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The Necessities of Paperless Accounting System 107

might be because paperless system involves technology which could make the business much moreeffective. Ramirez and Cosme (2008) have discussed the importance of technology in their article, Itis certainly no secret that technology has evolved to the point that no modern business enterprise cansurvive without it. It is shown by the fast-increasing number of paperless solution provider companiesin the recent years.

Many organizations are attempting to improve their effectiveness nowadays. Particularly,companies are eager to maintain uninterrupted growth and overcome the challenges to compete in the

marketplace by developing information technology on their business system. Tuunainen (1999)explained that the age of information technology provides possibilities for an effective coordination ofbusiness process. By electronic commerce, economic transaction between different partners and partieswill be facilitated in value chain.

Automation is one way to move towards more effective accounting process, and InformationTechnology (IT) is the answer. Automation on accounting department makes it more efficient andmore reliable while it reduces the costs. Information Technology, which is growing at a high pacenowadays, changes the ways of presenting the accounting information. Paperless system is used forautomating the accounting information processes. Gulkvist (2002) defined that Paperless accountingis an accounting, where transactions, accounting entries and data are received, transferred, and storedelectronically. Some of these technological and electronic solutions in financial accounting could be

summarized as electronic ordering, invoicing, payment, and archives. Automation in accountingsystem means reducing the paper dependency, and it will provide effectiveness. Larrivee (2005)explained paperless, in terms of the 2005 environment, The ideal situation is that paper is replaced byelectronic formats (imaging), resulting in electronically created information that reduces paperdependency and provides automating processes that effectively make using paper an option rather thana necessity.

Accounting system will be different for each firm, because of the difference in the businessprocess. To achieve the best performance and efficiency, accounting system needs to be well designedat the first place. However, the accounting system might also be redesigned for the sake of greaterperformance. As every day the demand of business is changed, accounting system is also to bemodified. The easier way to redesign the accounting process might be by redefining the business

process.This paper shows the complete concept of paperless accounting system which involves human

resource management system and time management system that are integrated, and how a completepaperless accounting system is analyzed and identified. This paper allows the board of director of acompany or institution to justify whether the cost of adopting a paperless accounting system isreasonable over the benefits they can receive after understanding how a complete paperless accountingsystem helps to redefine the business processes.

Research ProblemMany researchers have come across to discuss the importance of setting up paperless accounting

system. For example, it redefines business processes and making the company efficient in makingdecisions by drawing out the information from the accounting information system easily. Similarly,researchers had researched quite a number of areas in setting up paperless accounting system such asits impacts, obstacles and general concept of setting up. However, none of them discussed about whatare the specific businesses processes to be reengineered and the concept of paperless accountingsystem does not merely about account receivables and account payable only. Thus, two main researchproblems are justified in this paper.

Research Problem 1: The complete concept of paperless accounting system which does not limitto accounting system but also human resource management system and time management system.

Research Problem 2: The actual benefits of business processes that a company or institution canbenefit with.

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108 M. Krishna Moorthy, A. Seetharaman, M. Gopalan and Lee Har San

A complete accounting system takes every issue that involves cost. For instance, when acompany wants to requisite more human resources, the managing director (or the representatives) willcontact the print media to advertise vacancy notice, it costs at least RM300. Then, when thererecandidates coming for interview, their data will eventually be captured into human resourcemanagement system under pending or KIV status. After that, when the whole interview session hasended, one or a number of successful candidates will be chosen as the companys employee with statedbasic salary. The cost incurred during the process of resource requisition involves human resource

management system and accounting system and likewise to time management system which it is inter-related to the whole flow as well. This is because time management system stores the employees workschedule and attendance of work.

Defining and researching the research problems are crucial for the board of directors tounderstand how the complete paperless accounting system can really help to reengineer businessprocesses and thus they can justify the real benefits for adopting a complete paperless accountingsystem than the cost of setting it up.

