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Technology in accounting
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Most accounting today uses computers. Technology saves time but brings risks to data that must be managed.
Benefits
Accounting software: records transactions once and updates ledgers, trial balance and financial statements automatically; fewer arithmetic errors; quick reports; can handle large volumes.
Spreadsheets: formulas calculate automatically; easy to model 'what if' changes, such as budgets and forecasts; charts and graphs.
Spreadsheets: formulas calculate automatically; easy to model 'what if' changes, such as budgets and forecasts; charts and graphs.
Data security issues
Data loss: through hardware failure, viruses, fire or theft.
Access: unauthorised people may view or change records, for example to commit fraud.
Confidentiality: customer, staff and financial data is private and must not be disclosed.
Access: unauthorised people may view or change records, for example to commit fraud.
Confidentiality: customer, staff and financial data is private and must not be disclosed.
Protecting data
Hardware methods: regular back-ups stored on separate devices or off site, locked rooms, physical security of computers, uninterruptible power supplies.
Software methods: passwords, access levels for different users, firewalls, anti-virus software and encryption.
Software methods: passwords, access levels for different users, firewalls, anti-virus software and encryption.
A clerk accidentally deletes the sales ledger. How could the business have protected itself?
- The data was lost.
- A copy kept elsewhere would allow it to be restored.
Answer: Regular back-ups kept on a separate device or off site.
Software and spreadsheets save time and reduce arithmetic errors. Risks: data loss, unauthorised access and breaches of confidentiality. Protection: back-ups and physical security (hardware); passwords, access levels, firewalls, anti-virus and encryption (software).
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