KPK Release the Results of Study on State Treasury Offices

Jakarta, 01 December 2008 - In an effort to prevent corruption and to raise the quality of service at state treasury offices, the Corruption Eradication Commission (KPK) has conducted a study of the management systems in State Treasury Offices. This study was conducted from 1 February until 16 May 2008 and has been submitted by the Vice Chairman of KPK, Mochammad Jasin to the Director General of the Treasury, Department of Finance, Herry Purnomo on 27 November 2008 at KPK's Office, Jl H.R. Rasuna Said Kav. C-1 Jakarta Selatan. Today KPK will publicly announce the results of this study.

KPK conducted an analysis of 33 State Treasury Offices in the regions of Nanggroe Aceh Darussalam, West Java, Greater Jakarta and East Java. Based on these analyses, a number of potential corruption causing weaknesses were found to exist. These increase the potential for the misuse of authority and the loss of state funds through extortion, bribery, and the giving of gratuities. Systematic weaknesses included principles of program implementation, structural organization, and management of human resources.

In order to raise the level of effectiveness and efficiency of services at the State Treasury Offices, KPK recommended a number of reforms be made. The basis of these reforms is a system based on law enforcement and a strong leadership commitment.

With these recommendations, KPK hopes integrity levels of State Treasury Offices' staff will increase along with public perceptions and the perceptions of partner organizations.

As follow up to this study, the State Treasury Offices must compile an action plan to implement the recommendations of KPK. This action plan will be used by KPK as a basis to monitor the implementation of management reforms.

Conducting monitoring of state and government organizations is one of the KPK's duties as defined by Law 30/2002.

For further information, please contact:

Johan Budi SP
Public Relations
Corruption Eradication Commission
Jl. H.R. Rasuna Said Kav. C-1 South Jakarta
Telp. (021) 25578300

Sumber : www.kpk.go.id

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Accounting Cycle

The primary objectives of the accounting function in an organization are to process financial information and to prepare financial statements at the end of the accounting period. Companies must systematically process financial information and must have staff who prepare financial statements on a monthly, quarterly, and/or annual basis. To meet these primary objectives, a series of steps is required. Collectively these steps are known as the accounting cycle. The steps, applicable to a manual accounting system, are described below. Later, there will be a brief discussion of a computerized processing system.

The Steps of Cycle

1. Collect and analyze data from transactions and events: As transactions and events related to financial resources occur, they are analyzed with respect to their effect on the financial position of the company. As an example, consider the sales for a day in a retail establishment that are collected on a cash register tape. These sales become inputs into the accounting system. Every organization establishes a chart of accounts that identifies the categories for recording transactions and events. The chart of accounts for the retail establishment mentioned earlier in this paragraph will include Cash and Sales.

2. Journalize transactions: After collecting and analyzing the information obtained in the first step, the information is entered in the general journal, which is called the book of original entry. Journalizing transactions may be done continually, but this step can de done in a batch at the end of the day if data from similar transactions are being sorted and collected, on a cash register tape, for example. At the end of the day, the sales of $4,000 for cash would be recorded in the general journal in this form:
Cash 4000
Sales 4000

3. Post to general ledger: The general journal entries are posted to the general ledger, which is organized by account. All transactions for the same account are collected and summarized; for example, the account entitled "Sales" will accumulate the total value of the sales for the period. If posting were done daily, the "Sales" account in the ledger would show the total sales for each day as well as the cumulative sales for the period to date. Posting to ledger accounts may be less frequent, perhaps at the end of each day, at the end of the week, or possibly even at the end of the month.

4. Prepare an unadjusted trial balance: At the end of the period, double-entry accounting requires that debits and credits recorded in the general ledger be equal. Debit and credit merely signify position-left and right, respectively. Some accounts normally have debit balances (e.g., assets and expenses) and other accounts have credit balances (e.g., liabilities, owners' equity and revenues). As transactions are recorded in the general journal and subsequently posted to the ledger, all amounts recorded on the debit side of accounts (i.e., recorded on the left side) must equal all amounts recorded on the credit side of accounts (i.e., recorded on the right side). Preparing an unadjusted trial balance tests the equality of debits and credits as recorded in the general ledger. If unequal amounts of debits and credits are found in this step, the reason for the inequality is investigated and corrected before proceeding to the next step. Additionally, this unadjusted trial balance provides the balances of all the accounts that may require adjustment in the next step.

