POOR UTILIZATION OF AUTOMATED ACCOUNTING SYSTEMS

July 1, 2016

 

 

Poor utilization of an accounting system is often related to lack of training. Accounting systems are designed to record every business transaction, and when used correctly, they can generate important strategic reports that will help management make important decisions. Regulatory requirements and internal administration policies are key considerations in the design of an effective accounting system. Thus accounting systems show the books, records, voucher, files and related supporting data resulting from the application of the accounting process. It involves the design of documents and transactions flow through an organization.

 

However, when the accounting system is inadequately utilized, staff tend to use work-arounds. They will create manual processes to get the work done.  The usual tipoff is that staff rely heavily on Excel spreadsheets rather than the system for reporting. Perhaps the chart of accounts isn’t correctly set up or users aren’t entering all the necessary information – it becomes more tedious or even impossible to generate reports with any meaningful information. Poor utilization of automated accounting systems typically leads to manually generated reports, yet another example of less-than-ideal internal controls.

 

A typical computerized accounting package will offer a number of different facilities.  These include:
 

  • On-screen input and printout of sales invoices 

  • Automatic updating of customer accounts in the sales ledger 

  • Recording of suppliers’ invoices 

  • Automatic updating of suppliers' accounts in the purchase ledger recording of bank receipts 

  • Making payments to suppliers and for expenses 

  • Automatic updating of the general ledger 

  • Automatic adjustment of stock records 

  • Integration of a business database with the accounting program 

  • Automatic calculation of payroll and associated entries 

  •  

 

Computerized accounting programs can provide instant reports for management, examples are:
 

  • Aged debtors’ summary – a summary of customer accounts showing overdue amounts 

  • Trial balance, trading, profit and loss account and balance sheet 

  • Stock valuation 

  • Sales analysis 

  • Budget analysis and variance analysis 

  • GST/VAT returns 

  • Payroll analysis 


When using an automated accounting system on the computer, input screens have been designed for ease of use. With manual systems the level of service is dependent on individuals and this puts a requirement on management to run training continuously for staff to keep them motivated and to ensure they are following the correct procedures.

 

If you have questions, need advice or would like to discuss your accounting system conversion, Please Contact us now, consultation is free.

 

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