Phân tích hệ thống kế toán đối với hoạt động bán lẻ của công ty tnhh Ivy Management Solutions
Working Paper 2021.2.1.07
- Vol 2, No 1
PHÂN TÍCH HỆ THỐNG KẾ TOÁN ĐỐI VỚI HOẠT ĐỘNG BÁN LẺ CỦA
CÔNG TY TNHH IVY MANAGEMENT SOLUTIONS
Nguyễn Đức Dũng1
Sinh viên K56 CTTT Quản trị kinh doanh – Khoa Quản trị kinh doanh
Trường Đại học Ngoại thương, Hà Nội, Việt Nam
Nguyễn Thúy Anh
Giảng viên Khoa Quản trị Kinh doanh
Trường Đại học Ngoại thương, Hà Nội, Việt Nam
Tóm tắt
Các công ty vừa và nhỏ, đặc biệt trong lĩnh vực bán lẻ, luôn gặp khó khăn trong việc thiết lập một
hệ thống kế toán hiệu quả và có năng suất cao. Tuy nhiên, các nghiên cứu trong lĩnh vực kế toán
phần lớn tập trung vào môi trường tài chính vĩ mô cho các mô hình kinh doanh quy mô lớn. Bởi
vậy, bài nghiên cứu này nhắm tới việc xác định các vấn đề cốt lõi trong thiết kế và triển khai hệ
thống kế toán phù hợp cho doanh nghiệp vừa và nhỏ, thông qua nghiên cứu điển hình công ty
TNHH Ivy Management Solutions. Bài nghiên cứu sử dụng phương pháp phân tích định tính và
nghiên cứu điển hình. Nghiên cứu đã xây dựng một mô hình phân tích toàn diện dựa trên các lý
thuyết kế toán và các phương pháp thực hành tốt nhất trong kế toán doanh nghiệp để đánh giá thực
tiễn hệ thống kế toán của công ty TNHH Ivy Management Solutions. Dựa trên cơ sở này, nghiên
cứu đưa ra các khuyến nghị liên quan đến việc tìm kiếm nhân sự cấp cao cho phòng Tài chính và
cải thiện các chức năng của hệ thống quản lý thông tin (MIS) hiện tại. Mô hình phân tích toàn diện
nói trên cũng sẽ hữu ích cho các doanh nghiệp vừa và nhỏ khác trong việc đánh giá vả cải thiện hệ
thống kế toán của mình.
Từ khoá: hệ thống kế toán, hoạt động bán lẻ, doanh nghiệp vừa và nhỏ, mô hình phân tích.
AN ANALYSIS OF ACCOUNTING SYSTEM IN RETAIL OPERATION OF
IVY MANAGEMENT SOLUTIONS LTD.
Abstract
Having an efficient and effective accounting system has always been a struggle to SMEs, especially
retail business. However, studies in the subject of accounting system have been largely focused on
the macro financial environment for large-scale business model. This research paper aims to
identify the core problems in designing and implementing a suitable accounting system for SMEs,
by studying the case of Ivy Management Solutions Ltd, specifically its retail operation. The
qualitative and case study methods are applied in the paper. A holistic model was built by authors
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based on the accounting theories and best practices in business and accounting application to assess
the performance of Ivy Management Solutions Ltd. On this basis, it is recommended that Ivy
Management Solutions Ltd. hire a new talent to lead the Finance Department and improve the
functions of its Management Information System. The holistic model can be also applicable for
other SMEs.
Keywords: accounting system, retail operation, SME, analysis model.
1. Introduction
The effectiveness of accounting system is very crucial for the business operation, especially
in retail operation. There was plenty of research done about these issues. However, there are
questions that are left unanswered.
Firstly, there is a lack of official study about financial matters for SMEs. Most studies on this
topic are general and unfocused, funded by governments and corporations. On one hand, this is
good for the economy and the creation of many modern finance instruments and the global
financing market itself, lay the stone for the invention of e-currency such as Bitcoin and Ethereum;
but, on the other hand, this leaves out SMEs. Studies about financial management in SMEs are
hardly founded because they have been struggling to survive in a competitive market and have no
resource to produce proper research about how they manage their finance information.
