Saudi Arabia Refineries Company’s Accounting Information System

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Saudi Arabia Refineries Company limited is a small company that operates in Saudi Arabia. Its production per year is small as compared to those of other competing companies. It is headed by a chief executive officer and has a total employee population of one hundred. Its future aspirations include being a regional leader. It has been in operation for less than ten years.

Types of information systems

An information system is an organized system used by an organization to generate information for the daily running of the organization. It has the following components; hardware, software, data, and people who generate and those who use the information.

The Saudi Arabia refineries company limited has the following types of information systems in place; management information systems, office information systems, transaction management information systems, expert information systems, and support information systems (will 11).

Office information systems

An office information system combines both hardware and software to enable the flow of information between users of the system. In Saudi Arabia Refineries Company limited, this system enables the communication between employees. In this company, most tasks are performed electronically though some tasks are still carried out manually in the office. The tasks that are automated permit quick and effective communication between employees. The automated functions are executed manually once in a while when the electron system is temporarily not available.

The office information system supports a range of Saudi Arabia company limited refineries office activities. Some activities that are carried out using this system are;

Creating and sharing documents – some activities supported by this include word processing, spreadsheets, and graphic presentations.
Sending messages – through e-mail, facsimile (fax), voice mails, and video conferencing.
Making work schedules – management of work schedules includes task allocation, day and of the week a particular task is to be carried out. It also shows who is to carry out the particular task mentioned.
Carrying out most activities related to accounting – the accounting department is among the greatest beneficiaries of the information systems. Some tasks that the department can carry out are creating balance sheets, making income statements, and generating invoices.

In Saudi refineries limited all the levels of the users of the office information system utilize and benefit from features of this system. This is a good indication that the system is a sound investment for the company.

The following is hardware that plays a part in this system;

Computers connected to the internet
Scanners
Fax machines
Cameras
Speakers
And microphones

Transaction processing information system

A transaction is any business activity. Payment, deposits, and making orders are some examples day- to- day transactions.

The Clerical staff of Saudi Arabia refineries limited performs some activities that are part of transaction processing. These activities include the following:

Recording day-to-day business activities such as processing a customer’s order, processing a client’s payment, or registering a new product.
Confirming an action to be taken or initiating the desired response, such as sending an appreciation message to a customer, managing an employee’s paycheck, or issuing a receipt of a transaction to a client.
Managing data; that is generating and adding new data, modifying existing data, or deleting obsolete data.

Computerized transaction processing systems were developed to allow for faster processing, reduced costs, and improved customer service.

The company uses two transaction processing systems. In one system the transaction data is collected over a specified period. All transactions are later processed as batch or lot. The other system processes data in real-time. This system relies on internet connectivity. This system is sometimes referred to as online transaction processing. This system processes data as they are entered. Data can be entered from any computer with an internet connection anywhere in the world. When data is entered the system executes the desired function and reports back immediately. Clerical officers monitor this system and often intervene when necessary. In some cases where invoicing is required, instant responses are not possible. An invoice is usually printed and mailed to the customer at a later date. Transactions that require calculation are also not supported by the online transaction processing system.

Management information system

Management information systems evolved from the transaction management system. A management information system is sometimes called a management reporting system. In Saudi Arabia, Refineries Company limited to this system is mainly used by management. The managers of the company use the system to generate timely and organized information that is useful in decision making. This information is also used to track the progress of various activities in the company.

The management of the company uses this system to carry several activities. The activities include the following:

Generation of reports- these reports typically recap daily sales activities.
Record stock performance- the management can generate graphs of fast-moving products and slow-moving products using this system.
Making lists of customers who owe the company and those who are owed by the company. The company values this as it helps it in networking. Honoring financial commitments helps the company enhance its corporate image.

The management reporting system can generate three categories of information for the company’s top-level management. They are:

Summary information or report- summaries contain compiled reports in an easy to understand form. This enables management to retrieve and review information easily. A summary report generated by the system contains tables, graphs, and totals among other forms of summaries.
Detailed information- this is a representation of all activities that went into a transaction.
Exception information- this is information generated that alerts the management of any deviation from the accepted range. When such a report is received the management can make quick and timely decisions. Exception reports help the management save time as they need not go back to the system to identify the anomaly.

Decision support systems

The decision supports systems help provide information to support the management to make decisions.

A decision support system is an information system intended to help management arrive at a decision whenever a decision-making situation arises.

Data in this system can be either from internal or external sources.

Internal sources of data include; sales, manufacturing, inventory, or financial data from an organization’s database.

Data from external sources include; interest rates, population trends, and costs of raw material pricing. These data can be manipulated by managers to help in decision making. These external data sources can provide valid information on interest rates, commodity prices, and other major economic indicators.

Typical components of this system are:

Questioning
statistical analysis capabilities,
spreadsheets,
and graphics

All these components help the managers extract data and evaluate the results.

