How Technological Advances Benefit and Challenge Financial Accounting and Managerial Accounting Data Security

How Technological Advances Benefit and Challenge Financial Accounting and Managerial Accounting Data Security
Name
Institutional Affiliation
How Technological Advances Benefit and Challenge Financial Accounting and Managerial Accounting Data Security
Executive Summary
The principal purpose of this report was to show how technological advancement can change the way in which companies do their business, mainly how firms control accounting data. There are various benefits that technology brings in accounting. However, some challenges influence businesses negatively.
The findings show that automation of accounting processes is essential because the production of accounting documents has become more comfortable. Organizations can produce critical financial statements efficiently. Besides, financial information is displayed in the respective books of accounts or journals instantly, which prevents mistakes made through manual systems and ensures there are integrity and consistency. One of the challenges found to affect the computerized accounting systems is the viruses, which pose a problem of producing information that is not accurate. Outsiders can hack information and employees can have unauthorized access, which is a threat to the security of the data.
Introduction
Accounting is the art of keeping records, organizing and summarizing business transactions and activities which are, in part at least, of monetary character, in the form of dollars, and in a substantial way, and in interpreting the outcomes thereof. According to Tepalagul and Lin (2015), accounting is an information system that measures, processes, and gives out an economic unit's financial information. Improvements in information technology have enhanced accounting structures and changed economic life. Digital technologies that include computers have increased the productivity of offices enabling the quick exchange of documents, collaboration with business associates, research, and the gathering and evaluation of data.
Accounting processes have experienced changes lately due to development of accounting technology. Accounting technology allows certified public accountants to manage financial statements and carry out accounting procedures using computer program applications (Ismail and King, 2014). Companies identify the accounting computer software applications as financial management program or accounting software, which are useful in tracking business transactions, computing income taxes, classifying income and expenditures, expediting payment of bills, evaluating investments, and generating financial reports.
Technological developments can alter the manner in which businesses function, which includes how the firms handle accounting information. According to Guragai, Hunt, Neri, and Taylor (2015), computerized accounting systems simplify accounting procedures while efficiently keeping financial data for a corporation. In spite of the benefits, technological know-how in accounting has disadvantages and challenges that can negatively influence business. Being conscious of those concerns allows company managers to act on them before they develop into more significant problems.
Main Body
There are two types of accounting software. The accounting programs are double-entry systems and single-entry systems. Personal finance managers or single-entry systems are the most straightforward accounting software intended to computerize chores such as cheque writing and record keeping. On the other hand, double-entry systems back functions such as accounts payable, accounts receivable, and financial ledgers. Other sophisticated enterprise solutions have multi-user abilities and support utilities for invoice, payroll, sales analyses, inventory, marketing, and manufacturing.
Benefits of Technological Advancements in Accounting Data Security
Automation of accounting procedures is the most significant benefit of accounting programs. With computerization, production of accounting documents such as account statements, checks, and invoices have become cheap. Institutions can efficiently create essential financial accounts. Furthermore, economic information is posted to respective financial accounts or ledgers spontaneously, which prevents manual mistakes and makes sure there are integrity and consistency.
In addition to that, workers are capable of automating repetitive and routine manual duties using accounting software. The ability of data storage of accounting programs permits fast information distribution and improved communication amongst staffs. According to Cassar, Ittner, and Cavalluzzo (2015), advanced accounting software applications handle complex problems such as supply chain management, foreign currency transactions, and logistics management.
Accounting software applications make employees to be focused and well-organized, hence, increases the efficiency of management. Quicker and efficient financial information processing streamline management decision-making process. Workforces are capable of automating large and labor-intensive accounting practices and turn their attention to other strategic and vital activities. Sophisticated accounting programs, with an inbuilt mechanism, ensure there are a severe risk and compliance processes to meet the regulatory standards (Islam, Bilal, and Ilyas, 2017). Comprehensive business performance and sales accounts assist organizations to take crucial decisions on income-creating strategy.
Challenges of Technological Advancements in Accounting Data Security
All accounting software need companies to enter records manually. If organizations do not examine the information for completeness and accuracy, the financial statements produced by accounting software will result in errors. Most accounting software requires being tailored to match business needs. It is crucial for management to train workers mainly to access and use the accounting software, which involves enormous cost and time. If rates and rules of the tax change, errors occur, hence affecting data security. Therefore, accounting software used to compute the taxes must be rewritten accordingly to prevent the mistakes. It is possible for computer viruses, power failure, and hackers to affect automated systems when institutions fail to put appropriate security and precautionary measures in place.
Organizations can create the security of accounting data in a computerized software package to the quality of the progra...