1. The document discusses how information technology has impacted and improved the accounting function. IT has automated accounting processes, shortened lead times for financial reporting, and improved efficiency and accuracy. 2. It compares manual and computerized accounting systems. Computerized systems allow for greater organization and compartmentalization of work while treating information similarly to manual systems. 3. The document outlines several ways that IT has positively influenced accounting, including increased functionality, competitive advantage, economic efficiency, improved accuracy, faster processing, better external reporting, security, and flexibility. It also discusses the role of software tools like accounting, tax, word processing, and audit software.

1. Accounting &
Information Technology
Mayank Garg
NRO-0303257
CA- Article ship
ICAI – Delhi
Ph.: +91- 9873819207
mayankgarg0607@hotmail.com
By

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Introduction
Information technology plays a crucial role in modern business, especially regarding the
accounting function. The initial interest in the relationships between counting and
information technology was gradually taken for granted; accounting was simply not
possible without information technology and the assumption appears to be that
information technology is a platform for accounting data and it allow certain
sophisticated queries to be performed. The purpose of this paper is to focus on the effects
of I.T. related organizational changes on the management accounting function.
Computerized Accounting System
IT has created significant benefits for accounting departments. IT network and computer
system has shortened the lead time needed by accountants to prepare and present
financial information to management and stakeholders. Not only shortening lead time
but also has improved the overall efficiency and accuracy of the information.
Paper ledgers, manual spreadsheets and hand-written financial statements have all been
translated into computer system that can quickly present individual transactions into
financial reports which help companies to create reports individually reports quickly.
Manual Accounting v/s Computerized Accounting
Manual system is the first type of accounting system. It utilizes paper-based journal and
ledgers. Manual system is labor intensive for this system relies on human processing.
Because manual system relies on human processing, they may be prone to errors.
In computerized system, accounting data are kept separately from other operating data.
At this point, there is greater degree of compartmentalization of work in order to
preserve the integrity of accounting information system. Treatment of information is
same with that of the manual system. The only difference is that the user here is simply
filing in a computer screen that looks and often times act as the source documents of the
transactions.

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Flow in Economic Activities in A.I.S
With the touch of information technology, rapid communication are formed. This can
help increase productivity of the business and improve business decision making.
Communication channels such as emails server, routers, internal company billboards
and chat service can help in the company’s communication. The utilization of computer-
based communication system help disseminates routine and critical business
information in a speedy and efficient manner. IT equipment can be used to send business
status reports to executives, to update employees on critical business projects and to
connect with business partners and customers.
Influence of Information Technology in Accounting
Computers, internet, software or even personal digital devices have changed the way
business entries operate. Information technology advancement also improved together
with the accounting system. Since accounting deals with business information, any
improvement in this area will create a positive impact on the entity more especially in
the accounting department.
INCREASED FUNCTIONALITY
By improving the timeliness of financial information, accountants can prepare reports
and operation analyses that give management an accurate picture of current operations.
The number of financial report has also been improved by computerized system;
ACCOUNTING
PROCESS
ACCOUNTING
INFORMATION
DECISION
MAKING
ECONOMIC
ACTIVITIES

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cash flow statements, departmental profit and loss, and market share reports are now
more accessible with computerized system.
COMPETITIVE ADVANTAGE
Information technology can be used to make new and improved products and distance
them from existing market that makes it si8fficult for customers to switch platforms or
products. This can increase productivity and reduce the need of employee overheads.
ECONOMIC EFFICIENCY
Reluctant tasks can be centralized in one location through the use of information
technology infrastructure. Cost saving could also be found through outsourcing
opportunities, remote work options and lower-cost communication options.
IMPROVED ACCURACY
It has improved internal; check and balance measures to ensure that all transactions and
accounts are properly balanced before financial statements are prepared. Accuracy is
also improved by limiting the number of accountants that have access to financial
statements. Less access by accountants ensure that financial information is adjusted only
by qualified supervisors.
IMPROVED EQUIPMENT
One way to see the technological advancement in business entities is through their
equipment used in information processing. In the study of Amindu ET. Al. in 2011,
survey showed that 97% of the business entity respondents were using computers in
their operations. This serves as an evidence on how essential computer is in business.
FASTER PROCESSING
It helps accountants to process large amount of financial information and process it
quickly through the accounting system. Month or year-end closing periods can be
especially taxing on accounting departments, resulting in longer hours and higher labor
expenses. Shortening this time period aids companies in cost control which increases
overall efficiency of the company.

