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 Accounting Systems Analysis and Design

Makarova L., Maksimova N.

High School of Economics

Nowadays when accounting is taught both in a training process and in practice

a special attention is paid to its organization and conduct, on the basis of regulatory
accounting documents, which are in force today. Due to this, the possibility to form
and to put into practice professional skills and knowledge of a future accountant,
auditor or analyst, is strongly limited. Professional skills and knowledge, in our view,
include the ability to make a critical analysis of the existing types of accounting,
including those, given in a specialized literature, to improve accounting models,
taking into consideration work specificity and regulatory forms of accounting objects,
to adjust accounting systems to the demands of the International accounting standards
and to regulatory documents changes, to find and solve accounting problems.
Specialists, working in the above mentioned sphere, should solve professional issues
with the help of the accounting theoretical foundations.
However, in the theory of accounting and financial accounting the accounting
systems and design methods, based on accounting principles, demands, and types,
accounting methods elements and accounting objects characteristics, are not given.
One of the most progressive trends in the sphere of accounting (financial accounting)
teaching methods on different higher education levels and postgraduate training, is to
emphasize organization and conduct of accounting process, to design accounting
system elements in accordance with both regulatory documents and accounting
theory.
The purpose of the designed approach in teaching accounting is not to set out
solutions, made by the tutor, but to actively engage the students into analytical work,
that makes it possible to form the skills, necessary for any professional accountant.
We are sure that to implement the designed approach in teaching accounting, design
methods and accounting types analysis concerning financial business activity, should
be considered to be either a self-study issue, or taught together with business
accounting policy. The accounting system is known to be based on different
accounting categories , principles, and methods and contain accounting objects and
organizational aspects.
The accounting methods elements are: documenting, inventory making,
accounts and double recording, money evaluation, calculation, accounting record
information generalization. The accounting should be based on regulatory documents
and supposes the determination of accounting objects, types of accounting, working
out documents flow and accounting data processing technology, financial operations
monitoring. Taking into consideration accounting system structure, to implement the
designed approach in training process and in practice , and to provide the students
with necessary professional skills and knowledge , the following matters should be
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taken into account:
- accounting objects structure
- accounting aims
- accounting objects evaluation
- primary accounting records content
- objects reflection in records
- register books technology forming
- accounting data exposure in accounting records
- flow of documents scheme
-accounting control functions
- accounting requirements arrangement (in a form of an accounting system
design)
- accounting types analysis (derived from both specialized literature and
regulatory documents)
The structure of a financial business process (Fig.1), helps to summarize
accounting objects, to determine its content with the purpose of designing and
organizing an accounting system. The circulation of business resources, achievement
of the purposes of its activity are accompanied by financial resources flow, financial
results forming, business value changing.
Resources Process Results

Nonnegotiable assets Financial relations Revenue (expenses)

Negotiable assets Profits (Losses)
Capital Business value
Loans

FIGURE 1. Composition and Interaction of financial-economic business activity

elements

According to Fig.1. accounting includes: nonnegotiable, negotiable assets,

capital, liabilities, financial activities which characterize financial relations, revenues,
losses, profits, and losses, business value. In accordance with Russian Federation
Law "About Accounting" (on 03.11.2006 № 183- FL) the accounting includes:
business assets, business liabilities and financial activities. This limitation impedes the
working out of a unified accounting system.
The classification of accounting objects (Fig.1) and the investigation of the
process of their formation and movement helps us to detail the structure of accounting
objects. For example, if we characterize materials as accounting objects, it is
advisable to investigate their storage, outcoming, usage in the process of production,
providing service and, for managerial needs. The materials are subdivided into
groups, subgroups, and types. The list of the groups of materials is shown in Table 1.
Types, subgroups and groups of financial activities are accounting objects materials.
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 Financial activity groups characterize incoming, availability, outcoming of
materials and some other activities (e.g. overvaluation, inventory, etc.). Material
resources availability and movement may be accompanied by estimation operations,
expenditure and financial results forming. Group composition and types of financial
activities correlate with the accepted in accounting system of financial activity
classification, determined for managerial needs. As a rule, separate subgroups
operations accounting is needed to stipulate the right of the ownership transition from
one participant to another, without an assumption of ownership change. To the first
group of financial activity we refer purchase and sale, barter, capital, gratuitous
receipt, etc. Assignment, mortgage, trust management do not assume the change of
the owner.
Materials accounting purpose is to collect, register and generalize the data in
the form of money, in groups, subgroups, types of material values and activities,
connected with their availability and movement. Accounting data enables both outside
and inside users to get all the information concerning accounting objects movement,
financial operations legal control and their efficiency analysis. Accounting aims,
which characterize its content, should be determined in accordance with the
accounting objects purposes. For example, Table 1 shows extended aims of material
accounting, stipulating the subdivision of resources into groups.

