Accounting information and accounting information systems (AIS) in today's information age play critical roles in facilitating decision-makers with accurate financial status of the organization and activities to pursue strategic objectives. Accountants, who are the disseminators of accounting information, need to ensure that the information provided to decision-makers such as managers, executives and board of directors is up-to-date to achieve organizational objectives, monitor performance and/or amend strategic objectives when needed. Sometimes accounting information is not as useful and even impacts negatively on the users. This is due to a host of issues that plague accounting information and its systems including authenticity, integrity and quality of the information generated. For these reasons, companies have to develop and maintain accounting information systems congruent with their business objectives to ensure usefulness, integrity and transparency to avoid ethical, legal and business conflicts. In the following evaluation, the researcher shall demonstrate the role of accounting information and accounting information system at Barratt Development Plc, with special emphasis on how the implementation of computerized accounting information systems affects issues of quality, integrity and reliability.
Barratt Development - Overview Barratt开发-概述
Barratt is one of the UK's largest homebuilders. Founded in 1958, the company today has an extended growing network of divisions spread throughout the UK. The breadth and scope of Barratt’s organizational structure can be measured by the number of resources and other pioneering projects development it serves to the communities. The company boasts market share with specialization in "creating high quality, value for money homes for sale, rent and shared ownership, often in partnership with local authorities, housing associations and others" (Official Website 2007). The majority, that is 80%, of the projects, are based on brown field recycled land. This commitment towards sustainable development has been congruent with the Government's future plan in sustainable development and innovation in homebuilding and construction (Official Website 2007).
Even though the company has been founded since four decades, it is growing at an unprecedented speed. Since its listing in the London Stock Exchange in 1968, Barratt Development Plc has achieved high turnover. For the year 2006, the company has had a group turnover of £2,431m. With 33 operating divisions throughout the country to serve all sectors of the market, Barratt is considered one of the most powerful groups of builders in planning and developing of the country's housing sector (Official Website 2007).
According to its executives, Barratt's success lies in its geographical spread and extensive product range. The company has always ensured that sales of its homes and buildings are congruent with the average market place to appeal to a variety of buyers, yet maintains quality throughout the project. In addition, Barratt does not believe in remaining stagnant and following other players. Instead, part of its success lies in its ability to grow through innovation, and using green technologies effectively to develop projects that cost less, have more valuable benefits to the customer and environment, as well as customized to the end user's preferences. Problems such as energy efficiency, health and safety, and regeneration are taken into consideration seriously (Annual Report 2006). With a strong team of specialists on its hand, Barratt's management is confident in its performance and in creating value for its shareholders and stakeholders.
Role of Accounting Information and AIS at Barratt Development 会计信息与AIS在Barratt开发中的作用
The emergence of the digital economy and globalization has precipitated the concept of organizational systems for managing knowledge and information. In the financial context, digitized information reporting has become a link between the different units of the organization. It is through this network of information that organizations are able to utilize information in individualized management. Accounting information systems are enablers of information provision to synthesize financial information such as reports for non-standard managerial decisions. The AIS has come to be the manager's knowledge through which the organization deploys knowledge for various purposes in decision frameworks (Bhimani 2003). Thus, AIS can be defined as a subsystem of the organization's information system in which quantitative data are processed to provide information for individuals or group of people with similar information needs, to use in understanding organizational activities and support decision-making. Accounting information refers to processed data converted into information for the purpose of decision-making (OpenLearning ).
This ideology can be exemplified by studying Barratt Development and its AIS. Accounting information at Barratt serves various groups of individuals and mainly those who are in direct relation with the business. From the top of the decision tree, the board of directors who need to direct and control the organization are the principal users of accounting information. Accounting information is used to study the trend in revenues, pre-tax profit, losses, group activities, cash flow, return on capital employed, forward order book, land, net assets, interest rates, selling price, volume of business, product sale and earnings per share to estimate the status of the business. They base their assessment on future plans, the types of project they will focus on, the kind of resources they plan to employ, and the kind of risks involved in the business (Annual Report 2006).
Apart from the board of directors, accounting information provides valuable information for monitoring purposes for external groups of individuals such as the auditing committee. They study the integrity of the financial statements to objectively evaluate its relation with the organizational performance. They are also responsible for studying the financial management and reporting system to ensure that accounting procedures, system of control and processes are congruent with standards prescribed by the regulators (Annual Report 2006). The accounting information also provides useful status of the kind of credit transactions that have taken place with suppliers, the terms for repayment and how much debt the company is in without risking the company's integrity.
After the Board of Directors, the auditors, and the creditors, the executives and managers are the ones who make use of the accounting information. They utilize make use of accounting information for assessing operational performance and how to improve it through strategic plans. Accounting information provides insight pertaining to the gaps or problems inherent in the skills, resources, and financial constrains that hinder the maximization of efficiency of resources to achieve organizational objectives and targets (Annual Report 2006).
External users of accounting information also include the shareholders and speculators who are keen on studying the performance of the company from time to time to safeguard their interests. Information pertaining to earnings per share, share pricing, profitability, rates of returns and announcement of new shares being floated are all useful for shareholders to make investment decisions.
Apart from the above-mentioned core decision-makers, accounting information is also used at the operational level for information like salaries, benefits, bonuses, pension benefits, as well as ensuring that divisional leaders are able to gauge the status of inventory, receivables, cash flow activities, assets, land, payables and taxes etc. which will impact on the overall status of the projects.
The accounting information that these individuals utilize is processed by an accounting information system, which generates information from daily transactions such as sale receipts, invoices, payment slips, taxation forms, salary slips, suppliers transactional slips, and trade receivables etc. The AIS comprises of sub-sub systems set up based on accounting standards such as inventory system, supply chain system, sales proceeds systems, human resource system, and capital investment systems. The AIS is also formed based on various internal transactions recorded in these systems. Hence, the AIS at Barratt Development is based on both internal and external accounting information processing.
Accounting Information Strategy at Barratt Development Barratt开发会计信息策略