Kudler Fine Foods, a specialty food store, is expanding. The company should ensure an effective and efficient accounting information system is installed enabling continued growth. An accounting information system (AIS) involves six main components. The components are people, procedures and instructions, data, software, information technology infrastructure, and internal controls (Kte’pi, 2009). The role of information systems in business is to support business processes, decision making, and competitive advantage (O’Brien & Marakas, 2008). Kudler has an AIS in place that has been examined to help determine if the system provides these roles and helps meet the company’s needs. Recognizing the key business and accounting operation needs are important when developing and upgrading an AIS. An examination of Kudler’s AIS revealed that even though software programs are currently in use, an all-encompassing, seamless, secure accounting information system will provide better inventory tracking and streamlined purchasing methods, help with the integration of e-commerce, and help provide a higher level of customer service.
Key business and accounting operation needs There are key business and accounting operation needs specific to the business of Kudler Fine Foods. The tracking of inventory and efficient purchasing methods are important for accounting operations, as well as customer service. An effective, accurate inventory tracking system allows management to determine popular items that sell quickly, when items need to be reordered, and unpopular items that may need to be discontinued. A streamline purchasing process helps with the accuracy and efficiency in purchasing and receiving items. The ability to quickly gather financial information from each store into a centralized program is important to make management decisions. An efficient AIS will provide the company and the customers with secure transmission and storage of financial information. Kudler Fine Foods also needs the ability to track and manage coupons and promotions through the system. The streamlined payroll process integrates payroll data directly from the time clock into the accounting system provides less human error and timely payroll functions. As the company expands into the e-commerce market through the ability to sell products on the website (Appollo Group, Inc., 2003), the AIS will need to be upgraded and expanded to meet these needs. These are some of the key elements of the business that an all-encompassing, seamless, secure AIS would help the business to be more efficient.
Strengths and weaknesses of the current system Determining the strengths and weaknesses of Kudler’s current computer system and technology used will help identify opportunities for improvement and evaluate the possible threats encountered with the current system. Currently, each Point of Sale (POS) station utilizes the latest technology in touch screens eliminating the need for keyboards. The operating system employed company-wide is Windows 7, a relatively current system. Employees clock in and out with a biometric time clock system. This system directly uploads time data to the current payroll system, eliminating possible human error when entering time. Also, the biometric system provides accuracy through personalization, by not allowing one employee the ability to clock-in for another employee that would alter the hours worked. Currently, the POS program sends inventory information, when transmitting daily sales, to a central computer that can produce a number of inventory reports for management to evaluate. According to Bagranoff (2008), "the objective of inventory control is to ensure that an AIS records all goods purchased for and dispensed from inventory" (122). Inventory control is important for management to see what items move quickly and what items may need to be discontinued. There are costs associated with carrying inventory that is not selling that the business does not want to incur (Bagranoff, 2008). The weaknesses of the computer system in place involve changing technologies, efficient inventory tracking, security, and expansion into e-commerce. As technology evolves the operating systems and hardware will need to be upgraded. When Kudler opens more stores in new towns, the operating systems and computers used at current locations may need to be upgraded leading to increased cost. Frequent upgrade costs can be seen as a weakness, but upgrading is imperative to continued growth.
The current system does not feature online purchasing through the website. As the company moves into online sales, a form of e-commerce (O’Brien & Marakas, 2008), the infrastructure and programs will need to be in place to transmit financial information securely. “Cybersecurity,” the protection of electronic information (O’Brien & Marakas, 2008), is increasingly important because of the amount of scams and electronic intruders stealing personal financial information. There is a lack of written and implemented internal controls and security policies and procedures.
Also, there are weaknesses in the inventory tracking. If visual inventory tracking is performed to match against the computer inventory, it has to be hand counted. With a portable device, like a portable scanner, the employee can scan the items on the shelf reducing human error. These are all weaknesses that can help determine opportunities for improvement of technology and also help evaluate threats that Kudler may encounter with the current system.
Opportunities and potential threats The strengths and weaknesses of the current technology help evaluate potential threats and help to recognize technology opportunities. Some of the threats create opportunity for improvement and upgrades in technology. Breaking through existing security or the lack of security is a threat to the system. There are security features such as passwords, dollar limits, and limited access features currently used. However, there are no formal written company security policies or procedures implemented for the financial and accounting systems. There is a high level of security threat with the transmission of customer financial information. The company must protect credit and debit card information of their customers. Also, the company must have a system that protects their employee information so further security features are needed to ensure privacy and protection.
The company can develop policies and procedures as they upgrade hardware and software systems. Firewalls used to protect against access from an external user (Bagranoff, 2008) is important, but the company should also look into security monitors. Security monitors also provide warning messages and record evidence of unauthorized computer use (O'Brien & Marakas, 2008). Security will be especially important as the company expands locations and develops their e-commerce business. There is a high level of security threat with the transmission of customer financial information. The company must protect credit and debit card information of their customers. Also, the company must have a system that protects their employee information so further security features are needed to ensure privacy and protection. Inventory is tracked through the POS system in place. To verify and check again the inventory on hand, an employee must verify by hand counting and deliver the information to management to check against the computer system. Also, when inventory is received this is checked against a paper copy of the purchase order and then entered into the system. There is potential for human error in the count or input of information. The company could automate this through handheld scanning devices that would automatically upload the information to the computer system. An entirely automated inventory system could help with time management and customer service. The company does have the power back up in case of a power outage and a backup module at each site. The company should consider also utilizing an off-site backup to protect against damage to the on-site backup. Security procedures should also be implemented to protect the information stored on the backup.