Computerization of accounting function - Essay Example

Overall, probably the greatest benefit comes from the fact that a unauthorized accounting system can do the same thing as a manual system, but does them better 1 . Many software or accounting packages have been developed which can be used in various businesses, whether small or large. This project paper discusses the Computerizing of accounting functions and looks at the problems, challenges, prospects and success in selected two Mammalian business organizations. Manufacturing and trading entities are important organs of the world’s economic dimension.

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Companies and other entities need to communicate to the employees ND public and statutory administrative bodies about the transactions they perform which have financial implications. This need is precisely addressed by a language called accounting. Accounting is hence the language of business. Until about one hundred years ago all accounting data was kept by being recorded manually in books. Nowadays although manual accounting system may be used (particularly by smaller organizations) most accounting data is recorded electronically and stored electronically using computers. Most businesses now use modern computerized accounting systems.

It is worth noting that the benefits of using computerized accounting system vary from business to business with each one deriving different benefits. The decision by an organization to have computerized accounting system depends on the company’s need to have accurate , consistent and timely data in a variety of reporting formats. This project paper will discuss the Computerizing of accounting functions in two selected organizations. The paper will discuss the theoretical aspects of Computerizing, the benefits and disadvantages of Computerizing, the determinant factors for Computerizing in the two organizations.

The paper will also discuss radical issues on Computerizing of accounting functions relating to policy, legal framework, financing, hardware and staffing. Challenges and prospects of Computerizing will be discussed and recommendations will be made on Computerizing in general and the two companies in particular. The methodology used in the study is that questionnaires were administered to key staff in accounts and information technology departments in the two organizations. The responses to the questionnaires have formed the basis of this project paper.

Smallholder Farmers fertilizer Revolving Fund of Malawi (SCOFFS) is a Government trust body which was established in 1988. The main objective for its establishment was to ensure the timely importation, distribution and sale of various types of fertilizer for both food and cash crop. The organization also coordinates the Farm Inputs Subsidy Programmer on behalf of the Malawi Government. The organization has a workforce of 128 permanent employees.

The organization also employs temporary staff and laborers especially during the period it is conducting the Government subsidy aerogramme. The organization has a head office in Blatantly and it has three main depots which have warehouses in Blatantly Allowing and Muzzy. SCOFFS has satellite depots through which it sells fertilizer through the country. The organization has computerized almost 70% of its accounting functions and uses Protests SOC-Unix software. Some of its accounting functions like stocks, debtors and fixed assets are not yet computerized. Alliance One Tobacco (Malawi) Limited (Alliance One) was formed on 13th May 2005.

Alliance One is one of the only two global independent publicly held leaf tobacco merchants. Alliance One primary business revolves around the selection, purchase, processing, storage, packing, shipping and sale of leaf tobacco. The tobaccos are used internationally in branded cigarettes. Alliance One is a multinational company. Alliance One consolidated entities employ approximately 4,400 persons excluding seasonal employees. Alliance One use SAP accounting software which is supported by TOPS and ‘FAST as subsidiary packages. All accounting functions of Alliance One are computerized. 3. THEORETICAL ASPECTS OF COMPUTERIZING Computerized accounting system uses computer software to process accounting data and information. The computerized accounting system follows the same process as the manual accounting system. This means that in the computerized accounting system there are same stages of input, processing and output as in the manual accounting systems. Manual accounting implies that employees perform the whole accounting cycle manually on a periodic basis: they calculate trial balances, journalize transactions, prepare financial statement reports and other routines.

Of course it takes much time, resources and effort in large organizations. Computerized accounting implies that the only thing that employees do is recording transactions onto the computer which processes other steps of accounting cycle automatically or by requests. Accounting is purely human invention, having no independent existence in nature. Hence, it cannot in any true sense have been discovered, but it must have been constructed by human minds to serve human needs.