S A N TA I S A B E L C O L L E G E O F M A N I L A

A Reasearch Study about proposing

An Accounting Information System
To Day Star Laundry Shop
(Chapter 1)

Submitted by:
Guintibano, Clarice I.
Aguila, Christian Dave O.
Derama, Grace T.
Avedaa, Ada Johanna C.

Submitted to:
Dr. William Baltazar, CPA

December 14, 2016

S A N TA I S A B E L C O L L E G E O F M A N I L A
CHAPTER 1
THE PROBLEM AND ITS BACKGROUND
INTRODUCTION
The study is about the recommendation of an Accounting Information System
to the respondent, Day Star Laundry Shop located at Blumentritt Rd., Manila. The
respondent belongs to the Small and Medium Enterprises sector. Currently, the
business uses manual accounting system in recording its revenues from their dayto-day operations. However, there are problems that may arise in using the manual
accounting system because accounting become more complex as the firm grows.
Some companies overlook the importance of having an organized accounting
system particularly those who belongs to the SMEs sector.

The proper

implementation of Accounting Information System to SMEs can give them a high

degree of competitiveness, enhancing the reputation of the company. Even though
the company is small, it must still consider the use of Accounting Information
System.
The Information System is the set of formal procedures by which data are
collected, processed into information and distributed to users. The structure of an
organization reflects the distribution of responsibility, authority and accountability
throughout the organization. Firms achieve their overall objectives by establishing
measurable financial goals for their operational units. Understanding the distribution

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pattern of responsibility, authority, and accountability is essential for assessing user
information needs. (James Hall, 2012)
The use of information technology in business has had a major impact on
society and thus raises significant ethical issues regarding working conditions,
privacy and more. The control environment is the foundation for setting the tone for
the organization and influences the control awareness of its management and
employees. Important elements of the control environment that this study serves as
guidelines are: the integrity and ethical values of management, the structure of the
organization, the participation of the organizations board of directors and the audit
committee, if one exists, managements philosophy and operating style, the
procedures for delegating responsibility and authority, managements methods for
assessing performance, external influences such as examinations by regulatory
agencies and the organizations policies and practices for managing its human
resources. The factors that were observed on this study are the elements of control
activities of an organization that will help the management in terms of the transaction
authorization, segregation of duties, supervision, accounting records and access
control in the said business.

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BACKGROUND OF THE STUDY

Accounting is the language of business. On the other hand, Information

System is a system composed of people and computers that will process and
interpret the data. The most important thing to consider in handling a business is the
proper organization of the procedures, accounting records, equipment and devices
to utilized the resources of the business and achieve its objectives.
Accounting records is one aspect that is put into emphasis in this study.
Accounting records of an organization consist of source documents, journals, and
ledgers. These records capture the economic essence of transactions and provide
an audit trail of economic events. This is one of the factors that the respondent of
this study lacks on their operations. The importance of keeping these records in its
proper form and process is to maintain trails that the management/owner will need in
making and evaluating decisions to make. This will help employees respond to
customers inquiries by showing the current status of the transactions in process. For
reasons of both practical experience and legal obligation, business organizations
must maintain sufficient accounting records to preserve their audit trails. This study
covers the three objectives in having information system; to support the stewardship
function of the management, to support management decision making and to
support the firms day-to-day operations. (James Hall, 2012)

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The specific advantages that can be obtained by the respondent in
optimizing the use of AIS are: better management of the day-to-day transactions,
fast adaptation on the rapid changing business environment and the improvement of
the competitiveness level of the business to the industry where it belongs. The Day
Star Laundry Shop currently belongs to the service industry. According to the
research, one of the most common providers of services in the country is the laundry
services. In fact, it provides 6.0% of the total employment in the sector, which is a
significant percentage.

