CIE AS Level Accounting: Computerised Accounting

Computerised accounting is used for the following:

  • automatic processing — a source document can be entered into a computerised accounting system which processes the data automatically so that ledgers, trial balance, statements of profit and loss, and the statement of financial position can be produced whenever they are required

  • integration of functions — automatically updating inventory after every sale and purchase, providing payroll records, and producing documents such as invoices and credit notes

  • management information — providing managers with information that can help with the running of the business in an effective way e.g. obtaining aged trade receivables analysis, audit trails, ratio and performance analysis, break-even analysis, application of costing systems, production of budgets, and capital investment decisions

Benefits of computerised accounting

Limitations of computerised accounting

speed of processing data is increased as the data will only be entered once and the system will automatically update all the relevant ledgers — saves time and wages

cost — purchase of new computers, technician costs for installation and networking, accounting software subscriptions/licenses, maintenance, warranties, staff training costs

physical space is saved from the discontinued use of physical books and ledgers

staff training — when should this take place?

production of documents is quicker and can be produced in large quantities e.g. invoices, overdue letters

systems crashing — power cuts or programme failures could occur and work could possibly be lost; procedures can be put in place to back up work regularly

reports and financial statements can be produced quickly in formats to suit the needs of managers e.g. aged trade receivables schedule

external threats to data e.g. cyber-attacks; anti-virus systems can be installed, staff carelessness can mean outsiders get access to information or systems

improved accuracy — safeguards are built into most accounting packages e.g. journals can’t be entered if they don’t balance

carelessness — staff could take less care knowing that there are built-in facilities to prevent errors

auditing and fraud prevention — many systems will highlight unusual and potentially fraudulent activity so that auditors and managers can investigate potential problems

employee resistance — some employees may not welcome change and may leave

Protecting the Integrity and Security of Data

Business owners are concerned about protecting their data from being corrupted, lost, or stolen. If these incidents occur, it will waste time and increase costs or may even give competitors an advantage whilst trying to replace or recover the compromised data.

A business can take the following measures to protect their data:

  • installing up-to-date anti-virus software that can warn people that there is an attempt being made to access the system

  • strong passwords — passwords should not be obvious and should be changed regularly

  • restricted access — employees should only be able to access the parts of the system required to do their job as this will minimise the number of people with the opportunity to steal data; if a person leaves, the business access rights should be removed immediately

  • automatically lock-down or logging out — this will ensure people who leave their computer unattended don’t have an intruder getting authorised access to the system

  • saving or backing up work — regular backups can prevent data from being lost from viruses or crashes

  • encrypted or restricted USB drives — some companies insist that only company USBs are used and they are encrypted. Personal USBs are often banned from company computers; this will help prevent viruses contaminating data or illegal theft of sensitive data. If the USB was lost, the data could fall into the hands of the general public

  • introduce an acceptable use policy — many businesses provide regular training courses in cyber awareness; this training provides practical tips on how to spot suspicious emails that may be harmful if opened

  • disciplinary process — consequences of not following procedures are set out in the staff handbook or acceptable use policy

  • compliance audits and tracking — management may carry out unannounced audits to ensure people follow the rules. They could identify downloads, emails, and websites that employees have been using