AC550 Unit 10 Information Systems Evaluation Report Example

Passing One Test of Four: A Unit 10 Systems Evaluation Report With a Costed Replacement Plan

[Student Name]

Purdue University Global

AC550: Accounting Information Systems

Unit 10 Systems Evaluation Report

[Instructor Name]

[Date]

Halvorsen Welding Supply, its owners and every figure are composite; the textbooks, framework and standard cited are real.

To the Owners and Controller

This report evaluates how Halvorsen records, bills and reports cylinder rent and gas sales, and recommends what to do about it. It draws on the process narrative, flowchart, requirements analysis, selection matrix, governance brief, implementation plan and control assessment prepared over the past several months.

Evaluation

The current arrangement was scored on four tests that matter to a reader of Halvorsen's numbers.

Completeness. Are all cylinders and transactions recorded? Fail. Counter swaps are keyed a week or more late and by total, so some exchanges are missing when rent bills, and 468 accounts show holdings that disagree with the last physical scan.

Accuracy. Are recorded amounts right? Fail. The dispute log holds 146 rent disputes in six months, and two thirds trace to late keying and nightly overwrites. Twenty-one involved customer-owned cylinders billed as company cylinders.

Traceability. Can every billed amount be traced to its source and every source to the bill? Fail. The trail breaks twice: when a driver voids and rescans before sync, and when the nightly transfer replaces the holdings count without logging its prior value. The rent line on invoice 58213 could not be traced to any document.

Timeliness. Are records available when needed? Partial pass. Gas sales bill within a day of delivery, which passes. Month-end close takes twelve business days because rent disputes must be worked before the books are final, which fails.

Only the timeliness of gas billing passes.

What the Failures Cost

The disputed rent is about $18,000 a month. Beyond that, the billing clerk spends roughly a third of her time on disputes, the controller spends three days a month on rent reconciliation, and two customers moved their argon business to a competitor last year after billing disputes. Customer complaints about rent appear in the sales team's call notes more than any other topic.

Recommendation

Replace the current billing system and cylinder tracking with the vendor-hosted industry package selected in the matrix, which matched February's test bills to the cent and has a clean twelve-month SOC 1 Type 2 report on the vendor's controls (American Institute of Certified Public Accountants, 2016).

Cost. First-year cost is about $186,000: $72,000 in subscription fees, $64,000 for implementation services, $30,000 for the field count in driver and staff time, and $20,000 for new handhelds and counter scanners. Ongoing cost is about $78,000 a year, against $46,000 for the current system and its support. The increase of $32,000 a year compares with $216,000 of disputed rent a year and the staff time now spent on disputes.

Phases. Phase one, the field count and data governance rules, runs six weeks; owner, branch operations manager. Phase two, conversion and the parallel rent cycle, runs two months; owner, controller. Phase three, cutover and the first three months of operation, including weekly review of correction transactions; owner, controller, with the branch operations manager owning holdings.

The replacement is justified not by new features but by the four tests: it records cylinders by serial at every exchange, logs every change to the field that drives rent, and lets every bill be traced to scans, which is what the current arrangement cannot do at any price.

Interim Controls

Until cutover, two controls reduce the exposure: handheld voids require a reason code, and a daily report compares billing counts with scans, with rent held wherever the gap exceeds two cylinders.

Risks

The main risks are customer resistance to the field count, data conversion errors and staff adoption. The implementation plan addresses each with exit tests and fallbacks. A further risk is dependence on a hosted vendor; the contract will require annual SOC 1 Type 2 reports, a standard data export, and ninety days' notice of any change to the rent routine. Halvorsen must also operate the complementary user controls the vendor lists, such as quarterly review of user access (Romney et al., 2021).

Alternatives Considered

Two alternatives were evaluated and rejected. The first was to keep the current billing system and add a hosted cylinder-tracking service. It would cost less, about $28,000 a year more than today, but it failed the February test on eleven of forty accounts because its interface still sends totals into billing, recreating the overwrite problem. The second was a mid-market enterprise package with a partner's cylinder module. It would also replace the general ledger, which the owners did not want to change now, and it failed six of forty test accounts on customer-owned cylinders. Doing nothing was also considered. Its cost is the status quo: about $216,000 a year of disputed rent, three days of the controller's time each month, and continuing customer losses.

Decisions Requested

The owners are asked to approve the replacement, the first-year budget of $186,000 and the five-month timetable, and to sign the customer letter that begins the field count. The controller will bring the vendor contract for signature once legal review confirms the SOC 1, data export and notice terms. If the owners prefer to wait, the interim controls should be kept in place indefinitely, and the rent dispute log should be reported to them monthly so that the cost of waiting stays visible.

Lessons From the Evaluation

Three lessons from the work apply beyond this replacement. First, the problems were found by following real documents, a disputed bill and a single invoice, through the process, not by reviewing procedures; the procedure binder described a process nobody followed. Second, the most important weaknesses sat where detailed data was turned into summaries, so any future integration should be examined at that point first. Third, the field that drives the most revenue had no owner, and naming one changed how everyone else treated it. The controller proposes repeating a short version of this evaluation each year on the next most important cycle, starting with gas purchasing and the hydrostatic testing shop.

What Success Looks Like

Six months after cutover, the report's four tests should show: no unexplained differences between holdings and scans, rent disputes below ten a month, every bill traceable to scans, and month-end close within five business days. The controller will report against those measures to the owners each quarter. An information system earns its cost when the numbers it produces can be trusted without a separate reconciliation (Hall, 2019; Committee of Sponsoring Organizations of the Treadway Commission, 2013).

References

American Institute of Certified Public Accountants. (2016). Reporting on an examination of controls at a service organization relevant to user entities' internal control over financial reporting (Statement on Standards for Attestation Engagements No. 18). AICPA.

Committee of Sponsoring Organizations of the Treadway Commission. (2013). Internal control: Integrated framework. COSO.

Hall, J. A. (2019). Accounting information systems (10th ed.). Cengage.

Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A. (2021). Accounting information systems (15th ed.). Pearson.