Implementation of an Automated Accounting System- Free Samples

Question: Explain Implementation Of An Automated Accounting System? Answer: Introducation At the time of establishment, a manual accounting system has been developed, in which each transaction has been recorded manually through the preparation of general journal and general ledgers. However, after five years, the company has changed the manual accounting system to Xero. This is an automated system of accounting, which could be accessed online through the cloud (Cheng, Dhaliwal and Zhang 2013). In addition, such system has enabled the organisation in reviewing the accounting system to ensure appropriate functioning of the software. However, after the use of cloud accounting for few months, the organisation has received few mails for disclosing personal and business bank details. Thus, the threat of security is inherent in this type of accounting system (Dirnagl 2016). Monitoring of the record-keeping system: In the initial few months of the implementation of cloud accounting system, Prisha was responsible for monitoring the record keeping of Karen for assuring that the transactions are entered appropriately into Xero. However, after few months, Prisha has stopped monitoring Karen and the latter is allowed to change the password solely in each month. In addition, Karen was asked to provide quarterly bank reconciliation and trial balance; however, she has not provided the same. In this case, Simons (2013) advocated that failing to provide the needed financial statements within the stipulated time could lead to manipulations and unethical practices in the financial reports. Authority of payments: The accounting procedures of Event Private Limited have changed, while Prisha was on leave. In the initial stage, both the signatures of Tim and Karen are required for co-signing the cheque. However, as the demand of the customers increases, Tim has been busy in other work and therefore, he did not have adequate time for signing cheques and authorising payments. Therefore, Karen has been provided with the sole authorisation of cash receipts from customers and cash payments to the suppliers for services like utility bills. This has been a big loophole in the accounting system of the organisation, as Karen could use the cheque for personal use. As a result, she could manipulate the cash amount in the balance sheet statement and trial balance of the organisation (Skaife, Veenman and Wangerin 2013). References: Cheng, M., Dhaliwal, D. and Zhang, Y., 2013. Does investment efficiency improve after the disclosure of material weaknesses in internal control over financial reporting?.Journal of Accounting and Economics,56(1), pp.1-18. Dirnagl, U., 2016. Quality Control and Standard Operating Procedures.Rodent Models of Stroke, pp.291-300. Simons, R., 2013.Levers of control: How managers use innovative control systems to drive strategic renewal. Harvard Business Press. Skaife, H.A., Veenman, D. and Wangerin, D., 2013. Internal control over financial reporting and managerial rent extraction: Evidence from the profitability of insider trading.Journal of Accounting and Economics,55(1), pp.91-110.