Accounting Package and Systems - Coursework Example

Part 1

The Impact And Or Influence of Account of the Development of IT or Computing

The advancement in the accounting profession has elicited developments, created opportunities for relevant bodies such as IT, and computing. Understanding the influence or impact of accounting on the development of IT or computing would suffice in a bid to trace the advancement made by the current computerized accounting environment. Accounting security education, security, decision-making, and adoption of new accounting standards inspire the development of appropriate IT or computing systems.

The need for efficiency and accuracy in the accounting profession inspires the development of Accounting Information Systems (AIS). Accounting remains a critical element in the field of business. However, the need to facilitate organizational operations necessitates the advancement of computations, which promote flexibility as well the speed of the recording, classifying and summarizing transactions (Lim, 2013). The need to improve services forms a foundation for the computing innovations because of the viability presented by the accounting profession. Accounting professionals seek to retain the value of the field within the economic sector, which opens up more opportunities for the IT advancements. The incorporation of IT systems within AIS is one of the compelling reason for the development of reliable financial information.

The shift from General Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) inspired the formulation of IT networks that would expedite the process. Conversion to IFRS aimed to increase the viability and credibility of the financial information reported by private or public traded companies. (Weygandt, Kimmel, and Kieso, 2015) The changes in the filling aspects and accounting standards influence the business of information technology systems, which businesses could use to eliminate the challenges of financial reporting through the previous accounting framework. In addition, the interpretation of IFRS standards is equally important. The interpretation compels the computing professionals to come up with systems that could eliminate technical issues associated with the process (Lim, 2013). The new accounting standards further create the need for reconfiguring or modifying new systems and vendor maintenance.

Accounting security is becoming a compelling business issue and the reason behind the development of robust computing or IT systems (Weygandt, Kimmel, and Kieso, 2015). Businesses understand the risks that come with passing or sharing financial disclosures to confidential parties, which has attracted cyber thieves. A report by PwC on information security breaches in the UK showed increasing expenditures of security systems that would retain the value of the accounting field in the contemporary world. According to PwC (2015), 9 out of 10 organizations dealt with security breaches, which targeted the financial information prepared by relevant accounting departments. The need to protect passwords and identifications necessitates procurement or development of relevant computing programs. The 2015 PwC report acknowledges the need to encrypt accounting information to deter unauthorized use. The development of appropriate IT systems occurs on an ongoing basis due to the changing aspects of accounting security.

Furthermore, the demand for accounting education has created a gap for the development of IT or computing systems to expedite the process (ICAEW, 2016). The synergy between accounting education and IT systems is noteworthy in the twenty-first century where students want to become accomplished accounting professionals but have a significant knowledge and skills in IT systems. Currently, the curriculum within the UK colleges and universities incorporates relevant accounting concepts in IT, due to the demand by accounting students to become technologically knowledgeable. The Institute of Chartered Accountants in England and Wales (ICAEW) (2016) acknowledges the development that the UK has made in achieving the current accounting standards and creating opportunities for appropriate bodies such as IT or computing.

Additionally, management accounting is one of the compelling reasons behind the development of cloud technology. The need to revolutionize the platform of management accounting necessitates exploitation of IT advancement, which brings significant business merits (Park and Lee, 2014). Organizations are seeking new ways of using the decision-making tool of management to expedite executive or subordinate functions. The configuration of relevant cloud technology to facilitate knowledge sharing, security and decision-making become the foundation for diverse business successes. According to De Haes, Van Grembergen and Debreceny (2013, p.307), COBIT 5 came into being after the need arose relating to the establishment of efficient enterprise governance.

Evidently, accounting has identifiable impacts and or influences on the development of IT. The field has inspired the creation of cloud technology and enterprise governance frameworks such as COBIT 5. The conversion of IFRS evoked the need for relevant IT systems. Accounting security and increase demand in accounting education have facilitated the development of frameworks such as AIS.

Part 2

• Introducing Or Upgrading Computerized Accounting Systems
• Advantages and Disadvantages of Computer Accounting System

Advantages

Computer accounting system increases the speeds of preparing accounts (Albrecht, Stice, and Stice, 2008). The preparation of accounting reports and statements allows managers to expedite organizational processes easily. Faster processing overcomes the challenge of human beings in performing simple or complex accounting.

In addition, a computer system produces accounting details with high accuracy. Software makes it easier to process the smallest details in reports, reports, or disclosures (Coe et al., 2010). The data entered in accounting systems through addition or subtractions eliminates the complexities of manual accounting. Error-free records such invoices become available to relevant accounting departments.

The reliability of computer accounting system is high. The accuracy of the details generated through automation simplifies decision-making. The straightforwardness of the information generated in financial statements increases the scalability and comparison (Gilbertson and Lehman, 2009). The computer systems eliminate boredom or repetitive accounting functions particularly in business with long chains of command.