Objectives of the Research

The extreme purpose of writing this research is:a. To understand the complete concept of paperless accounting system which involves human

resource management system and time management system that works as a whole.b. To analyze, identify and understand how a complete paperless accounting system helps to

redefine the business processes.c. To have an understanding of to what extent the complete accounting system can go paperless.d. To allow the board of directors of a company or institution to justify whether the cost of

adopting a paperless accounting system is reasonable over the benefits they can receive afterunderstanding how a complete paperless accounting system helps to redefine the businessprocesses (from item b).

Scope of the Study

In order to have a very in-depth and precise survey, the scope of this literature is limited to Small-Medium Enterprises (SMEs) only. For furthermore understanding, a SME generally is an enterprisewith full-time employees not exceeding 50 or annual sales turnover not exceeding RM 5million(National SME Development Council, Bank Negara Malaysia, September 2005).

Furthermore, different agencies define SMEs based on their own criteria, so there are somespecific SME definitions for different sectors such as primary agriculture, manufacturing,manufacturing-related services and services (including information and communications technology)that can be used for special purposes. In this research we used general definition of SMEs.

The scope of this study is to examine and analyze how a complete paperless accounting systemhelps SMEs to redefine their business processes. Also, this research attempts to determine how a

paperless accounting system involves human resource management system and time managementsystem in SMEs. Finally, an evaluation and review on what extent the complete accounting system cango paperless in SMEs, will be focused.

Study of LiteratureThe survey of literature is sub grouped into:

a. Approaches and principles of paperless accounting systemb. Information Technology in Accounting systemc. Aspects on paperless Accounting system

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Approaches and Principles of Paperless Accounting System

Briefly defined, Accounting is the information system that measures business activity, process the datainto reports, and communicates the results to decision makers, which could be Individuals, Business,Investors, Creditors, or Taxing Authorities (Horngren, Harrison, 2007). It shows that accountingsystem has three main processes which have to be integrated. Accounting system will be different foreach firm, because of the business process differences. To achieve the best performance and efficiency,

accounting system needs to be well designed. However, the accounting system might also beredesigned for the sake of greater performance. Every day the demand of business is changed,accounting system has to be modified. Automation allows companies to change the business processmore easily.

Automation is one way to move towards more effective accounting process, and InformationTechnology (IT) is the answer. Automation on accounting department makes it more efficient andmore reliable while it reduces the costs. Information Technology, which is growing at a high pacenowadays, changes the ways of accounting system presenting its information. Paperless system is usedfor automating the accounting information processes. Gulkvist (2002) defined that Paperlessaccounting is an accounting, where transactions, accounting entries and data are received, transferred,and stored electronically. Some of these technological and electronic solutions in financial accountingcould be summarized as electronic ordering, invoicing, payment, and archives.

Paperless system has become a need for business process, especially for a company that hashigher volumes and more transaction because it will demand a computerized system (Webster 2004).James Blaylock (2005) believed that, Going paperless is no longer an option, but must for a CPA(Certified Public Accountant). With the trend of moving in this direction, it is imperative to gopaperless in order to keep up with the competition. In 2005, PCPS/Texas Society of CPAs NationalManagement of Accounting Practice (MAP) surveyed that 41% of CPA respondents indicated that theywould consider going paperless, and 20% already have done it. 25% of the firms are planning to gopaperless, but 13% will not consider it. But then in 2008, the CCH Incorporated, parts of WoltersKluwer, publisher ofAccountancy, has done a survey with accountancy practitioners who haveimplemented paperless system. 95% of those surveyed by CCH would recommend implementing apaperless office system to other potential users. Paperless accounting system has been proved forhelping the company improve effectiveness.

For CPA, the reasons why they decide to adopt paperless accounting system are vary, but all ofthem seek the same reason, benefit, even it will need huge investment. Based on the survey of CCH(2008), 95% of those surveyed by CCH, which have implemented paperless accounting system, citedsecure backup or ease of access to client files as their main reason for making the switch, 89% said thatthey were motivated by administration and storage cost saving, 84% said a reduced risk of humanerror, and 67% cited environmental concerns. The CCH research also found that 79% of allaccountancy firms have gone paperless in some respect, even though a whopping 37% has justintroduced online filing for tax returns.

