IT in Accounting and Finance

 

IT in Accounting In Accounting IT can be used in the form of Accounting Information systems. They are the oldest and most widely used information systems in business, which record and report business transactions and other economic events. Operational accounting systems emphasize legal and historical record-keeping and the production of financial statements. asically it follows Transaction  processing systems. !anagement accounting systems focus on the planning and control of business operations. "i# common purposes of accounting systems include$ %. Order &rocess &rocessing. ing. Or, sales order process processing ing is is an important important ttransact ransaction ion  processing system which captures and processes customer orders and  produces invoices for customers and data needed for sales analysis and inventory control. '. Invent Inventory ory ( (ontro ontrol. l. These system systemss tra track ck an and d monitor monitor level levelss of and changes in inventory. inventory. They may be programmed to notify managers managers if some threshold level of inventory is reached that re)uires a decision. They may also be e)uipped to handle routine re-order information. *. Accoun Accounts ts + +eceiva eceivable. ble. Acc Accounts ounts receiv receivable able system systemss kee keep p records records of amounts owed by customers from data generated by customer purchases and payments. . Accoun Accounts ts & &ayable ayable.. Ac Accounts counts payabl payablee sys systems tems keep track of d data ata concerning purchases from and payments to suppliers. . &ayrol &ayroll. l. &ayrol &ayrolll syst systems ems re receive ceive and m mainta aintain in dat dataa from employee employee ttime ime cards and other work records to produce paychecks and other documents such as earning statements, payroll reports, and labor analysis reports. . /enera /enerall 0e 0edger. dger. /enera /enerall ledger ledger system systemss cons consolida olidate te da data ta rreceive eceived d from accounts receivable, accounts payable, payroll, and other accounting information systems. How AIS is being Used-

AI" typically follows a multitier architecture separating the presentation to the user, application processing and data management in distinct layers. The  presentation layer manages how the information is displayed displayed to and viewed  by functional users of the system 1through mobile devices, web browsers or client application2. The entire system is backed by a centralized database that stores all of the data. This can include transactional data generated from the

 

core business processes proce sses 1purchasing, inventory, accounting2 or static, master data that is referenced when processing data 1employee and customer account records and configuration settings2. As transaction occur, the data is collected from the business events and stored into the system3s database where it can be retrieved and processed into information that is useful for making decisions. The application layer retrieves the raw data held in the database layer, processes it based on the configured business logic and  passes it onto the presentation layer to display to to the users.  For example-consider the accounts payable department when processing an invoice. 4ith 4ith an accounting information system, an accounts payable clerk enters the invoice, provided by a vendor, into the system where it is then stored in the database. 4hen goods from the vendor are received, a receipt is created and also entered en tered into the AI". efore the accounts payable department pays the vendor, the system3s application processing tier  performs a three-way matching where it automatically automatically matches the amounts

on the invoice against the amounts on the receipt and the initial purchase order. Once the match is complete, an email is sent to an accounts payable manager for approval. 5rom here a voucher can be created and the vendor can ultimately be paid. Duties of VP in A Accounting ccounting

%. Accoun Accounts ts &aya &ayable ble 1m 1money oney out out22 6 In o order rder to maint maintain ain gre great at relationships with vendors making sure tthat hat everyone gets paid on time is a vital role. The role of the accounting department includes keeping an eye on opportunities to save money, for e#ample, determining if there are discounts or incentives available for paying certain vendors more )uickly. At the very least, A& A& should be scheduled to assure that the least amount of money has to go out per  payment, i.e., no late payment payment charges7 '. Accoun Accounts ts +ecei +eceivable vable and + +evenue evenue T Tracki racking ng 1money iin2 n2 6 A Anothe notherr critical duty of the accounting department is to account for and track receivables, including outstanding invoices and any re)uired collection actions. Accounts Accounts receivable is rresponsible esponsible for creating and tracking invoices. The responsibility here includes assuring that customers pay those invoices on time, so a system of friendly reminders is crucial.

 

*. &ayrol &ayrolll 6 &ayroll iiss a critic critical al funct function ion of the acc accounti ounting ng departm department ent and includes making sure all employees are paid accurately and timely. In addition, proper ta# is assessed and ta# payments are on time with state and federal government agencies. . +eport +eporting ing and 5i 5inancia nanciall "tatem "tatements ents 6 T The he primary primary reason you co collect llect data properly in your accounting software is to prepare financial reports that can be used for budgeting, forecasting and other decision making processes. In addition, these and other reports are needed for communication to investors, banks and other professionals that play a role in the growth of your business. . 5inanc 5inancial ial (ont (ontrols rols 6 5inan 5inancial cial cont controls rols incl include ude reconc reconciliat iliations, ions, dividing the responsibilities and following the /AA& standards of accounting principles, all of which are implemented with view toward compliance, fraud and theft prevention. The role of tthe he (ontroller is to ensure procedures are set up properly to manage that process without errors. Information needed b VP to perform !is tas" is # 

%. 8etai 8etails ls of cust customers omers ffrom rom the m marketi arketing ng depar department tment to know whether the customer can be classified as a bad debt '. 5or prep preparati aration on of inco income me sta statemen tementt and bal balance ance she sheet et they w would ould re)uire information from marketing department for sales, 9+ department for lay offs and pay slips and production department for  inventory information.