Furthermore, financial information is kept secret from competitors, so a wide and comparable
research among SMEs is an impossible task. In short, most financial studies, besides being general,
are only benefiting the macro economy as a whole and large corporations, not individual problems.
Secondly, the financial market and instrument is always growing and evolving. Fraud risks
can occur at any step of the financial management process, and the methodology for fraud is ever
changing. Moreover, the risk in retail operation is even higher, in which the accounting system
process involved employees from multiple levels. These are the reasons for continuous
development for fraud detection and prevention. A plan or method to mitigate fraud risk for SMEs
is needed.
Lastly, business needs a fully functional accounting system to provide the business with
cutting edge knowledge to increase the competitiveness of operation. Retail businesses with its
fast-changing pace of business will benefit greatly on a functional accounting system. Therefore,
a complete study for accounting system and its functions is needed.
In conclusion, previous studies are general and failed to recommend practical solutions for
SMEs to increase the effectiveness of accounting system, and also failed to provide a
comprehensive model to assess accounting system in SMEs. The author of this research paper will
try to fill this gap, by studying the operation and accounting system of Ivy Management Solution
Ltd. during the period of 2018 – 2019. By looking into the financial records and accounting system
of IMS, this paper will provide a completed model to assess the standard accounting system for
SMEs and recommend a practical solution to improve IMS ’s accounting performance, which can
be applicable for others.
2. Literature review
2.1. Accounting system
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An accounting system is consisted of accounting and system. Accounting is a method of
recording, analyzing and summarizing transactions data of a business (BPP Learning Media,
2019), while system is understanded as a way of doing things, or a set of connected things and
devices that operate together (Cambridge University Press, 2021). Together, an accounting system
can be understood as a set of connected devices or procedures that record, analyze and summarize
transactions data of a business.
Accounting is considered as one of the significant and most critical factors for both Private
and Public entities. With many financial methodology and applications, decision making process
can improve its effectiveness due to the collection of supporting data. Moreover, accounting is
viewed as an economic management tool which supports in summarizing, controlling and
recording of financial transactions of the companies (Allen, et al., 2012). The main objective of
the accounting system is to provide specific information to the various stakeholders which includes
investors, public, creditors and the government authorities. The aim behind providing the
information is that with the help of this information, related parties can effectively analyze the
financial condition, development, growth and profitability of the companies.
According to the research of Burns and Needles (1994), the theory of accounting was first
conceptualized in early 1930s. With more than 80 years in development, it has been assessed that
with the advancement and development of accounting, a standard modern financial system must
be able to carry out the followings: collect and record transactions information, process
transactions data, issue financial and management reports (BPP Learning Media, 2019).
Specifically, for SME retail business, the accounting system is also in charge of executing
transactions (Horngren et al., 2013).
Collecting and recording transactions information is always important for a business.
Nowadays, every decision is expected to be data-driven, therefore, this function is the most crucial
for an accounting system, as accounting is the method of recording, analyzing and summarizing
transactions data (BPP Learning Media, 2019). For example, a business can know its profit for the
month, and calculate the amount needed to invest in inventory next week based on the transaction
information in the last month.
Processing transactions data is usually computerized, using Management Information System.
This provides the company with advantages of processing large amount of data in less time,
improving accuracy, increasing functionality and issuing better external reports (Ghasemi et al.,
2011). With the support of Information Technology, a sale manager can get real time update on
his or her department’s performance without going through papers and invoices, which makes the
decision-making process simpler and easier than before.
Issuing financial and management reports can provides important information that helps
coordinate decentralized decision-making in different departments of the company. In the modern
era, decision making process is data driven. Therefore, the competitiveness level of the accounting
system in regard of the ability to provide crucial information in a timely manner is extremely
important for business operation. The information needs of managers are mainly covered by
reports based on information from the management accounting and financial accounting. The
reports are drawn up according to the manager’s objectives, which relate to managerial functions
(Munteanu et al., 2011).
