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1 E-ACCOUNTING & REPORTING: AN INFORMATION TECHNOLOGY (IT) PERSPECTIVE OF CORPORATE REPORTING IN THE DIGITAL AGE By Adejola Adebayo Paul, PhD., FCSA( USA ), CNA, ACA, ACTI Lecturer, Department of Accounting, Nasarawa State University, Keffi Tel:

2 Outline Introduction E- Accounting & Accounting Soft wares Peachtree Accounting Web Based Accounting Audit Soft wares System Audit and Investigation Conclusion 2

3 INTRODUCTION We are in a world of Information and Communication Technology (ICT), where virtually most activities are no longer done manually, instead electronically. The enormous advantages ICT has accrued to the delivery of information and communication around the world, as well as the central role of ICT in the new global economy, means that ICT will shape the dynamics of the new millennium. The role of and potential for ICTs in private and public sector accounting, auditing, investigation and reporting is enormous and cannot be over emphasized. This is year As at date, over 7 billion people exist on earth; Nigeria coming 6 th with an estimated population of 169million. 3

4 The information technology (computer) is a fast developing one that keeps changing every now and then. It has touched every profession; thus changing our way of doing things in an organization and society as a whole. Of particular importance is the electronic accounting aspect which has brought about speedy, timely and efficient information processing which is very significant for day to day accounting and reporting as well as decision making. With the ongoing waves in digital and information revolution, it is not a fallacy to assert that “becoming an accountant on a technology platform is a sure way for accountants to secure their careers in the Digital age”. 4

5 E- ACCOUNTING & ACCOUNTING SOFT WARES E-accounting simply means using electronic processing computer based systems to: Acquire financial data Processing Storage Planning and forecasting Coordination and cost control Dissemination of vocal, textual, pictorial and numerical information for timely decision making. 5

6 Presently, the following accounting soft-wares are available in Nigeria to solve accounting and financial problems: Peachtree Accounting Quick books Dac Easy for window Ms-Money (Financial management Software) Spec – pay (personnel mgt software) Eagle tracks for inventory management MYOB Accounting Sages accounting software Budgetmatic software for budgeting and budgetary control Sun system software Tally accounting 6

7 Benefits of Using E-accounting in an Organization The following are the benefits of appropriate usage and application of electronic accounting in an organization. You are able to: Get quicker information on financial position of the organization by just pressing/touching a button. Ascertain with accuracy the revenue generated in an organization on daily, weekly, monthly, quarterly etc within a second. Provide detailed expenditure information to aid the management in cost control and facilitate decision-making. Budget and forecast e.g. annual budget etc. Reduce clerical and administrative overheads. Project monitoring and variance analysis. Prevent frauds. Get timely report and financial statement after every transaction. 7

8 PEACHTREE ACCOUNTING This software comes in different flavors depending on the number of users. Peachtree Pro, Peachtree Complete, Peachtree Premium and Peachtree Quantum. Most organization prefers Peachtree accounting to any Other accounting Package(s) as a result of its: Cost Effectiveness Comprehensiveness Reliability Flexibility Portability Storage capability Timing Peripherals Documentation 8

9 Basic Steps in Using Peachtree Accounting 1. SET UP A NEW COMPANY TIPS/PROCEDURES: Click Start button Click on program, select and click Peachtree Accounting Note: Peachtree Window dialog box will display Click on set up a new company Peachtree new company set up wizard/dialog appears. Click next Type the Company information e.g. Company Names, Addresses, City, State etc. Click Next Select a chart of Account e.g. set up a new company on using Samples, Copy Chart from existing Peachtree Accounting Company, etc. 9

10 Click next and select chart of accounts as related to your business line Select accounting method e.g. Accrual or cash and Click next Select posting method e.g. Real Time or Batch and Click Next Select Accounting period and click next Select the monthly accounting periods e.g. Jan- Dec The first month of Data entry e.g. Jan. 2011, first year of entering payroll select 2011 and click next. Click finish. 10