Disadvantages

The initial cost of installation of computer accounting system is high (Gilbertson and Lehman, 2009). The software needs must meet the accounting demands of an institute. The expensive require update and reinstallation to befit new versions to expedite accounting tasks.

A computer accounting system increases dependence level (Albrecht, Stice, and Stice, 2008). Accounting workers cannot process information without using the machines. The professionals must use the information in a confined location and must have necessary computer skills to perform computer-based tasks.

• Setting a Computerized Accounting System

One should consider the following factors when setting a computerized accounting system:

An individual or organization should consider the data used in the package (Coe et al., 2010). Knowing the kind of accounting data shapes the depth of installation of accounting systems. A company with a simple recording or reporting frameworks requires a straightforward computerized accounting system. The nature of data should define the accounting functions that the system can automate.

The knowledge required in an equally important aspect when setting up a computerized system (Gilbertson and Lehman, 2009). The operations that an individual or organization seeks to undertake through the computerized accounting systems should have a definite date of occurrence and the person set to initiate the processes. An accounting software requires high-level accounting knowledge from the employees. Relevant accounting education or technology experience is critical.

The cost of the system is important when an individual has settled on a system that meets scope, knowledge requirements and ease of use (Albrecht, Stice, and Stice, 2008). The cost of upgrades, licensing, and support should not exceed the proceeds of generated through the system. In addition, availability of cost-effective maintenance procedures is an important aspect of setting up automated accounting systems due to the occurrence of unanticipated errors.

The kind of products a computerized accounting system can produce should be a decisive factor during installation (Gilbertson and Lehman, 2009). An organization or individual should then decide the persons in needed of the data and the period of production. The priorities of a business should feature in any application installed within sensitive departments such as accounting.

• Chart of Accounts

Chart of accounts entails the code structures for the accounts contained in a nominal ledger (Simkin, Norman, and Rose, 2015). An accounting packaged installed uses the code structures to perform tasks such as recording or preparing financial reports. A chart of accounts requires the organization to use a logical structure to expedite organization of accounting balances. The chart of accounts should simplify the process of adding new accounts.

Impetus limited has a chart of accounts with alphanumeric code structure. The nominal ledger for Impetus incorporates the number and the name of the accounting entry. An alphanumeric code structure enables organizations to comprise, which makes inputs faster and easier (Halpin and Senior, 2011). The data comes in handy in the preparation of reports and balancing books of accounts.

• Accounting Packages
• Features of an Accounting Package

An accounting package is generic, which necessitates customization to meet the needs of an organization (Weygandt, Kimmel, and Kieso, 2012). The installation process should consider the understanding of a chosen package and the business expected to utilize the system. An organization can use a professional from within or hire a specialist to assist in understanding the vital aspect of an accounting package. Accounting can be costly due to the prices of hardware and software.

In addition, accounting packages offer general reports as the principal standards (Simkin, Norman, and Rose, 2015). The reports encompass the basic needs of an organization, but they may have insufficient information when a business seeks specific details. Computerizing an accounting system happens due to the general reports. A specialist may come in handy to help in the installation process to prevent future comprises from the accounting package.

On the other hand, an accounting package is easy to use (Weygandt, Kimmel, and Kieso, 2012). A person or organization does not need to understand how accounting packages work to utilize them. However, they reduce the quality of the skills of accounting professionals because they obscure errors during operations. Therefore, adequate and constant training of the accounting staff is necessary for an organization that considers an accounting package.

• Module and Its Purpose

A Module is a composition of nominal, sales, and purchase ledgers (Wilson, 2014). Modules enable an accounting system to assume features of the traditional manual accounting system. Businesses circulate information or data, which becomes useful through accounting analysis. A company must have statutory books and records in addition to a comprehensive list of debts and creditor, which helps to trail accounting balances.

The purpose of a module is to facilitate operations in the core functional areas relating to sales, purchase, and general ledgers (Hall, 2008). The debtors or creditors support the accounting functions of business. In addition, the module reconciles all other equally important functional areas relating to stock, bank, cash purchases, and sales. An organization may capture purchase order process, transactions for fixed assets and materials meant for production and costing.

Impetus Limited has a module that features nominal, sales, and purchase ledgers managed by different assistants. Russell McNally handles sales orders sent from Timothy Dobson and Sarah Sheringham. The accounting assistants utilize computer-generated statements to track or trail purchase sales, which present information in the module of 1996. The procedures occurred each month to balance accounts from sales or purchase transactions.