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Executing transactions refers to the method for settling payment are designed to manage with
the expense and the risks related with the procedure. Costs emerge through processing fees,
transfer taxes, and the maintenance of collateral, while risk arises because one party may not keep
its end of the contract. For instance, the purchaser will most likely be unable to financing, or the
seller can’t deliver the products. The process of executing a transaction can be loosely divided into
three categories of execution, clearing and settlement, according to the opinion of Santomero,
Viotti & Vredin (2013). The execution stage requires the most attention from the stakeholders
involved, and with the development of banking system and technology nowadays, business
concern is mostly about the process of execution, and how to avoid fraud and dysfunction during
this step.
According to Foundations in Accountancy: Accountant in Business (2019), the Finance
Department, who is responsible for the operation of the accounting system, should carry out the
followings:
• Financial Accountant and Management Accountant provides information and reports to
relevant stakeholders. However, their needs are different, and not all stakeholders are equally
satisfied. The information analyzed was the transaction data from executing transactions activities,
processed by a Management Information System.
• Treasurer is responsible for executing transactions, which in the process collecting
transaction data for Financial Accounting and Management Accounting to process
• Processing and recording are often computerized, using a Management Information System.
In conclusion, the purpose of the accounting system is to execute transactions, collect and
record transaction data, process data and provide financial statements and management reports.
2.2. Elements of an accounting system
One of the important elements of an accounting system is people, who is heavily involved in
the operation of the business as well as the accounting procedures. Typically, the Finance
Department of a company usually has the following structure:
Figure 1. Typical structure of a Finance Department
Source: (BPP Learning Media, 2019)
In which, each of the separated subdivision has its own responsibility (BPP Learning Media,
2019):
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• Treasurer is responsible for fund raising, investing surplus and controlling cashflow. To
fulfill their objectives, Treasurer manages the Input Stages of the accounting system. The
transaction data was later processed and stored by their Management Information System.
• Financial Controller is responsible for routine accounting, providing accounting reports and
cash controlling. Financial Controller use information provided by the Management Information
System.
• Management Accountant is an important part of the business, as they have a vital and
separate responsibility to do cost accounting, budget control and financial management for
projects. Management Accountant also use information provided by the Management Information
System.
Usually in a SME, the Accounting Department is responsible for the above. In smaller
company (05-10 people), the department consists only one to two people to act simultaneously as
a Financial Controller, Management Accountant and Treasurer. SMEs usually have General
Accountant positions, which responsible for all procedures below.
A standard accounting system must be able to do financial accounting procedure and
management accounting procedure (Tan Thanh Thinh Ltd., 2021), which issues financial
statements and management reports for relevant stakeholders. Financial accounting procedure is
required and heavily regulated by the government, as it is the method to determine tax balance of
a company, based on its income and expense. Financial accounting standards are expressed in
Circulars and Decree from the Government, and the information required is fixed. Financial
statements are often referred to as external statements, as it illustrates the status quo of the company
and does not include crucial information for the prediction growth of the company. For example,
standard financial statements from a retail business are not required to disclose the growth rate of
its customer base, which is very important for this business model. The Vietnamese government
also has requirements for receipts, invoices and payments (Vietnamese Congress, 2019), therefore,
in SMEs, financial accounting function has to execute transactions, including payment and receipt
as well to uphold the standards. This procedure is done by Financial Controller.
To fulfill the need for management – related information, the shareholders established another
system to produce internal reports, or management reports. Management accounting procedure
collects the data that are relevant to the operation and management of the business and generates
meaningful information from this. Moreover, to suit the management needs, these reports are
customizable. For example, the managers of a retail business can require a tracking number of
their growing customer base on monthly basis. These reports are issued by Management
Accountant.
To generate the mentioned reports and statements, the accounting system requires processed
data. Therefore, another crucial part of the accounting system is the procedures to collect and
process transactions data (BPP Learning Media, 2019).
There are two procedures to collect transactions data: purchase procedure and sale procedure.
