information dissemination, knowledge management, and decision support, IS research focuses not on content issues, but on the technical aspects of using ICT for such purposes.
Business process (re)design efforts can extend beyond the intra-enterprise boundary to include inter-enterprise linkages, and creating and maintaining externalities of this nature beget a host of business and accounting risk issues for trading partners. For instance, because trading partners are concerned about potential business interruptions during the implementation and operation of inter-enterprise systems, contingency and backup plans must be developed and tested. Trading partners also monitor and control external transactions and agreements to ensure that all parties in the inter-enterprise network live up their trading
partner arrangements, else a weak link in the chain could have serious business and financial implications for all interdependent trading partners. While the accounting discipline focuses on these types of implementing, monitoring, and controlling issues, the IS discipline concentrates on the technical aspects of establishing and maintaining inter-enterprise relationships.
Finally, the accounting discipline provides public assurances regarding the extent to which financial statements fairly reflect the financial position of the enterprise and the ICT infrastructure is reliable. The information systems discipline is uninvolved with providing such assurances. These similarities and differences between the accounting and IS disciplines form the basis for the accounting value chain, presented next.
The Accounting Value Chain
The accounting value chain shown in Figure 1 adapts and extends concepts imbedded in enterprise (Porter and Millar 1985), assurance (Elliott 1994), and information (Elliott 1995) value chains. Using the accounting value chain as a guide, this section addresses one of the most important questions and challenges to the accounting profession. That is, how can accountants add value to business organizations in today's computerized, interconnected, global business environment?
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Capturing Economic Events On the low-value end of the spectrum fall the traditional functions of identifying, measuring, and recording accounting transactions as they pierce the boundary of the entity. Since most of these functions are routine and predictable, cleverly written computer programs can handle most of these activities. Sometimes, economic events unfold that are new or unusual to the firm and require that a properly trained accountant intervene.
Source: Arnold, V, and S. Sutton,(2001) Researching Accounting as an Information Systems Discipline, Information Systems Section of the American Accounting Association, forthcoming.
However, on the whole, data-capturing tasks performed by accountants in the past, have been supplanted by information technology. Because real-time event-capturing processes are mature and reliable, accounting researchers have few opportunities in this area to add incremental value to extant theory or practice.
Processing Economic Events
The next phase of the accounting value chain deals with converting data into meaningful information streams. As with input activities, computerized processing of accounting transactions is routinely automated. Reliable accounting controls are built into most information-processing systems, hence the integrity of such systems is quite high. For instance, automated checks and balances, coupled with security features, can insure that data are not lost, corrupted, or altered during processing, storing, and retrieving activities. Future research in this area will not concentrate on ICT alone; rather, it will focus on how to leverage ICT to develop and integrate innovative business process models.
Disseminating Business Knowledge
The high-value side of the accounting value chain deals with generating, managing, and integrating business knowledge. As suggested by Elliott (2001), knowledge leveraging is the most important and distinguishing competency of professional accountants. While many information technology tools exist to assist in this regard, such as database query languages, data warehouses, and data marts, it is humans who ultimately apply reason, judgment, and interpretation to informational patterns-which in turn produce new knowledge. Accountants can play valuable roles in identifying, processing, and utilizing business knowledge, and disseminating such knowledge to other information consumers inside and outside of the organization.
A relatively new arena where accountants can add value to the business organizations concerns the development of external linkages to other firms in the environment. As discussed previously, business networks of this nature allow for the formation of emerging e-commerce models across value and supply chains. However, the creation of externalities evokes a host of implementing, monitoring, and controlling concerns relevant to accountants.
For example, when a firm establishes digital connections with another firm, the rules of engagement must be carefully specified. That is, an exchange protocol must be agreed upon and collaborative partner agreements must detail the responsibilities, authorizations, and restrictions of each party.
Once external linkages are in place, each party must monitor and control informational flows and exchanges to insure that the privacy, confidentiality, and security rights of affected parties are protected. Since the development of external digital linkages has significant internal control implications, accounting researchers face a host of new opportunities in this regard.
There are many new and exciting opportunities where the accounting profession could add value to managers, investors, and society through an expanded line of assurance services. The most notable, yet traditional, form of assurance is manifest in the auditor's opinion regarding the fairness of financial reporting. However, the heavy dependency on ITC within and across business organizations has opened doors to an entirely new line of potential assurance services.
For instance, the American Institute of Certified Public Accountants (AICPA) and Canadian Institute of Chartered Accountants (CICA) considered business-to-consumer assurance in the form of WebTrust. More recently, the AICPA/CICA rolled out a product called SysTrust, which reflects a type of business-to-business assurance. Other assurance services will likely emerge over time, such as assurance over the quality and reliability of firms* business and information processes, located in the middle of the accounting value chain, and assurance over knowledge management tools and techniques, located on the upper end of the spectrum. Last, but certainly not least, a new breed of e-commerce assurance service opportunities will likely emerge as firms begin to link their internal systems to one another, thereby forming unique and innovative e-commerce models.
Synergistic Research Opportunities in Accounting
The accounting value chain illustrated in Figure 1 provides a structure for pondering and framing a wide array of research questions for accounting scholars. The more prominent issues investigated by accounting information systems researchers are reflected in an upcoming AIS research monograph sponsored by the Information Systems Section of the American Accounting Association (Arnold et al,2001). Since most of these issues have been directly or indirectly addressed above, this section identifies representative areas where accounting information systems and other accounting researchers can collaborate on research projects.
