INTRODUCTION
The evolution/development of accounting software was through a big process as well as so many
advancements and adjustments. It therefore took time to realize their global application in all
organizations.
These accounting softwares have had big contributions among which there is increased accuracy,
speed of work to mention but two.
After the development of, Internet, E-commerce and technology in general, more and more
developments have been realized in the contemporary world of business. Organizations have
changed the way they do business; methods of employee payments have changed as well as
improvements in the international accounting standards.
This tremendous development has forced organizations to change the way departments do
operate. It is there for important to note that the accounting section has not been left behind as
well.
Originall
y accounting was done manually, but due to its associated disadvantages like tedious work,
constant errors and other related mistakes, the way accounting was done has changed. This has
lead to the development of computerized accounting systems that came with the development of
accounting software that would automatically do most of the work.
However, they are as well associated with some shortcomings as well that have retarded there
efficiency in some organizations among there is the desire for technical knowledge for effective
use especially when it comes to developing countries where technology is just being developed.
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OVERVIEW OF ACCOUNTING
Accounting is a body of principles and conventions as well as an established general process for
capturing financial information related to an entity's resources and their use in meeting the
entity's goals. Accounting is a service function that provides information of value to all operating
units and to other service functions.
Accounting is an Umbrella term encompassing the multitude of disciplines including auditing,
taxation, financial statement analysis, and managerial accounting. Accounting-related functions
include financial accounting, cost accounting, and financial planning.
FIELDS/BRANCHES OF ACCOU NTIN G
The following are the branches of accounting:
Management accounting
According to the Chartered Institute of Management Accountants (CIMA), Management
Accounting is "the process of identification, measurement, accumulation, analysis, preparation,
interpretation and communication of information used by management to plan, evaluate and
control within an entity and to assure appropriate use of and accountability for its resources.
Management accounting also comprises the preparation of financial reports for non-management
groups such as shareholders, creditors, regulatory agencies and tax authorities" (CIMA Official
Terminology).
Financial accounting
The financial accounting is guided by various rules and regulations, some of which are
mandatory. The system cannot normally deviate from the accepted accounting practices.
The object of financial accounting is to provide information mainly to outsiders such as
shareholders, investors, government authorities, financial institutions and so on. The analysis and
interpretation of financial data contained in the income statement and the balance sheet enable
persons interested in the business to make meaningful judgment about the profitability, liquidity
and solvency of the enterprise.
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Cost accounting basically relates to the utilization of resources, such as material, labour,
machines, etc. and provides information like products cost, process cost, service or utility cost,
inventory value among others so as to enable management taking important decisions like fixing
price, choosing products, preparing quotations, releasing or withholding inventory and so on.
Tax accounting is the branch of accounting relating to preparation and filing of tax forms with
government agencies. Tax planning to minimize tax payments is a significant part of the tax
accountant’s work.
Auditing is the branch of accounting involved in reviewing and evaluating documents, records,
and control systems. Auditing may be external or internal.
DEFINITIONS OF KEY TERMS
Computerized Accounting
Computerized accounting is a beneficial use of current technological advances. Not only has it
revolutionized the traditional paper methods of accounting, but it has also created new types of
accounting applications for business. Companies now create entire accounting information
systems that integrate all business operations, including external suppliers and vendors in the
value chain.
Computerized Accounting System
A computerized accounting system is a system used by businesses for recording their financial
information. Many systems are available and companies look for a system to match their needs.
Information System
An information system is any combination of information technology and people's activities that
support operations, management and decision making. In a very broad sense, the
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term information system is frequently used to refer to the interaction between people, processes,
data and technology. In this sense, the term is used to refer not only to the information and
communication technology (ICT) that an organization uses, but also to the way in which people
interact with this technology in support of business processes.
Accounting Information System - AIS
This is the collection, storage and processing of financial and accounting data that is used by
decision makers. An accounting information system is generally a computer-based method for
tracking accounting activity in conjunction with information technology resources. The resulting
statistical reports can be used internally by management or externally by other interested parties.
Accounting Software
This is a Computer programs that assist bookkeepers and accountants in recording and reporting
on a firm's financial transactions. The functionality of accounting software differs from product
to product. Larger firms may choose to implement a customized solution which integrates a vast
amount of data from many different departments. Smaller firms often choose an off the shelf.
HISTORY/OVERVIEW OF ACCOUNTING SOFTWARES
The history of the first computerized accounting system was also implemented in 1953, when
Arthur Anderson Consultancy (now known as Accenture) was asked by General Electric to
implement an automated payroll processing system at their site in Louisville, Kentucky.
