COMPUTERIZED ACCOUNTING

Transcription

1 COMPUTERIZED ACCOUNTING SYSTEMS (CAS) (A TECHNOLOGY PERSPECTIVE) ORGANIZED BY KOGI STATE UNIVERSITY CONSULTANCY SERVICES UNIT Mrs. Pauline Ann Baba Director, ITRC Department of Science Education Faculty of Education May 20 th 2015

2 WHAT IS UP? - CONTENTS In this morning introductory section we will take a brief walk through the following topics: Introduction Definitions Components of CAS Benefits of CAS Why CAS in academic institutions? Categories of CAS Where to start and what to do next List of common CAS software for 2015 Decision making Discussion and information sharing

3 INTRODUCTION Management Information Systems (MIS): is a method of using computer technology to help organize, better manage people and resources in an effort to make better informed decisions for your company or institution. MIS is used to gather and analyze information about various parts of your institution like: staff, students, school fees, inventory, production, distribution, sales, supply chains, evaluate performance of students, staff and directorate(sections) of the institution. MIS is also used to create/generate reports on things like sales, revenues, expenses, projections, track growth or reduction as the case may be. MIS in most organizations, is part of the IT, ICT department, or the case of Kogi State University Information Technology and Resources Centre (ITRC). There are no hard and fast rules as to the position, it s at the management s discretion.

4 COMPUTERIZED ACCOUNTING SYSTEMS (CAS) Accounting is a basic process required to operate any organization. Every debt must be paid in full and on time, and all incoming monies must be noted. Depending upon the size of an organization, developing an accounting system that is accurate and efficient can be a challenge. Although many small businesses keep track of all financial activity manually through the use of a physical ledger, other companies prefer to track monetary transactions with computerized software. Computerized Accounting Systems (CAS) is an accounting system or operation that is done with the use of computer technology. A computerized accounting system has great potential to increase productivity, streamline workflow, reduce data redundancy and error reconciliation, and help with financial management for large and small businesses. When you mention CAS, many either think Payroll systems or Excel spreadsheet. But, it is more than that.

5 COMPUTERIZED ACCOUNTING SYSTEMS- COMPONENTS There are many different accounting options to choose from, including Microsoft Money, Microsoft Dynamics, Oracle, QuickBooks, Sage, Xero and of course MYOB (Mind Your Own Business) A good accounting system must have provision for the followings: Accounts Payable: Allows you to manage invoices and bills that you must pay. Accounts Receivable: Allows you to manage payments, billings, and incomes. Auditing: tracking and managing income and expenses judiciously for check and balance purpose Payroll: Handles employee payroll within the accounting system. Benefits Management: Allows for employee budget management, accrued vacation time reporting, and other budget reporting. Budgeting: Let you create and manage a budget. Assets: Let you manage fixed and fluid assets, calculate depreciation, and perform other asset management. Reporting: Integrates your data with existing reporting standards, so that you can comply with regulations that affect your business. Project Reporting: Let you manage the assets and workflow for multiple projects at one time. Supply Chain Management: Allows you to track inventory, suppliers, goods pricing, and other supply side services.

6 BENEFITS OF COMPUTERIZED ACCOUNTING SYSTEMS Some of the advantages or benefits of a CAS according the Henderson (2014) are: Accuracy There is an old proverb that begins with the statement to err is human but in financial management the room for error is slim to non. CAS are designed to minimize the existence of human errors and such expensive blunders. Additions, subtractions and other calculations are performed by the machine. This ensures that only the correct total listed at the end of the general ledger. Automation saves time CAS helps eliminate many cumbersome and time consuming manual processes because calculations are automated, many accounting software programs allow various reports, such as year-end financials, audit reports and statistical information to be generated at the touch of a button. Document that usually takes a less experienced accountant hours to compile can now be created in a matter of seconds. Information Sharing Automating the accounting process creates the ability to expediently share information. Multiple authorized users can independently entered into an automated system information regarding their section and these information can be accessed at a central point to generate detailed information. Accounting documents like financial statements, yearend financial reports can be ed from one colleague to another in just a few moments.

