Review of Applications of Accounting Information System of Petroleum

To daylight the hawkish world has thrown to a greater extent challenges to the in corpo authorizedd world. More transp arnt and clear call for to the corporate way and its clients alike has been the travesty of success in nowadayss grocery store. A compevery burn puddle confidence and attract more customers if it is actual transparent, clear substantial and subjective in its learning it hand all overs to its investors and managers. Keeping this in witness account culture System has been the confabulation of the corporate world.The petroleum producing countries are also forced to follow certain technologies in their write up rests so as to realize more breeding regarding distri thoion and sharing of profits among its investors. This article is a study on the importance and also applications of AIS in petroleum companies with special reference to Yemen. judgment and translation of AIS The definition of AIS has evolved over the old age from maven focusing on the preparation of more formal, mvirtuosotaryly quantifiable entropy to assist in ratiocination- devising processes to ane that embraces a much broader scope of data.The dimensions apply to shine the heading of AIS hold focus, orientation, meter horizon, aggregation, integration, clock opportuneness, pecuniary and non- pecuniary, and quantitative and qualitative. Defining AIS has been difficult like a shot and research in this area is preferably diverse. It includes behavioral studies of audit decisiveness making tools, field studies of disposalal bodys, design, development of worldwide ledger strategys, and development of bill models that effectively utilize advancement in figurer technology, application of different technology solutions to AIS situations, and many a(prenominal) different types of studies.In general, an discipline agreement is apply to represent the real world phenomena with a come of symbols which are captured and implemented at hear t a computerized environment (McCarthy, 1979). Therefore, an news report teaching musical arrangement is one that translates representations of scotch activities into a format that is valuable to accountants and to their customers i. e. , headache close makers, who carry culture to the highest level economic activities. Accountants are organism pressured to redefine their part to body of ruless and to expand the scope of their activities beyond pecuniary introducement preparation and analysis.They are universe called upon to be receive active enterprise-wide team members who tin schooling and guidance in strategic finding- making salutations. Similarly, day-to-day mathematical processs managers occupy a wide couch of financial and non-financial performance measures. Therefore, if AIS is going to result todays accountants to give the tuition, line of products conclusiveness makers, should meet the following definition An story data system is one that captu res, stores, manipulates, and presents selective information, round an organizations value-adding activities to aid decision makers in planning, monitoring, and controlling the organization. This definition sure as shooting includes financial accounting systems, which come the native purpose of generating financial statements in compliance with principally Accepted accounting Principles (GAAP). til now this definition recognizes that lineagees essential perform a wide range of value-adding activities ( much(prenominal) as production, distri andion, sales, and so forth ) to be successful, and that the types of information needed to mange much(prenominal) activities will be extensive. Therefore, the scope of corporate systems that are included under the AIS umbrella is much broader than the general ledger system and the programs that prepare journal entries to feed it.Actually, AIS is a system that aids in touch deeds and in tracking the entropy that result from such a ctions. These systems also moldiness provide performance measurements (financial and non- financial) and help to follow up management control objectives. They include transaction bear upon systems (such as billing systems for sales processes), interorganizational systems that share info with upstream and downriver partners (such as web-establish order systems and electronic info interchange cash receipt bear on), and retain systems.This enables economic exchanges (such as order process, customer market analysis, and inventory control systems). This definition has strong integrative implication. For example, the impact of initiative Resource Planning (ERP) systems on the market has been dramatic. These systems were initially designed around center field functions such as manufacturing or homosexuals resources. As they matured, their breadth expanded to include much more of the organizations activities. The key characteristic they embraced was developing an merged data re pository which was accessible by users through let on the organization.ERP systems provide massive amounts of data that is up dated in real time, and they are able to provide greater planning support and a wider range of performance measurements which were done previously by manufacturing or management planning systems. story learning System (AIS) is the Information subsystem at bottom an organization that accumulates information from the entitys discordant subsystems and communicates it to the organizations information processing subsystem. The AIS has traditionally focused on collecting, processing, and communicating financial-oriented information to a companys external parties (e. . investors, acknowledgmentors, and government authorities) and internal parties (brinyly management). at a lower place the traditional view of AIS, each organizations functional areas, such as marketing, production, finance, and human race resources, maintain a take apart information system. Ho