The purchase procedure collects information about payments the company made and execute the
settlements, while the sale procedure collects the receivables from external stakeholders. The
Vietnamese government issued requirements for the process of collecting transactions data, as well
as provide proof of payment or receipt (Vietnamese Congress, 2019).
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On the other hand, the procedure used to process transactions data depends from the managers
of each company, however, in the modern context this is usually done by a computerized system
called Management Information System to gain more in-depth insights from said data
automatically. This system is designed to suit the needs of accountants in the company.
2.3. Information flow through standard accounting system
The modern accounting system should have the general information flow (Kaplan Publishing
UK, 2018):
Figure 2. Information flow through the accounting system
Source: Author
This is the basic operation model of an accounting system. The Treasurer mainly manages the
input stage to execute day to day settlements and generate transactions data, which was then put
into the Management Information System to further processing. This processed data will be later
analyzed by Financial Controller and Management Accountant to produce their respective outputs.
• Input
The input stage is comprised of many Transactions Processing Systems (TPS) of the accounting
system, which record historic information and represent the simple automation of the manual
systems (Kaplan Publishing UK, 2018). This system routinely records, processes and stores and
output low level transaction data.
• Process
After being recorded in the General Ledger, transactions data is further processed by
Management Information System (MIS). MIS focuses on providing useful information to all level
of management, to enable effective and timely decision-making process. Information from this
system can be used for planning and controlling activities, which is very helpful for middle
managers (Kaplan Publishing UK, 2018).
• Output
There are two outputs for the accounting system: Financial Statements and Management
Reports.
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Financial Controller is responsible for financial accounting, which is a way recording,
analyzing and summarizing financial data. This is different from management accounting.
Although both are interested by managers, financial accounting provides historical data about the
business, and mostly to satisfy the needs of external stakeholders who are not involved in running
the business (BPP Learning Media, 2019).
Management Accounting is concerns with using the financial data and how to communicate
it as information to users. Management Accounting is the application of the principles of
accounting and financial management to create, protect, preserve and increase value for the
shareholders of for-profit and not-for-profit enterprises in the public and private sectors (BPP
Learning Media, 2019).
2.4. Accounting system in retail operations
Retail operations consists of buying and selling goods rather than services. The difference
between a retail and service firm is that a retail organization has cost of goods sold, which
generates from the process of making physical products (Horngren, et al., 2013). Therefore, it is
important for a retail business to have an inventory system to manage its goods.
3. Methodology
To assess the performance of accounting system in SMEs accurately and comprehensively,
the author used a qualitative and case-study approach. By building a holistic framework based on
the information flows of standard accounting system (Kaplan Publishing UK, 2018) and the best
practices of modern accounting system, the authors can grasp a snapshot of the performance of the
accounting system of the company with clear strengths and weaknesses. After expert review and
adjustment, this model can be used to assess the case of Ivy Management Solution Ltd., who was
experiencing problems with its accounting system, to analyze their performance and recommend
practical solutions to improve.
The model assesses three fundamental processes of an accounting system
- Input: The process of recording, storing and processing low-level transactions data, which
ultimately appear on the General Ledger as accounting data
- Process: The accounting data was further processed by a Management Information System
(MIS), to generate first level insights and reports, which are useful for middle managers (e.g.
customized monthly sales report for Sale Department)
- Output: Refined information will be used to issue Financial Statements and Management
Reports, which was insightful for various stakeholders. Financial Statements are suitable for
external stakeholders with its standard format, while Management Reports are used by internal
stakeholders for its customization, especially high-level managers.
Base on theoretical basis of information flow and element in an accounting system, the author
has built a holistic model that assess accounting system with detailed marking on the criteria. This
model is built on the basis of information flow in accounting system, with consideration to the
status of the subject at hand, which is a SME in retail business.
The model was also modified and adjusted based on the comments of 02 experts in the field
of accounting and 03 accountants in retail business, to provide perspectives and balance between
effectiveness and efficiency. The experts were asked to assess the comprehensiveness, precision,
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relevancy, phrasing and fairness of the model, as well as provide written comments with more
detailed information about the types of misunderstanding that may occur using this model.
