Chapter 1

Introduction

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1.1 Background of the study

Masters of Business Administration (MBA) degree of University of Chittagong

includes internship program as a credit course. Obtaining this degree requires
successful completion of that program with knowledge enhancing report on
practical field which is experienced in internship period.

I have worked with Finance Department of Xin Chang Shoes (BD) Ltd, a 100%
export oriented Taiwanese company for quite a few years. Therefore, it is my
profound pleasure to prepare an internship report on our activities of accounting
department through Accounting Information System (AIS). Moreover, in the
way of preparing a report on our duties and responsibilities, I may have the
opportunity to judge, compare or analyze our activities from theoretical
viewpoints, which I have tried to develop throughout our course works of MBA
degree. It will be also helpful from my part to develop and to enhance my
knowledge.

AIS is the most popular system in the world and most widely used system in the
business organization. By this system an organization can easily prepare Balance
Sheet, Income Statement, Cash Flow Statement and Financial Budget. AIS
changed the traditional view of accounting and finance. Computer based AIS has
empowered us to enter information from various areas all the while, process
information at a fast, and produce reports rapidly. This system is based on
computer and computer helps to process the data and provide the actual
information for the organization. Progression in data and correspondence
innovation in most recent twenty years has changed the conventional perspective

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of AIS for good. This Internship report is an effort to envisage the appraisal of
AIS of Xin Chang Shoes (BD) Ltd.

1.2 Objectives of the Study

The main objective of this report is to understand the real business set up and
relate AIS with the system of the business with special focus on the use of AIS
in Xin Chang Shoes (BD) Ltd. The motivation behind AIS is to gather, store, and
process money related and bookkeeping information and deliver educational
reports that superiors or other invested individuals can use to settle on business
choices. So, all the departments of an organization are benefited by the
information or data which are provided by AIS.

The specific objectives of the study are:

1. To fulfill partial requirement for obtaining the degree of Masters in
Business Administration.

2. To accumulate theoretical knowledge with practical experience.

3. To address and understand accounting procedures of a company by

working in practical field.
4. To give a overview of the accounting software use by the company
in the successful implementation of AIS.
5. To address some strengths and weaknesses of the AIS of the
Company.

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1.3 Methodology of the Study

The historical data and the current data both were used to prepare this report.
The information were gathered to prepare this report from the web site of
Golden Chang . The internship experience was also helpful to prepare the
report.

Data were collected from different records, papers and documents. Different
formal and informal interview helped to collect the data. No questionnaires were
used to collect the data in this report.

Generally two sources of are used to gather data for generating adequate
information regarding the preparation of this report.

1. Primary Sources of Data:

 Face to face conversation with employees of the regional office.
 Information given by Senior Finance Executive.

2. Secondary sources of Information:

 Website of Golden Chang.
 Annual Report
 Study of relevant books, report and documents
 Any other relevant websites.

Data/Information were presented in a formal way in this report. I have tried me

best to compile all the relevant information regarding AIS of the Xin Chang
Shoes (BD) Ltd.

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1.4 Limitations of the Study

Despite the best efforts the study suffers some problems, which are as follows:

1. The work, which I have finished, is complex and time consuming. But the
time ultimatum has given us to complete this study and submit report is
difficult.
2. The most problems that I felt in the study is to collect necessary data &
information, especially current financial statements were not available in the
written form.
3. Due to the organisational confidentiality, concrete analysis of the study in
some cases was hampered.
4. During my internship program the personnel of the concern department were
very busy, which hampered to collect data and information.
5. Some of the key personnel of the different departments of Xin Chang Shoes
(BD) Ltd were reluctant to provide me with required information. As a result
the facts were not fully found out.
6. Finally, we are not getting sufficient financial contribution from our
department. So it creates economic crisis.

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 Chapter 2

Overview of the

company

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2.1 Background of the Company

When the world economy started to move forward, the whole world was dedicated
to promoting the living quality and had an increasing demand for wearable leather
boots. In view of this, Mr. Ho (Ho Ruei-cin) established Min Tai Leather Products
Company Limited in Taiwan in 1953.

As the world economy maintained the sustainable growth in 1970s, Mr. Ho

(Johnson Ho), who had kept excellent relationship with customers, took the right
opportunity to expand the business. In 1979, he established Golden Chang Shoe
Factory in Taiwan. As it had a strong, experienced and hard-working team, it
gained the praise and full support from its customers and its scale expanded
gradually.

With the passage of time Golden Chang expands its business in different countries
in the world and established Xin Chang Shoes Ltd. in Bangladesh.

