Project Report Contents:

1. Features of Computerised Accounting System

2. Codification and Grouping of Accounts
3. Spread-sheet Software
4. Pre-packaged Accounting Software
5. Customised Accounting Software
6. Enterprise Resource Planning (ERP) Software
7. Outsourcing of Accounting Function
8. Choice of an Alternative

1. Features of Computerised Accounting System:

The following are the features of computerised
accounting system:-
(i) A number of computers are used which are used by the
members of the office staff who know how to operate them.
(ii) Usually, a number of computer software’s are used. A
computer software includes any programme or routine that
performs a desired function or set of functions quickly and the
documentation required to describe and maintain that
programme or routine. The computer software may be
developed by the firm’s staff specifically for the business or it
may be software acquired from the market.
(iii) Acquired software may consist of a spread-sheet package
or may be pre-packaged accounting software. Larger
organisations may use an Enterprise Resource Planning
(ERP) package for developing a customised accounting
package.
(iv) Work is done with great speed and a very high level of
accuracy.
(v) Sometimes, the whole function of accounting is outsourced
where the firm gets its financial accounting processed by an
outside agency which also uses computers to perform the
function.
(vi) The system poses the problems of controls, security and
integrity as information is stored in soft copies inside the
computers. There may be unauthorised access to the data.

2. Codification and Grouping of Accounts:

In manual accounting system, account codes are rarely used.
In computerised accounting also, there are many accounting
software’s available which support non-coded accounting
system. But mostly a computerised accounting system uses a
well-defined coding system.
Proper codification requires a systematic classification of
accounts. The main unit of classification is the major heads
which are divided into minor heads. Each of the minor head is
further divided into subordinate heads generally known as
sub-heads. The sub-heads are further divided into detailed
heads. Thus, there may be a four tier arrangement of the
classification structure of accounts.
To give you an idea, the following may be a part of
codification of accounts in a manufacturing concern:-
Revenues (1000-1499)
1100 Domestic
1200 Export Expenses (1500-7999)
Manufacturing Expenses (1500-1999)
1500 Raw Materials Consumed
1600 Direct Labour
1601 Wages 1700 Power
1700 Fuel
1800 Carriage Inwards
Selling Expenses (2000-2999)
2000 Advertising
2100 Commission
2200 Discount
Administrative Expenses (3000-3999)
3010 Postage
3011 Telegrams
3013 Telephone
3100 Salary
3205 Repairs to Furniture
3306 Travelling Expenses
3388 Insurance
3389 Rent
3392 Rates
3396 Audit Fee
3397 Depreciation on Furniture
There is always some logic behind the classification. For
example, two major heads of a company may be car-
manufacture and servicing of cars. Car manufacture may be
divided into manufacture of chasis, the door, the front panel
etc. The servicing of cars may be divided into servicing under
the guarantee period and servicing outside the guarantee
period.
The detailed classification of account heads and the order in
which the major and minor heads are to appear in account-
records must be got approved by the top management and
reviewed by the auditor before being introduced in the
enterprise.

3. Spread-sheet Software:
Spread sheet package may be used to maintain accounts. In
doing so, the user will have to keep a control of the figures
also. Special spread sheet controls including physical spread
sheet controls like spread sheets locked on a protected shared
drive with restricted access and read / write access controls
and password protected-cells and formulas with passwords
may be used.
Advantages:
The following are its advantages:
1. It is simple to use and easy to understand. Accounts can be
easily regulated.
2. Most of the common functions like doing calculations,
setting formulas etc. can be easily done.
3. Presentation can be made in various forms including
graphical presentations like bar diagrams, histograms, pie-
charts etc.
Disadvantages:
The following are the disadvantages:-
1. It can accept data only up to a specified limit.
2. Simultaneous access on a network may not be possible.
3. Double entry is not automatically completed. Also, reports
are not automatically generated.

4. Pre-packaged Accounting Software:

There are several pre-packaged accounting software’s which
are available in the market. These software’s are easy to use
and relatively inexpensive. The installation of a pre-packaged
software it very simple. An installation diskette or CD is
provided with the software to install the software on a
personal computer.
A network version of the software is also available which has
to be installed in the server and then work can be performed
from the various workstations or nodes connected to the
server. User manual is also provided to guide the user of
software. The vendor to the software normally provides
regular updates to take care of the changes of law as well as to
provide additional features.
Advantages:
The following are the advantages of pre-packaged
accounting software;
(i) It is easy to install.
(ii) It is relatively inexpensive.
(ii) It is easy to use.
(iv) Backup procedure is simple.
(v) It is specially effective for medium sized business houses.
Disadvantages:
The following are the disadvantages of pre-packaged
accounting software:-
(i) A standard package may not be able to take care of the
complexities of the modem business house. There may be
certain peculiarities of the particular business which may not
be taken care of by the standard package. Many reports which
are required may not be possible.
(ii) It may not cover all the functional areas. For example,
production process may not be covered.
(iii) Customization may not be possible in most such
software’s.
(iv) There is lack of security because any person can view data
of all concerns with common access password. Customized
accounting software does not suffer from this drawback.
(v) Usually in the initial years, there are bugs which take long
to be rectified by the vendor.
Consideration While Selecting Pre-packaged
Software:
To select appropriate pre-packaged software from a
number of them available in the market, the
following points need to be considered:
(i) An attempt should be made to match the requirements of
the particular business with the available solutions. The one
which fulfils the maximum requirements should be picked up.
(ii) Costs of the different packages have also to be taken into
account.
(iii) It should not be very detailed or cumbersome to use.
(iv) Reputation and track record of the vendor will also be
considered. A vendor who is prepared to give updates has to
be preferred.

