Course Title: Accounting For Managers

Topic: Accounting & Information Technology

Conducted By: Muhammad Ali Haider Khan

GROUP MEMBERS:
S. No. NAME STUDENT ID
1 Yousuf Jamal 11122
2 Syed Saad Ali 110912
3 Mannan Azeem 110913
4 Ahmad Arif 10271
5 Ammar Khan 8367

ACKNOWLEDGMENT:

We might want to express our unique thanks of appreciation to our

instructor ‘Sir Muhammad Ali Haider Khan’ who gave us chance
 to investigate our insight and to make ourselves to turn out from
the nutshells.

ACCOUNTING ISSUES
1. Poor Data Entry

 Manually entering data from invoices into the computer is time-consuming and
mistake-prone. Even a simple mix-up when transferring numbers can result in costly
errors for your company. And when you are talking about money that’s owed to
your business, there just isn’t room for sloppy work. Another thing to consider is
that if you’re using Excel or a similar program for your accounting then there are
errors in your spreadsheets. About 88% of the Excel spreadsheets used by a
business contain significant errors. Finding these errors and correcting them takes
huge amounts of time.  

2. Disappearing Invoices

Any time accounts department fall behind on invoice processing there’s an

increased danger of losing track of invoices. Incoming invoices might be lost
permanently or just temporarily misplaced. Either way, if accounts department can’t
keep track of your information accounts department will just keep falling farther or
farther behind on getting invoices processed.

For invoices that are permanently lost slow processing isn’t the only problem. The
accounts department will have to spend time getting in touch with suppliers so they
can issue replacement invoices. And if they don’t notice the invoices are missing
then you have to deal with suppliers calling and asking why you haven’t paid yet. On
top of that, you’ll have all the problems of an inconsistent paper trail when it’s time
for audits.

3-Slow Processing

Manual invoice processing takes a huge amount of time. In contrast, automation

makes average invoices processed per AP employee increase by roughly 5 times. In
other words, if an AP department can manually process 1,000 invoices per employee
each month automation can bring that number up to 5,000 per employee.

4. Lost Money

Inefficient invoice processing puts them at risk for losing money. For one thing, the
longer it takes to process an invoice the higher they cost-per-invoice is going to be.
Labor costs account for a large percentage of how much it costs to process an
invoice. Another issue comes up if they records aren’t accurate and you make
duplicate payments or overpayments. There’s a good chance they’ll never see that
money again unless your AP department catches the error and initiates re-collection
efforts.

If you fall behind on invoice processing that will also mean missing payment
deadlines. This will result in late fees, which are one of the most common accounts
payable problems. And fees aren’t they only issue. Falling behind on payments also
damages their relationships with vendors. If they’re always paying late they might
even stop doing business with you.
Enterprise Resource Planning (ERP)

INTRODUCTION:

ERP software for banking industry focus on key processes such as financial
transactions, protecting client’s sensitive info, connecting multiple
departments etc. It’s important to note that such solutions barely can handle
literally all business tasks because this leads to great implementation costs and
difficulty. Thus, you should define the essential things to gather them into a
single solution.
IMPORTANCE of ERP for Banking Industry
 Banking sector is facing tougher competition and demands rapid change.
Moreover regulatory and legal requirements want information to be accurate
and most important of all, it should be timely. Banking Sector has huge
potential for applications of ERP due to its vast data oriented nature. It
provides solution for various things which include cash accounting, payment
processing, security of cash and cash management. ERP systems also help in
analyzing financial condition of an enterprise, account management and
preparation of financial reports and statements. An ERP system is also
responsible for strengthening the logistical capability which includes handling
of non-banking goods and services and handling of bank notes and monitor
every transaction in real time and other important range of services. It helps in
decision making which includes decision for strategic, tactical and operational
planning and uses various technologies which help in saving time, reducing
cost, and effective communication.

First and foremost, ERP is the way to combine all essential business processes
in a single powerful system. There are tons of advantages, so check the most
valuable ones which are perfect for banks:

 Easy access to financial data. It’s enough to input information once to make it

available for everyone with permissions. Such data come without extra revise.
 Communication between branches. ERP software for banking industry connects all
departments and greatly facilitates workflow.
 Control and monitoring. While everything is tracked by machines, it becomes really
simple to check staff performance or business processes’ current states.
 Control and monitoring. While everything is tracked by machines, it becomes really
simple to check staff performance or business processes’ current states.
 On a par with strengths, there are always some weaknesses. They are strongly
linked with advantages and, thus, are inevitable:

 Dependence on hardware. Stand-alone products can’t work without solid servers.

However, SaaS web ERP for banking industry is less demanding.
 Complicated system of permissions. Banks have to control security and create
different access levels for different employees. It may be difficult for large
corporations.
 High costs of implementation and switching. Again, fully-functional ERP with a lot of
modules is expensive as you have to install it and train workers.

 Here’s a list of the top 6 ERP systems used in the banking industry for several
different purposes:

SAP: it is the market leader for Financial Accounting, ERP and CRM solutions.
SAP is used mainly by top-tier banks, which effectively means only those
institutions that can afford the cost of implementing such a high profile
software system.

