Use of Technology in Accounting

Emergence of Technology

We are living in an era of technology. The new age of technology has changed everything in and around us. Whether it’s booking of railway tickets or movie tickets, online shopping on ecommerce sites or transfer of funds or making electronic payment, everything is done online. This was not the case about two decades ago. Information technology (IT) became a buzz word in India during late 1990’s and early 2000’s. During this period, companies like Wipro and Infosys grew leaps and bounds and got listed in securities market of United States of America (USA). From that time, there was no looking back for IT and IT enabled companies in India.

The current Central Government has identified this as very crucial area and they are promoting Digital India. Nowadays, even the Government records are computerized. The IT has changed the way of conducting business. It’s a boon for business houses. If we take example of a manufacturing industry, even the various processes of production are computerized with minimum human intervention. Likewise, with the emergence of technology, the way of accounting had also changed. In this article, we will discuss about the use of technology in Accounting.

Accounting and Technology

We all know that Accounting existed since medieval period and it had evolved with advancement of human civilization. Till few decades back, the accounting records were manually maintained. Every single record – whether related to Cash/ Bank, Sales, purchases, fixed assets or Journal entry, were recorded on a piece of paper. With the emergence of technology, the way of accounting has changed. Technology had impacted Accounting in a very good way. Nowadays, it’s very difficult to find anybody doing manual accounting. Whether its large business houses, medium or micro enterprises, partnership or sole proprietorship firm, the accounting records are computerized. We all know that accounting is a critical factor for any business house. In today’s dynamic and complex business environment, real time financial and accounting information is required for a number of purposes like –

1. Analyzing the performance of business on a day to day basis.
2. Furnishing of Financial statements and other records to various authorities like Registrar of Companies, Stock Exchanges, Government authorities, Bankers, Debt Providers, Promoters, regulators and other stakeholders.
3. Making strategic plan and budget.
4. Payment of Central, State and local taxes.

The technology has made real time processing of accounting information possible and make them available to various stakeholders whenever and wherever it is required. In olden day’s abacus were used for the purpose of computing. Later calculators and other computing devices came into picture. Towards the end of twentieth century the accounting profession began to take a whole new look. Various softwares changed the way of accounting for each and every industry. Microsoft office program like Microsoft Excel had eliminated the use of calculators, paper and pen. Here a spreadsheet is available for data recording, forecasting, consolidation, budgeting and analytics and the same can be done with accuracy and efficiency. Various database can be maintained with the help of Microsoft Access. Also for the purpose of presentation we use Microsoft PowerPoint.

When we talk about advancement in field of accounting because of technology, it is important to discuss about networking. Typically in a networked environment, various computers, printers and others devices are connected via common server. One can access data even while sitting across thousand miles apart. Within same premises, networking can be done via cable and across various geographies it can be done via wireless media.

Enterprises Resource Planning and Accounting

Nowadays various Enterprises Resource Planning (ERP) packages are available that integrates various functions of an enterprise like –

1. Manufacturing
2. Supply chain management
3. Inventory management
4. Financial Accounting

Some of the famous ERP packages available in market are manufactured & marketed by SAP and Oracle. Apart from these, a variety of industry specific, customized software are available in market. Now let’s discuss about some famous ERP packages available in market.

1. SAP

SAP is one of the most common and widely used ERP software made by German company. For the purpose of financial and management accounting, SAP FICO module is available. SAP FICO module refers to Finance (FI) and Controlling (CO) modules of SAP ERP software. These modules are integrated with other modules. This modules integrates financials information from various modules that roles up to trial balance. From trial balance Financial Statements are prepared. Also this modules provides operational information to the management to support business analysis and decision making.

2. Oracle

Oracle also offers various ERP packages that takes care of end to end accounting. One of the common software is PeopleSoft financial management solutions. This is very common in KPO, BPO and shared services entities. Other common software is J D Edwards. It offers a number of application for various business process including Finance & accounting. It is common in medium to small size manufacturing entities.

3. BUSY

BUSY is an integrated business accounting and management software for Micro, Small & Medium Enterprises (MSMEs). BUSY helps to manage business management processes like Inventory / Invoicing / Taxation / Orders / Payroll / Customer Support and much more.

4. Hyperion Financial Management (HFM)

Hyperion Financial Management (HFM) package is available which is used across globe for the purpose of consolidation. So with one click hundreds of trial balances are consolidated.

5. Tally

Tally is one of the most commonly used software package used in India by small business entities. This product is developed by Indian company and is known for its ease of use.

6. Dynamics

Dynamics is an ERP package offered by Microsoft. It provides business solutions to both small & medium sized entities. In India, it is very common in Shared services and captive unit.

7. Finacle

Finacle is core banking software developed by Infosys. This software is used by multiple banks across several countries.

8. Maconomy

Maconomy is another commonly used ERP package which is used by consulting firm and captive units across globe. It is user friendly and supports various accounting functions like AP, AR, Banking functions and Journal entries.

Conclusion

Technology has greatly helped accounting system of business entities. With new age accounting packages and diversified financial management software, business performance seems to improve. Also the affordability of these softwares creates opportunity for smaller entities to improve their business. In future, with advancement of technology, more customized packages of accounting would be available that will make entities more efficient and competitive. Also many education institutes are offering various courses to impart training to accountants for commonly used ERP packages.

If you want to make a career in accounting, it becomes very important that you stay updated with the technology and various developments in it. EduPristine offers a course “Post Graduate Program in Business Accounting and Taxation” which can help you with that. Check the details and enroll now.