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Accounting system and control
- 1. Accounting system and control Presented by RAZIYA HAMEED 2015-ag-194
- 2. Accounting system •Organized set of manual and computerized accounting methods, procedures and controls established to gather, record, classify, analyze, summarize, interpret, and present accurate and timely financial data for management decision.
- 3. Factor What are the factor that influenced the development of an Accounting system within a business entity? • Size of business • The volume of transactions • Branches/ subsidiaries • Types of business activities
- 4. Components of Accounting System An accounting system typically has six basic parts: • People who use the system, including accountants, managers, and business analysts • Procedure and instructions are the ways that data are collected, stored, retrieved, and processed
- 5. Components of Accounting System •Data including all the information that required for accounting. •Software consists of computer programs used for processing data •Information technology infrastructure includes all the hardware used to operate the accounting Internal controls are the security measures used to protect data
- 6. Principles of Accounting System •Security - Access to the system and its data is controlled and limited only to those authorized. •Confidentiality - The protection of sensitive information from unauthorized disclosure. •Privacy - The collection, use, and disclosure of personal information about customers is done in an appropriate manner.
- 7. Principles of Accounting System •Processing integrity - The accurate, complete, and timely processing of data done with proper authorization. •Availability - The system is available to meet operational and contractual obligations.
- 9. Developing Accounting system Analysis • Planning and identifying information needs of internal and external users • Sources of such information • The records and procedure for collecting and reporting the day • Analyzed present system ___Strength and weakness • Proposed new/ revised system
- 10. Developing Accounting system Design • Specify systems requirements more precisely captured • Where data would be captured • The required processing • Where the output would be used
- 11. Developing Accounting system Implementation • Install new/revised system (e.g. hardware & software) • Making the system fully operational User manual • Training user/personnel
- 12. Developing Accounting system Evaluation • Assess the progress and status of new systems • Monitoring effectiveness and correcting any weakness • E.g General acceptance by user, Cost and benefit
- 13. Accounting control •Accounting control is the method and procedure that are implemented by a firm to help ensure the validity and accuracy of its financial statement. •The Accounting control do not ensure compliance with laws and regulations, but rather are design to help a company comply.
- 14. Principles of Accounting control Establishment of responsibility Segregation of duties Documentation procedures Physical, mechanical and electronic control Independent internal verification Others
- 15. Principles of Accounting control Establishment of responsibility •Assignment of responsibility to specific individuals. •Monitoring of compliance with procedures Segregation of duties •Responsibility for related activities assigned to different people •Segregation of responsibility for recording and physical custody of the asset.
- 16. Principles of Accounting control Documentation procedures •All documents generated by the business to be pre-numbered •Documents to be initiated •Provides a audit trial for checking of transactions
- 17. Principles of Accounting control Physical, mechanical and electronic control •Use of sales and safety deposit boxes •Locked cabinets and warehouses •Alarms Monitors and sensors •Passwords to computer systems and programs •Time clocks
- 18. Principles of Accounting control Independent internal verification •Checking procedures to ensure segregation of duties •Monitoring by supervisors Verification by internal auditor Rotation of duties Other controls: •Bonding of employees who handle cash, •Rotating employee’s duties, •Requiring employees to take vacations.
- 19. Internal audit •An independent appraisal activity established within an organization as a service to the organization •It is a control that functions by examining and evaluating the adequacy and effectiveness of other controls