International Accounting and Auditing Practice

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Post Info TOPIC: Manual versus a computerized accounting information system
What are the functions of accountants in your organizaiton? [28 vote(s)]

controller
7.1%
treasurer
7.1%
tax specialist
10.7%
financial analyst
7.1%
cost accountant
7.1%
general accountant
10.7%
information specialist
7.1%
budgeting specialist
7.1%
managerial accountant
7.1%
accounting information system designer
7.1%
internal auditor
10.7%
external auditor
10.7%


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Manual versus a computerized accounting information system


There is no doubt that the long-standing image of the accountant as a conservative, green eye shaded, nonsocial employee who is stucked in the back of an organization has been forever shattered.  Today's accounting professional is relied upon by owners and managers to identify and monitor enterprise risks (events that may cause an entity to fail to achieve its objectives); assure the reliabilityof information systems used to gather, store, and disseminate key information for decision making; and possess the requisite general business knowledge, coupled with business process measurement and assessment skills, to evaluate the state of the business enterprise and its supporting operations.

Discuss the transition from a manual to computerized acccounting
information system the change of focus of accounting professional (as external auditor, internal auditor, corporate accountant, and or manager).

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In my own experience as an external auditor, manual accounting system requires a lot of time, long period of scrutinizing documents, lot of paper works.  While in computerized accounting information system, works would be easily to performed. Lesser time to spend and irregularities are easily to detect. 

Zen Salomon

-- Edited by faithinGod at 16:03, 2008-08-14

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A manual system is using a special journals. These are cash receipts, cash disbursements, sales, purchases, and general journals.

A computerized system is using 2 types of entries into the system. One type is using the debit and credit system while the other is through performing a transaction and the general ledger impact will be automatically reflected into the system.

Discuss more the differences between the manual system and a computerized system.

-- Edited by Chal at 06:18, 2008-08-16

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The big difference in using the computer is the speed with which we can get Accounting done. In addition, we find that it is very easy to do accounting functions. Posting to the ledger, a tedious task of double entry, when done directly from the general ledger module, can be largely automated when done through special purpose modules like accounts payable or accounts receivable. With an accounts receivable module, you just need to enter the actual cash totals of items purchased and the software distributes these amounts to the general ledger so they become credits to corresponding revenue accounts. At the same time, an offsetting entry is made automatically to the accounts receivable account.

Accounts receivable, when computerized, can get your bills out the same day youve performed a service. An accounts receivable module prepares invoices and customer accounts, adds credit charges where appropriate, handles incoming payments, flags your attention to customers that are delinquent, and produces dunning notices. It allows you to have daily cash control. You get out the bills on time, yet you avoid errors such as billing a customer twice for the same item. The further advantage is that debits and credits are posted automatically to the general ledger, order entry, and in some instances inventory, once they are entered in accounts receivable.

Accounts payable, when computerized, will provide for purchase order control, invoice processing, payment selection and handling, check writing and control, cash-requirements and  forecasting. It will also double-check the accuracy of the vendors invoice, and some software systems will cross-check it against the purchase order and the inventory module.

Inventory Control module has multiple functions, including tracking inventory for both costing and tax purposes, controlling purchasing (and the overall level of expenditure) and minimizing the investment in inventory (and subsequent loss of cash flow). The payroll module prepares and prints payroll checks, including all itemized deductions. It is integrated with the general ledger so you automatically set aside the correct amount for payroll deductions and withholding taxes.

With a computer, one can receive a balance sheet, income statement or other accounting reports at a moments notice.

zen salomon


Question:  What are the possible threats in using computerized accounting information system and how can we prevent it?



-- Edited by faithinGod at 19:16, 2008-08-15

-- Edited by faithinGod at 02:53, 2008-08-16

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Shifting from manual to computerized accounting information system is a sign of advancement in accounting profession. As a practitioner I found out that  generating financial reports using MAIS requires longer time of preparation considering the fact that I have to finish my reports on or before the deadlines. I don't want to stagnate in practicing my profession, so i enrolled to a learning institution to learn about computer programming. Now, I am using my own designed and programmed CAIS in generating the financial reports of my clients. It is easier now for me to generate financial reports by just making debits and credits entries in the computer.  

We could improve accounting practice by initiating ourselves to produce something that can elevate our profession, continuously think of advancement coupled with technology driven sytem that could help us to  easily but more effective  accounting practice. 

QUESTION: What are the control problems caused by computerization?
       



-- Edited by lyncortes at 03:12, 2008-08-16

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marilyn u cortes


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Threats to using computerized accounting system:

· Power failure, computer viruses and hackers are the inherent problems of using computerized systems;

·Once data been input into the system, automatically the output are obtained hence the data being input needs to be validated for accuracy and completeness, we should not forget concept of GIGO (Garbage In(Input) Garbage out ( Output) and

· Accounting system not properly set up to meet the requirement of the business due to badly programmed or inappropriate software or hardware or personnel problems can caused more havoc and

· Danger of computer fraud if proper level of control and security whether internal and external are not properly been instituted.


