Papers by Zechariah Patterson
Businesses have always needed accounting information systems (AISs). The first AISs were physica... more Businesses have always needed accounting information systems (AISs). The first AISs were physical and rather simple. However, as time progresses, technology and business processes have also changed; therefore, businesses must have AISs that have both physical and electronic components. Because business processes and transactions have increasingly become computerized, audits must cover not only the basic transactions, financial statements, and controls of a company, but must also include information systems. Five different types of audits are necessary. Financial audits determine accuracy of transactions and financial statements. Internal control audits detail the consistencies of internal control policies and procedures, along with the effectiveness of an AIS. Operational audits gauge the ability of a company to fulfill its goals and contracts and use of its resources. Compliance audits reconcile obedience to laws and inconsistencies with said laws. Investigative audits evaluate potential crimes employees and managers can commit. Each audit is necessary and should be combined for increased effectiveness. Computer-assisted auditing tools (CAATs) exist to simplify the auditing process. Eight theories for technological audits exist. Using these audits and the tools that go with audits, auditors, executives, managers, and other users can determine departures in the companies and formulate ways to improve such that more favorable audits result and the likelihood of illegal activities or unethical activities decreases.
Until 1985, companies relied on traditional costing methods and simple cost pools, such as direct... more Until 1985, companies relied on traditional costing methods and simple cost pools, such as direct labor-hours and machine-hours, to allocate overhead costs. As economies and business processes became increasingly complex, a new system for cost allocation was devised, called activity-based costing (ABC). Compared to traditional costing methods, ABC is more accurate in assigning revenues and costs because it assigns different costs to separate cost pools. To implement ABC, managers follow five steps: Determining cost pools and measures, assigning costs to said pools, calculating rates, assigning costs to cost objects, and writing performance reports. As for assigning costs to cost objects, they are assigned by unit, by batch, by product, and by customer; and if costs do not belong to any of these cost objects, they are assigned to costs that sustain businesses. Although ABC was originally intended for use by manufacturing companies, this is more common among service companies. ABC cannot be used by itself; rather, it must be combined with other business techniques such as decision support systems (DSSs). It is also useful for differential analysis and segment reporting. A variant of ABC, time-driven ABC (TDABC) is useful when using time as a cost driver, and provides a more accurate estimate of expenses than does standard ABC.
Management by objectives (MBO), designed in the mid-20th century, is an effective and commonly us... more Management by objectives (MBO), designed in the mid-20th century, is an effective and commonly used strategy managers can use to achieve objectives more efficiently than they could without MBO, but it comes with responsibilities they must follow. MBO calls for strong leaders who are willing to discuss progress with their subordinates. Although MBO is usually associated with autocratic leadership because of the nature of MBO, democratic leaders can also apply MBO. Managers can use it in societal responsibility and in corporate social responsibility to meet the needs of the stakeholders and society at large. MBO can also spark motivation, and incentives are necessary for MBO to be effective. It encourages use of SMART and SMARTER goals, as they help organizations meet their objectives effectively. Although MBO can be used for specific goals, it is a general management paradigm, commonly associated with strategic managers and can facilitate the difficulties present in strategic management. Finally, it helps with total quality management (TQM) and new public management (NPM).
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Papers by Zechariah Patterson