7 BENEFITS OF CAS - CONTINUES Compatibility The implementation of CAS also allows various businesses to share financial information +easily. For example, if a company with manual accounting procedures purchases from another organization with manual accounting procedures, it may take weeks or even months to completely integrate the financial data of the two firms. But if both companies utilize compatible computerized accounting systems, all data can easily be integrated because one program is able to speak to the other Other advantages listed by Hadler (2014) are: 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 purchases 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 OVERALL INCREASE IN PRODUCTIVITY

8 CATEGORIES OF CAS Personal accounting system: used mainly to manage personal household budgets, expenses, income, purchases etc. This is necessary to make tax time easy. Low end accounting system: usually also know as small business package used for account payable, receivable, payroll, timesheets, inventory etc. Also capable of generating invoices and reconcile accounting activities High end accounting system: more robust more, expensive, and has a learning curve to fully utilize all section of the package. High end CAS are usually designed for large multimillion dollars ($) or naira (N) transactions. This is where most Nigerian higher institutions fall, yet we are still operating manual accounting system. Whether off the shelve or customized package, it must be capable of providing or performing general business accounting functions and capable of integrating with MIS systems. This systems are mostly sold through dealers due to the high level of support and high end customization needed.

9 WHY CAS IN ACADEMIC INSTITUTIONS? CAS in academic systems is different from other industries as academic institutions have dynamic clientele making conversion to computerized systems a nightmarish and overwhelming idea for many. Why fix it if it aint broke? Though the orientation is different, population in academic institution is increasing, the financials obligations and involvement have gotten larger, budget is growing and decisions making have gotten slower because of our accounting checks and balances is cumbersome thus the time to automate accounting system is now.

10 CONSIDERATIONS FOR IMPLEMENTING CAS We must understand that: Data entry can be overwhelming at the beginning Work flow changes can be scary and meet resistance As payroll must understand the intricacies of staff benefits and the various pay structure like overtime, excess workload, hazard for all, etc. Purchasing must know tax laws, rules and regulations for better tracking. Auditing must understand state audit rules and regulations. Increase accuracy, efficiency, productivity, and integrating all of your financial management into one accounting system can prevent having to enter the same data in multiple places, thus CAS eliminates redundancy, and cuts down the time spent on day to day accounting-related tasks.

11 TO DO THIS... You must know your company or institutional needs Examine the various software in the market. Conduct a study on kinds of data you want to be linked to your central accounting system Should individual sections, directorate conduct their financial business and reconcile or is everything going to be centralized Figure out what to do and which software best serve your purpose. Desktop software vs. Web Based Server based software vs Standalone Off the shelf vs in-house development or contracted Ready made with or without customization All have their pros and cons Determine/understand your technology human resources strength Cost, cost, cost (what is included: software, hardware, training, etc?)

12 WHERE TO START... Who gets access to what, where and when Data warehousing and security Training and professional development STAKEHOLDER BUY-IN (management is crucial) IS THE TECHNOLOGY INFRASTRUCTURE IN PLACE TO SUPPORT? Be mindful of security issues To avoid security breach and fraud: Understand your unit Identify level of rights to give to certain personnel Make sure your chosen software allows for different access levels. Like data entry, data editing, data delete rights, level of changes (textual or numerical). Limited access from office premises Immediate removal of access right before employee leaves company Close monitoring systems

13 WHAT TO DO NOW? Evaluate infrastructure Ascertain specific needs Understand institutional financial commitments Software acquisition Training of personnel Technical support Get stakeholders buying (determines failure or success) Develop a acquisition and installation timeline Determine migration system Migrating existing data (only if electronic already exist) Merging existing data Starting from scratch Converting existing data

14 CAS SKILL ACQUISITION Basic knowledge of accounting system. Knowledge of technology use. Knowledge of company structure, organizational dynamics, and information needed. Reports required. ETC Ability to think ahead and envisage corporate needs. Most importantly Flexibility and Change