Replacing accounting paper records with computer records surely has many advantages. Theadvantages include: easier access to accounting information, increased accuracy of accountinginformation, and improved quality of accounting information (Pincus, 1999) Keeping records oncomputers can ease access to accounting information. More people can simultaneously access acomputerized databank of information that could read a written accounting record. Using computersfor accounting calculations can improve mechanical accuracy. There are differences in accuracybetween paper and electronics system. Cameron (2006) explained, Anytime you move a piece ofinformation from one place to another or one user to another without re-entering it on a keyboard,youve removed an opportunity for error. The author describes in his articles about his firm that theyroutinely move data between accountants, and between their firm and the firms client, and it greatlyincreases the work effectiveness and improve the accounting performance. It could happen becausecomputers make fewer mistakes adding up long columns of numbers than people do. Even if there are

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mistakes, it is able to be fixed. Computers also present new opportunities for accountants to providebetter information to users with its Graphic User Interface (GUI).

Gullkvist (2002) found out that by paperless accounting, greater efficiency can be achieved andwill reduce the costs of accounting. The first objective for many vendors focus on primary reason formaking a move to paperless is cost reduction (Davis 2005). By performing paperless system, acompany would improve the management of the cost, which could be financial, time, or material costs.Cameron (2006) explained that by using paper-based accounting, there is the cost of material, time, and

money. When a piece of paper becomes a document, it has to be filled and stored, and it costs forstorage space, securing, heating, and air conditioning the space. Regular purging of old files will timeconsuming, and misfiled document will hard to search for and retrieve it. In 1996, The NationalArchives and Records Administration (NARA) compared the costs for storing paper in ordinary officeand in Federal Records Centers. For office space, a cubic foot of records was estimated to costs $23.24,when, for Records center, the cost was $1.56/ft3. In both cases, it was only the cost of leaving therecords in place, while the cost of employee time to prepare the records for storage, access them asneeded, and determine when they can be disposed of is usually much larger. The accounting recordscan also be kept longer if it is stored electronically. Paper storage has large scale and weight, so it hasto be purged manually from time to time. Electronics storage of financial and tax information, since itinvolves letters and numbers rather than pictures or other graphic images, is quite inexpensive. As a

result, client files could be kept as long as required by state or federal regulations (Cameron 2006).A companys use of IT to organize the office leads to a digital makeover and new business.

Setting up paperless accounting system is one of the digitalization the companies could make. Phelan(2003), a technical manager in personal financial planning at the AICPA, shared a paperless successstory of Atlantas Habif, Arogeti & Wynne LLP (HA&W) in the late 90s on her article. The companyhad moved quickly, performed 100% paperless audits and achieved 100% paperless tax season in1999. Their management is relentless about training, which was the key to a successful transition to apaperless office within two years only. What the company had done is to set up a committee to protectand maintain technology projects to generate efficiency. Its mission was to reduce manual andrepetitive tasks, file retrieval time, trips between the office and work sites, wasted office, and to offerbetter client service.

Information Technology in Accounting System

Technology is the solution to overcome the challenges of an accounting profession. All future-thinkingcompanies are putting todays most advanced technologies and innovations in place to standardizeprocedures and create workflow processes that basically run themselves. Standardization andautomation are achieved via integrated product suites, paperless system, virtual offices outsourcing,and leadership approach (Teresa 2008). Sutton (2000) described that the accounting change towardsthe use of Information System indicate recognition of two key changes in the business environment:(1) information technology has enabled companies to focus on their key competencies and shift otheractivities in the value chain to business partners with more competencies in these areas; and (2) thefinancial reporting model must eventually shift to something closer to a continuous reporting model,and assurance on this information can only be provided in a timely manner by focusing on thereliability of the systems that generate the information. Banker et al., (2002) had made a study on fiveaccounting officers of an international firm, that at the recently time had made a large IT investment,primary in audit software and knowledge-sharing application. The results from both regression analysisand Data Envelopment Analysis (DEA) indicate significant productivity gains following ITimplementation, documenting the value impact of IT in a public firm. Their qualitative evidencesuggests that audit software reduces the time for working paper preparation.

