Group work 1

Unit 11 - BTEC HND: Financial Systems and Auditing Topic: The main features of accounting packages Instructor: (Mr.) Jun Alejo Bathan

Group members: (Mr.) Tran Duy Tung 5255 (Team Leader) (Ms.) Nguyen Thi Phuong Anh 5377 (Assistant Leader) (Mr.) Nguyen Le Toan 4155 (Ms.) Nguyen Thi Hong Trang 4132 (Ms.) Bui Thuy Duong ------------------------At the increasingly competitive economic climate these days, technological integration has become indispensable method to increase the efficiency of a business, which might turn out to be its advantage over rivals. The aspects which are necessarily computerized can be from every corner in the business procedure; one of which is finance & accounting the blood and language of a business (Warren Buffett). To facilitate the work of accounting department, accounting packages which are collections of computer programs or software designed to carry out specific accounting tasks (Business Essentials, p.4) should be applied. Like any computer software, these financial-related packages have some major features that need identifying by the users for the best utilisation. The most obvious characteristics of computerising the business procedures (or accounting system in particular) are reliability and labour-saving. The scenario where an immensity of financial transactions needs processing would be eased by computerised packages. Besides, packages are customised (for large organisations) or bought off-the-shelf (for small-medium business), thus the rate of accuracy must be guaranteed to the fullest. Additionally, companies are likely to achieve cost-efficiency thanks to the subsidiary modules. Most accounting packages are made up of different modules, each of which has its own focus. For instance, common core modules include Accounts Receivable, Accounts Payable, General Ledgers, Billing, Purchase Orders, Sales Orders, and Stock and Inventory. Most programs are going to feature these
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modules, or some combination of them. Consequently, these tools can be highly supportive to the accounting staff with most of the workload manipulations. Automation is the second essential feature of accounting packages. For many businesses, support for simple accounting transactions and basic financial management tasks just isn't enough. They require the full automation of such financial data as employee expenses, payrolls and time sheets; company and departmental budgets; purchase requisitions and other complex financial activities. The advantage of integration in accounting package meets this requirement since data entered in one module will be passed automatically into any other module where the data is of some relevance. For example, an input into the invoicing module can be automatically linked to customers account in the sales ledger. As a result, wasteful repetition is prevented; or in other words, efficiency is obtained. Whats more, information is power in today's challenging business environment. That's why any accounting program you evaluate must have strong reporting and analysis capabilities. Once the data has been input, computerised systems can analyse them rapidly to present useful control information for managers (e.g. trial balance or trade receivables schedule). Besides helping users gain insight into crucial financial activities, reporting functions help companies conform to government and industry regulations because reports serve as a track record of the companys financial health as well as social responsibility. Moreover, a business depends on its accounting software for its existence. If data contains sensitive information, the company is probably in danger. Therefore, accounting packages normally ask users for separate passwords for different parts of the system. This prevents access by unauthorised personnel and ensures data security. The reality shows that no accounting software will exactly match all business's needs. That's why users will want to look for a product that allows the easy customisation of statements, forms, reports, and other program facets. To illustrate this point, we bring up the following examples regarding modifications in financial statements:

Difference in format of income statements of two business ownership types Limited company Some items do not appear in non-incorporated companies:
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Partnership

 Income Corporate Tax (tax on profit from the companys operations)

Partners, instead, have to pay Personal Income Tax on their current accounts, which is also clearly presented in the bottom-line of income statement.

Dividends are not paid to partners but In return for contributions, partners will receive shared profit on agreement. This split is showed stockholders. at the bottom of income statement and also reflected in their capital or current accounts.

(Source: bing.com)

(Source: bing.com)

In general, there are various features of accounting packages that users need to identify for the best usage. Besides the plus points, potential users of these packages should take into account such drawbacks as start-up expenditure, initial implementation time and personnel.
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