5. Prepare adjustments: Period-end adjustments are required to bring accounts to their proper balances after considering transactions and/or events not yet recorded. Under accrual accounting, revenue is recorded when earned and expenses when incurred. Thus, an entry may be required at the end of the period to record revenue that has been earned but not yet recorded on the books. Similarly, an adjustment may be required to record an expense that may have been incurred but not yet recorded.

6. Prepare an adjusted trial balance: As with an unadjusted trial balance, this step tests the equality of debits and credits. However, assets, liabilities, owners' equity, revenues, and expenses will now reflect the adjustments that have been made in the previous step. If there should be unequal amounts of debits and credits or if an account appears to be incorrect, the discrepancy or error is investigated and corrected.

7. Prepare financial statements: Financial statements are prepared using the corrected balances from the adjusted trial balance. These are one of the primary outputs of the financial accounting system.

8. Close the accounts: Revenues and expenses are accumulated and reported by period, either a monthly, quarterly, or yearly. To prevent their not being added to or comingled with revenues and expenses of another period, they need to be closed out—that is, given zero balances—at the end of each period. Their net balances, which represent the income or loss for the period, are transferred into owners' equity. Once revenue and expense accounts are closed, the only accounts that have balances are the asset, liability, and owners' equity accounts. Their balances are carried forward to the next period.

9. Prepare a post-closing trial balance: The purpose of this final step is two-fold: to determine that all revenue and expense accounts have been closed properly and to test the equality of debit and credit balances of all the balance sheet accounts, that is, assets, liabilities and owners' equity.

Computerized Accounting System

A computerized accounting system saves a great deal of time and effort, considerably reduces (if not eliminates) mathematical errors, and allows for much more timely information than does a manual system. In a real-time environment, accounts are accessed and updated immediately to reflect activity, thus combining steps 2 and 3 as discussed in the preceding section. The need to test for equality of debits and credits through trial balances is usually not required in a computerized system accounting since most systems test for equality of debit and credit amounts as they are entered. If someone were to attempt to input data containing an inequality, the system would not accept the input. Since the computer is programmed to post amounts to the various accounts and calculate the new balances as new entries are made, the possibility of mathematical error is markedly reduced.

Computers may also be programmed to record some adjustments automatically at the end of the period. Most software programs are also able to prepare the financial statement once it has been determined the account balances are correct. The closing process at the end of the period can also be done automatically by the computer.

Human judgment is still required to analyze the data for entry into the computer system correctly. Additionally, the accountant's knowledge and judgment are frequently required to determine the adjustments that are needed at the end of the reporting period. The mechanics of the system, however, can easily be handled by the computer.

BIBLIOGRAPHY
Dansby, Robert, Kaliski, Burton, and Lawrence, Michael (1999). College Accounting. St. Paul, MN: EMC Paradigm.

Ingram, Robert W., and Baldwin, Bruce A. (1998). Financial Accounting: A Bridge to Decision Making. Cincinnati, OH: South-Western College Publishing.

Larson, Kermit D. (1997). Essentials of Financial Accounting. Boston: Irwin/McGraw-Hill.

Meigs, Robert F., Meigs, Mary A., Bettner, Mark, and Whittington, Ray. (1998). Financial Accounting. Boston: Irwin/McGraw Hill.

Needles, Belverd E., and Powers, Marian (1998). Financial Accounting. Boston: Houghton Mifflin.

Porter, Gary A., and Norton, Curtis L. (1998). Financial Accounting. Fort Worth, TX: Dryden Press.

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What is Accounting ??

Accounting is a body of principles and conventions as well as an established general process for capturing financial information related to an entity's resources and their use in meeting the entity's goals. Accounting is a service function that provides information of value to all operating units and to other service functions, such as the headquarters offices of a large corporation.

Origin of Accounting Modern accounting is traced to the work of an Italian monk, Luca Pacioli, whose publication in A.D. 1494 described the double-entry system, which continues to be the fundamental structure for contemporary accounting systems in all types of entities. When double-entry accounting is used, the balance sheet identifies both the resources controlled by the entity and those parties who have claims to those assets.