After reviewing accounting theories, modern practices of accounting system and
incorporating experts’ comments, the following model was constructed by the authors as follows:
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Table 1. Holistic model to assess an accounting system
Evaluation
Medium (3)
Step
Criteria
Weak (1)
Strong (5)
Input A. Accounting
A=(A1+A2+A3)/3
system
1. Payroll
system
Unable to settle
wages and salary wages and salary,
Able to settle
Precisely settle wages
and salary in timely
but need correction manner
Correction requests Correction requests
take a lot of time to was processed quickly.
process.
2. Purchase
cycle
Unable to settle
payment and
track payable
accounts of
suppliers
Able to settle
Precisely settle
payment and track payment and track
payable accounts of payable accounts of
suppliers, but need suppliers.
correction
Correction requests
Correction requests was processed quickly.
take a lot of time to
process.
3. Sale cycle
Unable to receive Able to receive
payment and keep payment and keep
Able to receive
payment, keep track of
the revenue.
track of the
revenue
track of the
revenue but need
correction.
Able to track inventory
with high precision
Unable to track
inventory
Able to track
inventory with low
precision
4. Cash system Unable to
Able to maintain
Able to maintain the
cash balance and keep
maintain the cash the cash balance,
balance
but can’t keep track track of the expenses
of the expenses
Process B. Management
Information
B=(B1+B2+B3+B4)/4
System
1. Database
Unable to
Able to maintain a Able to maintain a
maintain a correct correct record of
record of financial accounts, financial accounts in a
financial accounts but unorganized meaningful order
correct record of
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Evaluation
Medium (3)
Step
Criteria
2. Direct
Weak (1)
Unable to
produce reports
on company’s
activities
Strong (5)
Able to produce
reports on
company’s
activities
Able to produce high-
quality reports on
company’s activities
control
3. Enquiry
Unable to search
for specific
information in the information in the
Able to search for
specific
Able to search for
specific information in
the database in a timely
manner
database
database, but time
consuming
4. Support
Unable to do
simple analytics
of the database
Able to do simple
analytics of the
database, but time
consuming
Able to do simple
analytics of the
database in a timely
manner
Output C. Financial
C=C1+C2
reporting
1. Regulation
alignment
Unable to align
with the VAS
Able to produce
VAS-aligned
statement
Able to produce VAS-
aligned statement and
insights related to
company’s business
2. Time
&Resources
Ineffective and
inefficient
Somewhat
effective and
efficient
Effective and efficient
D. Management
accounting
D=(D1+D2+D3)/3
1. Strategic
planning
Unable to
provide high level high-level
Able to provide
Able to provide high-
quality high-level
information on ad information on ad
information on ad hoc
hoc basis
hoc basis with low basis in time
quality and time
consuming
2. Management Unable to have
Able to have
Able to have high-
control
routine reports
about the
routine reports
about the activities about the activities in
quality routine reports
activities of
departments
of departments
with low quality
and time
time
consuming
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Evaluation
Medium (3)
Step
Criteria
Weak (1)
Strong (5)
Able to export
operational information
3. Operational
control
Unable to export
operational
Able to export
operational
information to
front line staffs
information to front to front line staffs in a
line staffs but time timely manner
consuming
Overall score
4. Results and discussion
T=(A+B+C+D)/4
4.1. Assessment of IMS’s accounting system using holistic model
Based on the holistic model, the author assesses the accounting system of Ivy Management
Solutions. The result is sent to experts in the field to be evaluated, then remarked and commented
for reliability. The following table presents the comprehensive result of said approach.
Table 2. Assessment of IMS's accounting system using holistic model
Evaluation
Step
Criteria
IMS
Note
Input
Accounting
system
3.5
Payroll system
3
Able to pay employee in time with low
precision. However, correction process was time-
consuming
Purchase cycle
Sale cycle
3
3
Able to track payable accounts for suppliers
with poor precision.
