POOR UTILIZATION OF AUTOMATED ACCOUNTING SYSTEMS
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.
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