5. Customised Accounting Software:

A customised accounting software is one where the software is
developed on the basis of requirement specifications provided
by the organisation. First of all, a feasibility study is made, If it
is decided to go ahead, requirements of the business unit are
noted.
Based on these requirements, the system analyst prepares a
requirement specification which is handed over to the top
management for approval. After the requirement specification
has been approved, the designing process is started. After
development of the system, it is tested. If it is found satisfying,
it is implemented.
Advantages:
The following are the advantages of a customised
accounting package:
(i) All the functional areas are covered as per requirement.
(ii) The input screens can be tailor-made to match the input
documents for ease of data entry,
(iii) The reports can be as per specifications of the
organisation.
(iv) Bar-code scanners can be used as input devices suitable
for the specific needs of an organisation
Disadvantages:
The following are the disadvantages that may arise in
a customised accounting package:-
(i) The system may work in a defective manner if
(a) requirement specifications are incomplete or ambiguous.
(b) documentation is incomplete, or
(c) control measures are inadequate
(ii) Inadequate testing may result in bugs remaining in the
software.
(iii) Vendor of the software may be unwilling to give support
due to other commitments. He
may also be not willing to part with the source code or enter
into an escrow agreement,
(vi) If frequent changes are made to the system and they are
not well handled, there may be defective functioning.

6. Enterprise Resource Planning (ERP) Software:

Enterprise Resource Planning (ERP) Software is an integrated
software package that manages the business across the entire
organisation. Big organisations often adopt this package.
Advantages:
The following are the advantages of an ERP:-
(i) An ERP is a generalized package which covers most of the
common functions
(ii) Most of the desired reports are available. Moreover, these
reports are standardized across industry and acceptable to the
users.
(iii) As it is an integrated package, duplication of data entry is
avoided.
(iv) Much more information is made available by this package
than what is available otherwise.
Disadvantages:
The following are the disadvantages of an ERP:-
(i) At times, the user may have to modify his business
procedure to use ERP effectively.
(ii) ERP is often too expensive for the small and medium sized
organisations.
(iii) There may be implementation hurdles.
(iv) It is a complex software.
Choice of an ERP:
The following factors determine the choice of an
ERP:
(i) The ERP that matches most of the requirements of an
organisation is preferred. It is evaluated whether all the
reports required by the business will be available or not.
(ii) The reputation and track record of vendor is considered
(iii) Costs of different available ERPs are compared.

7. Outsourcing of Accounting Function:

The accounting function may be outsourced to an outside
party for a fee. It is done to save cost and more importantly to
take the advantage of expertise of the outside party.
Accounting software is used by the outside party which
processes the data given to it and which hands over different
reports to the client from time to time.
Advantages:
The following are the advantages of outsourcing the
accounting functions:
(i) it is more economical.
(ii) It saves time thus enabling the concern to concentrate on
the core area of business activity.
(iii) It enables the organisation to take the advantage of expert
knowledge of the outside party to whom the accounting
function is outsourced.
(iv) The organisation is not bothered about the people leaving
the organisation in accounting department.
Disadvantages:
The following are the disadvantages of outsourcing
the accounting function;
(i) The data related to the organisation is in the hands of an
outside party. It may endanger security and confidentiality of
the organisation data.
(ii) The outside agency may provide inadequate services. The
desirable standards may not be met and ultimately the system
may prove to be more costly rather than cheaper.
(iii) The outside agency may be catering to a large number of
clients due to which service may not be timely.
Choice of outsourcing vendor:
The following factors are considered while choosing an
outsourcing vendor:
(i) The extent to which the services offered by the vendor meet
the requirements of the concern.
(ii) The reputation, background and track-record of the
vendor.
(iii) The comparative costs proposed by the different vendors.

8. Choice of an Alternative:
To a business concern different alternatives are available. The
alternatives include spread-sheet package, pre-packaged
accounting software, customised accounting package, ERP
package and outsourcing of the accounting function to an
outside party.
The following points are considered while choosing
an alternative:
(i) Scale of operation. A small or medium sized concern may
pick a pre-packaged accounting package while a large sized
organisation may have to opt for customised software or ERP
package.
(ii) If the operation to be computerised is complex with
several functional areas, customised software or an ERP
package may be the choice.
(iii) Customised software is the solution if the organisation
has several non-standard requirements.
(iv) The capacity of the concern to bear the cost is also
considered. The spread sheet and pre-packaged accounting
software are cheaper. The customised software and the ERP
package are comparatively costly.