Information_Flow_Analysis

Introduction Information technology (IT) has had a huge impact on the Accounting industry over the past few decades. Once a slow-paced and conservative industry has rapidly changed and becoming a part of the fast-passed word of Accounting Information Systems (AIS). AISs have impacted all areas of accounting such as financial accounting, managerial accounting, taxation, and auditing by improving the process of payroll, accounts receivable, accounts payable, inventory, and budgeting. Several forms of automation in recording, storing, managing and analyzing data are allowing accountants and business to expand their finical capacities by receiving more accurate, timely and beneficial information. Historic Accounting Method Originally accounting was performed manually with columned ledger books which took hours to record all relevant information. All transactions were recorded daily then summarized in monthly, quarterly, and annually financial statements along with comparative reports. Storing the documents took lots of space with the risks of losing the information from a fire for natural disaster. The historical ways of accounting took lots of manual labor which at times could become repetitive leading to potential errors in recording the data and calculating the results. Such errors made it difficult for managers, owners, and investors to understand a business results. Accounting Today Technology has made gathering, maintaining, analyzing, and reporting accounting information more effective and efficient for accountants, managers, bankers, and invertors. Programs are designed to gather the data into one place while removing some risks of bad information being recorded and allowing them to utilize the data better. Spreadsheets programs have become a major tool used by accountants and managers to present information such as revenue recognition, contract management, purchasing, inventory, billing and payroll. More recently though several companies have begun to incorporate automated systems that tighten internal controls while achieving a greater insight on the businesses financial health. Audit software and knowledge-sharing applications are two areas in which IT is constantly changing. Automated audit tasks and audit software has changed the structure of audit teams while "advanced systems to share knowledge bases across different parts of the organization that has enabled professional services firms to leverage their human resources more effectively” (Kao, Yi-ching, September 22, 2002). Through connecting the infrastructure of a business offices are set up to link to the main office to all departments and other offices via a Virtual Private Network (VPN). Linking all levels of a operates through VNP allows the office environment to replace paper documents with electronic documents providing easier access whole improving work efficiency and reducing operating costs. Such databases like a client database can easily be retrieved through a search function or with associated links where files for each client are stored. Auditing requires a lot of procedures and perpetration which involves substantial calculations, audit plan development, organization of audit activities, and referencing across different accounts. “Computer applications can automate such structured tasks and substantially reduce the processing time” (Kao, Yi-ching, September 22, 2002). Audit software has reduced the number in errors through automatic electronic preparation of working papers while making it easier to gather and organize information. There are several benefits to having integrated client storage database by offering a quicker reference and modification on previous audit plans and reports. Accountants and managers use “notes as a tool to manage internal resources and documents to save time and increase effectiveness” (Kao, Yi-ching, September 22, 2002). The issue with holding on to finical information is a thing of the past and it is essential for business to store such data. Now there are several ways to store electronically filed data with CDs, DVDs, zip discs, jump drives, external hard drives and tape drives that are easily separated from systems which can be used either on-site or off-site. Larger organization will even store and secure data in one or more off-sit locations. Along with the need for storage and easy access there is a greater need for security measures. Certain data needs to be effectively restricted to those approved to access the information. Even though nowadays computers automatically offer minimal security it is not efficient enough for multiple-user databases and reporting systems. Accounting software programs offer security set-up based on business function, customer user setup, or both which is managed by a system administrator. Conclusion Information technology has had a positive impact on the Accounting industry with several programs and knowledge-sharing making business operation more effective and efficient. Once difficult jobs of financial accounting, managerial accounting, taxation, and auditing have been mortified with AISs making processing payroll, accounts receivable, accounts payable, inventory, and budgeting by saving a company resources and reducing costs. IT will continue to develop and change as the business world grows and becomes more global. Reference: Yi-ching, K., (September 22, 2002). “Impact of information technology on public accounting firm productivity”, AllBusiness A D&B Company. Retrieved August 13, 2009 from http://www.allbusiness.com/technology/356543-1.html