Relationship between accounting information system w88 link w88 moi nhat internal control system

ABSTRACT:

How do the internal control system impact on the accounting information system of an enterprises? This study was conducted to analyze the relationship of these two systems. Although they have different functions, the result shows that both systems interact, complement each other w88 link w88 moi nhat toward to obtain organizations the ultimate goals as maintaining w88 link w88 moi nhat protecting resources, providing efficient information for decision-making processes of managers exactly w88 link w88 moi nhat timely. Hence, managers can use this papers result to build, maintain w88 link w88 moi nhat operate these systems effectively, enhance the advanced competence w88 link w88 moi nhat secure the developtment of enterprises.

Keywords: Accounting information; Accounting information system; Internal control.

1. Introduction

The support of information technology in accounting is the key to the survival w88 link w88 moi nhat development of enterprises (Hernandez et. al, 2008; Dulcic et. al, 2012; Zaki Mohammad Baridwan Shadiq Khari, 2015). While, internal control frameworkemerged in 1992 by the COSO, amended, supplemented w88 link w88 moi nhat updated in 2013 has provided a solid foundation for the internal control system.

Although both of systems have different functions, they are the same inproviding of information for manager’s decision-making w88 link w88 moi nhat helping businesses attain their goals. Hence, we studied the relationship between the two systems to provide appropriated recommendations to improve the performance of them.

2. Research background

2.1. Internal control

Internal control system is a flexible unified process updated continuously the changes with which an organization is facing. Managers w88 link w88 moi nhat staff of all departments must be involved in this process to address risks w88 link w88 moi nhat provide reasonable assurance as well as achieve common goals w88 link w88 moi nhat missions of organization. An effective internal control system consists of five components.

2.1.1. Control Environment

The control environment consist of many standards, processes, w88 link w88 moi nhat structures that provide the basis for operating internal control through the organization.The control environment comprises the integrity w88 link w88 moi nhat ethical values of the organization; the parameters enabling the board of directors to carry out its oversight responsibilities; the organizational structure w88 link w88 moi nhat assignment of authority w88 link w88 moi nhat responsibility; the process for attracting, developing, w88 link w88 moi nhat maintaining individual competence; w88 link w88 moi nhat the rigor around performance measures, incentives, w88 link w88 moi nhat payoffs to drive accountability for performance. The principles include:

- Commitment to the values w88 link w88 moi nhat moral integrity.

- Board of Directors must demonstrate independence from management w88 link w88 moi nhat execution monitoring w88 link w88 moi nhat the development of internal management.

- Management structure setting, the media reports w88 link w88 moi nhat authority w88 link w88 moi nhat responsibility appropriate for the pursuit of goals.

- A commitment to attract, develop w88 link w88 moi nhat retain qualified individuals.

- Organization to the individual to explain the internal management while pursuing the objectives.

2.1.2. Risk Assessment

Risk is defined as the probability that an event will occur w88 link w88 moi nhat effect on the achievement of the objectives in an organization. Risk assessment is an active w88 link w88 moi nhat repeated process to identify w88 link w88 moi nhat evaluate the risks of the achievement of the objectives. Risks to achieving these goals within the organization are concerned about the degree of risk. Therefore, risk assessment creates the foundation of determining how to manage risk. Furthermore, risk assessment requires managers concerning about the impact of changes which can be found in the external w88 link w88 moi nhat internal environment of the business. The principles include:

- Specifying clear objectives to facilitate the identification w88 link w88 moi nhat assessment of risks relating to the goals.

- Identifying the risks to achieving its goals in the entire organization w88 link w88 moi nhat analysis of risks as a foundation for determining how to manage risk.

- The possibility of fraud in assessing risks to obtain the objectives.

- Identify w88 link w88 moi nhat evaluating changes which could have significant effectiveness on internal control system.

2.1.3. Control Activities

Control activities are actions regulated through policies w88 link w88 moi nhat procedures to help ensure that management's direction was practiced to reduce or eliminate risk in accomplishing organiation’s goals. Control activities are conducted at all levels of an organization at various stages in the business process w88 link w88 moi nhat technology environment. The division of tasks is usually built in to the operating controls are selected w88 link w88 moi nhat developed. When the division of duties is impossible, impractical, the managers select w88 link w88 moi nhat develop alternative control activities. The principles include:

- Selecting w88 link w88 moi nhat developing control activities in order to contribute to reducing the risks in accomplishing goals at acceptable level.