• Integrated, Semi-Integrated, and Non-Integrated Modules

Integrated modules share data automatically irrespective of the software used by the business (Lin and Huang, 2011). Businesses install integrated modules to carry out accounting functions relating to accounts payable, receivable, inventory, and management of fixed assets. The organizations interconnect the modules with each other and with the general ledger. Impetus has a Sage Sterling package that captures accounts related to prepayments, accruals, and depreciation.

Semi-integrated modules share data when users launch a formal request (Hall, 2008). In Impetus Limited Christine prepares updated copies of purchase ledgers for analysis purposes. She further writes a cheque for creditors and suppliers who request payment at the end of the month. In addition, Timothy Dobson is the signatory of relevant invoices every month.

Conversely, non-integrated modules cannot share data automatically (Singleton and Bologna, 2006). Users must rekey information and prepare it to make sense to the relevant persons. The information contained in General Ledger makes sense when linked to debtors and creditors accounts. Russell McNally and Christine reconcile the necessary remittances guided by Sage Sterling. The General Ledger provides relevant information and produces computer-generated statements for debtors or creditors.

• Control And Security In Computerized Accounting
• Controls Found in a Computerized Accounting Environment

General controls in the computerized accounting system relate to business as a whole. The system requires a generalized plan that covers risks or breaches from various aspects of the business (Bamber, Braun, and Harrison, 2008). General controls target organizational structures, divisions of duties, authority, and security within a business environment. In addition, general controls have pervasive effects on other aspects of the control system when a comprehensive framework lacks. The reliability and integrity of the computerized accounting system depend on the general controls, which expedite major operations.

On the other hand, application specific controls focus on a given module or operation, for example, a general ledger (Millichamp and Taylor, 2008). The controls require check or reconciliation generated from a computerized system and information from the environment. In Impetus Limited, Russell McNally undertakes the checks of credit customer status through the Sage Sterling system. The information comes from entries made by Christine Anderton in the sales ledger. The process eliminates discrepancies in the process of updating sales, nominal and stock ledgers in the module of Impetus Limited.

• Necessity of Controls in a Computerized Accounting Environment

Controls ensure completeness within a computerized accounting environment. Completeness in computer-generated statements, reports, and records captures all the necessary information keyed by accounting professionals (Reider, 2008). Availability of necessary information validates the efforts of the professionals. Greg Turner manages to monitor information in Impetus warehouse, which helps to monitor stocks levels by avoiding duplication.

Controls increase the accuracy of accounting information generated through computer-based systems. Correct accounts in the contemporary organizations produce reliable information by eliminating errors of traditional manual systems (Berman, Knight, and Case, 2013). While computer generates information at a high speed, the final document contains error free details. However, an organization must have accounting professionals with relevant computer skills.

Computerized accounting environment employs controls to increase the timeliness of the reports and disclosures (Spiceland, 2009). The speed of generating the statements is high, which enables relevant executives to get the accounting information within a set deadline to facilitate decision-making. The effort of Timothy Dobson and Christine in preparing remittances every month ensures that Impetus Limited responds to creditors as well suppliers’ requests.

• Batch Control and the Way It Works

Batch control is a process that makes easier to capture details of all input so that accounting professionals can make random or rough check (Millichamp and Taylor, 2008). The individual enters data in groups, for example in invoices, which becomes available for comparison. The assistant manages to check expected and actual results from a single platform. The occurrence of an error necessitates details checking within the batch.

Batch controls works by using grouped data to eliminate the occurrence of errors. The relevant accounting officers make adjustments in the journals based on the comparison made in the process of batch control (Berman, Knight, and Case, 2013). Impetus Limited assigns Christine the role of keeping ledgers updated. For example, the purchase or nominal ledger demands a correction to prevent analysing wrong information relating to creditors or supplier requesting payment from Impetus.

Reference list

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Bamber, L., Braun, K. and Harrison, W., 2008. Managerial accounting. Upper Saddle River, N.J.: Pearson Prentice Hall.

Berman, K., Knight, J. and Case, J., 2013. Financial intelligence. Boston, Mass.: Harvard Business Review Press.

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De Haes, S., Van Grembergen, W. and Debreceny, R., 2013. COBIT 5 and Enterprise Governance of Information Technology: Building Blocks and Research Opportunities. Journal of Information Systems, 27(1), pp.307-324.

Gilbertson, C. and Lehman, M., 2009. Fundamentals of accounting. Mason, Ohio: South-Western/Cengage Learning.

Hall, J., 2008. Accounting information systems. Mason, OH: South-Western Cengage Learning.

Halpin, D. and Senior, B., 2011. Financial Management and Accounting Fundamentals for Construction. London, UK: John Wiley & Sons.

ICAEW, 2016. UK Accounting Standards | ICAEW. [online] Icaew.com. Available at: <http://www.icaew.com/en/library/subject-gateways/accounting-standards/knowledge-guide-to-uk-accounting-standards>.

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