Question 23 As an accountant of an organization, discuss why it might be necessary to initiate systems analysis. { 6 ma

1. Question 23 As an accountant of an organization, discuss why it might be necessary to initiate systems analysis. {6 marks} Giving reasons for your answer, discuss the accounting system you would recommend to a decentralized organization between a computerized accounting information system and a manual accounting information system. {14 marks}

2. DEFINATION OF SYSTEM ANALYSIS Systems analysisis the study of sets of interactingentities, including computer systems analysis. It is also "an explicit formal inquiry carried out to help someone (referred to as the decision maker) identify a better course of action and make a better decision than he might otherwise have made

3. Importance of initiating system analysis • In this dynamic world, accountants have to look into making systems that are flexible enough to accommodate changes as they are inevitable thus system analysis helps them in doing so • An accountant must fully understand a business problem before he or she can formulate a solution. An incomplete analysis will lead to a defective solution therefore system analysis is the bone of the system development life cycle.

4. It’s a way for the accountant to identify what aspects of the old system should be kept if there is a need for a system change from old to new. By fully understanding the current system, the accountant can identify those aspects worth presenting or modifying for use in new system. • System analysis also helps accountants to identify weaknesses and loopholes in a system so that they find ways of rectifying the problems so they its important that accountants initiate system analysis.

5. Decentralized organizations require computerized accounting information systems because: • Faster update of the master file For example, a business may have many branches or divisions in the country so individual decisions made by various division managers can be sent to the headquarters very fast enough through computers (online) • Legibility Computerized accounting software eliminates poor handwriting, thereby eliminating possibility of error due to misreading and handwritten line item.

6. Speed and accuracy When using a manual accounting system, each step in the accounting cycle must be performed by hand e.g. if a business pays their electricity bills and a cheque has to be written, an entity must be recorded into the cheque register and a transaction has to be posted to the respective ledger, which is a very long process but when using a computerized system, the whole process is completed in one step by just automatically posting to the respective ledger. • Staff motivation Accounting and book keeping departments should run more smoothly or be more efficient with computerized accounting software thus there will be less time and effort spent on complying reports

7. Easy production of end period reports Individual managers can post their financial reports and statements on-line faster meaning that all the end period reports can be processed without delay unlike where there is use of manual accounting where there is need to travel and submit financial reports to the head office which can be delayed.

8. On the other hand, computerized systems can be: • Training and knowledge requirements There is always time and energy spent in training personnel on the knowhow of the use of computers. Due to technology, there are always system changes here and there and some times, most of them require personnel to be trained so that they can be used which can be expensive. • Dependency Computerized systems is dependent on machines and other software to work properly. If a problem erupts, work to be done may also be disturbed. Thus an organization may end up incurring other unplanned costs of hiring technicians to solve the problem.

9. Loss of information There is always a high risk of loosing information when using computerized systems due to power outages or system crash. • Inputting data accuracy Since information must be captured into the computer by someone, it therefore means that the accuracy of this input is essential to ensure that correct information is put correctly. Inaccurate input could mean possible confusion at a lately which may be difficult to fix at a later stage and costing the organization.

10. Accessible data Data is stored in one central location making it easily accessible. Although it may be an advantage that information is accessed quickly but it makes it easier for hackers to take advantage and steal organization’s confidential information.

11. However, a decentralized organization may also use a manual accounting information system • Manual accounting information system may be: • Cheap It eliminates costs of purchasing, maintaining computers and the cost of training personnel that will use the system • Data corruption Risk of corrupted data are much less with manual accounting systems since information can be lost as a result of file corruption when using computerized systems.

12. Duplication of data copies Problems of having duplicate copies of the same accounting records is greatly avoided when using manual accounting systems. The ease of transportation and backing up of computerized systems may sometimes confuse the user. This can result in an out of date data set being erroneously judged as being the most recent version and result in incomplete accounting records.

13. The End