15 COMMON CAS SOFTWARE (IN ALPHABETICAL ORDER) Based on a research conducted by Sara Angeles (2014) to evaluate and recommend the best 2015 CAS software. The list had 24 that made it but below are the top nine. *FreshBooks A favorite among business owners, FreshBooks offers one of the most user-friendly cloud-based accounting software for non-accountants. It's also 2015 top pick for the best accounting app for ios and Android devices for offering a wide range of accounting tasks you can perform on the go. *Intuit QuickBooks Online Our pick for the best accounting software, Intuit's QuickBooks Online works for all types of small businesses. It offers basic and advanced accounting features, whether you're just starting out, looking to expand or have been around for some time. Intuit Quicken Home & Business Another Intuit accounting product, Quicken lets you manage both your personal and business finances in one place. This is perfect for really small businesses and home-based entrepreneurs who don't need a full-blown accounting software designed for more established businesses. The downside, however, is that the software isn't cloud-based, is only available for Windows, though an ios and Android app is available for viewing your data. quicken.com/personal-finance/home-business-2015

16 COMMON CAS SOFTWARE CONT Outright Formerly GoDaddy Bookkeeping, Outright simplifies accounting by using bookkeeping data to help you prepare for tax time. It automatically categorizes sales and expenses, then uses it to prepare your Schedule C, calculate taxes owed and more.outright.com Sage One has two types of accounting plans: one for invoicing by itself, and another for full-service accounting. The full-service version offers credit card processing and integrates with everything from e- commerce to point-of-sale (POS), customer relationship management (CRM), inventory tracking, document management and more. sageone.com *Wave Accounting Don't want to pay for accounting software? Wave Accounting can help. This Web-based accounting platform offers the same features as paid accounting services, making it our top pick for the best free accounting software for small businesses with 10 employees or fewer. Xero Xero is a cloud-based accounting software that offers a ton of integrations with third-party business solutions you likely already use (it's particularly useful for online stores, as it integrates with 26 e- commerce apps). xero.com *Zoho Books Part of the Zoho Office Suite, Zoho Books is a fullfeatured accounting software with a small business-friendly price tag. Zoho Books' comprehensive set of accounting tools is available for one low monthly price.

17 DECISIONS! DECISIONS! DECISIONS How complicated has your manual accounting system become? Do you really need a computerized systems? Answer is YES. How much is your institution willing to invest? In terms of software, hardware, training and continuous support Is the human capacity there and willing to support a switch? What package should you pick? Off shelf or in house What kind of record or report are you expecting? NOTE: a good CAS software is clean, easy to use, provides data entry interface, migration, export and import of data between other application

18 WHAT DOES THIS HAVE TO DO WITH AUDITING? Auditing refers to a systematic examination of books, accounts, documents and vouchers of an organization to ascertain how far the financial statements present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. A financial audit is conducted to provide an opinion whether financial statements (the information being verified) are stated in accordance with specified criteria. Financial audits exist to add credibility to the implied assertion by an organization's management that its financial statements fairly represent the organization's position and performance to the firm's stakeholders.

19 AUDIT TASKS Major tasks of the auditor are: Posting checking Testing the existence and effectiveness of management controls that prevent financial statement misstatement Casting checking Physical examination and count Confirmation Inquiry Observation inspection Year-end scrutiny Re-computation Tracing in subsequent period Bank reconciliation Vouching Verification of existence, ownership, title and value of assets and determination of the extent and nature of liabilities Audit task cannot be separated from the bursary duties that deals with accounting. Therefore if the accounting system is going computerized the audit department needs to perform an Information Technology audit.

20 INFORMATION TECHNOLOGY AUDIT An IT audit is different from a financial statement audit. While a financial audit's purpose is to evaluate whether an organization is adhering to standard accounting practices, the purposes of an IT audit are to evaluate the system's internal control design and effectiveness. This includes, but is not limited to: efficiency security protocols, development processes, and IT governance or oversight. Installing controls are necessary to provide adequate security. evaluate the systems that are in place to guard an organization's information the organization's ability to protect its information assets and to properly dispense information to authorized parties Simply put IT Audit examines if the the organization's computer systems be available for the business at all times when required? (known as availability) the information in the systems be disclosed only to authorized users? (known as security and confidentiality) the information provided by the system always be accurate, reliable, and timely? (measures the integrity) by taking a closer look at inputs, outputs, and processing procedures.