Technology enables business process to perform real-time accounting. Real-time accountingallows management to quickly adapt to opportunities and address problems. Daily reporting couldgreatly ease the stress for accountants involved in preparing quarterly and yearly financial statements.

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Management executives, accountants, and other business professionals are able to spend more time onmore useful tasks, such as financial management, product development, and costumer relation, ratherthan spending long hours in preparing periodic financial statement. One of Paul case examples (2008)involves Cisco System. With $22.2 billion in sales for the fiscal year ended July 2001, Cisco usedOracles ERP software to generate a consolidated balance sheet and income statement within abouthalf a day of a fiscal quarters close, compared with two weeks for 1996. In 1996, Ciscos financedepartment spent 65% of its time processing transaction and preparing financial reports, and only 35%

helping managers use the reports to make better decisions. After Cisco implemented real-timereporting, these percentages reversed. Additionally, the finance departments expenses as a percentageof total company revenue decreased from 2% to 1.3%. All of this occurred even as Cisco addedpersonnel to keep pace with growth. Real-time accounting has given Cisco an accurate measure ofrevenues, expenses, margins, and profits every day of every month.

Information technology in accounting system can be used also for management purpose.Management is responsible for making plans, specifying strategies the organization will use to achievethe goals which has been set before. But the goals and plans will be unproductive if there is nomechanism to ensure that the plans are carried out as intended and the progress towards goals isregularly reviewed. This mechanism is the internal control system. To accomplish goals effectively, theinternal control system has steps to: (1) assign responsibility, (2) establish standards, (3) motivate and

reward performance, (4) monitor performance, and (5) communicate progress and take correctiveaction (Pincus, 1999).

One of accounting tools which is used for going paperless system is Accounting InformationSystem. Auditors and accountants have to know well about the importance of accounting informationsystem. A study of accounting information system will enhance understanding of the basic concept ofmanual data processing and how this processing is being carried out with the use of computers.Studying accounting information system will help auditors understand how to review computer-basedsystem and help them in their planning and execution of audit procedures using computers.Accountants will work with computerized systems as part of their daily routine and will also becomeinvolved in the development of new computer system (Aseervatham and Anandarajah 2003).

Briefly defined, Accounting Information System (AIS) is an information system that is

specially designed for accounting and finance. An accounting information system records, processes,and reports events using accounting methods to achieve predefined accounting objectives. This systemis designed to handle common business transaction which generally grouped into 5 categories: (1)Revenue, (2) Expenditure, (3) Production, (4) Human Resource Management, and (5) Reporting(Aseervatham and Anandarajah 2003). This mini-research touches The Human Resources Managementcategories only.

The Human Resources Management (HRM) section within an organization is responsible forthe hiring of personnel. It involves all the decisions that in some way affect or influence the peoplewho work for an organization. There are two approaches to human resources management, hard andsoft. Hard HCM is financially hard-nosed with a focus on the bottom line. It is more about function andplace management prerogatives above the concerns of employees. Soft HRM is quite the opposite in

that it applies the concept of developmental humanism, or helping employees to improve and furthertheir experiences and education, rather than engaging in wholesale redundancies and terminations.Additionally, the soft HRM approach tends to regard employees as assets that help to build asustainable competitive advantage for the firm. The present trend amongst organizations is to adopt asofter, more strategic HRM approach. Effective HRM has the following main objectives: (1)Organizational productivity, (2) Increased quality of work (3) Improved quality of working life, and (4)Statutory and legal compliance (Aseervatham and Anandarajah 2003).

