Accounting Information Systems: The Processes and Controls, 2nd Edition

IT SYSTEMS OF CONVERSION PROCESSES (STUDY OBJECTIVE 5)

Because of the potentially large number of inventory items maintained by a company and the variety of processing flows that may affect them throughout the conversion process, it is often difficult to keep current inventory and production records with manual systems. IT systems can be a true friend of the conversion process. Recent technological developments have resulted in significant changes in the way that many companies conduct their conversion processes. Computerized systems may provide the following benefits in this process, which result in huge savings in terms of productivity, quality, flexibility, and time:

• Automatic computation of materials requirements based on sales orders and sales forecasts
• Systematic scheduling that allows for greater flexibility and increased efficiencies
• Timely transfer of inventories throughout the process, due to the automatic notification features
• Validation of data entries that detect errors before they are recorded
• Automatic updating of inventory status reports that saves time and increases accuracy
• Automatic preparation of financial accounting entries and cost accounting reports

In addition to these advantages, integration of all or part of the company's processing applications, planning, resource management, operations functions, and cost accounting system will yield even greater benefits in terms of workforce efficiency, paperwork reduction, and other cost reductions.

A computer-based ...