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2.2 Evolution of Xin Chang Shoes Ltd.

Xin Chang Shoes Ltd. is the expanded business of Golden Chang Shoes in
Bangladesh. The evolution of Xin Chang can be shown as follows:

Year Event
1953  Founding of Min Tai Leather Products Company Limited
in Taiwan by senior Mr. Ho.

1968  It has changed business model from Taiwan domestic sales

to international export business, specializing in Goodyear
Shoes manufacture.

1979  Founding of Golden Chang Industrial Company Limited in

Taiwan.

1984  Installation of the first Cement Shoes production line

1988  Founding of Zhongshan QingLong Shoes Industrial

Limited at XiaoLan, Zhongshan, renamed later to
Zhongshan Road Mate Shoes Industrial Limited.

1990  Founding of Guangzhou Glory Shoes Industrial Limited at

HuangPu District, Guangzhou

1996  Founding of Dongguan Glory Shoes Industrial Limited.

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1998  Award Excellency In Export Performance by Guangdong
Foreign Enterprises, honored from Guangdong Foreign
Economic And Trade Commission.

1999  Removal of Golden Chang Slovakia.S.R.O. from Slovak

Republic to Macau founding Golden Chang Shoes
Industrial Limited in Macau. Exceeding 1 million pair
monthly production
2000  Award Dual Excellency In Economic And Export
Performance, honored from China Association of
Enterprises With Foreign Investment.
 Partial destruction of Dongguan Glory Shoes Industrial
Limited by fire.
 Merging of Zhongshan Road Mate, part of Guangzhou
Glory Shoes and Dongguan Glory Shoes to found
Zhongshan Glory Shoes Industrial Limited at Tanzhou,
Zhongshan.

2001  Accredited Grade A Laboratory by SATRA, first laboratory

in China.
 Passed ISO9001 Quality Management System
Certification.
 Award Top Ten Largest Export Taiwan Enterprises by
Guangzhou Municipal Government

2002  Relocation of Golden Chang Shoes Industrial Limited

from Macau to Vietnam founding Kim Viet Shoes Factory
in Vietnam

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 2004  Founding of Zhang Shan LuMeiDa Shoes Industrial
Limited at Tanzhou, Zhongshan.
 Benchmark of over 1.25 million pairs production in single
month.
 Award Grade A Enterprise by China Customs, faster
export customs clearance.

2009  Founding of Xin Chang Shoes (BD) Limited, Production

start at Comilla factory in Bangladesh.
 Founding of Zhongshan Xin Chen Shoes Material Limited.
 Starting of Chittagong factory construction in Bangladesh.
 Completed first two phrases of Business Process Re-
engineering: Lean Operation for 15 production lines.
2010  Expand Xin Chang Shoes (BD) Limited to add self own
factory in Chittagong, Bangladesh.
 Founding of Cunzhou and LeiYang Upper Production
Factories to reinforcing overall production stability.
2011  Expand Xin Chang Shoes (BD) Limited to add self own
factory in Comilla, Bangladesh.
 Expand Xin Chang Shoes (BD) Limited to add outsole
production project in Chittagong, Bangladesh.
 Continue to expand China domestic market, current sales
outlet over 100.

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2.3 Vision & Mission

Vision Statement

“WE BENEFIT FROM SOCIETY

WE REWARD TO SOCIETY”

Mission Statement

MAINTAIN OUR STATUS QUO AS THE WORLD’S NO.1 PRODUCER OF

FUNCTIONAL FOOTWEAR.

Core value

Passion, Respect, Efficiency, Teamwork, Innovation, Integrity.

2.4 Company at a glance

Company Name Xin Chang Shoes (BD)Limited

Type of Business Manufacturer and Exporter
Legal Status Private Limited Company
Year of Establishment 2009
Contact Person Mohiul Alam Opu
Senior Executive of Finance
Mobile: 01672535862

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 Corporate Office & Factory Plot No.47-52&68-73,KEPZ
North Patenga,Chittagong-
4204,Bangladesh

Bank (1) Citibank

Agrabad Branch, Chittagong,
Bangladesh
Function: Import payment and Export
Proceed(EXP) in ctg.
Bank (2) Standard Chartered Bank Ltd.
Agrabad Branch, Chittagong,
Bangladesh
Function: Foreign staff salary, Import
payment and EXP in Comilla.

C&F Agency  Biplob Trade Overseas C&F

 National C&F
 Nupur Traders
 Yasin Transportation C&F Ltd.

