Finance - Theses
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ItemAn architecture for computer-based accounting information systems( 1991)The question addressed in this thesis is whether cost-effective, computer-based accounting systems can be used to generate "better" accounting information than existing transaction processing accounting systems. The first half of the thesis is devoted to gathering and summarizing information about how computer-based accounting systems work today, and what might constitute "better" accounting information. Data about present-day computer-based accounting systems was collected by mail questionnaires and personal reviews of widely-used packaged accounting software. Information about what constitutes "better" accounting information was collected, first, by reviewing the normative accounting literature, second, by reviewing the empirical literature on the inflation accounting experiments in the US (SFAS 33) and UK (SSAP 16), and third, by reviewing the academic literature on computer-based accounting, particularly the work of Ijiri, McCarthy, and Weber. To reconcile the apparent conflict between the empirical evidence that (a) inflation accounting is essential in times of very high inflation and (b) the empirical studies had found very little evidence of additional information content in SFAS 33 and SSAP 16 reports, it is suggested that the benefits of inflation accounting must only become apparent when general price-level changes exceed, say, 15% - 20% p.a.. Thus the ideas of the normative theorists are not rejected, and it is decided that a computer-based general ledger system that (a) is inflation-tolerant, (b) draws its data from the firm's transaction processing system database, and (c) can provide accounting reports based on different sets of accounting rules (called Multiview Accounting), would be likely to meet the objectives for the thesis. The second half of the thesis focuses on the design of such a system. To build inflation-tolerance into the profit measurement system, it is proposed that the constant-value journal entries and constant-value ledger account balances of conventional ledger systems should be replaced by formulae like those in spreadsheets. It is shown that a coherent system of double-entry bookkeeping, called Formula Accounting, can be developed, where ledger account balances may be functions of any variable that is likely to change in value over time, e.g., time itself, stock market prices, and price-index series. For automatic generation of Formula Accounting (FA) journal entries it is proposed that either the firm's many special-purpose transaction processing systems should be modified, or that a combination of (a) a specially-defined accounting data model (called the REE model), and (b) a computer program that encodes the rules used by accountants when they prepare journal entries (called an Interpreter), should be developed. To demonstrate the feasibility of all these proposals, a prototype REE-Interpreter-FA system was developed in roughly 4,000 lines of Prolog. Multiview Accounting is illustrated by using the prototype system to generate Historical Cost and Current Cost/Constant Purchasing Power interpretations of representative Exchange Events for both a trading firm and a manufacturing firm.