IT in Finance 5inancial Information "ystems support financial managers in decisions concerning the financing of the business and the allocation and control of financial resources. :ey areas for financial information systems include$ %. (ash and "ecuri "ecurities ties !anagement. !anagement. Inform Information ation system systemss co collect llect information on all cash receipts and disbursements within a company on a realtime or periodic basis. 5urther, m many any businesses invest their e#cess cash in short-term marketable securities and these portfolios can be managed by systems software. '. (apit (apital al ud udgetin geting. g. The II" " assi assists sts tthe he ca capital pital budget budgeting ing p process rocess by helping to evaluate the profitability and financial impact of proposed capital e#penditures.

 

*. 5inanc 5inancial ial 5orecas 5orecasting. ting. The financ financial ial iinformat nformation ion ssystem ystem package of th thee organization will have a variety of statistical forecasting packages to  provide analytical techni)ues that result in economic or financial forecasts of national and local economic conditions, wage levels, price levels, and interest rates. . 5inanc 5inancial ial &lanni &lanning. ng. 5inancial 5inancial p planni lanning ng sys systems tems use fi financi nancial al pl planning anning models to evaluate the present and pro;ected performance of a business or  of one of its divisions or subsidiaries. They also help determine determine the financing needs of a business and analyze alternative methods of financing. Duties of VP in finance

%. 5inanc 5inancial ial +epo +eporting rting-<i -<ice ce preside presidents nts of finance are al also so responsi responsible ble for composing and issuing the financial reports given out by the company to investors, regulatory agencies and other stakeholders. !any of these documents re)uire that one or more top-ranking e#ecutives sign their names, testifying to its accuracy. '. Audit Auditing-A ing-Ass part of the m monitor onitoring ing of the or organiz ganization ation=s =s finan finances, ces, vice  presidents of finance must conduct regular audits of e#penditures, assets and liabilities, making sure the recorded figures are verifiable and accurate. *. &lanni &lanning-One ng-One o off the mo more re amorp amorphous hous dut duties ies of the vice pre presiden sidentt of finance is planning for the company=s financial future. This can take various forms, including drawing up short- and long-term plans, as well as coordinating with other top e#ecutives about the company=s direction. . +isk !an !anagemen agement-< t-<ice ice pre presiden sidentt of finance is genera generally lly respo responsibl nsiblee for oversight of the risks the organization is taking. This can include outlining possible financial risks and weighing the comparative benefit of  certain potential courses of action. . uil uild d >#ternal +e +elati lationships onships-< -<ic icee presiden presidents ts of finance are e#pe e#pected cted to represent the organization and build outside relationships with stakeholders with a financial interest in the organization=s health. These can include banks, stockholders and members of the community. . 5undrai 5undraising-T sing-The he vice pre president sident o off finance w will ill supe supervise rvise th thee raisin raising g of funds. This can include working out methods of attracting investors or donations and deciding how the money will be spent. 8irect and coordinate line of business financial planning and budget • management functions

 

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+ecommend benchmarks for measuring the financial and operating

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 performance !onitor and analyze monthly operating results against budget Oversee daily operations of the finance and accounting department !anage the preparation of all financial reports !anage the preparation of financial outlooks and financial forecasts &repare financial analysis for contract negotiations and product

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investment decisions >nsure compliance with local, state, and federal budgetary reporting

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re)uirements 4ork 4o rk with department managers to develop five year business plans Assist in establishing short- and long-range departmental goals,

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ob;ectives, policies, and operating procedures 8esign, establish, and maintain an organizational structure to effectively

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accomplish the departments goals and ob;ectives "erve on planning and policy-making committees

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"erve as primary government liaison relative to financial issues (oordinate financial audits and provide recommendations for procedural improvements

Information needed b VP to perform !is tas" is # 

The finance department use past financial reports to measure the organisation=s annual performance, employees bank account information to pay salaries or wages, the businesses bank statement to revise where the business is overspending and government corporation ta# information to be able to forecast how much they will be ta#ed on profits. And all these information is needed by <& to know whether the reports prepared by his department are acceptable. 5ollowing are information needed from other departments%. Income sstatem tatement ent and ba balance lance sh sheet eet pre prepared pared by aaccount ccountss departm department ent is needed to know the current standing of the business and also for  posting of this information in its its financial report and also the policies followed by its accounts department for preparation of these statements. '. 5or prep preparatio aration n of the budget budget an and d forecasts forecasts info informati rmation on from tthe he marketing regarding the sales pro;ection and also accounts receivable

 

and payable from the accounts department and also future manpower re)uirements from the 9+ department. *. 5uture re) re)uirem uirement ent from th thee manufa manufacturin cturing g departm department ent for an asse assett is needed for fundraising.