Factory Space : 22500 Square meter

Total Manpower Number of Employees: 5023
Foreign Staff: Chinese 75, Taiwanese
15
Management Personnel Two stage management including
Taiwanese and Bangladeshi Personnel.

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Departments of Xin Chang Shoes (BD) Ltd.

1. Embroidery
2. Binder(lamination)
3. Outsole
4. Insole
5. Stitching
6. Cutting
7. Lasting
8. Cutting Die
9. Purchase
10. Store
11. Quality Control
12. General Affairs and Maintenance
13. HR
14. Planning
15. Fianance and
16. IT

List of Buyers of the Company

1. Apache
2. Ariat
3. Cat
4. Carhart
5. Temberland
6. Bates
7. Dr. Martine

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2.5 Core Business

Core business of Shoe manufacture:

To focus on the core and globally competitive & advantageous business field, the
group has actively deployed different industry-characterized and related units,
including shoe outsole factories, special labs, and global supply chain operation
offices.

Confronted with the challenges of times, the group strengthens to keep the good
interaction and supply chain relationship with customer ends and suppliers.
Moreover, it actively promotes its value through the e-system of resources sharing
to consolidate its whole competitive advantages, bring into full play its guideline of
Resources and Interests Sharing, and thus build the world-competitive non-sports
shoe manufacture business group.

Samples of Business Development:

As the forward of group, the business department gains the optimum balance
among customer service, product quality and enterprise growth. With the spirit of
"Endeavor Persistently and Innovate Continuously", the business department plays
the role of bridge between customers and manufacturers from order taking to
product development and delivery, and provides brand customers with the
sweeping service of product manufacture through professional development and
excellent technologies.

 Business Field: Inherit the brand partners that has been supporting
Oftenrich all the way, offer OEM and ODM orders & provide the full-course

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 planning, and develop new partners actively to jointly promote the diversity
of goods in the market.

 Development Field: Assist the brand customers in developing concept

shoe patterns into virtual shoe patterns and improving various functional
requirements of goods.
 Technical Field:Provide the complete massive-production technology
transfer and ensure smooth production of samples to reach the optimum
commercialized production.

2.6 Corporate Social Responsibilities (CSR)

Corporate social responsibility, abbreviated as CSR, refers to the moral behavior of

an enterprise paying back to the society. World Business Council for Sustainability
and Development (WBCSD) defines CSR as follows: Corporate Social
Responsibility is the continuing commitment by business to contribute to economic
development while improving the quality of life of the workforce and their families
as well as of the community and society at large.

The corporate social responsibility continuously supported by Golden Chang

includes the following main targets: follow the local laws and regulations, protect
the work rights of workers, provide the healthy & safe environment, promote the
harmony of employee-employer relationship, strengthen the staff care &
environmental protection, reduce environmental pollution, meet the customer
requirements, and take part in social welfare and disaster relief & donation
activities enthusiastically to establish the CSR vision consistent with the social and
environment joint profits.

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Social Welfare-From Society and For society:

When no attention was paid to the concept of CSR 16 years ago, Golden Chang
Shoes founded the Golden Chang Education Charity with the spirit of From
Society and For Society, to contribute both human and material resources actively,
help the weak group, and made every effort to take part in public welfare activities.
Since 1995, its contribution to the society has been over CNY 12,000,000, which
covers the following fields:

Education and Training:

Orientation Training: The orientation training aims to inherit the corporate culture,
enhance the understanding of corporate information, management systems and
corporate welfare by new employees, promote the recognition of corporate quality
management system, vocational safety and fire protection safety by employees,
and provide the knowledge of corporate shoe manufacture technology and flow to
employees, so as to benefit the effective implementation of various management
activities and let the employees be integrated into the corporate operation and
development in the shorter time.

Skill Training: Skill training is the solid support for training and supply of
product-line technicians and is the cradle of corporate technicians. The skill

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training area is designed completely according to the actual scene. The mini lean
production line is set. It is the important training area to train the new employees
for correct operation of machines and guarantee of production safety.

The education and training center undertakes the corporate development mission. It
builds the overall communication platform for inductive education & orientation
training of new employees, skill training of existing employees, and management
knowledge training of existing executives

Safe Production Environment:

To ensure the life and property safety of the staff and fulfill the protection
responsibility to the staff by the enterprise, Golden Chang Shoes establishes
definite targets for both work safety and staff protection, and study, prevent &
rectify the overall shortcomings from the practical angle, e.g. It teaches new
employees the steps to operate machines correctly, gives examples of various work
safety problems for alert, and cooperates with the work safety system, etc at the
training of new employees, so as to ensure that the alert concept is deeply rooted in
the mind of every employee to prevent troubles from happening and reach the
100% zero work injury.

