Examining Accounts: Computer Generated Records: Software
Most businesses now use some form of proprietary package, and it is only likely to be in the larger businesses that these will be significantly customised for the particular needs of that business, or an in house bespoke system has been created. For most other business users, the extent of any customisation of a package may be quite limited. Many of these packages are designed for use in specific situations such as
- small businesses
- various types of VAT accounting
- specific trade groups like dentists or hoteliers.
A taxpayer using a mainframe computer is likely to have specially designed software but this will still record the same basic transactions as the `off the shelf’ packages and in much the same way.
There is often little if any guidance available to the taxpayer looking to purchase an accounting package. In the case of a small trader with a PC or laptop the choice of software may be influenced by the hardware supplier because it is common for these types of machines to be sold with a large amount of software already installed and included in the price. This can include accounting and bookkeeping software. Similarly, such business people might be influenced to use software favoured by their accountants. It is easy for somebody with little knowledge to choose a package which is not particularly appropriate for their needs. The main accounting software manufacturers vary a great deal in the amount of technical help they will provide to the purchasers of their product. There are a number of packages which have been approved by the professional bodies, particularly The Institute of Chartered Accountants in England and Wales (ICAEW). Packages which have been approved by the Institute carry its corporate logo on the packaging and documentation.
No matter how sophisticated the software package is, all accounting and bookkeeping packages require a degree of setting up before they are ready for use. This includes creating and naming ledger accounts, setting up supplier and customer details and entering the period that the record is to be for. In principle this is no different to making out sales ledger cards or heading up the columns in a Cathedral analysis book in a paper based system.
Generally the more sophisticated the software is the more likely it is to be able to make changes at a later date to the framework created during the initial setting up procedure. Changes to the framework include changes to the number of ledgers etc and the ability to change customer details or delete a customer or supplier within that time period originally set.
A typical accounts package will consist of a number of parts. In some packages all of these parts may be available separately. In others (sometimes described as integrated software) all of the parts must be present for the whole system to work. The various parts of the accounting package will deal with collecting and reporting the details of a variety of accounting, bookkeeping and management information functions. For example, within a package you should expect to find some or all of the following.
- Nominal ledger
- Sales ledger.
- Stock control.
- Ordering and invoicing.
- Purchase ordering.
- Fixed asset control.
The relationship between the various records is the same whether the record is kept on computer or not. A computerised nominal ledger will contain exactly the same type of information as a paper nominal ledger would.
When examining computerised business records you should ask
- what is the software package and who manufactured it?
- when was the current package first used?
- if this is the first year of use what action has been taken to ensure that the accounts are prepared on the same basis as before? This includes a change from one computerised system to another and a change from paper to computer record
- what was the previous system?
- what parts of the package are used? What records are actually kept on the computer? It is common in small businesses for the stock control part of a package to not be used.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)