C
OMPUTERIZED ACCOUNTING
SYSTEMS
(CAS)
(A
TECHNOLOGY PERSPECTIVE
)
ORGANIZED
BY
KOGI STATE UNIVERSITY CONSULTANCY SERVICES UNIT
Mrs. Pauline Ann Baba
Director, ITRC
[email protected]
Department of Science Education
Faculty of Education
W
HAT IS
U
P
? - C
ONTENTS
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
I
NTRODUCTION
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.
C
OMPUTERIZED 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
C
OMPUTERIZED 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,
BENEFITS OF
C
OMPUTERIZED
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
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
C
ATEGORIES 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
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
C
ONSIDERATIONS 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.
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
W
HERE 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
W
HAT 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
CAS S
KILL 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.
C
OMMON
CAS S
OFTWARE
(
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
C
OMMON
CAS S
OFTWARE
–
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
full-featured accounting software with a small business-friendly price tag.
Zoho Books' comprehensive set of accounting tools is available for one
low monthly price.
D
ECISIONS
! D
ECISIONS
! D
ECISIONS
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
W
HAT 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.
A
UDIT 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.
I
NFORMATION 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.
C
OMPUTER
-
ASSISTED AUDIT
TECHNIQUES
(CAAT
S
)
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
I
NTERACTIVE 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
O
THER
C
OMMON
CAS S
OFTWARE
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. AccountEdgePro 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 freeplan 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
O
THER
C
OMMON
CAS S
OFTWARE
–
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