1. Staff Care:

Golden Chang Shoes believes that every employee should be treated and respected
fairly. It not only works on and respects the internationally recognized human
rights standards, but also establishes the human rights policies to communicate
with customers, suppliers, investors, employees and communities about the
corporate ethical spirit and social value view. All senior executives sign the
declaration of human rights every year to ensure that equal work opportunities are
provided to job seekers and every employee, the basic human rights of employees

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and their family are secured, and the right of association freedom conferred by
laws to the employees is respected.

The following welfare systems are provided:

◆ Dividend/Bonus
1.Annual Bonus
2.Birthday Present
3.Performance Bonus, Bonus for Proposal Improvement
4.Staff Children Schooling Aid/Medical Mutual Fund
◆ System
1.Sound Organization Management
2.Tidy Accommodation Environment
◆ Recreations
1.Different departments organize various activities regularly
2.Society Activities
3.Holiday Cultural Performance, and Lottery on May Day
4.Sports Meeting, Basketball Game, Football Match and other sports
competitions
5.Children Summer Camping
6.Various art learning classes
7.Other various activities

2. Environment Protection Policy:

Golden Chang Shoes will mobilize the whole staff to take part in the
environmental protection activities, and follow the above environmental
protection policies, so as to promote the corporate image and fulfill the
corporate social responsibility.

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  Compliance: Comply with local applicable law and regulation in area of
environment protection, healthy ecology growth, public health and safety.
Prevent Pollution: Conduct environmental impact assessment, maintain
effective monitoring.
 Conserve Energy: Limit energy consumption and promote recycling.
 Continuous Improvement: Use PDCA to improve EMS continuously.
 Community Environment: Through internal education and training,
participate in local community service, encourage stakeholders to promote
EP activities.

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 Chapter 3

Theoretical Concept of

Accounting Information

Systems (AIS)

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3.1 Information and System

Information is data that have been processed in such a way as to useful to the
recipient.

The systems is a set of interrelated components that function together to achieve a

common goal.

It is now necessary to examine system characteristics to better understand the

abstract nature of systems: The following are generally considered the hallmarks of
systems:

1. Interrelationships and interdependence of objects: A system is

composed of various interdependent objects (parts) that possess attributes.
The interdependence of objects in a system constitutes the interrelationships
of objects in a system.
2. Differentiation: Systems are made up of parts, each of which performs a
specialized function. Parts in a system may be divided further into subparts
and then into sub-subparts, thus forming a system hierarchy.
3. Holism: A system can be studied effectively and will be understood only
from the holistic viewpoint because a system is more than the sum of its parts
or objects. When studied in isolation, any part of a system is not meaningful;
it is meaningful only with reference to the whole.
4. Goal seeking: Every system pursues a specific goal, or set of goals. For
example, people seek social status and recognition, and governments seek to
protect their citizens and to a socioeconomic environment conducive to
economic growth.

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 5. Inputs and outputs: A system accepts inputs and produces outputs.
6. Transformation: Systems are transformers, converting inputs into outputs.
A production system transforms raw materials into finished goods; a
marketing system transforms inventories into sales.
7. Feedback: All systems need information to regulate the interacting
activities of the parts or objects in the system. Regulating system activities
with the aid of feedback is generally referred to as "cybernetics."

3.2 Accounting Information Systems (AIS)

An accounting information system (AIS) is a collection of resources as such as

people and equipment, designed to trams financial data into information. This
information is communicated to a wide variety of decision makers.

According to jerry.j.weygandt and Donald E kieso:

The system that collects and processes transactions data and disseminates financial
information to interested parties is known as accounting information system.

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FIGURE: Accounting information systems, their organization, and their external
environments.

3.3 Purposes of AIS

The information system of the firm of the world of business and government has
three major purpose:

1. To provide information that supports decision-making.

2. To provide information that support day-to-day operation. And
3. To provide information that pertains to stewardship.

Both internal and external users are served by decision support and operational
support information, while only external users are the targets of stewardship
information most of the information for the first purpose, are produced through the
processing of transaction data.

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3.4 Principles of AIS

Cost effectiveness:
The accounting system must be cost effective. Benefits of information must out
weight the cost of providing it.

Useful output:
To be useful, information must be understandable, relevant , reliable , timely , and
accurate ,designers of accounting system must consider the needs and knowledge of
various users.
Flexibility:
The accounting system should accommodate a variety of users and enhancing
information needs, the system should be sufficiently flexible to meet the resulting
changes in the demands made upon it.

