The Impact of Computerization in an Accounting Organization
Information technology and computer systems have significantly benefited accounting
departments and organizations. They have reduced the lead time required by
accountants to prepare and present financial information to management and
stakeholders and have upgraded the accuracy, efficiency and timeliness of the
information. The translation into computer systems of paper ledgers, manual
spreadsheets and hand-written financial statements have resulted in quick presentation
of individual transactions into financial reports.[1]
In manual accounting systems, a calculator is used in aiding the preparation of all
entries and records by hand. Specialized journals are used in recording initial
transactions like sales and payables, after which they are manually posted to the
subsidiary journals and/or to the corresponding general ledger accounts. At the end of
a monthly, quarterly or annual accounting cycle, worksheets are readied, adjusting
entries are entered and financial statements and reports are prepared.[2]
In a computerized accounting system, basic components like receivables, payables,
inventory and payroll will also be recorded and processed to obtain reliable financial
statements and reports, but this time they are keyed into a computer.[3]
Integration is the major difference in a computerized system, because a transaction
entered into the computer is carried to all parts of the system. For instance, in the
recording of a sales figure, only one entry of the invoice account is needed to post it
to a sales journal, to a subsidiary accounts receivable ledger and to the general ledger.
This will then facilitate the updating of sales and accounts receivable reports, client
billing statements and the financial statement as well. Time and accessibility of
information is a second advantage of a computerized system, because accounts
will always be current following the immediate posting of information in a computer.
The frequent issuance of financial statements and reports are useful to clients.
Flexibility is a third difference in a computerized system, because handling of
information and producing of reports can be simple and straightforward or be very
sophisticated, depending on the need.[4]
Spreadsheets allow accountants to perform multiple tasks, including the saving of data
for use in different business locations and the creation of a structured set of data on
spreadsheets by linking them. Since accounting software packages supplant manual
accounting tasks, they enable accountants to have more time for analysis. They also
offer automatic closing procedures at each accounting period’s end. The push-button
moving of temporary account balances to permanent accounts, the resetting of the
accounting cycle, plus the reporting of any problems during the process collectively
reduce closing time from days to hours. Computers likewise facilitate the access to
financial information by accountants via the Internet. Since establishments like banks,
creditors and suppliers likely use online websites, downloading statements, making
payments, updating information and preparing data can be done by accountants
through these portals.[5]
Practice management is another area in an accounting firm where a computerized
system can be used, because it enables the ready tracking of client files, employee
files and billing and work assignments. Word processing software can prepare letters
of billing and of information to clients, with standard report and engagement letters
being readily modified. Data bases can house client information like filing dates and
work type, where they can be sorted for scheduling purposes, and can allow the
selection of clients for specialized mailings and also prepare labels for the same.[6]
Software packages that cater to the needs of the professional accountant are the
recommended products to use, as in the case of a general ledger write-up package for
the public accounting firm, because it contains subsidiary journals for receipts and
disbursements, and sales and purchases in addition to a general journal. A good
program should be user-friendly, simple in operation, not much different with
traditional accounting procedures and have the ability to integrate with other programs.
The software provider to consider is one which has a solid history of keeping its
software up to date with advances in both the accounting and computer fields.[7]
[1] Osmond Vitez, “The Impact of Information Technology on Accounting”, eHow money, 2011,
<http://www.ehow.com/about_5471307_impact-information-technology-accounting.html>
[accessed 21 May 2011]
[2] Marlyn A. Schwartz, “Computers and Accounting”, AllBusiness, 1 May 1990,
<http://www.allbusiness.com/technology/computer-software-auditing/123395-1.html>
[accessed 21 May 2011]
[3] ibid
[4] ibid
[5] Kirk Thomason, “How Have Computers Changed Accounting”, eHow money, 10 April 2011,
<http://www.ehow.com/info_8196868_computers-changed-accounting.html> [accessed 21 May 2011]
[6] Marlyn A. Schwartz
[7] Thea Graves Pellman, “Accounting & Computers: The Perfect Union”, AllBusiness, 1 May 1991,
<http://www.allbusiness.com/accounting/160724-1.html> [accessed 21 May 2011]
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