The system comprised of a UNIVAC 1 (UNIVersal Automatic Computer-1) computer and
printer. It was the first ever commercial computer system ever implemented and became the first
ever computerized accounting system.
The first computerized spreadsheet appeared in 1961 whilst the first 'off the shelf' accounting
auditing system appeared seven years later in 1968.
The first ever micro-computers started appearing in the mid 1970s. At first these were expensive,
cumbersome and of limited benefit to small or medium-sized businesses. Micro-computers were
perceived as being an expensive hobby toy with limited benefits. Where micro-computers were
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used in business, it was typically used for word processing and word processing systems sold for
around £10,000 per system.
In 1978, two things happened in history. The Intel 8080 processor and the MOS 6502 processor
became available significantly bringing down the cost of micro-computers, Apple launched the
Apple II micro-computer, and the first commercially available off-the-shelf spreadsheet package
was developed: VisiCalc.
TYPES OF ACCOUNTING SOFTWARES
As emphasized by Weaver, Brower and Smiley (1988:520) many software programs are
available to handle the tasks and procedures involved in the accounting subsystems. Some major
types of accounting software and the features and capabilities commonly found in these
programs are described as follows;
General ledger software
The general ledger from Weaver’s point of view is at the heart of every accounting system be it
manual or computerized.
A general ledger program can be used to create and maintain that of accounts and the general
ledger to record and post journal entries and to prepare financial statements.
Because posting is done automatically on a computer, the balances in the ledger are always
current Weaver (1988:521) notes that, a trial balance and financial statements can be generated
instantly without having to do manual calculation.
Many general ledger packages allow a variety of reports to be generated that helps managers
evaluate the financial performance of their businesses. It’s important to note however that, as
with all accounting softwares, the output generated is only accurate as the date that was entered.
Weaver, Brower and Smiley (1988:521) add that, a generate ledger program may be all that is
required by a small business.
However, if a firm has large numbers of general ledger accounts and a wide variety of
transactions, it will need to use subsidiary ledger and special journals.
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In that case, a business may use other programs together with general ledger software.
Accounts receivable software
With this software, Weaver, Brower and Smiley (1988:521) assert that, information about a
company’s credit sales and cash receipts can be recorded and reports involving these transactions
can be generated.
Features of accounts receivable software differ, but most programs allow the user to record
entries involving credit sales and cash receipts, maintain an accounts receivable ledger and
generate a variety of reports.
For instance, a program may produce sales analysis reports showing which customers are buying
particular items or sales returns reports that analyze what items are being returned.
The software may print customer lists and mailing labels, maintain customers’ credit
information, and create as schedule of accounts receivable.
Therefore in this case, because reports can be generated automatically with the software,
management can receive sales and credit information quickly hence being able to analyze and act
on information in a timely manners.
Sales invoicing
If a sales invoicing program is used, it is generally integrated with accounts receivable. The
major task of a sale invoicing program is to generate invoices and statements of account.
Thus when the necessary data is entered a sales invoicing program can automatically computer
with prices and extensions and any sales communication sales taxes shipping charges or
discounts involved in the sale.
Sale on voicing program many prefer other tasks associated with sales such as producing credit
memorandums, maintaining a back –order file, or generate lists of product lines.
Accounts payable software
Weaver (1988:522) and the colleague Brower and Smiley lament that, accounts payable
software handles the activities involved with purchases of supplies and merchandise an account
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and payments for those purchases. Typically accounts payable software allows user to record
transaction involving purchases and payments on account, maintain an accounts payable ledger,
generate cheques for payments and maintain a cheques for register, some systems generate
purchase orders.
Many accounts payable system indicates when invoices must be paid in order to take advantage
of discount periods, and will automatically track discounts earned or lost. And with this feature,
management can easily determine whether it is taking full advantages of discounts.
Inventory software
Weaver (1988: 523) asserts that, inventory software is available that automates many of the
procedures involves in inventory control.
For example, some inventory programs keep track of merchandise items by age which is
important information to a business that stocks merchandise that decreases in value sales times
and provide items-by-items sales analysis.
Many keep track of the minimum number of units of an item that must be kept on hand and show
when items must recorded. Perpetual inventory records can be kept on a computer so that when
physical inventory is recorded the program does an automatic comparison of the figures in the
sales of records.
Some businesses obtain sales or purchase programs that handle some tasks that can be performed
by inventory program, or, a business may have an inventory program that is integrated with its
sales and or purchase program.
For example when a purchase of merchandise is recorded the increase in merchandise
automatically appears in the inventory records, thus when a sales of merchandise is recorded, the
items are subtracted from the records.
Payroll software
It should be kept in mind that. Payroll work required performing a mind range of activities and
involves a great deal of time in recording information, preparing forms, and making calculations.
