Reviewing of Accounting Information System on Account Payable Process in a Pharmaceutical Company?
Accounting Information System
Businesses today operate in a highly competitive and changing global business environment and therefore require information systems that provide speedy responses to complex business enquiries. An Accounting Information System (AIS) is a system of collection, storage and processing of financial and accounting data that is used by decision makers. An accounting information system is generally a computerbased method for tracking accounting activity in conjunction with management or externally by other interested parties including investors, creditors and tax authorities. Accounting information systems is a tool that organizations can use to achieve stronger, more flexible corporate culture to face continual changes in the environment.
Initially, accounting information systems were predominantly developed “in-house” as legacy systems. Such solutions were difficult to develop and expensive to maintain. Today, accounting information systems are more commonly sold as prebuilt software packages from vendors such as Microsoft, Sage Group, SAP and Oracle where it is configured and customized to match the organization’s business processes. As the need for connectivity and consolidation between other business systems increased, accounting information systems were merged with larger, more centralized systems known as Enterprise Resource Planning (ERP). Before, with separate applications to manage different business functions, organizations had to develop complex interfaces for the systems to communicate with each other. In ERP................
Account Payable
Accounts payable is money owed by a business to its suppliers shown as a liability on a company’s balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents. When a company orders and receives goods (or services) in advance of paying for them, we say that the company is purchasing the goods on account or on credit. The supplier (or vendor) of the goods on credit is also referred to as a creditor. If the company receiving the goods does not sign a promissory note, the vendor’s bill or invoice will be recorded by the company in its liability account Accounts Payable (or Trade Payables)...........
ABC Pharmaceutical Company
The company was established in the year 1985 with four cardiology products and a team of two members for marketing its products. It had its compact manufacturing facility at Jamnagar in Gujarat. It soon grew to become a multinational pharmaceutical company with its headquarters in Mumbai, Maharashtra. The company today has its own manufacturing facility and is independent on outsourcing its manufacturing. The manufacturing operation is spread across 32 locations, including plants in the UK, Argentina, Czech Republic, China and Jordan................
Existing Accounting Information System in ABC Pharmaceutical Company
With its exponential growth over the years it became essential for a company such as ABC pharma to be very accurate and strict in its accounting practice. ABC awoke to the wave of ITES revolution that was taking place in the world and also adopted the software integration to its company. The company in its initial stages was dependent on external sources to manufacture the drugs. However, with the rapid growth and expansion in the drug industry it stopped outsourcing its drug manufacturing and began household operations............
The Vendor Relationship Management
For any company to make its success it is very necessary to have a firm vendor base. A good vendor relationship will lead to better understanding and better deals paving way to a profitable future for the company. Thus, the account payable process must also facilitate vendor management strategies. A pharma company should have a very robust vendor base...........
Enhancing the system
A system however meticulously devised has always a scope of improvement. Thus the system adopted by the company was timely but is not as efficient as it may look. The company still maintains that there is a desperate need to enhance the existing system for wealth maximization. This requires modifications within the existing system to generate better revenue, which in turn requires reduction of cycle time in the accounting information system process..........
Exhibits
Exhibit I: Account Payable Process at ABC Pharma
Exhibit II: Month-wise Analysis for Time between Bill Date to Voucher Confirm Date and Voucher Confirmation to Bank Voucher Confirmation Date
Exhibit III: Site-wise Analysis for Time Between Bill Date to Voucher Confirm Date and Voucher Confirmation to Bank Voucher Confirmation Date
Exhibit IV:Month-wise Analysis for Time between Bill Date to Receipt Date and Receipt Date to Receipt Confirmation Date
Exhibit V:Site-wise Analysis for Time between Bill Date to Receipt Date and Receipt Date to Receipt Confirmation Date
Exhibit VI: Month-wise Analysis for Time between Bill Date to Receipt Date (for QC) and Receipt Date to Receipt Confirmation Date (for QC)
Exhibit VII: Site-wise Analysis for Time between Bill Date to Receipt Date (for QC) and Receipt Date to Receipt Confirmation Date (for QC)
Annexures
Annexure I (a): Month-wise Analysis for Time between Bill Date to Voucher Confirm Date and Voucher Confirmation to Bank Voucher Confirmation Date
Annexure I (b): Site-wise Analysis for Time between Bill Date to Voucher Confirm Date and Voucher Confirmation to Bank Voucher Confirmation Date
Annexure II (a): Month-wise Analysis for Time between Bill Date to Receipt Date and Receipt Date to Receipt Confirmation Date
Annexure II (b): Site-wise Analysis for Time between Bill Date to Receipt Date and Receipt Date to Receipt Confirmation Date
Annexure III (a): Month-wise Analysis for Time between Bill Date to Receipt Date (for QC) and Receipt Date to Receipt Confirmation Date (for QC)
Annexure III (b): Site-wise Analysis for Time between Bill Date to Receipt Date and Receipt Date to Receipt Confirmation Date
