Acc8003: Accounting Information Assessment Answer

1IEDE

Accounting Information Systems & Controls

Task:

HurstTrails Co. is a small family photography business. The business has a good reputation for high-quality photos and enjoys longstanding arrangements with many schools for the provision of school photos. Hurst Trails Co. has traditionally used a small accounting package to manage it operations, with Make Your Business Profitable “MYBP” being the package currently in use. Recently, however, a few of the staff in the administration team have
complained that MYBP has become slow in processing transactions.

The computer that runs the program is also fast approaching its capacity, having not been updated for several years
and now also handling some of the business’s digital imaging requirements. As a result of the strained system, HurstTrails Co. is considering the possibility of an upgrade.

However, it is concerned that should it go ahead with an upgrade, it would have to employ a programmer to develop its new system, as well as a full-time IT specialist to keep the system running. It is also unsure of what needs to be done in managing the systems development process.

Once of the things particularly troubling Mr Johnny Wright, the part owner of HurstTrails Co., is the possibility of investing capital now and having to do so again in a couple of years time as technology changes. However, he does not mind spending a large sum now if the system is a long-term answer, since, as he himself said. ‘Once the system is acquired then the business can get back to normal and do what it does best – take photos – without having to spend money on IT.’

In light of the details you have about HurstTrails Co., prepare a discussion in relation to the
following questions:
1. Explain whether Johnny Wright’s statement is correct: ‘Once the system is acquired then the business can get back to normal and do what it does best – take photos – without having to spend money on IT’.
2. One option for HurstTrails Co. is to purchase and implement an SAP ERP system. SAP-ERP system is one of the world’s largest and most expensive and sophisticated software systems, which integrates all business processes, including the accounting processes. Considering from a strategic viewpoint, do you recommend HurstTrails Co. to replace MYBP with SAP-ERP? Justify your answer.
3. Consider an Application Service Provider (ASP) and other outsourcing methods. Which of these methods would be the best choice for HurstTrails Co. to limit the cost of maintaining the system once it is in place within the organisation? Why?
4. Would you recommend that HurstTrails Co. develop or buy the new system? Why?
5. Describe the process that HurstTrails Co. could use for selecting a vendor for the new system.
6. Identify three possible consequences for HurstTrails Co. of relying on a single vendor for the system?

Use the stakeholder analysis framework described in Chapter 1, to analyse if there is an ethical dilemma for William Pitt with reference to accounting standards, disclosure and any laws applicable.