- Selecting w88 link w88 moi nhat developing common control activities in technology to support the fulfillment of the objectives.

- Implementing control activities through policies, but these policies will be set up to the expectations w88 link w88 moi nhat the process of implementing these policies.

2.1.4. Information w88 link w88 moi nhat Communication

Information is essential for the organization to operate internal control system to support the accomplishment of its goals. Management attain or create w88 link w88 moi nhat use the helpful w88 link w88 moi nhat quality information from both inside w88 link w88 moi nhat outside to facilitate the operation of the other components of internal control. Communication is an ongoing process, repeated of offering, sharing w88 link w88 moi nhat collecting necessary information. The principles include:

- Obtaining or creating w88 link w88 moi nhat using the credibility w88 link w88 moi nhat quality information to fulfil the operation of the other components.

- Communicating information through organization, including the objectives w88 link w88 moi nhat responsibilities about internal control.

- Communicating with external parties on issues affecting the functioning of other components.

2.1.5. Monitor Activities

The regular monitoring built into the process at different activity levels of the organization to change in scope w88 link w88 moi nhat frequency, depending on the assessment of the risks, the effectiveness of regular monitoring w88 link w88 moi nhat other awareness of management. The principles include:

- Selecting, developing, implementing regularly or separately monitoring to clarify the composition of the internal control system are present w88 link w88 moi nhat functioning or not.

- Evaluating w88 link w88 moi nhat communicating about the internal control deficiencies in a timely manner to parties responsible for remedial action.

2.2. Accounting Information System

As a key component in the organization's information systems, including report financial w88 link w88 moi nhat non-financial information system, processing system w88 link w88 moi nhat operating management reporting system. An effective accounting information system comprises three secondary processing systems are General Ledger/Financial Reporting System(GL/FRS), Transaction Processing System(TPS) w88 link w88 moi nhat Management Reporting System(MRS). w88 link w88 moi nhat every secondary processing system have their own functions as well as characteristics.

- Transaction processing system focus on the overall function of the information systems by transforming economic events into financial transactions. These transactions, then, are recorded in accounting books (journals w88 link w88 moi nhat ledgers), w88 link w88 moi nhat distributed essential financial information to operations personnel to support their daily operations. This process resolved business events which happen every day...

- The general ledger system (GLS) w88 link w88 moi nhat the financial reporting system (FRS) are two main components of this system. w88 link w88 moi nhat a large amount of information of general ledger come from the transaction cycle. A summary of the activities of the transaction cycle are handled by the general ledger system to update the general ledger control accounts. Whereas, the financial reporting system measures w88 link w88 moi nhat reports the status as well as changes of financial. Information of this system is the main information source of external parties.

- The management reporting system provides financial information according to demand of corporate management. Managers must address immediately daily business issues as well as plan w88 link w88 moi nhat control their activities. Managers require different information for different types of decisions are made. Traditional reports of this system include budgets, variance reports, profit-volume-cost analyze w88 link w88 moi nhat reports using current (rather than history cost data).

3. Relationship between accounting information system w88 link w88 moi nhat internal control system

It can be seen that, internal control is split to five separated components having each other supporting relationship w88 link w88 moi nhat virtual department for survival of organization. While, accounting information system is an essential part of information system of enterprises, help collecting, recording, processing w88 link w88 moi nhat analyzing as well as supply helpful information for organizatons operation. Hence, we research w88 link w88 moi nhat find this relationship between two systems according to five components of internal control system to figure out similarities w88 link w88 moi nhat differences as well as interactions of both systems. The result was presented that point as following:

Table 3 shows the similar w88 link w88 moi nhat different characteristics between accounting information system w88 link w88 moi nhat internal control system. From then, the relationship between them is a mutual relation, interaction w88 link w88 moi nhat supporting each other to achieve objectives of each one. This relationship is illustrated clearly following the figure 2.

