There is no doubt that Accounting is one of the most important functions which has to be performed by a business, but they should pick the suitable accounting system. The process of Accounting System Analysis actually examines the Accounting system followed by the business and also provides assistance in case they are not using the proper accounting systems.
What is Accounting System Analysis?
Accounting System Analysis can be defined as a process in which the present accounting system of the business is examined and evaluated. The people doing the analysis first examine the requirements of the business and then accordingly check if the present accounting system can fulfil the requirement of the business.
The process of Accounting System Analysis can also be used to create a suitable accounting system that can be used by the business. There are three different processes available to a business when availing Accounting System Analysis. These are:
Every business that is operating currently is different. It becomes important that a thorough analysis of the business is done first, and then the system of accounting being operated in the business entity is customized accordingly to fit the business needs.
The next division is to design a system that fulfills the business needs as well as the individuals. With the help of advanced technology, the framework of the accounting system could be infused into the system so that activities related to reporting, database storage, data entry could be carried out easily.
The implementation phase may take time as it depends upon the business size as well. The accounting system developed touches every area of business. It is a complex process and thus might take sufficient time to get implemented.
Why should you analyse an Accounting System?
It is always good to analyze any domain over a period of time to understand the requirements and fulfil them accordingly. The need to analyze an accounting system is stated below:
- To avoid unnecessary cost related to accounting processes
- To use up-to-date technology
- To rectify loopholes in the system (if any)
- To generate accounting reports easily
- To check if the accounting software is functioning properly
What are the Different Functions of an Accounting System?
There are various functions of an accounting system for a business. Each business has a different and unique accounting system, and therefore each accounting system can have different functions. The basic functions, which are the same in each of the Accounting systems, are given below:
- The accounting system should not only be able to collect the accounting data of the company but also should be able to process all the data which is generated by a business.
- The accounting system of the business should be designed in such a way that that it should not only be able to generate the necessary reports but should also be able to capture the data so that it could be provided to the management as and when required.
- A proper accounting system will provide accurate data to the management as well as the investors of the company. It will also provide transparency and will be easier to share data across different people.
How does Accounting System Analysis help a Business?
Accounting System Analysis should be done periodically so that the management is able to understand the business requirement in terms of accounting. It can assist a business in many ways. Some of the ways by which Accounting System Analysis can help a business are mentioned below:
- It will help the management in presenting the current situation of the business so that the management will be able to take steps for the betterment of the business.
- The accounting system should be designed and implemented in such a way that the management should be able to understand the requirements of the businesses in an easy manner.
- Assessing the Accounting System from time to time will allow a business to keep itself at par with the ever-developing technologies in the field of accounting and business management.
What are the key factors which are to be considered while implementing Accounting Information System (AIS)?
Following are some of the key factors to be kept in mind while implementing Accounting System Analysis:
- Detailed Requirement Analysis
- System Design
- Data Conversion
The accounting department is responsible to generate the reports that a business entity stands on. The chances of analyzing the AIS increase because of the rapid technological developments. Every business entity needs to keep a check on the AIS update so as to conduct the accounting and financial activities in a smooth way. It is highly recommended that you should have a word with a consultant who can analyze your accounting system in a hassle-free way. We at Jaxa, help business entities to set up and deal with accounting services. Our team consists of business valuation experts who hold industry experts and will be able to analyze your accounting system with best practices for your business to maximize profit. To proceed to the next step, do contact us. We’d be glad to assist you.