Question

‘Accounting software is an integral part of the Computerised Accounting Systems’ Explain. Briefly list the generic considerations before sourcing accounting software.

Answer 1

The accounting software does form an integral part of the Computerised Accounting Systems. The accounting software should be selected after considering the level of skill and proficiency of the accounting professionals. This is one of the important aspects that should be taken care of before introducing Computerised Accounting Systems, as the accounting professionals are responsible for accounting and the not computers.

The following are some of the important points that should be taken into consideration before introducing accounting software in an organisation.

1. Flexibility- This is the most important factor that should be considered before sourcing accounting software. The accounting software should be flexible in terms of data entry, retrieval of data and generating design of reports. The software should be able to run on different computers having different operating systems and having different configurations. It should provide some flexibility among its users. It should also provide easy switch over between users, operating system and hardware.

2. Cost of Installation and Maintenance- The selection of accounting software largely depends upon its cost to the organisation. The cost of accounting software includes cost of installing the related components and hardware, maintenance and alteration costs, cost of training the staff and cost involved in recovering data in case of data failure. An organisation needs to evaluate the benefits of the software against its costs. Based on its evaluation, an organisation will introduce the software if the benefits are more than the cost and if it is in the affordable range of the organisation.

3. Size of Organisation- The size of an organisation also determines the selection of accounting software. The small-sized organisations, where the volume of business transactions is not so large, usually opt for simple and single user oriented software. On the other hand, large scale organisations, where the volume of business transactions is very large choose the latest and sophisticated software for meeting the multi-user requirements.

4. Training Needs- Another factor that affects the choice of software is the training needs. There are some accounting software that requires comparatively lesser training and are more user-friendly. While, there are some other complicated software that requires continuous and thorough training.

5. Level of Secrecy- The level of expected security is one of the important factors that an organisation bears in mind before sourcing accounting software. Software should be able to prevent the unauthorised access and manipulation of data. It should have in-built features of security. For example, in tailored software the user rights may be restricted according to their work or responsibility criteria.

6. Exchanging Data Facility- The capability of accounting software to transfer data is another important factor to be considered for its selection. The accounting software should be able to provide an easy and safe transfer of data from one system to another system and during migration of database.

7. Utilities/MIS Reports- Another factor which helps in determining the software selection is the MIS reports and the extent to which they are used in the organisation.

8. Vendor Reputation and Capability- The selection of software is also affected by the capability and competence of the vendor. It depends upon the reputation of the vendor in the market, the user-reviews of the similar software, the extent of post sales support services from the vendors, etc.