21 COMPUTER-ASSISTED AUDIT TECHNIQUES (CAATS) Computer-assisted audit techniques (CAATs) are those featuring the application of auditing procedures using the computer as an audit tool. CAATs are normally placed in three main categories: input control, processing controls and output controls Application controls: does the three above by performing reasonableness check, eg net wage to gross wage existence check, eg that a supplier account exists character check, eg that there are no alphabetical characters in a sales invoice number field range check, eg no employee s weekly wage is more than $2,000 check digit, eg an extra character added to the account reference field on a purchase invoice to detect mistakes such as transposition errors during input. General controls checks datacentre and network operations system software acquisition, change and maintenance program change access security application system acquisition, development, and maintenance

22 INTERACTIVE SESSION Questions? What's happening in your institution? Do you have stakeholder support? What is possible? Take home: Conversion to Computerized Accounting System is a financially intense decision, Don t leave the decision for your IT department to make as they do not know the intricacies of the Accounting process in you bursary and auditing section

23 OTHER COMMON CAS SOFTWARE AccountEdge Pro does more than accounting. It features DIY or outsourced payroll services, so you can link accounting to payroll, pay your employees (including direct deposit), track time and prepare payroll taxes. It has an inventory management suite, which also integrates with popular e-commerce solutions allowing institutions to keep track of their IGR. AccountEdge Pro is available on Mac, Windows, mobile and in the cloud.accountedge.com/pro FreeAgent Unlike many accounting software products that limit transactions unless you purchase a more expensive package, FreeAgent offers unlimited users, clients, invoices, expenses and other functions for one monthly price. It also has a project management feature to help you keep track of billable hours. freeagent.com GnuCash Free Accounting Software Is your powered by Linux and it is a free, Linux-based accounting software that has all the features small businesses need to manage their finances: income and expense tracking, double-entry accounting, financial reports and calculations, scheduled transactions and more. It can also track bank accounts, stocks, bonds and mutual funds. Linux GnuCash is available on Android devices. gnucash.org Harvest Harvest makes it easy to bill clients and get paid. It offers a simple, easy-to-use platform that lets you easily track time and turn billable hours into professional invoices. You can also log expenses, take snapshots and store receipts, generate reports and connect the app to Google Apps, Salesforce, Basecamp and more than 50 other business apps.getharvest.com Hiveage is a customized accounting software for your freelance or other small business? Unlike your typical accounting platform, Hiveage lets you pick and choose which features to include in your plan, so you only pay for what you need, when you need it. The free plan offers unlimited clients and unlimited invoices, and additional features range anywhere from $1.95 to $4.95 per add-on. hiveage.com Intacct Intacct is advanced, cloud-based accounting software that s strictly about business finances and helping your business grow. It can generate a wide range of reports, so you can evaluate your business from any financial angle, including profit margins, losses, income, revenue segments such as total revenue, revenue by product, revenue by business and revenue histories and more. intacct.com

24 OTHER COMMON CAS SOFTWARE CONT Kashoo Kashoo's online accounting software can handle your invoices, expense tracking and double-entry bookkeeping on your computer, smartphone and tablet. It also offers collaboration features, so you can share your books with your bookkeeper, accountant, investors and business partners. kashoo.com Less Accounting Just as its name suggests, Less Accounting can help you spend less time managing your finances and more time running your business. It automates everything from data entry to billing, so you spend minutes instead of hours on your accounting. lessaccounting.com Paychex Accounting Online Paychex Accounting is a cloud- and mobile-based system that's designed to make accounting easier for you and your accountant. The platform can handle invoices, expenses, reports and collaboration features to give your accountant, bookkeeper and other users access to your finances.paychex.com/accounting-online Simple Invoices Great for solopreneur and all your accounting needs primarily consist of tracking sales and getting paid. This Web app lets you create estimates, send professional invoices, accept payments, generate financial reports and more, absolutely free. simpleinvoices.org WorkingPoint WorkingPoint is an all-inclusive accounting software that has everything you need to manage all aspects of your finances: accounting, invoicing, financial reporting and tax reporting. It's available anytime, anywhere over the Web or via mobile app. workingpoint.com Yendo If you have a lot of customers, multiple businesses and a dedicated sales team. It's both an accounting and CRM software, letting you and your sales reps manage and cultivate relationships with customers, while linking all the data with your enterprise resource planning and accounting platform. yendo.com

25 REFERENCES Angeles, S. (December, 2014). Business News Daily. Retrieved from Gary Hadler (2014). Components of a Computerized Accounting System. Retrieved from Henderson, K. J. (2014). Advantages of a Computerized Accounting System. Demand Media. Retrieved from