The payroll cycle is the system that manages the calculation and payment of remuneration toemployees. The remuneration is broadly divided into two types, wages and salaries (Aseervatham andAnandarajah 2003). Paperless payroll is a growing trend in the payroll industry and offers manybenefits for businesses, that is what PayMaxx, Inc believes (2004). The article explains that the

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reasons for this transition are numerous and include records storage, improved accessibility andenvironmental friendliness. There are many facets of paperless payroll, including applicant tracking,employee self service, direct deposit, payroll cards, and online payroll reports. Recording the hoursworked by an employee is the starting point of the payroll system. Time Management System is alsoincluded in the calculation of payroll system. In wages computation, recording of the time workedquantifies the normal hours worked and the overtime hours worked. For salaries, time recording issometimes used for controlling the attendance of employee (Aseervatham and Anandarajah 2003)

Aspects on Paperless Accounting System

The change of paper into paperless system is an important movement towards an improved accountingsystem. But there are also some aspects that should be considered when performing paperless system.Going paperless is not just about replacing paper with computer system. Bhansali (2005) argued thatno firm, especially for small, one to five partner firm, has increased its productivity significantly solelyby eliminating paper in its offices. The author hypothesized that to increase a firms productivity thegoal should be to find the most efficient means of using data and documents in client engagements,storing and retrieving them, and sharing them with the clients.

Going paperless needs time. LaRue (2006) described in his article about 7 mistakes that should

be avoided when going paperless. One of them is Trying to go completely paperless overnight. Theauthor explains that going paperless is a progressive transition. Trying to go completely paperlessquickly can be overwhelming and create frustration with the entire process. Starting off at a pace that isright and progressively moving to a paper-free environment is recommended.

There are many rewards for accounting firms that choose to go paperless, but there are risks aswell. Mongeon (2008) believed the risks can include a loss of control, and confusion amongaccountants and staff about their role on a new, paperless environment. The loss of control of their fileswhen adopting a new technology is one of the greatest risks for many accountants in going paperless.This can be particularly true when they use third-party vendor with proprietary storage system anddatabases managed by one vendor. It will be time and financial consuming when the firm wants tomaintain the technology, or even change the vendor. By carefully considering how paperless

documents are filled, stored and categorized, accountants can minimize this risk and maintain controlof their own data. The author also explains that in the paper world, accountants and staff typically havevery clear roles, but in the paperless world, such roles can be realigned or reshaped into the mostdesirable means. Realignment can increase efficiencies as firms are attempting to more fully utilizeadministrative staff to free up professionals for the high-level tasks they must perform. But, however,realignment can also lead to confusion about who needs to act and when. With good workflowplanning, firms can help ensure that engagements proceed as smoothly and even more efficiently thanthe work they managed on paper.

A firms workflow system is one of its strategies and assets because it can revolutionizeeffectiveness with tools to monitor, trend, forecast, and control all the aspects of their business. Bytying together people with system, and content with workflow, firms can improve efficiency andoperational consistency to deliver greater business value (Massie 2008). But when going paperless,firms should clearly articulate how process and workflow will change. Going paperless requires somereadjustment in the way that engagement process and workflow is managed. Mongeon (2008)commented that If accounting firms dont adequately prepare for their transition to paperless, they caneasily bite of more than they can chew. Unprepared firms could overload departments, individuals, orforce unnecessary workflow bottlenecks that hinder processes and lead to costly errors. He added,This risk is commonly realized when a firm doesnt plan accordingly and takes on a new technologyfirst and then as an afterthought, attempts to establish new better practices.

Computer may change the manual routines for those working with accounting and auditing(Sutton 2000). Gullkvist (2002) has found that there is a resistance towards paperless accountingamong the accountants and auditors. While they feel comfortable of using traditional system, they are

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forced to learn new technology. The author explains that according to normative isomorphism, theimplementation of new professional practices might be influenced by professionals. As auditor, theyare developing the legal accounting standards and principles and it may seem fair to believe that fellowauditors may adopt the new standards faster than other accounting professionals. The author finds outthat, Auditors are more in favor of paperless accounting than accountants. Auditors in general have amore positive attitude towards paperless accounting than accountants working in accounting agencies.

