A Teaching Case for Understanding the Data Structure of an Accounting Database: Comparing a Commercial System to REA

By Woolley, Darryl J. | Journal of the International Academy for Case Studies, January 2012 | Go to article overview

A Teaching Case for Understanding the Data Structure of an Accounting Database: Comparing a Commercial System to REA


Woolley, Darryl J., Journal of the International Academy for Case Studies


CASE DESCRIPTION

This case concerns design of a database for an accounting system. It compares two databases: a database from an actual market-leading accounting system and a database designed using the REA database design methodology. REA is often taught in accounting information system courses. This course is written for students that have had some exposure to both REA and database design. Its most common use would be in an accounting information system course, either at the undergraduate or the graduate level, but it could also be taught in a database design course if the students were to spend extra time learning the REA methodology. The case is designed to require approximately one hour in-class discussion and two hours out-of-class student preparation for students familiar with both REA and database design basics. Other students will need to spend additional time mastering these topics based on the level of their knowledge.

CASE SYNOPSIS

A recent college graduate is hired as an accountant attempts to reconcile what he learned in college with an actual accounting system. The underlying database structure of the actual accounting system is significantly different than how he learned a database system should be structured. In understanding the actual accounting database, he attempts to work out why the actual system is different. This case is designed to help students develop skills in analyzing accounting databases and understanding the structure of accounting databases. Textbooks, research, and educational cases related to databases focus on using REA as a design methodology of accounting systems. Although accounting systems in practice include some elements of REA, they also include elements that REA eliminates. In this case, students compare an accounting database from Great Plains to the REA methodology and evaluate why the differences exist.

THE DATABASE CASE

John Taylor was recently hired to be controller of Jackson Behavioral Health Center (JBHC). He now manages an accounts payable, accounts receivable, and payroll clerical staff. He personally performs budgeting, financial reporting, and contract reporting on major contracts.

JBHC obtains the majority of its funding through grants and contracts from various government agencies. Each of these contracts requires distinct financial reports. John spends a large part of his time preparing these reports. All of the reports use information from JBHC's accounting system, but all are prepared offline, as JBHC's accounting software does not include the functionality to prepare the reports.

JBHC uses two major information system applications. For accounting and financial reporting, JBHC uses Great Plains. Great Plains provides accounts payable, payroll, and financial reporting. Client appointments, medical histories, and funding information are kept in BHS, specialized software used in the behavioral health industry. BHS also manages accounts receivable.

Services provided by JBHC may be paid by the individuals receiving services, insurance companies, Medicaid, or government agency contracts. BHS tracks the funding for each individual and prints the appropriate bills for individual, insurance, and Medicaid billing. John uses information from BHS as well as accounting information from Great Plains to generate billings and reports for government agency contracts. Furthermore, he uses data from BHS to update revenue and receivable account balances in Great Plains.

John finds it frustrating integrating data from Great Plains and BHS for contract reporting. The standard reports provided by the software are not sufficient for his purposes. He has decided to understand the underlying data to more efficiently prepare the reports. He feels confident that he will be able to navigate the applications' databases, as he had enrolled in an accounting information system class in college and had developed several small databases using Microsoft Access.

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A Teaching Case for Understanding the Data Structure of an Accounting Database: Comparing a Commercial System to REA
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