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3.5 Users of AIS

 INTERNAL USERS:

Managers: These includes marketing manager, production manager , financial

directors and company officers .etc.

 EXTERNAL USERS:
Customers:
Routine information required by the customer of business organization includes
billing of data. Credit customer also require periodic information concerning the
status of their accounts including the amount used, discount available and the data
payment due.

Investors:
Evaluation of fast performance and prediction of company’s future performance is
done with the help of financial statement published by the ‘AIS’recipt of dividend is
also required by the shareholders.

Creditors;

A company financial statements are an important source of information for

evaluation of credibility by the loan giving financial institutions.

Taxing authority:

Taxing authorities needs accounting information to put –up tax on a company’s

income.

Suppliers:
The suppliers also requires certain routine transaction documents such as purchase
order, quantities and special feature of the product required.

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3.6 Development of AIS
Good accounting system do not just happen, rather they are carefully planned ,
designed, installed, managed, and refined , generally, an accounting system is
develop in the following four phases

1. Analysis:

The starting point is to determine the information needs of internal and external
users. The system analyst then identifies the source of the needed information and
the record and procedure for collecting and reporting the data.

2. Design:

A new system must be built from the group up forms and documents designed,
methods and procedure selected, job description prepared , controls integrated,
reports formulated and equipment selected.

3. Implementation:

Implementation of new or revised system requires that documents, procedures and

processing equipments be installed and mode operational. Also personal must be
trained and closely supervised.

4. Follow up:

After the system is up and running . it must be monitored, for weakness and break
down . also its effectiveness must be compared to design effectiveness must be
compared to design and organizational objectives.

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3.7 Impact of Computers on AIS:

A distinction between "data" and "information" needs to be made before starting a

discussion of the impact of computers on AIS’s. Data are compiled from a set of
characters, while information is the result of data processing. More importantly,
informatio n relevant to a decisions maker's choices of alternatives and to a
manager's, control of organizational activities, while data are not.) For example, in
deciding whether to market a new product a decision maker may base the decision
upon information about the expected demand for the product; the expected demand
for the product may be derived from the data of the historical market demand and
a firm's market share.

Computers do not change the objective or the function of AIS’s-which is to provide

information relevant to the needs of the information users - but computers do alter
the way AIS’s process data to generate information, and the way AIS’s are
developed. Another major impact of the computer is that it alters the procedures
which an independent auditor follows to evaluate internal control. "Internal
control" of an organization refers to the plans, methods, and procedures adopted to
safeguard its assets, enhance the reliability of financial reports, and promote
operational efficiency.

The computer provides a significant impact on the way AIS’s process data and the
way AIS’s are developed. In financial accounting, the procedures of recording,
classifying, and summarizing business transactions can be computerized; the
computerized accounting cycle is frequently referred to as the "data-processing
cycle." In managerial accounting, mathematical models are computerized and then

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manipulated by the computer. The development of an AIS undergoes a six-step
process called the "systems life cycle," which will be explained in a later section.

Data-Processing Cycle:

The data-processing (DP) cycle is made up of four steps: data collection, data
classification, data maintenance and summarization and report generation.

" D a t a collection" includes gathering and recording raw -d a t a i n a logical

manner, as exemplified by the use of the pre-designed source documents such as
invoices, purchase orders, and labor time cards. Data can also be captured and
entered into the computer system directly, as in the case of entering sales
transactions into the terminal at the point of sales.

"Data classification" is the batching, verifying, and sorting of data. Batching is

assembling source documents of a similar nature such as sales invoices. Data
verifying is checking the accuracy of data. Data sorting is arranging data according
to a pre-designated code such as the invoice number, the employee number, or the
general-ledger account number. The purpose of classifying data is to reduce data
errors and make the data ready for the next processing step-data maintenance and
summarization.

Once data are batched, verified, and sorted, they are ready for "Data
Maintenance" which involves the following operations: calculating, comparing,
summarizing, and storing. Calculating involves mathematical operations on data,
and is sometimes referred to as data aggregation and disaggregating. Comparing is
the logical operations on data such as "greater than," "equal to," and "less than."
Summarizing is the condensation of individual data into meaningful totals such as
total gross pay, total deductions, and total net pay. Storing refers to keeping the
results of data calculating, comparing, and summarizing in one location for 6future
reference. A group of related storage locations is generally called a "file. " When a

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file can be directly accessed by the computer, it is called a "computer file. " Files
must be frequently brought up to date to include new business transactions-this is
called "file update."

