THE ROLE OF INFORMATION TECHNOLGY AND PROFESSIONAL ETHICS
The advances in information and communications technology in the last few years have been of great benefit to the businesses. This technology has been applied to accounting systems in such a way that businesses are able to cope with a large amount of information very efficiently. Most businesses make use of computers to perform many of the routine bookkeeping tasks in addition to management and cost calculations.
The basic principles of bookkeeping are still applied in a computerized system. It must be remembered, however, that computerized bookkeeping will never replace
the need for people with the skill to understand the output of such a system.
the need for people with the skill to understand the output of such a system.
BENEFITS OF INFORMATION AND COMMUNICATIONS TECHNOLOGY IN
BOOKKEEPING
ACCURACY
Computers are extremely accurate and can perform calculations free from errors. Errors occur when information is not keyed in correctly. A computer cannot think for itself, it can only process the information put into the system.
ABILITY TO PROCESS HIGH VOLUMES OF INFORMATION
One a computer system can process vast quantities of information which would require a very large number of office workers if it had to be processed manually. For example, the payroll for a business employing a thousand people can be produced in a very short time.
SPEED OF PROCESSING INFORMATION
In addition to processing information very quickly a computer system can produce reports and analyze information much quicker than is possible manually. For example, in addition to entering up the sales ledger accounts, month-end statements for credit customers can be produced. In addition to entering up the purchase ledger accounts, the purchases can be analyzed between departments.
PERFORMING RECONCILIATIONS
A computer program can be designed so that it automatically performs reconciliations and provides management with the appropriate report. For example, the total of the sales ledger balances can be compared with the sales ledger control account and any discrepancies itemized.
EASE AND CAPACITY OF INFORMATION STORAGE
Manual accounting systems necessarily involve written records which have to be stored. The use of computers enable vast amount of data to be stored easily in the form of disks (and backup disks) using little space. If this information had to be stored in paper format s large number of filing cabinets would be required.
DRAWBACKS OF INFORMATION COMMUNICATIONS TECHNOLOGY IN BOOKKEEPING
COST OF INSTALLATION
The costs involved in a small business may not be too high if it is possible to obtain one computer with the appropriate software (program). To install a complete computer system in a large organization can prove to be very expensive initially. This cost should be recovered over a few years as the benefits of using the system prove cost saving.
ENSURING THAT MOST APPROPRIATE PROGRAMMES ARE INSTALLED INITIALLY
It is important that the most appropriate software (program) is installed initially otherwise the full benefits will not be gained. Further costs may also be incurred in installing a more suitable program.
COST OF TRAINING STAFF
Before a computer system can be fully operational it is necessary to ensure that staff can operate the system correctly and efficiently. This usually involves staff training courses. Once again this cost is recovered over a few years from the cost savings arising from the use of the system.
Operators’ errors and faulty input can have very important consequences so it is important that steps are taken to reduce and detect these errors.
DEPENDENCE ON COMPUTERS
In present times, more and more accounting transactions are performed using information technology. Hence, businesses are increasingly becoming dependent on their computer system. If the system “crashes” (breaks down) major problems can occur. It is necessary to have some form of back-up system available.
SECURITY
Information kept on a computer system is often regarded as being “safe”. This is not automatically the case and steps must be taken to ensure the security of the information. Permitting access to only the authorized users by the use of a password, ensuring that disks are not removed from the building, maintaining backup disks (stored at a different security site) are simple measures to compact breaches of security.
The misuse of computer systems through “hacking” and viruses must also be recognized and steps are taken to eliminate (or at least to reduce) this possibility.
(THESE NOTES ARE TAKEN FROM COUCOM'S TEXT BOOK)