Accounting Information System for Shipping Companies
TRANS-Account Introduction Case Study Interview

We successfully resolved all the four issues the accounting division wanted to address

Mr. Takashi Inui, President and General Manager,
Corporate Management
INUI STEAMSHIP CO., LTD.

Inui Steamship, which celebrates its 110th anniversary in April 2014, is engaged in overseas shipping services through a handy bulk carrier fleet. In 2011, it introduced TRANS-Account, a strategic accounting system for shipping companies, and improved the efficiency of accounting service remarkably. We asked Mr. Takashi Inui, President and General Manager, Corporate Management Department, for the key points.

TRANS-Account is an accounting information system understanding Maritime Industry

-- Three years have passed since you introduced the accounting system, TRANS-Account. Please tell us what triggered your decision to introduce it.

Mr. Inui: As you know, foreign currency that is dollar-based moves on a daily basis in shipping industry. As a company listed on a stock exchange, we are required to disclose our consolidated financial statements including overseas subsidiaries.
However, our previous accounting software only supported the Japanese yen under assumption of preparing non-consolidated financial statements. We had to rely on man power to prepare our consolidated financial statements. In addition, we needed to work on examining how to respond to the International Financial Reporting Standards (IFRS) as a vital issue to be addressed.
After examining some software products during the six months between October 2009 and March of the following year 2010, from among the candidates, we finally decided on introduction of TRANS-Account developed by AIS.

-- What was the decisive factor?

Mr. Inui: There were a lot of reasons, but first of all, TRANS-Account already had a solid foundation as an accounting system specialized in the shipping business. To develop such an accounting system, the system usually needs to be customized and it would cost more. TRANS-Account, however, was equipped with features required for accounting in the shipping business as standard. It can be said that the cost of introduction could decrease as the extent of customization decreases and that the fit ratio was extremely high.
Also, in the course of examination, I visited others in the same trade having already introduced AIS products to ask about their evaluation and heard that they were all working stably -- it eased my worry.

-- What are the practical advantages?

Mr. Inui: First, as for the foreign currency control, in case of software that does not support any currencies other than the Japanese yen, a task of converting into the Japanese yen has to be done manually when inputting. Errors may happen in this process. However, if the control can be done with the original foreign currency, let's say, 1000 dollars can be entered as 1000 dollars, no miscalculation or transcription error could happen because figures converted into the Japanese yen are immediately reflected in an account ledger at a rate registered in a master table.
Moreover, TRANS-Account has a function of offsetting unsettled accounts in multiple currencies by converting them into a settlement currency such as dollar all at once and a foreign currency revaluation function at closing of accounts. It is no longer necessary to use a calculator each time.


"Inconsistency in elimination of intra-company transactions" can't occur

-- Are there any other unique characteristics?

Mr. Inui: In preparing consolidated financial statements, a parent company's figures must be consistent with its subsidiaries' figures. As a matter of fact, this is very difficult work. However, it has been dramatically changed.
For instance, there are shipping companies which operate by chartering ships from an overseas SPC (Special Purpose Company) they established as shipowner. The case that SPC is practically a dummy company whose finance and accounting functions are under the direct control by a parent company is not uncommon.
The procedure of recording a certain transaction between a parent and its subsidiary in the debit column and the credit column respectively is called a "Journal Entry." Suppose, in the above case, the shipping company is the parent and the SPC is its subsidiary. With conventional accounting software, you must make an entry for each company, that is, two journal entries in total, but with TRANS-Account, you can complete the journal entries of the transaction by a single input.
Let's assume the subsidiary has an outstanding accounts payable to the parent, which means that the parent has an outstanding accounts receivable from its subsidiary on the other hand. Just one manual entry of the figure will complete the journal entries for both companies of the transaction between the parent and the subsidiary at the same time. TRANS-Account was the only software product that had this feature.
In terms of accounting, this is expressed as "decrease in inconsistencies in elimination of intra-company transactions." With this system, such inconsistencies can't occur rather than that such inconsistencies decrease. To do this confirming work, which should take man power and a certain number of days, we have only to click on a button now.

TRANS-Account also helped alleviate the mental burden borne by the persons in charge

-- Are there any positive impacts of introducing TRANS-Account?

Mr. Inui: Overtime hours at the accounting division, especially those during financial closing, have decreased clearly.
In addition, a sense of security has a great effect, too, in that it eased the mental burden. Our strict internal controls won't allow any error or mistake in daily business at each division. I would say people at the accounting division in particular must be feeling much less stressed than before.
In examining which accounting system to be introduced, we focused on the four points: (1) Response to the International Financial Reporting Standards (IFRS); (2) Expedited financial reporting business process; (3) Eradication of a material weakness in internal control; and (4) Prevention of an increase in the number of personnel of the accounting division due to an increased number of ships.
TRANS-Account cleared all of these.

-- Are there any expectations for TRANS-Account?

Mr. Inui: I heard from AIS that the financial projection function would be newly upgraded. Now that the systemization in divisions of accounting, sales and ship management is almost finished, we wish for good products in fields of corporate planning such as fleet planning and business planning.

AIS CO., LTD.

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