Oracle EBS: is one of the most widely used ERP systems in the banking
industry. Oracle EBS and SAP dominate the market share with their highly
process oriented and secure application flows.

Corniche: is specifically designed for the management of private banks,

offshore banks, and other financial institutions involved in loans and
payments. It provides multiple currency accounting, a back-office interface,
merchant services, card services, payment interfaces and online banking
facilities.
EBANQ: is an out-of-the-box mobile-ready e-banking application for small
to medium sized banks and other financial institutions. EBANQ’s design is
quite user friendly, both for administrators as well as end users.

Moneyman: is a cash management software for the small and medium

business, either through brokers/agents or direct. It’s considered highly
efficient for Church Development Funds.

CoBIS Microfinance Software: manages micro-banking & SACCO

operations. It helps manage savings, loans, term deposits, and shares.

Cashbook: calls itself a multi-site, multi-currency, multi-lingual solution. It

is a helpful application that assists finance departments to perform daily tasks,
thus reducing operational time and increasing productivity. It is also an
essential tool for many companies who are looking to implement an effective
Corporate Governance policy.

Risk Management

Risk and risk management Risk has traditionally been defined in terms of the
possibility of danger, loss, injury or other adverse consequences. In accounting
and finance risk is considered in terms of decision trees, probability
distributions, cost-volume-profit analysis, discounted cash flow, capital assets
pricing models and hedging techniques, etc.

Risk management is the process by which organizations methodically address

the risks attaching to their activities in pursuit of organizational objectives and
across the portfolio of all their activities. Effective risk management involves:
 risk assessment; risk evaluation; risk treatment; and risk reporting. The focus
of good risk management is the identification and treatment of those risks in
accordance with the organization’s risk appetite. The enterprise risk
management approach is intended to align risk management with business
strategy and embed a risk management culture into business operations.

Essential Points of Risk Management

A well-known and respected risk management approach has been developed

by COSO. The COSO (2004) model of internal control comprises eight
components:

 The internal environment sets the basis for how risk is viewed and the
organizational appetite for risk.
 Organizational objectives must be consistent with risk appetite.
 Events affecting achievement of objectives must be identified, distinguishing
between risks and opportunities.
 Risk assessment involves the analysis of risks into their likelihood and impact in
order to determine how they should be managed.
 Management then selects risk responses in terms of how risks may be mitigated,
transferred or held.
 Control activities in the form of policies and procedures ensure that risk responses
are carried out effectively
 Information needs to be captured and communicated as the basis for risk
management.
 The enterprise risk management system should be regularly monitored and
evaluated.
 Advantages or Benefits of Risk Management Process

 Benefits of risk identification

 Benefits of risk assessment
 Treatment of risks
 Minimization of risks
 Awareness about the risks
 Successful business strategies
 Saving cost and time
 Protecting resources

Disadvantages of Risk Management Process

 Complex calculations
 Unmanaged losses
 Ambiguity
 Depends on external entities
 Mitigation
 Difficulty in implementing
 Performance
 Potential threats
 Financial statement Process
The preparation of financial statements involves the process of aggregating
accounting information into a standardized set of financials. The completed
financial statements are then distributed to lenders, creditors, and investors,
who use them to evaluate the performance, liquidity, and cash flows of a
business.

The preparation of financial statements includes the following steps (the exact
order may vary by company):

1. Compare the receiving log to accounts payable to ensure that all supplier invoices
have been received. Accrue the expense for any invoices that have not been
received.
2. Compare the shipping log to accounts receivable to ensure that all customer
invoices have been issued. Issue any invoices that have not yet been prepared.
3. Accrue an expense for any wages earned but not yet paid as of the end of
the reporting period.
4. Calculate depreciation and amortization expense for all fixed assets in
the accounting records.
5. Conduct an ending physical inventory count, or use an alternative method to
estimate the ending inventory balance. Use this information to derive the cost of
goods sold, and record the amount in the accounting records.
6. Conduct a bank reconciliation, and create journal entries to record all adjustments
required to match the accounting records to the bank statement.
7. Post all subsidiary ledger balances to the general ledger.
8. Review the balance sheet accounts, and use journal entries to adjust account
balances to match the supporting detail.
9. Print a preliminary version of the financial statements and review them for errors.
There will likely be several errors, so create journal entries to correct them, and
print the financial statements again.
10. Accrue an income tax expense, based on the corrected income statement.
11. Close all subsidiary ledgers for the period, and open them for the following
reporting period.
12. Print a final version of the financial statements.
13. Write footnotes to accompany the financial statements.
14. Provide a cover letter that explains key points in the financial statements.
15. Distribute the financial statements.

ACCOUNTING DEPARTMENT PROBLEMSREGARDING IT

 Reversing the wrong posted transaction problem

 No system generated Financial Statements can be generated
 No direct link inventory department
 Accesses constrain
 Hard to customize the software
 Limited accesses to outlook
 Network and connectivity problems
 Hardware Installation problems