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Therefore, computerizing a payroll system can be very beneficial to a company since it cuts
down on the time required for payroll work.
Weaver or Salaries based on various plans such as hourly, weekly, salary, commissions or
automatically, as well as federal, state and local tax, deductions and voluntary deductions such as
saving bonds and Union dues. Many payroll program print payroll cheques.
A payroll program many be integrated with the generated ledger system so that the necessary
accounting entire are automatically posted to the general ledger.
ACCOUNTING SOFTWARE COMMONLY USED
Accounting software is a boon for so many modern business organizations. These help
accountants maintain the accounts - whether personal or for our business. However, with so
many options available in the market, it sometimes becomes very difficult to choose the right
accounting software package that will be perfect for the accountant as well as for the individuals.
Hopefully, this review will help you narrow down your choices.
Peachtree
This software comes in different flavors depending on the number of users. Between Peachtree
Pro, Peachtree Complete, Peachtree Premium and Peachtree Quantum buyers can choose from
among several features, depending on what they specifically require. Of these, Peachtree
Premium and Peachtree Quantum also have Accountants’ Editions, which can prove to be of
great use for professional accountants. Added to these are several accounting and business
management tools, reports customized for industry specific needs, and even payroll management
solutions - you have a complete accounting software package that is just right for your pocket as
well.
QuickBooks
A very popular choice of accounting software for personal and professional accounts
management, QuickBooks offers something for everyone. QuickBooks is offered in versions
Simple Start, Pro and Premier. There is also a free version of the software available for download
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from the website, and an online version of the software which you can access via the Internet.
There is also a Premier version specifically for Accountants. Each of the versions offers a
number of features - typically a simple and intuitive interface, access to several reports, payroll
and even tax management.
MYOB
This is another popular choice across the board for individuals, small businesses and
accountants. A cross-platform software package, MYOB offers the versions Premier Accounting
and Business Essentials for Windows users, and Account Edge, First Edge and Checkout for
Mac users. Typically the features include invoicing, banking, contacts management, payroll
management, inventory management, time billing, purchase management, and over 200 different
reports.
Microsoft Accounting Express
Microsoft offers an accounting suite that integrates seamlessly with your other Microsoft
products, while allowing you to manage your accounts, invoices, payrolls and even accept credit
cards. You can also track your billable time, create quotes and invoices and custom create your
reports from 50 available templates.
Net Suite
This is an online accounts management system. There is no software to download and install
because it is web based. The website offers different roles for managing accounts, along with a
variety of reports and tools for managing accounts receivables, accounts payable, payroll and
inventory management along with time billing, costing and banking functions. A good option if
you don’t want to install another software package on your computer and want to be able to
access your accounts via the Internet.
Fresh Books
This is another web-based accounts management system. Fresh books offers several features like
invoicing, time tracking, estimate creation, tracking of expenses, and client and staff tracking
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among others. You can have either a free account with Fresh Books or a paid account depending
on the number of contractors you want to add. FreshBooks also offers branding solutions helping
you create an interface which is in line with your logo and company colors.
Bookkeeper
This is a software package offering a complete suite of accounting features like integration with
banking, expense tracking, payroll management, creating customized invoices, credit card
payment processing, and over 125 custom reports. An additional purchase of Tax Table Updates
enables you to automatically calculate your taxes and deductions.
DacEasy
DacEasy is a fairly good accounting software package which offers the typical features and
sections like accounts receivable, accounts payable, payroll management, inventory tracking,
banking and general ledger entries. A variety of reports from these different sections also allow
you to review and manage your business more effectively.
CYMA
CYMA is also another preferred accounting package. Like several accounting software
packages, this software also offers accounts payable and receivables, payroll management,
banking integration, job costing and general ledger entries. However, it also offers two sections
which are not offered by many other accounting software packages: Purchase Order management
and Systems management. However, this software doesn’t offer features like inventory and time
billing.
NolaPro
A web-based suite of accounts features, NolaPro offers a number of facilities like accounts
payable and receivable, payroll management, order tracking, inventory control, point of sale
management, and an e-commerce shopping cart. NolaPro also has a number of plug-in which
enhance the functionality of the accounts suite.
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STFB
STFB Inc. develops and markets - Integral Accounting Enterprise, a complete accounting & ERP
system with source code and distribution rights. Based on ASP.Net, Visual Basic.Net based
platforms. Integral Accounting Enterprise is perfect for developers, Consultants, Resellers
(VARS) looking for accounting packages to customize and resell to end-users.