Keenan (2008) revealed that Auditing your existing process and adapting them for your new

technology, and then documenting them, are important steps and may take some time. Getting yourfirms entire employees, from the top to down, to follow the new process is the bigger challenge thatgoes back to the change management issue. Workflow automation doesnt solve the changemanagement problem, even though it solves the work management problem, which is an integral facetof process change and standardization. Implementing technology and eliminating paper is not enoughfor performing paperless system. Workflow automation should not mean simply automating specificprocesses. It should empower people and teams to work more effectively in all departments across thefirm. It standardizes processes, centralizes knowledge, and helps the staff manage their responsibilities,while creating the accountability, the firm and its people need to be successful. Individual differencesamong the users and technological skills should also be considered also, as these factors may affect theattitude. One of the problems of using technology for accounting system is the awareness of individual

users, who have just been introduced to advanced technology. It is important for accountingpractitioners to have an understanding of IT.

To compensate with the risks of going paperless is very important. While there are many risksto going paperless, accounting firms can minimize virtually all the risks with proper planning.Understanding the risks to technology, process, and people before you buy a paperless technology willallow you for more strategic plan, a seamless integration strategy, and the highest probability ofsuccess (Mongeon, 2008). One of the best ways to get started with implementing the paperless office isto develop a plan that contains easy-to-follow steps and sets of reasonable milestones. The planshould contain the paper-reducing goals of your firm, how you envision achieving them, how you planto organize your digital files, and your target deadlines for meeting your firms desired level ofpaperless, said LaRue (2006).

Research MethodologyThis study covered only the small and medium size enterprises (SMEs). The data for the research werecollected from different journals, bulletins and web sites as listed below:

Journals

CPA Journal Journal of Information Systems International Journal of Accounting System Accounting Today Practical Accountant Accountancy AICPA Online Publications articles, the practicing CPA Accounting TechnologyBulletins

e-Business Research Center Boomer

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Web Sites

http://www.knowledge.org http://eetd.lbl.gov/paper/counting/html/fedstorage.html

In order to understand the complete concept of paperless accounting system and its impacts onhuman resource management system and time management system in SMEs, some cost-related sub

functions such as Leave Module, Claim Module, Appraisal Module, Training Module, ResourceRequisition Module, and Employee Profile Module were analyzed. Also, the benefits and limitations ofsetting up a paperless accounting system in SMEs were studied in aspect of individuals, decisionmakers, human resource/finance, and third party points of view.

Our research framework is illustrated in Figure 1.

Figure 1: Research framework on paperless accounting system

Human Resource

Management System

TimeManagement

System

Payroll

System

Setting up

Paperless

Accounting

System

Leave

ClaimAppraisal

Employee

Profile

Resource

Requisition

Training

Benefits

Aspects and

Limitations

Discussion, Analysis, and FindingsUnderstanding the Accounting Concept

One of the actual concepts of a complete accounting system is the interaction of human resourcemanagement system, including time management system and payroll system. The accounting systemdoesnt work alone without taking considerations of human capital (or employee) and other businesstasks. Employee operates the business tasks and there are many different type of costs incurred duringthe employment. Such costs incurred by employees are stored under human resource managementsystem. Furthermore, the functions of human resource management system have catered sub functions(or modules) such as leave, claim, appraisal, resource requisition, training, loan and employee profile.The sub functions mentioned are cost-related but there are also non cost-related sub functions such asbulletin and alert which simply works as an additional tool to help users in one way or another.However, it is important to analyze and understand whether the sub functions can be fully utilized sothat the manager can justify the cost of implementing the paperless accounting system over the actualbenefits received. Bear in mind that the cost of implementing the whole complete accounting system is

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not cheap. According to Raymond Sudo, the Managing Director of Orisoft Technology Berhad, anaccounting system provider, the cost can be ranged from RM 160,000 to RM 350,000 for Small toMedium Enterprises, excluding the hardware such as database server or web server. Likewise to humanresource management system, time management system stores information and data consists of workschedule, employee attendance and often used for overtime calculation. Time management can pairedwith additional tool such as a clock-in system to auto record the attendance every time the employeeclocks-in and clocks-out. Finally, all the data is eventually synchronize in payroll system for pay-out.