Accounting entity (groups Accounting purpose- to form the data, needed by outside and
of materials) inside users to:
Code Name movement f legally control see the condition and
accounting objects of financial analyze the necessity
financial activities activities and efficiency
A B 1 2 3
100 raw materials and 1001 1002 1003
basic materials
200 auxiliary materials 2001 2002 2003
300 semi-finished 3001 3002 3003
products and
complete sets,
structures and
parts
400 fuel 4001 4002 4003
500 package and 5001 5002 5003
packaging
materials
600 spare parts 6001 6002 6003
700 other materials 7001 7002 7003
800 construction 8001 8002 8003
materials
900 inventory, special 9001 9002 9003
equipment,
protective

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 Table 1. Extended Aims of Materials Accounting

To understand the materials accounting system better, we advice to use

identifiers. The first three categories of the identifiers represent groups, subgroups
and types of materials. The last category characterizes the accounting aim. For
example, code 1001 corresponds to the aim of data forming, concerning availability
and raw materials movement during the process of business activities of an
organization. Code 4002 corresponds with the aim of data forming to control law
enactment when fuel transactions are made. Code 8003 corresponds with the aim of
data forming when the efficiency of building materials transactions is analyzed.
So, in columns 1-3 (Table 1) there is an accounting materials aim,
corresponding to the accounting aim. The extension of the above mentioned
accounting aims in subgroups and types of materials, and also in groups, subgroups
and types of financial activities makes it possible to systematize the complete set of
aims of analyzed financial activity sector. It also makes it possible to estimate weather
systematic approach requirements coincide with the list of material supply accounting
aims, which can be easily found in the Accounting Instructions, adopted by Russian
Federation Ministry of Finance (on 26.03.07 №26 n). The Accounting Instructions
are intended for:
-actual resources cost designing
-correct and timely transactions recording, and providing reliable information
connected with procurement, incomings and issues
-resources control both in storage places and all the way of their movement
-controlling services and their norms
- unnecessary resources timely identification, with the purpose of their possible
sale, or finding any other way of drawing the resources into economic turnover
-making resources efficiency usage analysis.

Any business organization estimates its assets and liabilities in accounting

records. Under the commonly accepted rules, the estimation of the materials depends
on the economic business activity and is made in accordance with the real costs
(market price), agreed prices, costs of assets which are handed over or must be handed
over by an organization. The price, at which the materials are bought, should be taken
into account. In any transaction with material values, fair cost usage should be
considered along with the above mentioned estimation methods. The structure of the
initial accounting records is determined in accordance with the organization business
activity and information sources. By the initial accounting records, which have legal
power, relationship with external organizations is usually established.
Some internal data, necessary to implement shared liability among the
employees of the organization during any economic transactions, is stored in the
initial accounting records. The content of the initial accounting records is determined
in connection with their essential requirements, i.e. organization name, name of
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record, code, drawing-up date, economic operation essence and volume, names of the
officials, responsible for the transaction, personal signatures and their deciphering.
Initial accounting record design enables to correlate the demands of the unified
records and the records, which are in force today.
In accordance with the accounting rules, having been taught the fundamentals
of the accounting, the students and specialists, working in the sphere of accounting,
have a good possibility to systematize the way the accounting objects are reflected in
accounting records, to design the type of accounting register books, the schemes of
documents flow, to determine the way of control, to unify the accounting
requirements of the analyzed sector, on the basis of accounting system design.
The accounting design of an organization serves as a base for practical
approbation and completion. On the design stage the students not only get knowledge
in the theory of accounting, and some other relative subjects, but gain professional
knowledge and skills. The design approach gives us the possibility to "built in" the
elements of scientific investigations into the process of study, to improve the models
of conducting classes and to use the elements of active students participation in
educational process.

Bibliography

On accounting^ Federal law № 129-FZ, 21 November, 1996.

Babayev Yu. A., Makarova L.G. et al. Financial accounting. Moscow, Vuzovsky
uchebnik, 2008;
Makarova L.G. Methodological aspects of developing internal standarts in
auditing organizations, Nizhny Novgorod, NNGU Publishing House, 2000;
Mizikovsky E.A., Makarova L.G. et al. Theory of Accounting, Moscow, Yurist,
2000.

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