wever, organizations have found the need to integrate these separate systems into one unseamed database or to enterprise-wide information system. Today, the AIS is concerned with non-financial information as well as financial data and information.account Information System (AIS) is based on value accounting guess which are designed to store and summarize financial transactions used to uncover financial statements in accordance with Generally Accepted Accounting Principles (GAAP) and to account to the owners of the personal line of credit in this way. The figure No. 1 has shown Accounting Information System as logical part of MIS. Management Information System (MIS) is defined as an organised method of providing information to each gutter with all the data and scarcely those data which he necessarily for his decisions when he inevitably them and in a form, which aids to get a line and stimulate his action.Fig. No. 1 Illustrates AIS as a Logical Part of MIS. In short, the re searchers agree with the definition by Remney Steinbart (2000) An Accounting information system (AIS) consists of state, procedures and information technology. Accounting Information Systems Functions Meigs et al. (1999) specified the basic functions of accounting systems in developing information almost the financial position of a business and the results of its operations any accounting system performs following basic functions 1. Interpret and translate the effects of business transactions. 2.Classify the effects of akin transactions in a means that permits determination of the various totals and subtotals useful to management and used in accounting reports. 3. tot and communicate the information contained in the system to decision makers. The differences in accounting systems rise primarily in the manner and rush along with which these functions are performed. They ensure liberal control, which plunk for the the true in arranging and manipulating the data related to business activity and also, nourish those data and organizations assets. Characteristics of Accounting InformationStambaugh Carpente, (1992) counted in briefly the Information characteristics as follows. 1- Provided on timely stem. 2- Presented in an aesthetically appeal format. 3- Relevant to the decisions at hand. 4- Concise stock-still sufficient in scope to allow what-if analysis. 5- Flexible to interface with information from other functional units. There is also a several characteristics determine the qualities that make information valuable 1. Costs-versus-benefits abouttimes information cost more to get additional information than the information is worth.Thus, cost-benefit considers to provide an overall shyness on the amount of information a decision-maker will get. 2. Understandability/Granularity/ solicitation Many factors can contribute to the understandability of information, including user knowledge, skill, training, and motivation. In addition, information design choices its level of aggregation (or granularity) which will move its understandability, hence, its usefulness for controlling information integrity. For some purposes, highly aggregated information whitethorn be called for whereas for other purposes, very particular information whitethorn be required.Thus, suitably tailored levels of granularity/aggregation can be enablers of information integrity. A placeholder for the understandability of information is its conformity with user-specified requirements. 3. dependableness the information must be reliable, you must be able to count on its being what its purpose to be (this is known, more formally, as representational faithfulness), and on its being reasonably free from error and prepossession (this is known, more formally, as neutrality) . Additionally , for information to be reliable, it ought to be true.If seversal different people(or systems)set out to derive the information from the data, they should all come to t he same conclusion (this is know, more formally, as verifiability). Infomration that is not veriable , or not neutral, or not representationally faithful cant be relied on for decision-making. 4. Currency/ seasonableness It must be accepted that commanding completeness and truth are impossible or impractical to achieve. Information Currency is alter by real world changes over time (as well as by information processing delays) with a competent impact on information accuracy.Since time is continuous, completeness and accuracy must be dumb in a context that defines delightful limits for information currency, hence accuracy. For example, if certain information, such as cash receipts is only updated on a weekly basis to accounts receivable, then accounts receivable could be considered ideal if it was missing a days worth of transactions. However, if information such as airline reservation transactions updates addressable seat inventory in real time, then seat inventory would be considered unacceptably inaccurate if a days worth of transactions were omitted.As presented here, processing timeliness and information currency are really aspects of information completeness, which in turn, determines the degree of accuracy that information possesses however, because of their unique kind to the dimension of time and the change that time engenders, it is useful to identify currency/timeliness as separate attributes of information integrity. 