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Three distinct aspects of Financial Applications that help in Systems Requirement Study (SRS).

What is SRS?

By SRS I am referring to the exercise undertaken to understand and to specify the requirements of a Business Application for development. There are at least two players involved in this exercise, one is the “User” who has a requirement to be fulfilled, and the other is the “Systems Analyst” who designs the application. SRS is perhaps the most important phase in application development, since the seeds of “success” or “failure” of an application are sown during SRS.

I have seen many applications which have failed to serve the purpose for which they were meant, and causes were traced to improper or incomplete SRS. While reasons could be many, including behavioral aspects of the players, in this article, I like to focus on certain functional aspects relating to knowledge gaps on the part of the concerned players and how awareness of certain aspects is going to be of use to both the parties.

Users of Financial Applications are usually accountants, who, instead of simply stating their requirements, may show tendencies of dictating to the Analyst, how a problem could be solved. Analysts, unless they had good exposure to accounting, may presume that they knew all aspects of accounting based on their limited awareness, and fail on final delivery.

What are Financial Applications?

a. Business involves Transactions.

b. Transactions get executed and related information needs to be processed.

c. Computers are in use for transaction processing for more than 4 decades.

d. We call them Business Applications

e. In relation to Financial Accounting examples are :-

- Vendor Payment Process – Accounts Payable

- Raw Material and Stores Accounting - Inventory

- Employee Salaries – Payroll

- Employee Expense Reimbursement – T&E

- Cash & Bank Transactions – Cash - Bank Operations

- Customer Invoicing – Revenue and Billing

- Customer Dues – Accounts Receivable

- Preparation of Financial Statements – Period End Procedures, Financial Reporting

f. In relation to Management Accounting examples are:-

- Product Costing, Budgeting, Performance Reporting and so on, dependent on the organization’s analytical requirements.

Three Distinct Aspects in relation to Business Applications

I am calling them “Operational, “Accounting” and “MIS” aspects of business transactions.

By “Operational” I mean documentation relating to the execution of a transaction. “Accounting” refers to book keeping aspects of transaction execution. From the examples you see below, you will realize that all transactions need not have “Accounting” aspects. Accounting is concerned with transfer of value from one to the other, and if there is no transfer of value, there is no “Accounting”. MIS covers analytical aspects of transactions which help in Planning, Organizing, Monitoring and Control, the four arms of Management. Following examples will help in appreciating the relevance of this classification for an effective SRS.


Invoicing Application: Order received from a Customer.

Operational: Issue Order Acknowledgement to the Customer. Plan Dispatch.

Accounting: “Nil” (Since no transfer of value has taken place yet).

MIS: Analysis of Order Backlog. (Orders to be executed)

Invoicing Application: Sale from a Factory.

Operational: Delivery Challan, Gate Pass, Invoice

Accounting: Sales goes up, Debtors Goes up (to the extent of Sales Value)

Inventory Goes down, Cost of Sales Goes up (to the extent of Cost of Goods)

MIS: Analysis of Order Backlog, Analysis of Sales Product-wise, territory-wise. Analysis of Receivables

Accounts receivable: Collection from a Customer

Operational: Bank Deposit Slip, Official receipt issued to Customer

Accounting: Bank Balance Goes up, Receivables Come down

MIS: Analysis of Collections against target, Receivable Age-wise Analysis.

Purchase: Purchase Order released on a Vendor

Operational: Purchase Order Copy for the Vendor and other stakeholders.

Accounting: Nil (Since no transfer of value has yet taken place).

MIS: Analysis of Purchase Orders Due / Not Due Analysis

Inventory: Receipt of Material in Stores against a Purchase Order

Operational: Goods receipt Note

Accounting: Inventory Goes up, Accounts Payable Goes up

MIS: Outstanding Purchase Orders

Inventory: Issue of a Material from Stores to a Cost Center

Operational: Material Issue Note

Accounting: Inventory Goes down, Material Consumption Goes up

MIS: Cost Center – wise Consumption Analysis.

From the above examples, all the Accounting aspects become a part ofFinancial Accounting and Financial Applications.

Relevance of this distinction in the world of Integrated Applications, today.

With ERPs in extensive use today, integrating all related business processes in an organization, this distinction is all the more relevant to know functional boundaries as well as for minimizing data entry efforts. Accountants, as Users can precisely specify what they need, and Analyst will also be able to do a more efficient and effective application design.

Thank you for your attention. For more articles from me on related topics, and to know about my book “Translating Operations into Money” please visit my website

Tulasi S Sastri


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Tulasi S Sastri
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