Accounting Systems Essay -- Business Management

Accounting Systems In accounting systems, certain controls are needed to ensure that employees are doing their jobs properly and ensure that the system runs properly. These checks are in the best interest of the organization. These controls come in the form of internal and external controls for the system. The internal controls are the checks that are placed in the system by the company's own management and directors. Today more and more companies are moving from the manual accounting systems to computerized accounting information systems. The advantages of a computerized system are increases in the speed and accuracy of processing accounting information. However, as systems become computerized, the internal controls for that system has to be adapted accordingly. This is because computerized systems bring with them certain unique problems that can only be removed or minimized by adapting the present controls and adding new controls. In a manual system there is a paper trail for the internal auditor to follow. All records and transactions are kept on paper and so an auditor has clear and documented proof of what has transpired. Computerized systems rarely have a clear paper trail to follow. Since computers do all of the sorting of the information the company rarely sorts the source documents. Also the computer does most of the calculations and processing so there would not be the amount of documentation that there would be in a manual system. Another problem of computer systems is the fact that there can be difficulty in determining who entered the data. In a manual system the identity of the person entering the data can be identified possibly by the person's handwriting. This cannot be done in a computerized system. ... ... disaster. This includes transaction logs of complete system dumps which will make periodic backups of all the transactions that occur within the system. Computerized accounting systems bring with then a set of new and unique problems. The internal controls that have been put into place for a manual system to help the internal auditor cannot fully prevent or minimize the possibility of errors or fraud that come with the computerized systems. Therefore the old controls must be modified for the new system and new controls must be put in. Only then can the internal auditor ensure that the number of errors that occur within the system be minimized or even eliminated. Bibliography Basset P.H. (1993) Computerized accounts, NCC Blackwell. Grudinsku G., Burch J., (1998), Information Systems Theory and Practice, John Wiley and Sons, Inc.