11 2. WORKING WITH CHART OF ACCOUNTS TIPS/PROCEDURES: Set Up a New Chart of Accounts Click on "MAINTAIN MENU" Click on Chart of Accounts A dialog box will appear: Type Account ID Number Type the Accounts description Select account type e.g. Cash, Income, and Expenses etc. Click save 11

12 WEB-BASED ACCOUNTING A web-based accounting package is a complete accounting system that resides on a web server. Anybody in the world can access that accounting system with a simple browser to set up and run their own company. Instead of paying large sums of money up front for hardware and software, the user pays a smaller monthly rental fee. Web based accounting is the next evolution accounting. It is an attempt to take accounting to the next level- level of paperless processing of financial transactions and presentation of financial statements; level of generating financial reports online without buying or owning hardware and software. 12

13 Benefits of Web-Based Accounting You Only Need a Browser Lower Up-Front Costs for Software Lower Up-Front Costs for Hardware Lower Administration Costs Shorter Implementation Time Frame Lower Costs for Multiple Locations Work from Home High-End Databases No More Backup Worries Up-to-date Application Code 13

14 Categories of Web-based Accounting Web based accounting is of two major categories: 1. Entry level for small business This software addresses the accounting functions of small business organizations. Examples of these soft-wares include: Merchant mirror accounting Xero online accounting Liberty accounting Cashbus accounting Saasu accounting Crunch accounting Nolapro accounting Arithmo accounting 14

15 2. Enterprise Resource Planning Soft- wares (ERPS) This software is also referred to as Cloud computing. It addresses the accounting functions, human resources management functions, warehousing functions and reporting functions of small and big business organizations. It simplifies accounting functions and has global coverage. Examples of these soft-wares include: Net suite Acumatical Navision 15

16 Key Requirements in Using Web- Based Accounting Connectivity to the internet. Awareness of the website address you are accessing. Payment of subscription. Existence of a valid account. Registration online. 16

17 AUDIT SOFTWARES In today’s modern and computerized world, even small companies have huge numbers of financial transactions going through the books. It is the responsibility of an (external) auditor, to analyze these transactions and ultimately form an opinion as to whether the accounts show a true and fair view of the company’s position. But with this huge number of transactions, it’s impossible to analyze everything manually, so what is the alternative? The answer is what is known as “generalized audit software”. Generalized audit software packages are tools designed specifically for auditors and have two main functions: 1) To facilitate and automate the testing of 100% of a population. 2) To focus the auditors attention on specific areas or transactions which are of higher risk. 17

18 Types of Audit soft-wares Specialized CAAT (Computer Aided Audit Techniques) tools such as ACL (Audit Control Language) and IDEA (Interactive Data Extraction and Analysis) include libraries of prewritten queries to ask typically meaningful questions on data sets. Other utilities such as Wiz Rule help explore complex data sets and applications. Excel 2007 allows analysis of over 1,000,000 records. ACL and IDEA are also faster at analyzing data than Excel, Active Data or Top CAATs, although none of the products were particularly slow. CAATs are wonderful for asking bizarre audit questions that ordinary system users, managers, analysts and developers have probably never even considered, some of which can lead to the identification of frauds or (conversely) confirmation that control weaknesses have not been exploited. 18

19 Application Areas and Features of Audit soft- wares Aging Produces aged summaries of data based on established cutoff dates. Append/Merge They are used in combining two files with identical fields into a single file. An example would be to merge two years worth of accounts payable history into one file. Calculated Field/Functions Audit soft-wares are applied in creating calculated fields by using data within the file. For example, the net payroll pay to an employee could be recalculated using the gross pay field and deducting any withholding/taxes. 19

20 Digital Analysis Audit technology designed to find abnormal duplications of specific digits, digit combinations, specific numbers, and round numbers in corporate data. Duplicates Audit software identifies duplicate items within a specified field in a file. Extract/Filter Extracts specified items from one file and copies them to another file, normally using an “if” or “where” statement. Gaps Audit software identifies gaps within a specified field in a file. For example, identify any gaps in cheque sequence. 20