In general, both of the systems, accounting information system w88 link w88 moi nhat internal control system, have similar w88 link w88 moi nhat different characteristics about target, control environment, risk assessment, control activities, information w88 link w88 moi nhat communication w88 link w88 moi nhat monitoring activities. Hence, the relationship between two systems is mutual relation, as independence as supporting each other forward to obtain objectives of entity. w88 link w88 moi nhat it look like that, internal control system have the role bigger than accounting information system.

4. Conclusion

Overall, both the internal control system w88 link w88 moi nhat accounting information system contribute to the control of resources, ensuring effectiveness in resources using as well as prevent fraud w88 link w88 moi nhat corruption in organizations. However, while the accounting information system aims to collect, process w88 link w88 moi nhat provide non-financial w88 link w88 moi nhat financial information to parties of internal w88 link w88 moi nhat external (financial reporting system focus on supply for the external parties more than internal parties w88 link w88 moi nhat management reporting system is converse) are conducted by the accounting staff w88 link w88 moi nhat accounting chief , the internal control system concentrates on risk assessment activities to achieve organizations objectives.

Thus, as the role like the final result using people of the accounting information system designed in an organization, accountants must have a clear w88 link w88 moi nhat strong view about their requirement with person who designed system w88 link w88 moi nhat internal auditors (as part of the internal control system) have to perceive their role w88 link w88 moi nhat position in the effective maintenance of operation of accounting information system. w88 link w88 moi nhat, the leader always commit to the pursuit of operational efficiency in an organization as well as the operational efficiency in the internal control system, make sure of the independence of this department in the internal activities w88 link w88 moi nhat policies.

REFERENCES:

1. Choi, J. H., Choi, S., Hogan, C. E., & Lee, J. (2013). The effect of human resource investment in internal control on the disclosure of internal control weaknesses.Auditing: A Journal of Practice & Theory,32 (4), 169 - 199.

2. OSO-Committee of Sponsoring Organizations of the Treadway Commission (2013), Internal control-intergrated framework. Executive Summary.

3. Dulcic, Z., Pavlic, D., & Silic, I. (2012). Evaluating the intended use of decision support system (DSS) by applying technology acceptance model (TAM) in business organizations in Croatia.Procedia-Social w88 link w88 moi nhat Behavioral Sciences, 58, 1565 - 1575.

4. Hall, J. (2008).Accounting information systems. Cengage Learning.

5. Hernandez, B., Jimenez, J., & Martín, M. J. (2008). Extending the technology acceptance model to include the IT decision-maker: A study of business management software.Technovation,28 (3), 112 - 121.

6. http://www.coso.org/aboutus.htm

7. Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information systems in small w88 link w88 moi nhat medium sized Malaysian manufacturing firms.Journal of Information Systems w88 link w88 moi nhat Small Business,1 (1-2), 1 - 20.

8. Khairi, M. S., & Baridwan, Z. (2015). An empirical study on organizational acceptance accounting information systems in sharia banking.The International Journal of Accounting w88 link w88 moi nhat Business Society,23(1), 97 - 122.

9. Li, C. (2014, June). Study on Internal Control System Optimization of Chinese Small w88 link w88 moi nhat Medium-sized Private Enterprises. In3rd International Conference on Science w88 link w88 moi nhat Social Research (ICSSR 2014). Atlantis Press.

10. Nurhayati, N., & Mulyani, S. (2015). User participation on system development, user competence w88 link w88 moi nhat top management commitment w88 link w88 moi nhat their effect on the success of the implementation of accounting information system.European Journal of Business w88 link w88 moi nhat Innovation Research,3 (2), 56 - 68.

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VÀ HỆ THỐNG KIỂM SOÁT NỘI BỘ

● TS. TĂNG TRÍ HÙNG

Khoa Kế toán - Trường Đại học Tôn Đức Thắng

● ThS. NGUYỄN HỮU THIỆN

Khoa Kế toán - Trường Cao đẳng Công nghệ Thủ Đức

● NGUYỄN HIẾU TRUNG

Phó phòng Tin học - Cục thuế Tỉnh Tiền Giang

● LÊ THÙY DUNG

Công ty Tư vấn Kiểm toán Rồng Việt (VDAC)

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