STFB includes all the standard features like General ledger, inventory control, AR/AP, ordering,
purchasing, and payroll, help desk, shopping cart, and reports
Pastel Xpress
Any company, large or small, has basic accounting needs. Through the automation of common
business processes, Pastel Xpress accounting software makes the management of these business
accounting needs just as simple! Pastel Xpress is so easy to learn and use, allowing you to
confidently steer your business’ finances. You have the flexibility to add modules to this
financial software, making Pastel Xpress a partner that can increase its functionality in line with
the growth of your business. Pastel Xpress can accommodate up to three.
Tally 9 - Accounting Software
Tally.ERP 9 –the latest evolution of the Tally series—took 3 years and the dedicated efforts of
200 developers to create. It has grown from a basic accounting package into a simple-yet-
sophisticated business management software product. Comprehensive capabilities allow
Tally.ERP 9 to meet the needs of small to large businesses with dispersed operations. And
traditional functions of a business are handled as capably as the more advanced.
The new Tally comes with breakthroughs in collaborative technology that extend a company's
capability of managing information across your software applications, across your offices, with
the business partners and the managers-on-the-move. This leads to better decisions and improved
profits.
Other business programs
The program describes above are designed specifically are other business programs available that
are frequently used by accounting personal. These are as follows;
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Electronic spreadsheet
Weaver (19988:523) lament that a spreadsheet can be thought of as a grid. Columns and rows of
date can be entered in a spreadsheet and set up in the form of a table. What has made the
electronic spreadsheet so popular for business use is its ability to perform large number of
calculations and recalculations. The spreadsheet is able to do this by using formulas that the user
enters into the computer. These formulas show the interrelationships of the numbers and date
enter.
Word processing
Within a word processing program, one can prepare store and pain all types of written material.
A first draft is created and then corrections can be made for typographical errors specifying
frunctration, and style. In addition a new format can be created at the touch of the keys; For
example if a page has narrow margins and is single spiced, spaced and with wider margins.
Thus from the above overview it can be seen that word processing makes writing easier because
text can be edited heavily and surprisingly the final printed copy shows no alterations liquid
correction flied or erasures.
Data bases
Weaver (q988:524) defines data base as a group of records that share something in common for
example, a customer data base is a group of customer records, and a patient data base is a group
of patient records.
Data base software helps businesses manager the information contained in their files or data
bases. After data bases are created, they can easily be revised and pulled out in alphabetic,
numeric, or subject order, or in any other sequence desired.
A data base is used to file records for a business and find them again when they are needed.
It should be noted that there are so many other commercial software programs available today
that most business are able to find packages with the capabilities and features they require.
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DEVELOPMENT/ EVOLUTION OF ACCOUNTING SOFTWARE
Over the course of three decades, SAP has evolved from a small, regional enterprise into a
world-class international company. Today, SAP is the global market leader in collaborative,
inter-enterprise business solutions. The company now employs more than 47 578 people, whose
commitment and innovative spirit pace our future success.
The 1970s: A Real-Time Vision
In 1972, five former IBM employees – Dietmar Hopp, Hans-Werner Hector, Hasso Plattner,
Klaus Tschira, and Claus Wellenreuther – launch a company called Systems Applications and
Products in Data Processing in Mannheim, Germany. Their vision: to develop standard
application software for real-time business processing.
One year later, the first financial accounting software was completed and this formed the basis
for the continuous development of other software components.
The 1980s: Rapid Growth
SAP moves into the company's first building on Max-Planck-Strasse in an industrial park in
Walldorf, near Heidelberg. Our software development area and its 50 terminals are all now under
one roof. Fifty of the 100 largest German industrial firms are already SAP customers.
The SAP R/2 system attains the high level of stability of the previous generation of programs.
Keeping in mind its multinational customers, SAP designs SAP R/2 to handle different
languages and currencies. With this and other innovations in SAP R/2, SAP sees rapid growth.
By the middle of the decade, SAP founds its first sales organization outside Germany, in Austria.
The company makes its first appearance at the CeBIT computer fair in Hanover, Germany.
Revenues reach DM 100 million (around $52 million), earlier than expected.
In August 1988, SAP GmbH becomes SAP AG. Starting on November 4, 1.2 million shares are
listed on the Frankfurt and Stuttgart stock exchanges.
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Germany's renowned business journal, manager magazine, names SAP its Company of the Year
– a distinction we would receive twice more in the next few years.
With the founding of subsidiaries in Denmark, Sweden, Italy, and the United States, SAP's
international expansion takes a leap forward.
The 1990s: A New Approach to Software and Solutions
SAP R/3 is unleashed on the market. The client-server concept, uniform appearance of graphical
interfaces, consistent use of relational databases, and the ability to run on computers from
different vendors meets with overwhelming approval.