Expert systems

Expert systems are used by the company to store expert information. This information is used to guide the operations of employees with little experience. Expert systems are increasingly being used by the company in areas that require repeated but accurate moves. Expert systems are made up of two components: a knowledge base and inference rules. The knowledge base contains the expert information and inference rules guide the execution process.

External users of the company information

The information generated by the company information systems is useful to persons both inside and outside the organization. External users of this information use it to make various decisions affecting them. Among the external users of this information include investors, creditors, non-profit organizations, government, and scholars.

Investors: people who want to invest money in the company want to know the financial status of the company. The accounting information generated by the company will help them in evaluating the past performance and future performance of the company. This information is very important for the investors as they do not want to invest their money in a non-performing company. This company has previously used this information to raise more capital. Accounting information is shared with prospective investors in a bid to improve the company’s image. Most investors are mainly interested in accounting information. Accounting information helps investors gauge the prospects of the company.
Creditors: Creditors means supplier of goods and services on credit, banks and other lenders of money may want to know the financial status of a company before giving loans or providing credit. These groups of users need information relating to current assets, quick assets, and current liabilities. This information is available in the company’s financial statements. The information requested by lenders is used to gauge the company’s ability to pay back the loans. This information may therefore affect the credit rating of the company. The company takes loans once in a while to expand its operations and improve its future profitability.
Members Of Non-Profit Organizations: some non-profit making organizations such as hospitals, clubs, schools, and colleges may need accounting information of the company to know whether they partner with the company in meeting some of their calls. This information helps them to make crucial decisions regarding future support and partnership. The information may make the difference between the company clinching a major deal and missing it.
Government: the Government uses this information to calculate the company’s earnings and sales. The earnings and sales of a company for a particular period are used to calculate the tax payable to the government. Income tax payable by the company is calculated using information obtained from looking at a company’s income statements.
Research Scholars: Accounting information is useful for any researcher who wants to study the company. When such information is shared with scholars, the company may derive some benefit from it. Scholars often make recommendations and give feedback that is useful in the improvement of the company.

Internal users of information

The users of information in the company are those people or entities that close relations with the company itself. Major internal users include the following:

Owners: owners of the business use information generated by the company to know whether their capital investments are being put to good use. This group of users is more interested in accounting information. The accounting information they obtained is used to know the profitability and the financial position of the company they have invested in.
Management: Accounting information acts as the eyes and ears of management. It enables managers to keep track and appraise the performance of other employees. Management is among the major consumers of information generated by the company. Crucial decisions are never made without the backing of valid information.
Employees: Employees also need the information to know how their company is performing. This may motivate them to work harder. Employees may also use this information to market the company. Employees may also use accounting information to calculate their bonuses.

System outputs

There are several outputs generated by the system. The information system generates outputs for use by different people. The outputs generated are dependent on the quality of the inputs.

Daily activities report- this is an output that the management gets from the system. The report the managers receive is generated from the following data: items sold amounts paid for each item, time of day the sale was made, and description. A daily sales report is important for management to know the volume of sales per day. This comprehensive report of the daily sales activities made at various levels. The clerical officers enter the data into the systems at the time of sale. The system is made in such a way that the information entered is automatically processed. The main computer processes the information and generates an output depending on initial commands. The raw data is stored on the main computer. The processed information is stored in the company computer though it will generally require different commands to retrieve it. Some transactions that require invoicing are not processed instantly. These transactions are managed manually a little bit later.
Stock performance reports- the system generates this output using information such as time stock was purchased, the time it was sold and a general description of the product like the manufacturer. All the information regarding a particular product is entered into the main computer the moment it is received from the suppliers. The information is stored here for future use. When the product is sold new set of data is generated. The information in the system is bar-coded and the product is sold the relevant information is generated automatically. This information is used in monitoring the performance of the stock. From this information, management can know slow-moving products and fast-moving products. Fast-moving products offer an improved chance of making a good profit. The company’s management may, therefore, use this information to make important decisions. The management may want to stock more of the fast-moving products and less of the slow-moving product.

The information system of the company is a sound investment. With this system in place, the company has been able to generate information whenever it is required wherever it is needed. The organization has also been in a position to cut its running costs as is reported in its annual report. Though the system breaks down sometimes, it is largely reliable and dependable.

Company strategy

The company is positioning itself as a major player in the oil sector. Being a small company it will take a lot of effort for the company to achieve its dream. The company is approaching this through various.methods. One of the strategies employed by the company includes the expansion of current capacity and acquisition of other small enterprises. The company is fully aware that expansion is necessary for increased profits. It also appears to understand that expansion may be dangerous. To achieve their goal and vision the management embarked on automation of operations first. Having a working information system is one-way management thought would help them achieve their goal.

Accounting information systems are necessary for this process. This system will largely aid the company is positioning itself as a leader in the region. Regional and global businesses that have adopted this system have reported improved profits. There have also been reports of ease of operations.

Works Cited

W., and Joe, P. Strategic Planning for Information System, 3rd Ed. West Sussex: John wiley & Sons Ltd, 2002. Print.

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