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BETTER EXTERNAL REPORTING
Report issued to outside investors and stakeholders have been more systematic which
help investors to determine the company’s investments, opportunities and the potential
to be high-value Company. Companies can utilize these investors for equity financing,
which they use for expanding.
SECURITY
The use of identifications and passwords provide as strong control in accessing
information about the entity. Accounting information can be encrypted in a way to
prevent unauthorized use, making it quite safe.
CLOUD
Web hosting off site or called as cloud is the latest tread with accounting application.
Instead of installing a program onto the entity’s computer and saving data there, the
program resides on a server in a different location. This cloud technology also uses the
internet to connect and save their information or documents online. In this way,
businesses can save money in software and hardware purchases by just signing up with
a cloud provider and using its programs and space for saving data. Information is not
open to all citizens, the administrator can resist access to the information.
INTERNET
REDUCTION OF PAPER USAGE
SPEED
IMPROVE INTERNAL REPORTING
FLEXIBILITY
Software Tools in the Accounting Process
In business entities’ point of view, software is considered as an intangible assets.
Commonly used software in business are accounting software, audit software, word
processing software and many more.

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ACCOUNTING SOFTWARE
These contains the basic accounting functions such as input, processing and output. This
application records and processes accounting transactions within functional modules
such as accounts payable, account receivables, payroll, and trial balance. These
programs are used for organization and centralization of data.
Backbone systems consists of basic system structures on which to build. In this approach,
the primary logic is preprogrammed and vendor will be the one to design the user
interface that suits its client.
INCOME TAX
Manual tax preparation is becoming more and more difficult and time consuming.
Instead of processing tax manually, companies can use computer software to perform
the same functions.as a result, even complex calculations can be performed via
computer in short period of time.
WORD PROCESSING SOFTWARE
Under this, textual data can also be edited, stored and printed. Accountants and other
entity employee use word processing software in communicating information.
ELECTRONIC DATA INTERCHANGE (EDI)
This is the intercompany exchange of computer-processed business information in
standard format. There is no presence of human intermediaries to approve or authorize
transactions in a pure EDI environment.
ELECTRONIC FUND TRANSFER (EFT)
This system enables companies to make payments and collection electronically. The
company don’t need to wait to get the money in fact these can be done electronically
and any payments need to be made or collected by them can be done through electronic
transfer which helps in saving time and reduces human efforts and cost.

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AUDIT SOFTWARE
SPREAD SHEETS
IMAGE PROCESSING
GRAPHIC SOFTWARE
AND MANY MORE ARE REGULARLY BEING USED…..
Accounting software and programs can help accountants or business owners create sales
forecasts, economic business models and other business decision tools. They will also
automatically input the business’ financial information, limiting the number of human
data entry error. These processes ensure that the company’s counting books are always
in balance and do not violate any preset requirements. Electronically transferring
information is usually are more accurate and timely than handing over a stack of manual
accounting ledgers.
Our Take Away
Today accounting and IT are inseparable. Accountant’s uses of sophisticated
management accounting techniques are clearly dependent of IT existence, the
configuration choices made in IT implementation are powerful in what enable. The
benefits for accounting from IT materialize only in uncertain ways and only after long
implementation. Information technology applied in accounting is not perfect.
Sometimes we must consider the fat that this is just piece of technology. In these
advanced days in information technology, computers have improved the accounting
processes but computers can’t replace the role of man in the accounting system.