Time management is more likely to be used for company or institutions with many shift workers. Forexample, Petronas- an oil manufacturing company, News Straits Times Paper (NSTP) - a newspapercompany and Sunway Hotel.

In the next few sections, we will analyze the general purpose of each sub function and find outwho can benefit the most out of these sub-functions. After that, we will find out to what extent that anaccounting system can go paperless.

Leave Module

It is normal employee could absent from work due to different reasons. Generally the common ones areannual leave, paternity leave, maternity leave, emergency leave, hospitalization leave, examinationleave, Haj leave (specifically for Malays) and unpaid leave. Over time, a confirmed employee will be

rewarded a number of days for certain leaves without having to deduct their salary. If the employee isexceeding the permitted days, the rest of the days will be considered as unpaid leave which will bededucted from the employees salary. Thus, it is to know that there are a few benefits of having leavemodule. First, it creates the rewarding leave day to the right employees by running a processautomatically. Second, approved leave will synchronize to payroll system to determine if such leavewill be deducted from salary or not. Third, it speeds up the deduction calculation with the facility ofapplying various leave calculation formula for different group or rank of employees such asmanagement level, executives level, non-executives level and drivers. Forth, it stores all the leaverecord of employees for the ease of information retrieving purpose during annual performance review.Thus, this is best utilized by companies which have hundreds or thousands of employees with differentranking, calculating their leave is just a few clicks away.

Claim Module

Claim is fully utilized by employees who travel to different work places. Jobs such as marketingmanagers and sales persons, consultants, support assistants, drivers and managers claim the most.Furthermore, the claim types available are medical claim, mileage claim, mobile charges claim,entertainment claim, accommodation claim and miscellaneous claim. Thus, the claim module helps toset budget for each rank of employees, for example management level can claim up to RM3000 yearlywhile executive level can claim up to RM1000 yearly only. The claim balance is automaticallycalculated every time when a claim application is approved. The data is eventually synchronized topayroll system.

Appraisal ModuleAppraisal also means performance review and the person could be promoted to a higher rank ordemoted to a lower rank and finally the salary adjustments. When a person moves to a different rank,the budgets for each module, the formula for any calculations and the entitlements could be different.So, the appraisal module creates a hassle free tool to move employee to any rank by running a processwith a few clicks.

Training Module

There are internal and external training provided by company. Internal training is held by internalemployee itself and external training is held by the third party. Certain course is designed for selectedtype of employees and if there are other employees who are not supposed to register for the course, has

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applied, their supervisors are notified. By having this training module, the supervisor does not need tocheck the eligibility manually; it will auto filtering out the applications for special confirmation.Material cost, instructor cost and other cost under a budget will be synchronized to payroll system.

Resources Requisition Module

The process of acquiring new resources can be quite cumbersome without having a proper system.First, it needs to go through the supervisors for approval. Then, approved request will need to be

published in media like newspaper, Internet or through head hunters. Applicants will submit theirresume and the resource requisition takes down all the information including the interview commentsand further stage of process, whether he or she will be recruited as an employee or as KIV.Correspondence letters will be mailed or emailed to these applicants. With resource requisitionmodule, massive data can be stored, retrieved and updated easily. Sub module like correspondencemodule will store several templates to fasten the process speed.

Employee Profile Module

Lastly, employee profile module can be said as the core and basic module among the rest. A lot of datacan be stored, such as personal details, family details and employment details. All modules rely on thiscore module to run some processes, for example, leave module takes joined date and probation period

to determine the leave entitlements. Training module takes division, department and position data todetermine if the applicant is allowed to go for this training or not.

The Further Extends of being Paperless

It is important to understand, having the client system (human resource management system, timemanagement system and payroll system) alone will still need to rely on massive papers especiallyapplication forms. For example, leave application form, claim application form, training nominationform, resource requisition form, appraisal form and many more. In addition, it is still cumbersome topass the forms around to get approval and the time and effort taken is still not fully enhanced. Intodays technology, software providers have already come out with Employee Self-Service (ESS)which is a web-based system that integrates with client systems. Users can login to ESS to obtain allkinds of application forms and submit through the system. Once it is submitted, the form will beescalated to the corresponding recipient for further approval. The routing map and viewable pages areconfigurable from the system and all the data will be synchronized into the system automatically.