21 Cross Tabulate Allows you to analyze character fields; by setting them in rows and columns. By cross ‐ tabulating character fields, you can produce various summaries, explore areas of interest, and accumulate numeric fields. Index/Sort Audit software sorts files in ascending or descending order. An example would be sorting a file by codes to see if any blank or “strange” codes exist. Samples Audit software creates random or monetary unit samples from a specified population. Test grouping These are groups of tests all designed to be run simultaneously on a specific report or area of the accounts, e.g. Journals, listings, trade receivables, fixed assets, etc. Highlight differences These audit software highlights the differences between two different versions of a report. 21

22 SYSTEM AUDIT AND INVESTIGATION System Audit System auditing is a branch of general auditing concerned with governance (control) of information and communications technologies (computers). System audit is also referred to as IT audit or Computer audit. IT auditors primarily study computer systems and networks from the point of view of examining the effectiveness of their technical and procedural controls to minimize risks. Auditors spend the bulk of their time dealing with the people who specify, develop, test, manage, administer, use and abuse the computer systems but it’s being able competently to audit the information technology that makes an outstanding and versatile auditor. 22

23 What do system auditors actually do? IT auditors review risks relating to IT systems and processes including: Inadequate information security (e.g. missing or out of date antivirus controls) Inefficient use of corporate resources, or poor governance (e.g. spending large on unnecessary IT projects) Ineffective IT strategies, policies and practices (including a lack of policies etc.) IT-related frauds 23

24 How is a system Audit Performed? The main stages of a ‘typical’ IT audit assignment have been extensively analyzed as follows: Scoping and pre-audit survey The auditors determine the main area/s of focus and any areas that are explicitly out-of-scope, based normally on some form of risk-based assessment. Planning and preparation The scope is broken down into greater levels of detail, usually involving the generation of an audit work-plan or risk-control- matrix. Fieldwork Gathering evidence by interviewing staff and managers, reviewing documents, printouts and data, observing processes in action etc. 24

25 Analysis Involves desperately sorting out, reviewing and trying to make sense of all that evidence gathered earlier. SWOT (Strengths, Weaknesses, Opportunities, and Treats) or PEST (Political, Economic, Social, and Technological) techniques may come in handy. Reporting Involves desperately reviewing and trying to make sense of the evidence and the analysis, figuring out how to relate what was actually examined and found back to the original audit objectives, then gradually writing it all up, re-writing it, re-re-writing it... circulating it within the department for peer review, modifying it again, then circulating or presenting it to clients and client managers to have their say, making final corrections, and finally issuing it. Closure In addition to sorting out the mess somewhat mistakenly called ‘indexing and cross-referencing’ and literally shutting the audit files, closure involves preparing notes for future audits, chasing-up management to complete the actions they promised months earlier. 25

26 System Investigation Investigation is enquiries made, by a professional, into the financial and non financial affairs of an organization on behalf of his client, for specifically agreed purpose other than to report on the truth and fairness of the organization's financial information. System investigation is the examination of the system(s) of an organization for a specified purpose. 26

27 CONCLUSION / FINAL CHARGE The world is undergoing revolution in information and communication technology (ICT), which is righty referred to as the digital revolution…. The ongoing revolution in the area of information and communication technology will continuously present huge opportunities to internationally recognized scholars and professionals. The losers will be nations, professional and scholars who fails to meet the challenges of ICT. By privilege, a member of this Association (ANAN) is the only Nigerian that made it into the Council of Association of Chartered System Accountants in the United States of America. This is by virtue of his standing with this Association and research in Accounting Information Technology

28 In 1998, I passed through the Nigerian College of Accountancy in Jos and eventually became a Certified National Accountant. When I accepted the offer to lecture at Nasarawa State University, the Acting HOD then was a member of ICAN…… Readers are Leaders. It is your ability to know ahead, see ahead and go ahead that make you the Head (a Leader with a difference). Get copies of the materials on Electronic Accounting & Reporting, IFRS and IPSAS, go through them and what “other Professionals” are following after will follow after you. 28



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