Able to receive and keep track of the revenue
and inventory. However, the front-line employees
made a lot of mistakes, and correction process was
time-consuming
Cash system
5
2
Able to maintain a cash balance and keep track
of spending. With limited fund and only one
person in charge, this was simple.
Process
Management
Information
System
1.6
Database
There were records of financial accounts but
was unreliable. Moreover, it’s was multiple Excel
sheet without connection with each other.
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Evaluation
Note
Step
Criteria
IMS
Direct control
1.5
The system consisted of Excel sheet and
statements was unable to produce any type of
reports. However, some insights were gained from
the sale system/
Enquiry
2
1
Using Excel, the accountant still be able to
search for the information. However, the accuracy
of the input data and the reliable of the sheet was
questionable
Support
The Excel sheet was made only for recording
purpose and did not provide any analytics.
Control
Financial
reporting
1
Regulation
alignment
1
1
The Finance Department is unable to produce
any VAS-aligned statements
Time &
Resources
If needed, the said process would be inefficient
and ineffective due to insufficient experience
Management
accounting
2.3
Strategic
planning
2
2
3
Able to produce some low-quality information
manually with high inefficiency
Management
control
Able to produce some information, mostly
using existing POS system.
Operational
control
Front line staffs in the store can use reports from
POS system to operate.
Front line staffs in products did not have a
comprehensive report or system to assist them.
Overall score
2.1
4.2. Using holistic model to assess accounting system of benchmark example in retail operation
The author interviewed a similar SME in clothing retail to estimate the average performance
of the market. Pomme de Han (PH) was a new clothing brand in Hanoi, whose revenue was mostly
from online sources. PH also used the same sale system as IMS, but with a stronger accounting
team. An analysis of PH’s accounting system using the holistic model is showed below.
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Table 3. Assessment using holistic model of benchmark example (Pomme de Han)
Step
Criteria
Evaluation
Note
PH
Input
Accounting
system
3.5
Payroll system
Purchase cycle
Sale cycle
4
4
3
PH was able to maintain a time record of its
employees, pay on time with precision. However,
this process was still manual.
PH had an online record of settlement for each
supplier. However, proper invoice collection was
not properly executed.
Able to receive and keep track of the revenue
and inventory. However, the front-line employees
made a lot of mistakes, and correction process
was time-consuming
Cash system
5
4
Able to maintain a cash balance and keep track
of spending.
Process
Management
Information
System
4
Database
PH stored its sale and inventory data using
Google Sheet. Twice a day, data was pulled from
sale system. Any purchase was recorded
immediately, due to limited transactions.
However, this practice was manual, and
vulnerable for contamination.
Direct center
4
PH’s analyst integrated a report about sale data
and cost in Google Sheet using updated data,
which was automatically generated every day or
month. This practice had a limit since the heavy
data online made the file slow.
Enquiry
Support
4
4
Leveraging Google Sheet and meaningful
sorting method, PH’s system was able to pull any
data as requested in a timely manner. The process
was mostly automatic, but slow due to file size.
The established finance team can execute
basic analytics on the provided data. However,
the process was slow due to file size.
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Step
Criteria
Evaluation
Note
PH
Output
Financial
2.5
reporting
Regulation
alignment
3
2
PH paid an external accountant to produce
VAS-aligned financial statements for investors
with an acceptable quality
Time
&Resources
PH paid a high fee for the external accounting
service
Management
accounting
3.7
Strategic
planning
4
4
3
By using the report data provided daily, high-
level management of the brand could better
decide the next steps
Management
control
Middle managers could request a specialized
report for their departments, but these requests
would take time.
Operational
control
Front line staffs in the store can use reports
from POS system to operate.
Front line staffs in products did not have a
comprehensive report or system to assist them
Overall score
4.3. Results and discussion
3.55
Using the holistic model to assess, it could be seen that IMS’s accounting system was
performing poorly (2.1) compared to their peer (3.55) in the same business. This proved that IMS
has a lot of room to develop in the future.
Their current system had some benefits that was discussed below.