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THEORETICAL FRAMEWORK
According to Dr. Calmorin, theoretical framework shapes the justification of
the research problems in order to provide the legal basis for defining its parameters.
For better comprehension of the role of theory in research, it is better to identify key
concepts that are used in this study.
The research is grounded to the five basic steps in developing accounting
information system provided by the accountinginformationsystem.org. The very first
phase is planning which involves developing of ac accounting information system.
This involves determination of the scope and objectives of the project, the definition
of project responsibilities, control requirements, project phases, budgets, and final
products.
The second phase is analysis used to determine and document the
accounting and business processes used by the company. These accounting
processes are usually redesigned to take advantage of the operating characteristics
of modern system solutions.
The third phase is data analysis which involves reviewing of the accounting
information that is currently being collected by the company. These data are then
compared to the data that the organization should be using for managerial purposes.
This will be used primarily in designing the accounting transaction processing
systems.

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The fourth phase is the decision analysis or the review on the decisions that a
manager is responsible for making is being conducted. This phase is valuable when
the primary objective of the system is decision support, so, this will not be given
attention much for the primary purpose of the research is to propose a formal
accounting system although this system would be of great help in decision making.
The last phase is the process analysis; this phase is more of a review in the
business processes of the company. Organizational processes are identified and
segmented into a series of events that are able to either add or change data. In this
phase, automation or reengineering of the accounting information system is done
which can improve the organizations operations in terms of improving service and
management information.

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CONCEPTUAL FRAMEWORK

Figure 2. Conceptual Framework

INPUT
I. Related
Literatures
II. Companys
current status
obtained
through
interview

PROCESS
I. Planning
II. Analysis
III. Data Analysis
IV. Decision
Analysis
V. Process
Analysis

OUTPUT

Proposed
Accounting
System

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STATEMENT OF THE PROBLEM

1 What is the present accounting system of the company in terms of the

following?
1 Procedures for interrelated activities involving the originating,
processing and reporting of financial and other data.
2 Existence of accounting policy and standards
3 Accounting records and reports necessary to gather, process, store
and transmit financial and other data
4 Bookkeeping system
5 Personnel involved directly in the accounting work
6 Equipment and device used in the system to expedite the work,
provide control and minimize fraud and errors.

SIGNIFICANCE OF THE STUDY

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The researcher postulates that the introduction of accounting information system to
the respondent may be a solution to tackle the problem encountered in using manual
accounting system.
Furthermore, the study could be of importance to the following:
To the Philippines economy, the proposed study could serve as a stepping stone to
economic growth. This could be an opportunity to improve the accounting system of
the business firms in the Philippines especially those who belongs to the Small and
Medium Enterprise sector that will lead to global competitiveness of the accounting
industry of the Philippines.
To the government, the research will promote compliance of Small Medium
Enterprises with regards to government taxes.
To the management, the proposed Accounting Information System will help them in
evaluating their performance and guide them in decision making with regards to
important and economic matters that would lead to achieving their objective.
To the accounting students, the proposed study could help them understand the flow
of the Accounting Information System and benefits that can be derived from it. Also,
they can learn from it as they go along to their future careers as accountants.
To the researchers, the proposed their analytical skills and critical thinking in the field
of research study.

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To the future researchers, the ideas presented in this proposed study may be used
as a reference data in conducting a new research study or testing the validity of
other related findings. This study will serve as a cross-reference that will give them a
background or an overview about the recommendation of an Accounting Information
System.

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SCOPE AND LIMITATION
This study covers only that information gathered from the respondent through
interview conducted by the researchers. This study rooted only on the accounting
information system recommendation only and will not go beyond the implementation
of the proposed accounting information system. The study is designed according the
available data gathered and to the answers obtained by the researchers.

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DEFINITION OF TERMS
For clearer understanding of the terms used in the study, the following are the
definition of the important/key terms:
1. Accounting Information System - is a system of collecting, storing and
processing financial and accounting data that are used by decision makers.
2. Computerized Accounting System - is an accounting information system that
processes the financial transactions and events as per Generally Accepted
Accounting Principles (GAAP) to produce reports as per user requirements.
3. Accounting records - are key sources of information and evidence used to
prepare, verify and/or audit the financial statements.

4. Audit trail - a system that traces the detailed transactions relating to any
item in an accounting record.
5. Small Medium Enterprises (SMEs) - are non-subsidiary, independent firms
which employ fewer than a given number of employees.

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