Even with these threats, there are numerous advantages of a computerized accounting system. Among them are as follows:

· Faster and efficient in processing of information;

· Automatic generation of accounting documents like invoices, cheques and statement of account;

·With the larger reductions in the cost of hardware and software and availability of user-friendly accounting software package, it is relatively cheaper like maintaining a manual accounting system;

· More timely information can be produced;

· No more manual processing of the data- all automatically been posted to the various ledgers/accounts and

· Many types of useful reports can be generated for management to make decisions


Question:

Discuss the various responsibilities of the Accounting Department versus the Internal Audit Department to ensure that an organization's accounting system is protected from threats and and abuse.

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Charmaine S. Opada


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Discuss the various responsibilities of the Accounting Department versus the Internal Audit Department to ensure that an organization's accounting system is protected from threats and abuse.

You may include other functional departments role in the protection of the accounting information system against threats and abuse.


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Question:

Discuss the various responsibilities of the Accounting Department versus the Internal Audit Department to ensure that an organization's accounting system is protected from threats and and abuse.




Accounting Department    
- Verify the completeness and accuracy of the input data before inputting it in the system.
- Properly file a record of source documents which can be used as an audit trail.
- Makes sure that employees under the department are not performing incompatible accounting roles.
- Provide physical security of the information system from any internal or external threats to mismanage the system, either by locking the room or providing user access codes.
- Set up contingency plans in case of power failure or virus contamination  .       

Internal Audit Department
- Recommend adequate control devices to be embedded in the design of the accounting information system - i.e. access security.
- Develop an audit plan using an appropriate risk-based methodology to verify the attestation of the Accounting Department.
- Communicate to management results of their audit especially loopholes in the internal control that needs to be addressed.
- Scrutinize the employee roles and responsibilities set-up by the Accounting Department


Question:  For the modern accountant/auditor, Ms. Lyn mentions about advancing our craft especially technology-wise.  If you are limited as of now, by your lack of knowledge of IT, what are the steps you can take or tools you can use to supplement it?

 



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Yes, Karen is right of pointing out how to make yourself more updated in information technology.  This is a pre-requisite to understanding the computerized accounting information system.  Answer Karen and please don't forget that this topic includes also an  understanding information system, organizing and managing information, enterprise risk management, business processes, and reporting with and acquiring accounting information system.  Kindly, integrate them in your questions.


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Indeed, there are a lot of updates regarding information technology that an accountant must know.  However, one does not need to be super techie in order to be up to date.  If you are observant, computer updates usually spring forth from older versions, or should we say, from the basics.  In short, knowing the basic components of a computerized system will give you an easier understanding of the technological advances in it.  For example, the basic components of a computerized accounting information system which are input, process, and output, are present regardless of the type of system.

Now should we wish to advance our craft technologically-wise, we may start our baby steps by familiarizing ourselves with the most common computer applications, e.g. Microsoft Excel.  Learning the different functions in MS Excel such as SUMIF, VLOOKUP, COUNT etc. is very much helpful in organizing and managing information.  This will also aid us in summarizing the data and reporting with the accounting information system.  This in turn will give us a better understanding in dealing with ERPs. 


smile

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There is no doubt that the long-standing image of the accountant as a conservative, green eye shaded, nonsocial employee who is stucked in the back of an organization has been forever shattered.  Today's accounting professional is relied upon by owners and managers to identify and monitor enterprise risks (events that may cause an entity to fail to achieve its objectives); assure the reliabilityof information systems used to gather, store, and disseminate key information for decision making; and possess the requisite general business knowledge, coupled with business process measurement and assessment skills, to evaluate the state of the business enterprise and its supporting operations.

Discuss the transition from a manual to computerized acccounting
information system the change of focus of accounting professional (as external auditor, internal auditor, corporate accountant, and or manager).


       Accounting is a language of business which is accepted in all developed and developing countries.  Manual accounting implies that employees perform the whole accountingcycle manually on a periodic basis: theycalculate trial balances, journalize transactions, prepare financial statement reports and other routines.  It takes much time, resources andeffort in large organizations.  Computerized accounting implies that the only thing that employees do is recording transactions into the computer which processes the other steps ofaccounting cycle automatically or by a request. 

In my opinion, with the advent of computerized systems and operations, the focus of the accounting professional conceptually should not change.  For example for an auditor,    his/her assurance and consulting services should still be centered in risk-assessment, evaluation of internal controls, and corporate governance.  The distinction lies on themethodology the auditor will use to achieve his/her audit objectives.  Definitely, the plan of attack of the auditor in manual accounting process compared to computerized accountingsystems will differ.  In a computerized system, the auditor's focus will be mainly on security and controls.  Controls such as input, processing and output controls.  

To sum it briefly, the accounting professional will still use the same basic principles he learned in accounting when he goes to battle per se and but he will definitely used differentkind "weapons" in winning the war (achieving his/her objectives).



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