A growing number of subsidiaries are managed out of Walldorf. The new Sales and
Development Center in Walldorf officially opens it doors. It symbolizes the global success of the
company. In our twentieth year, our business outside Germany exceeds 50 percent of total sales
for the first time.
By 1996, the company has earned 1,089 new SAP R/3 customers. At the end of the year, SAP
R/3 has been installed in more than 9,000 systems worldwide.
SAP celebrates its twenty-fifth anniversary in 1997 and now employs approximately 12,900
people. We continue to strengthen our industry focus and build more and more industry-specific
solutions. Henning Kagermann becomes Co-Chairman and CEO of SAP AG with Hasso
Plattner. On August 3, 1998, the letters S-A-P appear for the first time on the Big Board at the
New York Stock Exchange (NYSE), the largest stock exchange in the world.
As the decade draws to a close, Hasso Plattner, Co-Founder, Co-Chairman, and CEO announces
the mySAP.com strategy, heralding the beginning of a new direction for the company and our
product portfolio. MySAP.com links e-commerce solutions to existing ERP applications, using
state-of-the-art Web technology.
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The 2000s: Innovation for the New Millennium
With the Internet, the user becomes the focus of software applications. SAP develops SAP
Workplace and paves the way for the idea of an enterprise portal and role-specific access to
information.
Currently, more than 12 million users work each day with SAP solutions. There are now 140,000
installations worldwide, More than 2,400 certified partners, over 25 industry-specific business
solutions, and more than 75,000 customers in 120 countries. SAP is the world's third-largest
independent software vendor.
With service-oriented architecture and the underlying integration and application platform SAP
Net Weaver, SAP is providing our customers with solutions for end-to-end business processes.
With SAP Net Weaver, your company can integrate people, information, and processes within
the company and beyond.
To further demonstrate our commitment for ongoing innovation, growth, and market leadership,
SAP acquired Business Objects in 2008. Together, SAP and Business Objects, an SAP company,
offers the industry's most comprehensive portfolio of business performance and optimization
solutions for companies of all sizes.
STEPS IN USING ACCOUNTING SOFTWARE
Accounting packages are available to make accounting much easier. However, people who have
always used manual accounting might be doubtful of transitioning from manual accounting to
computer software. Once we discover how helpful computer software can be in keeping track of
accounting, we are likely to wonder how we ever lived without the accounting computer
software. Here is how to transition from manual accounting to computer software.
a) Recognizing the value of handling your accounting through accounting computer software;
Computer software can run reports significantly faster than a person can run manual reports.
Computer software makes it much easier and faster to reconcile accounts. Computer software
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can also help us set up and track a business budget. If we want to know where every dollar is
going, it is much easier to find out by using computer software.
b) Exploring available options; Quicken is one of the most popular accounting computer
software programs. Other options, such as Microsoft Money, are also available. It is there the
role of the systems manager to know each computer software package, what if offers, and
decide which one sounds like it will best meet the requirement accounting needs.
c) Trying the software before you buy it; many software companies make their accounting
computer software available to try for free for a period of time. Take these companies up on
their offers. Go to their websites and download the trial software. This gives the user the
opportunity to compare and contrast accounting computer software packages as well as to see
the difference between using the computer software versus doing your accounting manually.
d) Transferring the accounting data for one account, such as a checking account, to the
accounting computer software; For 1 month, get in the habit of recording your deposits and
checks in the computer as well as your manual accounting system. Be sure to use the
computer software to reconcile your checkbook. For many people, simply seeing how easy it
is to reconcile a checkbook through accounting computer software sells the software.
e) Using the features available for that account; when one writes a check, he/she use the
accounting computer software to record what he is spending his money on. At the end of the
month, he runs a report to view the cash flow over the past month. Once he has a month’s
worth of data on the computer, he can take advantage of many of the financial reports that the
software has available.
f) Transition the rest of your accounting data over to the computer software once you are sold
on the value of the accounting computer software. Once you do this, you can run a variety of
reports that will help you feel much more on top of how you are spending your money.
g) Back up your financial data regularly. One big fear that many people have in transitioning
from manual accounting to computer software is of losing all of their financial data. Be sure
to back up your accounting computer software data onto a disc on a regular basis so you have
that data available if your computer crashes.
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ADVANTAGES OF USING ACCOUNTING SOFTWARES
Facilitates Auditing activities
Many organizations are using accounting softwares to process transactions and design those
systems so that service documents are retrievable in readable form and can be traced so easily
through the accounting system to output. In these instances, many of the traditional service
documents such as customer purchase order shipping and receiving records, and sales.