Updated files contain information which can be useful and relevant to information
users. Transferring information from files to a form suitable for utilization results in
"Report Generation." The forms most frequently used in report generation are
business documents (such as paychecks and customer statements) and business
reports (such as the income statement and the balance sheet).

3.8 Implications of AIS

Viewing organizations from the decision-making standpoint, one needs to design

AIS’s which are capable of providing information to facilitate managers' decision
making. Specifically, AIS’s should provide information to decision makers for
handling structured, semi structured, and unstructured decisions. Since the
structured decisions fall in the functional areas in which activities take place, they
can be well handled by the current technology of AIS’s. In other words, AIS’s that
are designed to serve organizations according to the traditional view of
organizations can also handle structured decisions. For example, transactions
processing in the area of payroll, accounts receivable, invoicing, and so on can be
programmed into the computer-based AIS’s. Semi structured decisions are
currently programmed into AIS’s only to a limited extent. A good example is
annual planning which (like sales forecasting and inventory level forecasting) may
be programmed based on a certain forecasting model.

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 Chapter 4

AIS in Xin Chang Shoes

(BD) Ltd

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4.1 Information Input:

Truly, most organizations utilized paper source records to gather information and
afterward moved that information into a PC. Today, most information are
recorded specifically through information section screens. Normally the
information section screen holds indistinguishable name from the paper source
archive it put. Very much outlined source reports and information section screens
enhance both control and exactness of catching information about business
exercises. Cases of source reports for Xin Chang Shoes (BD) Ltd are:

Source Document Function

Sales Order To record client order.

Delivery Ticket To record delivery of produce to client.

Credit Memo To maintenance adjustment in clients account for

sales return, sales discount etc.

Deposit Slip To record amount of cash and cheques deposited

in company bank account.

Purchase Requisition To request that purchase department orders

specific goods.

Purchase Order To request product from vendors.

Receiving Report To record receipt of product from sellers.

Time Cards Record time worked by employees.

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4.2 Information Processing

When information about a business element has been gathered, the following
stage normally includes refreshing beforehand put away data about the assets
influenced by the occasion and the specialists who took part in the movement.
For instance, information about a business exchange bring about refreshing the
data about stock to decrease the amount close by of the thing sold, and also
refreshing the clients account adjust. This refreshing are possible occasionally,
for example, once every day or week, or instantly as every exchange happens.

• Batch preparing is the occasional refreshing of the information put away

about assets and operators

• On-line, constant preparing is the quick refreshing as every exchange

happens

Information Storage:
A substance is something about which data is put away. Cases of substances of
the company incorporate representatives, stock things, and clients. Every
substance has properties, or attributes of intrigue, which should be put away. A
worker pay rate and client address are cases of characteristics. By and large, each
compose element has a similar arrangement of characteristics. For instance, all
workers of Xin Chang Shoes have a representative number, pay rate and street
number. The particular information esteems for those qualities anyway will
contrast among elements.

Record discussion information in diary:

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After exchange information have been caught on source reports, the subsequent
stage is to record the information in a diary. A diary section is made for every
exchange demonstrating the records and sums to be charged and credited.

 The general diary records rare or non-routine exchanges.

 Specialized diaries streamline the way toward recording huge quantities of

dull exchanges.

4.3 Accounting Procedure of Xin Chang Shoes

With the following simple diagram, a superficial view of accounting

procedure of the company can be depicted.

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4.4 Broad Accounts Heads, General Ledgers and Sub-Ledgers

Xin Chang Shoes (BD) Ltd. divides all of its accounts into four steps.

 The first broad accounts heads which are Assets, Liabilities, Owners
Equity, Revenues and Expenses, are categorized as Nature of Account.
 Then, each Natures of Accounts are divided into broad divisions as
Position of Accounts. Like Current Assets and Fixed Assets are two broad
divisions of Assets. In the same way, Revenues from Software Sales,
Revenues from Software Services and Revenues from Other Sources, are
broad division of Revenues, which are categorized as Position of
Accounts.
 Then, each accounts head of Position of Accounts are divided into many
General Ledgers. For example, Cash and Equivalents, Bank Balance,
Receivables from Debtors, Security Deposits, Account Receivable
Apache, Account Receivable Ariat, Account Receivable Temberland, are
general ledgers under Current Assets Position.
 In final division of accounts, there are sub-ledges under general ledgers.
As for example, there are many sub ledgers under the general ledger
Accounts Receivable Apache. For mentioning, sub ledgers can show
exact transaction history with a particular customer, expense history on a
particular time, like car fuel, and many more.

