INTELIGENT FINANCIAL COMPUTER SYSTEMS - NEW POSSIBILITIES FOR ACCOUNTING AND MANAGEMENT

INTRODUCTION

The purpose of this text is:

In the text that follows, we present: GENERAL DESCRIPTION OF INTELIGENT FINANCIAL COMPUTER SYSTEM
Intelligent financial computer system is the one that: For the time being, the single such a system on the market is TOMAS - TOtal MAnagement System, developed by the SUPER-KING Inc., Zagreb, Croatia.

TOMAS is a generalized information system for the management of various types of organizations. Here, possibilities of TOMAS as intelligent system in accounting and management control are described.

In short, these possibilities are the following:

Effects that are achieved by use of intelligent financial system are:


DESCRIPTION OF THE INTELIGENT FINANCIAL SYSTEM

Components of TOMAS, pertinent for use as intelligent system are:

  1. Database in which, normal general ledger data and financial plans are entered, primarily for standard accounting.

  2.  
  3. Knowledgebase in which various financial models are entered. Financial model is a set of financial relations (statements), based on accounts. Such a model is, e.g. balance sheet, profit and loss statement, set of various financial indicators etc. TOMAS makes possible use of any model that user could take from literature or make it specifically.

  4.  
  5. Informationbase, where any report could be stored and:
FUNCTIONING OF TOMAS works in the following way:
  1. User enters in TOMAS:
  1. Then follows intelligent data refinement by TOMAS:
  1. Report handling types that TOMAS offers are:
EXAMPLE OF USE OF THE INTELIGENT FINANCIAL COMPUTER SYSTEM

In order to show an example of use of intelligent system, the following example is presented:

Database contains:

Knowledgebase:

Model of profit and loss statement, that is in TOMAS entered in the following way:
 
Model
R.n.
Description
Relation
RM
1
PROFIT AND LOSS STATEMENT 0=
RM
2
Net sales  K75#P+K76#P=
RM
3
Cash paid to suppliers  K70#D+K71#D=
RM
4
Income of other activities  K74#P+K77#P=
RM
5
Costs of other activities  K72#D=
RM
6
Extra income  K78#P=
RM
7
Extra costs  K73#D=
RM
8
Profit before taxes  K75#P+K76#P+K78#P-K70#D-K71D=
RM
9
Taxes  0,35*(R2-R3+R4-R5+R6-R7)=
RM
10
Net profit  R8-R9=

One of the reports that intelligent system delivers is the following:
 
CROATIA - INVEST D.D. TOMAS, 11.07.1998. 

FINANCIAL RESULTS ANALYSIS FOR 1. 6.98.
*****************************************

MODEL: Profit and loss statement

Description
In current month
From the beginning of the year
 
    Plan       Actual  Index
   Plan     Actual   Index
  1. Net sales 
2,250.000    1,975.688   0,88 16,400.000 17,020.887    1,04
  • Cash paid to suppliers 
  • 1,750.000    1,405.883   1.24 11,644.000 12,688.954    1,09
  • Income of other activities 
  •   300.000      300.000   1,00  1,800.000  1,800.000    1,00
  • Costs of other activities 
  •    30.000       26.000   1,15    180.000    211.552    1,18
  • Extra income 
  •   100.000       72.876   1,37    600.000    311.237    0,52
  • Extra costs 
  •    10.000     60.000     38.892    0,65
  • PROFIT BEFORE TAXES 
  •   860.000      915.993   1,06  6,916.000  6,192.398    0,89
  • Taxes 
  •   301.000      320.598   1,06  2,420.600  2,167.339    0,89
  • NET PROFIT 
  •   559.000      595.395   1,06  4,496.600  4,025.059    0,89

    Hence, TOMAS produced this report, retrieving general ledger data and financial plan data, and destined those data according to the chosen financial model.
     

    FINANCIAL MODELS THAT COULD BE USED

    TOMAS could use any financial model where addition, subtraction, multiplication, division and recursion (use of previously defined relations) are used.
    In user documentation of TOMAS, as for a start, the following financial model is suggested:

    KNOWLEDGEBASE FOR MANAGEMENT REPORTING

    Results for a period:

    Statement of assets: Indicators for quality of business

    Liquidity and coverage:

    Costs vs. sales: Activity indicators: Profitability indicators: Hence, standard model of financial indicators for owners and management in TOMAS consists out of some 30 financial indicators. As it is mentioned before, the user could easily enlarge and/or reduce this model or develop their own model.

    INTELIGENT FINANCIAL SYSTEM USAGE MODALITIES

    This kind of systems could be used for the following purposes:

    1. In corporations and other organizations for:
    All this without bookkeeping jargon, i.e. using normal business categories, familiar to nonfinancial managers.
    1. In financial (CPA and auditing) firms:
    1. In governmental financial institutions:
    GENERAL CHARACTERISTICS OF TOMAS, AS INTELIGENT FINANCIAL SYSTEM DEVELOPMENT DIRECTONS BY USE OF INTELIGENT FINANCIAL SYSTEMS

    There are various possibilities for the development of new methods in finance and management, as well. Some of them are presented below:

    1. DEVELOPMENT OF FINANCIAL DSS MODELS (Decision Support Systems) that could be based directly on general ledger data.

    2. DSS models have been on the market for some years, for various types of activities, including the financial ones. However, the existing DSS solutions are such that the user has to enter all input data, in the form suitable for that DSS.
      TOMAS is using standard general ledger module data, and no other input has to be done.
      One type of financial DSS could have the following structure: to produce a report that would give clear picture of financial performance of the organization. This is an example of such a report.

      KEY FINANCIAL INDICATORS FOR XY Inc.
       

      Indicator
      very good
      good
      poor
      very poor
      inventories turnov. coeff.
      X
           
      receivables turnov. coeff.  
      X
         
      debt/current assets ratio     
      X
       
      profitability 
      X
           
               

      To achieve this, in TOMAS should be entered values that are considered to be very good, good etc, for the elements of the financial model. These data should be maintained for various types of organizations.
       

    3. DEVELOPMENT OF FINANCIAL EXPERT SYSTEMS
    Example of the possible structure of such an expert system follows:

    If current assets / short term debts > 1,5

    and total income / total assets > 10

    and profit before taxes / total income > 0,2

    then organization is very successful
     

    If liquid assets / short term debts < 0,3

    and total debt / equity > 1,3

    then organization is going to collapse.
    .
    .

    This kind of system could produce, in seconds or minutes, financial expert diagnosis, using standard general ledger data.

    Computer support for such an expert system could be easily added to TOMAS, as the main components required are available.

    However, it should be stressed, the financial experts should develop adequate financial models, i.e. the list of indicators and their values as a basis for diagnostics of financial performance.

    This should be done in specialized financial institutions or in large companies.

    Development and use of such systems would produce a whole new quality of work in finance and financial control.

    CONCLUSION
    In this paper, use of intelligent financial computer system is presented.
    This type of systems enables achievement of a new quality of work in finance and financial control and management of organizations, as well.

    TOMAS is a unique solution with such capability, there is no other on the market - even the solutions that cost tens times more, do not have this capability.