The related accounting software’s such as QuickBooks, Pastel and tally also product printed
journals and ledgers that allow the auditor to face individual transaction though the accounting
records.
Facilitates the organizational attainment of competitive advantage
Within the context of information explosion and pressures of the information age more and more
organizations are finding themselves investing heavily in computerizing that accounting system.
This because they do in order to cope with the volume of required accounting information and
the reduction of time within which the information is required.
This is unquestionable more acute in profit making organizations compared to service
organizations.
In this regard accounting softwares therefore help the organization to reap major advantages. For
instance with computerized accounting information systems and organization plan better carry
out monitoring and control activities move effectively can communicate across time space and
organizational hierarchy through the development and proper use different accounting
information and communication systems.
Thus, from the above explanation, computerized accounting is relevant in the management of the
modern organization.
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Supporting management decisions
It is understood that accounting softwares facilitate management’s decision making process. It is
well known that in all businesses management responsibilities entail making a variety of
business decisions.
Thus computerized accounting provides reports and other information useful in making these
decisions. This is so in that formal computerized financial statements provide variety useful
information which the managers need.
In achieving all these, a computerized accounting system will always be timely and flexible.
By being timely to computerized accounting information system can supply information on with
sufficient lead time hence permitting management to assimilate and use it in the decision at hand.
On the other hand by because of its flexibility a computerized accounting information system can
provide information to support new decisions without needing major modifications.
All these therefore can provide an immediate solution to the problem of delays in reports in
accuracy among other inefficiency which enhances making decisions.
Accounting softwares/Computerized accounting can do much to reduce labour and to
enhance the value of the information an accounting system generates.
It is obvious that by changing the way both operations and accounting objectives are
accomplished computers charge the control environment and the way control objectives can be
accomplished. This also leaves the senior staff time fixed up to allow focus on planning.
For example, since computers are more accurate and faster at authentic than humans most
calculations can be incorporated into application programs. This therefore eliminates the need for
employees to verify each other’s calculators the accounting department.
Speed and accuracy
In this case, it is clear that accounting softwares work very fast and thus can obey without of
constructions per second. This can be observed in their accuracy more over most of the mistakes
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that occur in a computerized accounting information systems are human errors which could have
resulted from people breeding say; computers with wrong data or his fractions.
This therefore, implies that computerized accounting information system can play a big role in
fastening transactions in the accounts section hence increasing efficiency in the department’s
transactions and the whole organization at large.
Reduces Embezzlement
Computerized accounting software makes it difficult for employees to steal money from the
company. For example, if a payroll employee tries to pay herself more than the allowed amount,
her theft will most likely be discovered because the accounting system stores all saved
transactions
Diligence
It is absolutely necessary to note that a computers unlike human to note are diligent or reliable in
the sense that, they never get tired or more because of lengthy repetitive or monotonous tasks.
For example, if a computer is given the task of calculating the payments made a thousand clients
or salaries for thousand employees, it will compute the amount of money for each of the clients
or employees with the same speed and accuracy.
Storage capacity
Furthermore, weaver (1988:823) I am….that unlike the human brain or any storage space a
computer’s memory can store vast amounts of accounting and other information or data more
over on a small device such as diskette or hard disk.
Therefore, because computers can store large amounts of information in relatively small place, it
means apparently that computerizing the accounting system can help the accounts department
and the company at large to reduce the amount of papers in offices which would otherwise bring
congestion. Even, weaver points out that, this excessive amount of papers would also put time
offices at a higher risk of five. Besides, a computerized system also makes records easily
accessible even to authorized staffs of the company.
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From the above, it can be observed that computerizing the accounting system can help the
company particularly the accounts department in bringing its offices nearer to the much desired
status of paperless electronic officers.
Versatility and automation
Accounting softwares being versatile they can perform any tasks provided that these tasks can be
broken down into steps (algorithus) that computers can follow. This is where computers when
used can work as calculators, records keepers, do graphics and even perform other financial tasks
in other financial tasks.
In simple words, with computerized accounting, the accountants can manipulate figures
numerical figures, do data base management among others depending on different needs of the
department.
On other hand, it should be noted that, computerized systems are so automatic in that once given
a set of data and relevant instructions, they can process information with minimum use intentions
in his case, it is apparent that this property of automatically of computerized accounting
information system is what distinguishes it from manual accounting systems.
Reduced labor
Accounting software reduces labor by also performing automatic, preparing documents, creating
transaction files, and recording and posting transactions while, employees input only the
minimum data to process transaction, in this, it is apparent that the computer period efficiency of
a computerized accounting system makes it forcible to integrate accounting records cost –
effectively say, from the sales and cash receipts cycle and the purchase and cash disbursements
cycle thus therefore provides management with greater access to useful information on a timely
basis. Through all this, the accounts department and the company a large can perform to the
stake holder’s expectations.