These divisions of accounts allow the company for getting information in more
focused view. If company wants to control or to implement corrective measures,
this division of accounts enables the company for being more judgmental. Like,

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if the company desires to be informed about business situation with a particular
customer, then it will require only few minutes to generate sub ledger report
from AIS Software for that particular customer for a desired period of time.

4.5 Accounting Software of the Company

Xin Chang developed three accounting software for it’s own use which comply
standard accounting rules. These are

 ERP software
 AIS Software
 BPM Software

Among the three software developed by the company, AIS is the core
software that adjusts the transactions recorded in the other two software. The
company allows users to access through internet irrespective of geographic
location and allows to put new record or to generate any desired financial
report. Xin Chang can control access and authority of users of this software
and it’s backend database. Altogether, this computerized system provides
Xin Chang’s Accounting Information System with required flexibility and
cost effectiveness.

AIS enables Xin Chang to generate every required Financial Statements, like
Balance Sheet, Income Statement, Owners’ Equity Statement, Trial Balance,
by using financial data previously stored into its database. Even, it allows
users to get report of any particular sub-ledger for focusing and controlling
into the narrowest possible way.

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 4.6 Operation of Software

The core functions of the three software are as follows:

ERP:

 Xin Chang manages its inventory recording through ERP

 Warehouse control is also conducted by ERP

BPM:

 Mainly deals with recording of day to day expenses through coding

system.
 Inventory purchase is also recorded initially only in case of Pre
payment.

AIS:

 It is the core software for adjusting all the transactions.

 Transactions entered in ERP and BPM are finalized through adjustment
made in AIS software.

The operations of these three software are so complex in Xin Chang Shoes (BD)
ltd. We can show the operation of recording Inventory and Expenses through
these software as follows:

Inventory Purchase: Xin Chang purchases raw materials inventory from

outside supplier either through Post payment or Pre payment.

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  Post Payment Purchase: Recording of Post Payment Purchase involves
the following steps:

• Purchase of Raw materials: Inventory is debited as

assset and temporary liability is credited.
ERP

• When payment is made: Temporary liability is

debited and bank is credited
AIS

 Pre-payment Purchase: It involves following steps:

• When inventory is purchased: Temporary Receive is

debited and Pre Payment is credited.
BPM

• When Payment is made: Pre payment is debited and

bank is credited.
AIS

• When inventory is received: Inventory is debited and

Temporary Receive is credited.
ERP

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Expense Recording: It involves following steps:

• When expense is occurred: Expense is debited using a

code and Temporary Liability is credited.
BPM

• When Payment is made: Pre payment is debited and

bank is credited.
AIS

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4.7 Asset and Liability Management of Xin Chang

Assets management is one of the major parts of accounting activities of the

company. Assets are broadly divided here in current assets, which includes cash,
bank balances, accounts receivables, receivable from debtors, security deposits,
and fixed assets, which includes furnitures, decorations and fixtures, Equipment
and Machineries, computer and accessories, car, machineries and equipments
etc.

As part of assets management, while any new assets are purchased, that is
numbered and properly registered in AIS Software. Afterwards, depreciation is
calculated based on expected usable time of that assets and is properly recorded
on due time. Companies have to follow accordingly if there are any guidelines
on depreciation calculation, given by government.

Accounts receivable are those which customers have to pay for enjoying
delivered product or services of the company. Accounts department inform
Customer Relationship department about dues of a customer and advise them to
process proper collection of those receivables.

Xin Change have policy and guidelines for employees to give interest free loan
against their salary. These are counted under receivable from debtors. Loans
taken by employees are adjusted with their monthly salaries in monthly
installment. Accounts department have a major role in these regards. They have
to disburse approved loan, maintain proper financial and legal documents of

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these loan, disburse salary accordingly and record these monthly transactions
and update loan balances.

Now, liabilities of the company come for consideration. Actually, Xin Chang do
not have any sorts of liabilities. It did not take loan from any parties and the
company has unwritten policy of not being indebted. All of its expenses are paid,
once those become due. Among regular expenses, considerable numbers of
expense items are paid in pre-paid basis. One of very few exceptions among
expenses is monthly salary of employees. Monthly Salaries are paid after the end
of a month. More precisely, Xin Chang pays monthly salaries to employees by
5th of next month. Another exception is utility bills which are postpaid in nature.
As in every aspects of accounting systems, the company follows GAAP
(Generally Accepted Accounting Principles) and standard accounting system,
every liabilities are carried out accordingly and expenses are also in line with
accruals basis principle.