Continuous Financial Reporting
In an effort to be more responsive to information consumers, publicly traded companies are considering the merits of providing financial statements on a more frequent basis than the current quarterly reporting period. Many issues and concerns arise with respect to continuous financial reporting, such what is meant by continuous (e.g., monthly, weekly, daily), how to deal with accruals, deferrals, and estimates in a continuous reporting environment, and the impact of continuous reporting on the capital market. Regarding the latter issue, financial and AIS researchers could simulate and compare various reporting frequencies, such as quarterly-to-monthly vs. quarterly-to weekly, and conduct either behavioral or experimental economic studies to investigate the impact of more frequent reporting on stock price valuations and market volatility.
To the extent that continuous financial reporting becomes a reality, the accounting profession must deal with the concomitant demand for continuous, or at least more frequent, assurance. The potential research issues in this area include:
(1) The type of assurance to render-audit or review,
(2) The marketplace demand for continuous assurance,
(3) The impact of continuous assurance on the audit process,
(4) Ways that audit firms can leverage ICT to render an effective yet efficient audit under these circumstances.
For example, auditing and AIS researchers could collaborate on projects investigating the efficacy of various types of ICT, such as embedded audit modules, for monitoring client transactions and activity levels and insuring that firms do not change financial information on their Internet sites after the auditors have provided assurance.
Quality of Earnings
The possibilities of continuous financial reporting and related assurance beget questions concerning quality of earnings. For instance, to what extent will more frequent reporting affect a firm's ability to manage earnings since accruals, deferrals, and estimates must be more closely tied, in real-time, to related economic events? Could a credit sale transaction captured at a cash register include estimated allowances for doubtful accounts and returned goods based on a percentage of the sale amount?
Market Value of Accounting Systems
The impact of ICT on accounting systems has evolved from fairly simple general ledger applications to extremely complex ERP systems. When firms adapt from one type of system to another, they typically incur huge outlays of financial and human capital.
Questions arise regarding the underlying value of embarking on enormous capital projects of this nature. One aspect of "value" can be viewed from the perspective of investors. For instance, how do investors respond when a firm announces that it plans to adopt an ERP system? While this question deals with investors' initial beliefs regarding ERP adoption, a follow-up question could focus on the extent to which ERP systems actually improve firm performance over time. Recently, AIS and financial accounting researchers joined forces to examine the first question (Hayes et al. 2001). Reading a study of this nature can help AIS and non-AIS researchers envision the end result of such collaborative efforts.
Decision Support Systems
Advances in ICT facilitate the development of a host of potential decision-support systems at both the individual and group level. For instance, decision-support systems can be developed to help design effective internal control structures, configure optimal business processes, and assess business and audit risks. Issues such as interface design, information content, training value, and user reliance are some of the more fruitful areas of inquiry. Depending on the context of the proposed decision support system, AIS researchers can work with financial, managerial, tax, and audit researchers.
Risk Assessm.ent and Management
When firms switch from one accounting system to another, say from a traditional general ledger system to an ERP system, the nature and extent of business, internal control, and audit risks can change considerably. For instance, ERP systems are more likely than general ledger systems to cause business interruptions due to the tightly integrated nature of ERP systems coupled with programmed workflow automation from one business process to another. In addition, security risks are often heightened with ERP systems, since corporate information is stored in a relational database and a compromise of the database, via viruses, hackers, employees, and the like, can ripple throughout the organization.
Company managers and internal and external auditors must be aware of risk differentials across accounting systems and revise contingency strategies, internal controls, and audit plans accordingly. AIS, audit, and managerial scholars can develop projects aimed at delineating risk profiles of various technology-based accounting systems. Once unique risks are identified, AIS and audit researchers can examine the extent to which external auditors are aware of the unique risks posed by different systems and how they either do or should adjust audit plans in response to differential risk profiles. A recent study by Hunton et al. (2002) represents an example how AIS and audit researchers are working together in this area.
Moreover, there are some other opportunities that accountant can have a active role which is include of:
Systems Reliability Assurance
Business Reporting Taxonomies
Internal Value of Accounting Systems
4- SUMMARY and CONCLUSION:
As highlighted throughout this commentary, information and communication technologies have radically transformed the nature of business and accounting practice.
Accordingly, the manner in which accountants can potentially add value to economic entities and society is undergoing a metamorphosis. As suggested by the accounting value chain shown in Figure 1, many traditional accounting tasks dealing with recording and processing of accounting transactions can be reliably automated.
Thus, accountants add little incremental value to organizations in this regard anymore. Rather, an accountant's worth is now reflected in higher-order critical-thinking skills, such as designing business processes, developing e-business models, providing independent assurance, and integrating strategic knowledge.
Many of the research issues reviewed in this commentary are interlaced with related topics in financial accounting, auditing, managerial accounting, and taxation.
Methodological approaches used to investigate accounting information systems research
questions, such as scientific modelling, archival analyses, and behavioral experiments and qualitative inquiries, are also common across accounting domains. Given such complementary interdependences, the academic community would be enriched if AIS scholars were to collaborate on research projects with other accounting researchers, where possible, as resulting synergistic relationships will most certainly produce high quality, relevant studies that could dramatically shape the future of the accounting profession and business practice.