1. Chapter 23 Computerised accounting systems

2. Learning objectives
After you have studied this chapter, you should be able to:
Explain how computerised accounting systems mimic manual accounting systems and can do everything that is done by a manual accounting system
Describe how computerised accounting systems automate most of the entries required in a manual accounting system including, in some cases, the initial entry for each transaction

3. Learning objectives (Continued)
Describe and explain the advantages and pitfalls of using a computerised accounting system
Explain the importance of fully integrating a computerised accounting system
Explain the importance of full compatibility between the various components of a computerised accounting system

4. Learning objectives (Continued)
Explain the need to take great care when converting from a manual accounting system to a computerised one

5. Computers in accounting
Computer accounting packages use the fundamental principles of accounting.
Therefore, even the most sophisticated computer accounting system needs to be operated by someone with accounting knowledge.

6. Benefits of using a computerised system
You can perform the processing much more quickly, consistently and accurately.
Output of reports is immediate.
A computerised system should be able to flag inconsistencies.
Computerised systems are capable of exception reporting to flag warnings.
Most systems are capable of enhanced reporting.

7. Key aspects of the computerised system
The computerised system will work on the same principles as double entry bookkeeping but the entries only have to be made once.
Reports can be run at any time.
The accounts are run using a system of codes, all classified for ease of reference.

8. Integration of other modules
It is possible to integrate other modules such as:
Inventory, so that stock levels are updated automatically.
Sales order processing, so that orders automatically generate invoices.
Purchase order processing, so that orders can be sent to suppliers and converted to inventory.

9. The integrated computerised system

10. Accounting information systems
An AIS is a total suite of components that comprises the inputs, storage, transaction processing, collating and reporting of data.
The objective is to collect and store data to generate meaningful output for decision-making.
An AIS does not have to be computerised but the benefits are greater when it is, and an AIS is only fully effective when all the components are integrated.

11. Electronic dissemination
One of the benefits of a computerised AIS is that output (and funds) can be sent electronically, including all HMRC reports and returns resulting in:
Improved speed, accuracy and security
Lower administration costs
Lower bank charges
Reduction in the use of paper

12. Considering an AIS When and how to introduce the AIS?
Which AIS to use and whether to customise?
Who is responsible for the AIS?
How long will it take to introduce?
Who will need training and when?
What hardware will be needed and when?
What safeguarding procedures are needed?
Who will run tests and how?
What costs and benefits are there?

13. Data safeguards Prevention of data theft by using a (secure) password.
Prevention of fraudulent or malicious data manipulation by using security measures.
Prevention of data loss by implementing and using a back-up system.

14. Learning outcomes You should have now learnt that:
Bookkeeping and accounting skills and knowledge are more important than computing skills and knowledge when a switch is made from a manual accounting system to a computerised accounting system.
The user interface of an accounting package often looks similar to those of other frequently used Windows-based software packages.

15. Learning outcomes (Continued)
Computerised accounting systems can do everything a manual accounting system can do, but does them quicker, more accurately, more consistently and with greater flexibility.
A considerably enhanced ability to obtain reports is available from a computerised accounting system compared to a manual accounting system.

16. Learning outcomes (Continued)
The various records maintained in a computerised accounting system mimic those in a manual accounting system, thought the names of some of the records may be different.
Account codes are used in computerised accounting systems instead of folio numbers.
Maximised integration of the various components in a computerised accounting system generates the maximum benefits.

17. Learning outcomes (Continued)
Compatibility between the various components in a computerised accounting system is essential if it is to operate effectively.
One of the major benefits of computerised accounting systems is the ability to generate electronic output.
Implementing adequate controls to safeguard data is essential when accounting systems are computerised.

18. Learning outcomes (Continued)
Implementing a switch to a computerised accounting system is a non-trivial task that should never be done lightly and needs to be done with the greatest of care.