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4.8 Strengths and Weaknesses of the Current AIS of the company

The AIS’s presented above represent the state of the art in their application to
business organizations. Their strengths and weaknesses may be evaluated through
an examination of the control functions they are designed to accomplish. Below
Table presents a classification of the AIS’s according to the three types of control-
resources, implementation, and planning-and according to the three types of
feedback-first order, second order, and third order.

Most AIS’s designed for resource control are used as scorekeepers; they produce
transaction data in the form of business documents. It is essential to business or-
ganizations that business activities be recorded in legal and general business docu-
ments. Accounting is traditionally viewed as the best device for keeping business
records. The reason that computer technology was introduced to business in the
1950s was that the record-keeping function of AIS’s is repetitive and is well suited
to computer applications. Thus, today, the widest AIS application falls in the record-
keeping area-the area in which the AIS has the greatest strength.

The inventory-forecasting and -control system, the standard-cost system, and the
budgetary-control system also necessitate the establishment of systems goals and a
revision of the existing goals in response to environmental changes. Besides
providing first-order feedback, these systems could perform as second-order
feedback control systems; but, again, such systems depend on human initiation, and
if management chooses not to respond to the signals provided by the systems, they
are reduced to performing the record-keeping function only.

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The obvious weakness in AIS’s is their inability to provide information for manage-
rial strategic planning or for third-order feedback control. The only possible AIS
qualifying as a third-order feedback system is the annual budgeting system, which
requires the managers in the organization to search for the best strategy or best
course of action for the budget year. Information systems to assist managerial
strategic planning, however, exist outside the area of the AIS. Note that the annual
budgeting system is concerned with the establishment of goals and budgets, while
the budgetary control system is concerned with the implementation of budgets to
achieve goals.

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 Chapter 5

Recommendations and

Conclusions

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5.1 Recommendations

I have worked here at Finance Department of Xin Chang Shoes (BD) Ltd.for
about 45 days. Therefore, I have the opportunity to closely work as well as to
observe activities and policies of Accounting and Finance Department of this
company.

All accounting activities of the company are in accordance with standard and
accepted accounting principles and government rules and regulations.

But maintaining three separate software and also sub ledgers, system for narrow
down ledger division, are making the whole accounting system more
complicated and clumsy. Although it gives a useful option for being more
focused in business situation by sorting out financial transactions into more
individualized categories. It has many other valid and considerable drawbacks.
Most of the occasions, authorities have not that much patience and time for
scrutinizing financial transactions in that narrowest possible way. In addition,
maintaining enormous numbers of sub ledgers hamper smooth workflow. The
company may consider developing a better way for preparing statement for
customers or getting appropriate view of business; an efficient way which is not
tiresome and which is also easily comprehensible and easily convertible into
policy.

In the company, Accounts and Finance department have little area for working
and practicing of many aspects of theoretical field, comparing with vast working
area of these subjects knowledge base. It is because of policies of higher
authorities and owners of the company. Scope of cost or managerial accounting
in today's world is considerably high. Proper utilization of resources, assessing
new investment opportunities, allocating resources in least cost, and many more

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can be done effectively by using knowledge of vast field of finance. Proper
utilization of knowledge and expertise makes a company not only more efficient
but also more profitable.
3.
Xin Chang Shoes (BD) Ltd can consider to shift own accounting software system
to widely used software. It might help to make accounting system of the
company more standardized. Newly recruited employees find software system
little complicated. Sometimes, they need several months of training for
becoming fluent in using it. On the other hand, if the company uses a widely
used accounting software system, then company can recruit peoples having
experience on that particular software. Certainly, it should be ensured first that,
new accounting system will serve every need more efficiently.

5.2 Conclusions

Xin Chang Shoes (BD) Ltd has been successfully running its business in
Bangladesh for about a decade. At the very beginning of its business inception in
Bangladesh it established another factory in Comilla along with the factory in
Chittagong. AS Xin Chang Shoes (BD) Ltd is a 100% export oriented
manufacturing company, it is contributing a lot towards the foreign exchange
earning of Bangladesh. Moreover, the two factories and offices both in Chittagong
and Comilla are providing employment to many people of our country as workers
as well as high officials.

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References:

 Accounting Principles by Jerry J. Weygandt, Paul D. Kimmel,

Donald E. Kieso, 9th Edition, Publisher – Wiley
 http://www.businessdictionary.com/definition/ accounting-
system.html
 http://www.goldenchang.com
 http://www.basis.org.bd/index.php/about
 Accounting information system by Ulric J. Gelians & Jr. Steve
G.Sutton.
 Introduction to Information Processing by Berye Rabichaud, Eugeneej,
Muscat and Alix- marie Hall.

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