Accounting Systems that are Poorly Implemented or Not Updated to Meet Changes in the Organization (E
It starts with the chart of accounts and ends with financial reports. It is very difficult to get good quality financial statements in a meaningful format if the chart of accounts is not properly designed and structured to reflect the true operations of the organization. However, even if the chart of accounts and financial reports are structured properly initially, most organizations change over time and the financial reporting needs to change with it.
The primary reason for poorly structured or poorly implemented accounting systems is:
An inexperienced internal financial management team, the team may have not done it before and the organization may suffer for that lack of experience.
Most organizations also need to periodically upgrade their systems, a piece of the process that often gets delayed in favor of other projects. Not upgrading an accounting system when an upgrade is needed can open up an organization to a variety of risks, including bugs, security issues and changes in regulatory rules.
All these problems can be prevented only if you use the right expertise and a proper distribution of resources in setting up an accounting system which consists of Personnel, Procedures, Devices and Records in an organization.
The basic functions in setting up an accounting system include:
Collecting all transactional documents in-house & externally
Processing all such information and documents
Interpreting and recording the effects of all business transactions
Classifying records as prescribed by accounting procedures
Dealing with all third parties to business in financial status of organization
Keeping track and support rotation of cash flow cycle of the organization
To develop accounting information
To communicate this information to decision makers etc.
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