Further DiscussionNowadays, people are trying to further eliminate the use of papers. For example, more reports aresaved in softcopy without needing to print it out. Databases are being backed up periodically to ensuretheres always a backup even theres a burglary, fire or any disasters that could possibly causing theloss of data. Some even thinks of scanning the receipt or bill and saved in a softcopy but it is yet to beimplemented due to the practicality issues. Moreover, security will be another compulsory aspects thatto think about. It is important to prevent intruders from stealing any data at any way.

LimitationSetting up paperless accounting system has great risks. Redefining business processes may cause theconfusion on realignment of job description. Lack of knowledge of technology affects the ability tocontrol the files and document (Mongeon 2008). Computer may change the manual routines for thoseworking with accounting and auditing. The workflow that has been defined and used for a long timewill be changed if the company decides to go paperless (Sutton 2000). But this research analyzes thebusiness process on Human Resources Management System, and Time Management System of Small

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Medium Enterprise companies which have been established, and proved for its improvements. Thecompanies have completely adapted its business process with new technology. The resistance ofTechnology implementation and the individual differences among the users and technological skills,which may affect their attitude, are no longer a problem. This research emphasizes on the paperlessaccounting system that has been worked and proved well. Therefore, the risks of going paperless arenot discussed.

Accounting Information System (AIS) consist of 5 categories, which are (1) Revenue, (2)

Expenditure, (3) Production, (4) Human Resources Management, and (5) Reporting (Aseervatham andAnandarajah 2003). This research only covers on the category of Human Resources Management,which explains the human capital business processes as a whole but not the practical issues that onemay faces. In addition, the system is not intelligent and flexible enough to cater for different occasionsautomatically especially when the people are going on long leave such as hospitality or maternity leavewhich the duration can go up to 1-3 months. Usually, company would employ a temporary staff to takeover his or her jobs and the job responsibilities should be forwarded to the temporary staff now.However, the system would not be smart enough to indicate the changes unless the required settingsare to be setup and switch to the temporary staff. Such settings are required especially when the personis involved in approval processes where the he or she is required to go through the applications anddouble check with the hardcopy and details submitted. However, small little changes would turn out to

be a little headache when initially people would just have to go to the temporary staff (in terms ofmanual way) but now even more efforts need to be done in configuring the system.

Furthermore, information stored under paperless system can be quite in risk when the world infilled with intruders or hackers. Normally, system provider will try to safeguard the information byusing all kinds of firewalls, anti-virus, anti-spam or others. However, it is still considered risky becausemost of the paperless systems do not have track and alert users when there are intruders trying toaccess into their network. Somehow, HTTPS (or secure protocol) is considered one of the safestprotocols to encrypt the information transmitted across the network. However, the real issue is notmany companies except banks, financial institutions or investment institutions insist on using HTTPSand it is actually a loop-hole for intruders.

ConclusionThe research analyze six sub functions of the client system which are Leave module, Claim module,Appraisal module, Training module, Resource requisition module, and Employee Profile module. Itdefines the paperless system of human resource management system. After analyzing the generalpurpose of each, we find out that the actual concept of a complete accounting system is the interactionof human resource management system, time management system and payroll system. The accountingsystem doesnt work alone without taking considerations of human capital (or employee) and otherbusiness tasks. It is important to understand, having the client system alone will still need to rely onmassive papers especially application forms. Unless we use todays technology, software providershave already come out with Employee Self-Service (ESS) which is a web-based system that integrates

with client systems. Users can login to ESS to obtain all kinds of application forms and submit throughthe system. Once it is submitted, the form will be escalated to the corresponding recipient for furtherapproval. The routing map and viewable pages are configurable from the system and all the data willbe synchronized into the system automatically.

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