5. rigourousness/Authorization Representational faithfulness of information about intangible objects implies that the information is sensible in ways other than understanding with an original physical condition.The concept of asperity means that information represents real conditions, rules or relationships rather than characteristics of physical objects. In a general context, conditions, rules or relationships are sensible if what they purport is true. In a business context, conditions, business rules or relationships are complete or approved by parties with the delegated business office to do so. Thus, transactions are binding if they were initiated and executed by personnel or systems that have been granted the authority to do so and if approvals are authentic and indoors the scope of the authority granted to the approver(s).For example, if the credit limit assigned to a customer reconciles to the companys rules and procedures used to set credit limits, the credit limit would be valid. Thus, the concept of validity includes elements of both accuracy and authorization. A validation process may in that locationfore require an investigation of an somebody item, a relationship between one item and another item, or a relationship between an item and a business rule, policy or standard. 6.Completeness true statement by itself is insufficient to convey the full dimensionality of the requirements for representational faithfulness which requires completeness of information in both space and time. T hus, there is a fundamental trade-off between completeness and accuracy because measurement and processing limitations of information processing systems will prevent 100% real-time completeness, especially for subject matter that changes frequently. This, in turn, prevents 100% accuracy. In other words, every discussion of accuracy is also a discussion of completeness, and vice versa.The amount of information is measured by the reduction of ignorance and scruple and not by the addition of knowledge. The material body No. 2 illustrates the AIS characteristics according to pecuniary Accounting Standards Board (FASB) in 1980 Accounting Information Systems Components An accounting system consists of the personnel, producers, devices, and depicts used by an organization to develop accounting information and to communicate this information to decision makers. The design and capabilities of these systems vary greatly from one organization to the next.In very small business, the accoun ting system may consist of unfore messinessful more than a cash register, a check book, and an annual trip to an income tax income office. In large business, an accounting system includes computers, highly trained personnel, and accounting reports that be active the daily operations of every department. further in every case the basic purpose of the accounting system remains the same to meet the organizations needs for accounting information as efficiently as possible. Many factors match the structure of the accounting system within a particular organization.The most Copernican are the companys needs for accounting information and the resources available for operation of the system. Accounting Information System Objectives Naturally, there is no system without goal, we should differ between stated objectives and the real objectives, when the entity declares its stated objectives satisfies consumers maneuver the real objectives maximum profits at to gain. Each enterprise has im plicit and perspicuous goals and objectives, enterprises may have a complaint statement that describes their goals.These goals can vary astray among enterprises ranging from nonprofit organizations, where goals are aimed at circumstances specified constituents, profit organizations, where goals are direct toward maximizing the owners objectives. It may seem at first sight to be an easy thing to do, but it can be seen as a complex problem in the absence of stated objectives. It means that the firm has no criterion against which to evaluate its success or failure or to use in the process of choosing between alternative activities.One of the problems in stating objectives for a firm is that only people involved with the firm can have objectives, not the firm it self. If this is accepted, then it is seemingly possible that there is more than one relevant objective. Accounting is purely human invention, having no independent existence in nature. Hence, it can not in any true sense have been discovered, but it must have been constructed by human minds to serve human needs. Accounting Information System objectives are as follows 1.Internal control, including the safeguarding of organization money and other property, the regular hookup and payment of sums of money owed to and by it, and the streak and detection of inefficiency, waste, and dishonesty by employees of the organization. 2. measure of financial data, by means of the recording of transactions and events affecting the financial state of the organization, and their processing in accordance with undifferentiated rules. 3. Provision of information for planning and decision making to management. 4. Reporting of financial information to properties, investors, and other interested persons.Another author also gives his contribution in accounting system objectives, such as Ijiri, (1975) in addressing the headway of what an accounting system should do ? He identifies accountability and information usefulnes s as the two main broad objectives that any accounting system should achieve. He states that accountability has clearly been the societal and organizational backbone of accounting for centuries. In this sense to account for he takes to relieve a consequence by providing a set of causes that have collectively produced the result. To provide accountability is thus an essential trait of an accounting system.However, in the modern business world, information usefulness is also an important, albeit secondary, requirement. Thus, the summation of any accounting system is to provide accountability with information usefulness a necessary adjunct. All accounting information systems seek five basic results 1. To record an actual, valid transaction 2. To accurately secernate the nature of the transaction 3. To record the oppose value of the transaction 4. To place the transaction in the proper accounting finis and 5. To generate financial statements containing information about the trans action.