Facilitates control on confidential information.
When the accounting system is computerized, the control emphasis slots away from separating
employee duties and performance many verifications of manual accuracy and is placed on
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ensuring the proper functioning of application programs, using security procedures to limit
access to the computer systems application programs and files to authorized employees,
verifying the accuracy of input and reconciling outputs to inputs. This entire safe guards the
company’s information whose leakage would make competitors or hackers to take advantage of
the company particularly the accuracy.
Improved productivity and creativity
When the accounting system is computerized, employees’ personal productivity is improved
because tedious time consuming and repetitive tasks are reduced or eliminated. This can improve
the quality of end users work and allows them to perform more complex tasks.
In other words on effective and efficient computerized accounting system frees the workers for
more creative thought oriented activities and for planning and control activities. This enables
them to make better, faster and more accurate decisions.
From the above, it is apparent that with a computerized accounting information system
employees’ skills are improved hence resulting into better performance of the department and the
organization at large. This is because working in a computerized environment the computer
literacy of uses hence allowing them to make better use of current technological advancements.
Ease of use
In this case, when an accounting system is computerized, it may become so easy for employees
to use it and perform tasks everywhere and at all times. Thus, it is obvious that most
computerized softwares are easy to understand and use. In this case, users (employees in the
accounts department) can change the information they produce or modify their application
anytime their requirements change. And with portable computers (laptops) some of the work can
be competed at home, on a plane or almost anywhere else. All this results into better execution of
the accounting and other tasks expected of the department and organization at large hence
gaining a competitive advantage.
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Easy illustration of various changes in the accounts
With computerized accounting system, a simple work sheet can be used to illustrate the various
changes in the accounts. This worksheet called “spread sheet” can be used in accounting to
perform financial calculations and record transactions. In other words the accounting clerks can
use computers to show the effects of business transactions on the basic accounting equation
quickly and accurately.
Thus if the computerized accounting system is programmed properly all accounts can determine
the accounts affected, the amounts involved and whether the accounts are being increased or
decreased. Once such data are entered, the computer will automatically calculate the new
accounts balances and determine whether the accounting equation is balance. From the avocet it
can be seen that when accounting system is computerized verifying the transactions become
easy.
Reduced audit costs and time spent before releasing an audit report.
With accounting softwares, aviators can reduce their costs significantly. These savings result
from sing word processing and spread sheets to document their work and to revise the
documentation when changes occur improved risk analysis better planning and control of the
audit better report content and presentation and enhanced creditability.
At first, it used to take auditors hours with manual accounting systems to prepare and foot
manual trial balances post adjustments and prepare financial statements and if additional
adjustments or changes are made for the case of manual accounting information system the
whole process has to be repeated.
While with a computerized accounting system an auditor can easily input the working trial
balance handle all types of adjustment and reclassification entries and automatically computer
the adjusted trial balance. It can also facilitate completion of financial statements and their fool
notes and tax return information.
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OBSTACLES/CHALLENGES OR LIMITATIONS TO ACCOUTNING SOFTWARES IN
MODERN ORGANIZATIONS
Wide variety of applications
One of the reasons that computerized accounting system was slow to take hold, and is still
difficult to implement successfully in some organizations is that, it supports a wide variety of
applications. These range from structured tasks to unstructured ones
Besides, the range is so wide that it is almost too simplistic to include these applications under
the title of computerized accounting information system” this is quite a different with transaction
systems such as payroll and inventory processing oriented toward specific well defined methods
and procedures.
Another reason that computerized accounting system shows to take hold is that, user support for
this technology is diffused in most organizations. For instance on accounting department is likely
to include hardware and software obtained from several different vendors and the kinds of
support for these different prices of equipment and software may vary. Seldom will the support a
user feels is necessarily be available.
In addition, a direct consequence of this multivendor environment is that the equipment or
software may be incompatible especially in the accounts department who want to share hardware
software or documents may find that sharing is impossible.
Lack of help options for the use
Contributing to problems with computerizing the accounting system is the fact that it is often
unclear where the end user should go in the organization for help some support may come from
the central data processing group and other support may be available from a special
computerized accounting support staff but in most organizations there are always fellow
employees who develop into self made experts and are quick to off advice.
For the above reasons among others most organizations find that they lack consistent policies
regarding computerizing the accounting information system. This explains why in most cases,
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the hardware and software available to end users (accountants) may be underutilized why
incompatibility problems occur and why many become frustrated and angry with computers.