Firstly, their accounting system was affordable for a SME. The Finance Department only had
one manager and one staff, and the company was still functional. Their input system score was not
too low (3.5) compared to PH (4.0). This was largely due to the same sale system both of the
companies were using, and the nature of cash balance in the business, which was unusual and in
small amount.
Secondly, the process of recording and reporting was made very simple, therefore, it did not
require capital expenditures or training period if key personnel was absent.
Lastly, the short process ensured supplier payment requests were responded quickly, which
improve the relationship between the company and other stakeholders.
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In addition to the strengths, their weaknesses are worth discussing. Through the model, the
performance of their accounting system can be assessed as weak compared to their peer. In order
to grow strongly in the future, there are several deficiencies that IMS’s team can direct for
immediate improvement.
Firstly, their Management Information was extremely weak compared to its peer, especially
the database function. The method the Finance Department use, which use several different Excel
files for the purpose of storing data without cleaning or validating it, made the later function in the
system extremely harder. This resulted in an extremely poor score in Process stage performance,
with only 1.6 compared to PH at 4.
Secondly, their output of the accounting system was also weak compared to peer. Their
financial reporting abilities (1.0) was null, and their management accounting abilities (2.3) was
lower than expectation, could trace back to the poor performance of the process stage.
4.4. Root cause analysis
During 03 stages of IMS’s accounting system (Input, Process, Output), clear weaknesses were
showed in Process and Output stage. Their Input stage score was decent to do business because of
the usage of a suitable system and the simple nature of the business.
Therefore, the following reasons were the root causes for their weak performance in
accounting system.
Firstly, IMS had a weak Management Information System. This was expressed through their
inefficiency in financial management (growing unknown expenditures, long cash cycle) and the
below-peer MIS score (1.6 vs 4.0). The underdeveloped MIS could be explained by the
unawareness of the importance of the said system from the high level of the company.
Secondly, Finance staff inexperience in the output process was a major problem for the
performance of their financial accounting reports. This was the main cause for the weak
performance of the output stage of their accounting system, and partly the cause for the weak MIS.
If IMS could improve these weaknesses, their result would change positively in a near future.
From these analyses, recommendations were formed to help IMS advance their accounting
system’s performance.
5. Recommendations and conclusion
Accounting System is always a crucial part of a business, especially in retail operation. To
grow in the future, the businesses are required to develop a strong accounting system to execute
transactions, collect and store transactions data, process said data and provide meaningful output
in form of financial statements and management reports. This system is the equivalent of the heart
in a human body, coordinating the activities of the business. The need for a strong system is
increasing now more than ever during the economy hardship of COVID – 19.
Developing a strong accounting system is a challenge for SMEs with limited funding and
resource. They need to ensure the performance of all the stages in the accounting system, which
include input, process and output without heavily investment. Although the IMS’s revenue was
growing strongly, there are room for improvement in their accounting system, to operate even
FTU Working Paper Series, Vol. 2 No. 1 (09/2021) | 96
more efficient and generate more profit for shareholders, thus survive during the COVID – 19
hardship.
Using holistic model to assess the current performance of IMS’s accounting system and
comparing with peer activity, the accounting system in IMS was performing poorly, especially
during process and output stages. Through analyzing, two main weaknesses were identified: Lack
of an effective Management Information System, and the inexperience of Finance staff. To
overcome these disadvantages, two solutions were recommended. Firstly, IMS should take after
their peer, and try to develop their own MIS on Google Sheet, focus strongly on the ability to store
and sort data in a meaningful order to improve the performance of their accounting system.
Secondly, IMS needed strong personnel on the Finance Department, to not only develop the MIS
in accordance with their demands, but also improve the quality of their output, which was financial
statements and management reports.
The research showed and solved a problem that many SMEs in the market has encountered –
how to build an effective and efficient accounting system. In this particular situation, the Ivy
Management Solution Ltd. accounting system were using still has its flaws in collecting,
processing and reporting on its transactions data, however, by implementing the recommendations,
IMS’s accounting system would be improved significantly.
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