What is the Flexibility Principle?

//What is the Flexibility Principle?
What is the Flexibility Principle? 2017-10-04T21:12:59+00:00

Definition: The flexibility principle states that an accounting information system should be able to adapt to changes in the company based on its needs, operations, and management. In other words, the flexibility principle is a concept that suggests any information system used by a business should be able to change and grow with the company.

What Does Flexibility Principle Mean?

Since most companies don’t stay the same size year over year, it doesn’t make sense that their accounting systems would. In order to accurately keep records and track the company’s financial progress, the accounting system must be able to expand and change with the company throughout its life.

Example

Size and operations aren’t the only things that can change in a company over time. Technology is one of the main driving forces behind business growth and development. Take a Hersey packaging plant for example. The plant produces the candy wrappers and actually wraps the chocolate up and packages them for distribution. Over the last 30 years, plants like this have become increasingly automated. Robots automatically perform most or all of the processes that employees did years ago.

With this great innovation, the production capacity of each facility can double and triple. The increased volume creates more record keeping, more asset management, and more logistic efforts. Without an expandable accounting system, you wouldn’t be able to keep up with this type of growth. The production would be increasing so fast that the record keeping wouldn’t be able to record everything that is going on.

In this case, Hersey would most likely invest in more accounting input devices like bar code scanners that can input data rapidly without having to rely on manual input. The flexibility principle recommends that all accounting systems be able to change with the changes of the business.