High risk of failure and inconsistencies
Some companies computerize their accounting systems to obtain a strategic advantage over their
competitors through providing improved financial services that would be impossible without the
use of computer technology.
However, using such computerized accounting systems does not guarantee such benefits as some
applications fail. In this case, it should be noted that, some accounting application programs can
be improperly programmed or improperly run, and input data can be erroneous. In such cases,
computers given the wrong input data make mistakes and can facilitate fraud at the same
incredible speed at which they perform useful tasks this therefore implies that computerizing the
accounting system may become more of a liability than an asset in the accounting department.
High costs
Because of high costs involved in purchasing, main training and designing the software there is
always a lack of long-term funding to support computers.
Furthermore, computerized accounting information systems are expensive in that, although the
cost of computer equipments has dropped dramatically over the years, most organization are now
designing larger and more ambitious computerized accounting systems and their cost can run
into mutinous amount of money
In addition, once a computer system is purchased the costs will have just begun in this case, large
professional staffs are often required to keep the system running and maintained and to develop
new applications.
Moreover, in time the hardware will become absolute and the imprecations that are used to run
the computerized accounting system may need to be changed frequently to meet the organization
changing needs. All the above circumstances serve to drain the financial resources as the benefits
of the system is superseded by the costs.
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Limited privacy of the computerized accounting information
Employees in the accounts with computerized system may erroneously believe the accounting
information and other confidential documents are safe and private only to be surprised when this
information ends up in places or with people they did not intend it to go to.
All this is true in cases where there are no effective controls to the system and for case where
there are hackers. All this leads to easy accessory to the company’s financial information and this
can be used to out compete or even defraud the whole organization at large.
Thus, in such cases, computerizing the accounting system does not mean a solution to a mess in
the accounts department.
Limited skills among workers
Computerized accounting system may not be relevant in the accounts department especially
given the limited skills people may be having as far as computers are concerned. In this, where
there is lack of the house information system skills, data presentation and impropriation workers
accounts and managers may find it impossible to easily excite tasks using the computerized
accounting system. This leads to efficiencies in producing the information needed hence
affecting the decision making process.
Logic and development errors
Because the workers or accountants may have little experience in system development and use,
they are likely to make errors and less likely to recognize when they have occurred, the
development may solve a wrong problem poorly define system requirements, application of
analytical remodel use the wrong software or incomplete or outdate information in developing
the accounting system.
Usually, these errors may be caused by incorrectly using formulas or software commands.
All the above may lead to inconsistent case in the performance of the accounts department and
the company at large.
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Duplication of systems and data and wasted resources
If the end users of the computerized accounting system are unaware that other users or
competitors are aware, similar information needs duplicate systems are most likely to occur.
Experienced users may also take one more than they are above to accomplish and so they are
likely to end up wasting time and resources. This implies that computerizing the accounting
system may become more of a liability than an asset to the department and organization as a
whole.
Dysfunctional behaviour
Some users of the computerized accounting system may go overboard in developing end user
systems and the result is a variety of dysfunctional behaviours in other words accounts may
develop a computerized system to enhance their power, position or reputation rather them
effecting the company’s financial tasks. They may develop such a system “just in case” they
need it.
Therefore, they may get to the point of “analysis proteolysis” in which they analyze data to death
and are still unable to make a decision. In other words such people may only develop an
accounting system to slant things toward a position they may to support.
CONCLUSION
In a nutshell, accounting softwares have had big contributions among which there is increased
accuracy, speed of work to mention but two. However to a greater extent computerized
accounting system/accounting softwares is associated with many challenges/problems because it
is the people in the accounts department who do the accounts. Besides accounting software is
associated with some shortcomings that have retarded the efficiency in some organizations
among there is the desire for technical knowledge for effective use especially when it comes to
developing countries where technology is just being developed.
Thus, if the organization has people who do not know what do and they are using accounting
softwares, the errors will be worse than ever before.
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REFERENCES
Roman S. (1996) Information Technology for Development Volume 7,
IOS Press Tokyo
Marshall B. Romney, Paul J. Steinhart and Barry E. (1973), Accounting Information System,
7th edition Cushing, Addison-Wesley. New York
Donald J. Guerrieri, Barry Haber and William B. Hoyt (1993), Accounting, 3rd edition
Glencoe, USA
Robert G. Mary James Jiambalvo and Charles L. McDonald (1995) Accounting. 1st edition,
Library of congress Cataloging-in-Publishing Data USA
David H. Weaver, Edward B. Braver and James M. Smiley (1988) Accounting Systems and
Procedures 5th edition, Library of Congress Cataloging-in-Publication Data, USA
Internet: www.pcmrp.com
www. daceasy.isasi.com
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