Early histories of business identify the bookkeeper as a valuable staff member. As businesses became more complex, the need for more astute review and interpretation of financial information was met with the development of a new profession—public accounting. In the United States, public accounting began in the latter part of the nineteenth century. The first organization was established in 1887; the first professional examination was administered in December 1896.

In the early days of the twentieth century, numerous states established licensing requirements and began to administer examinations. During the first century of public accounting in the United States, the American Institute of Certified Public Accountants (and its predecessor organizations) provided strong leadership to meet the changing needs of business, not-for-profit, and governmental entities.

Generally Accepted Accounting Principles (GAAP) No single source provides principles for handling all transactions and events. Over time, conventional rules have developed that continue to be relevant. Additionally, groups have been authorized to establish accounting standards. The Financial Accounting Standards Board (FASB) assumed responsibility for accounting standards and principles in 1973. It is authorized to amend existing rules and establish new ones. In 1992, the Auditing Standards Board established the GAAP hierarchy. At the highest level of the hierarchy are FASB statements and interpretations; APB opinions were issued from 1959 to 1973 by the Accounting Principles Board (APB), and Accounting Research Bulletins, issued until 1959 by the Committee on Accounting Procedure (CAP); both the APB and CAP were committees of the American Institute of Certified Public Accountants (AICPA).

What type of unit is served by accounting? Probably no concept or idea is more basic to accounting than the accounting unit or entity, a term used to identify the organization for which the accounting service is to be provided and whose accounting or other information is to be analyzed, accumulated, and reported. The entity can be any area, activity, responsibility, or function for which information would be useful. Thus, an entity is established to provide the needed focus of attention. The information about one entity can be consolidated with that of a part or all of another, and this combination process can be continued until the combined entity reaches the unit that is useful for the desired purpose.

Accounting activities may occur within or outside the organization. Although accounting is usually identified with privately owned, profit-seeking entities, its services also are provided to not-for-profit organizations such as universities or hospitals, to governmental organizations, and to other types of units. The organizations may be small, owner-operated enterprises offering a single product or service, or huge multi-enterprise, international conglomerates with thousands of different products and services. The not-for-profit, governmental, or other units may be local, national, or international; they may be small or very large; they may even be entire nations, as in national income accounting. Since not-for-profit and governmental accounting are covered elsewhere in this encyclopedia, the balance of this article will focus on accounting for privately owned, profit-seeking entities.

What is the work of accountants? Accountants help entities be successful, ethical, responsible participants in society. Their major activities include observation, measurement, and communication. These activities are analytical in nature and draw on several other disciplines (e.g., economics, mathematics, statistics, behavioral science, law, history, and language/communication).

Accountants identify, analyze, record, and accumulate facts, estimates, forecasts, and other data about the unit's activities; then they translate these data into information that can be useful for a specific purpose. The data accumulation and recording phase traditionally has been largely clerical; typically and appropriately, this has been called bookkeeping, which is still a common and largely manual activity, especially in smaller firms that have not adopted state-of-the-art technology. But with advances in information technology and user-friendly software, the clerical aspect has become largely electronically performed, with internal checks and controls to assure that the input and output are factual and valid.

Accountants design and maintain accounting systems, an entity's central information system, to help control and provide a record of the entity's activities, resources, and obligations. Such systems also facilitate reporting on all or part of the entity's accomplishments for a period of time and on its status at a given point in time.

An organization's accounting system provides information that (1) helps managers make decisions about assembling resources, controlling, and organizing financing and operating activities; and (2) aids other users (employees, investors, creditors, and others—usually called stakeholders) in making investment, credit, and other decisions.

The accounting system must also provide internal controls to ensure that (1) laws and enterprise policies are properly implemented; (2) accounting records are accurate; (3) enterprise assets are used effectively (e.g., that idle cash balances are being invested to earn returns); and (4) steps be taken to reduce chances of losing assets or incurring liabilities from fraudulent or similar activities, such as the carelessness or dishonesty of employees, customers, or suppliers. Many of these controls are simple (e.g., the prenumbering of documents and accounting for all numbers); others require division of duties among employees to separate record keeping and custodial tasks in order to reduce opportunities for falsification of records and thefts or misappropriation of assets.

An enterprise's system of internal controls usually includes an internal auditing function and personnel to ensure that prescribed data handling and asset/liability protection procedures are being followed. The internal auditor uses a variety of approaches, including observation of current activities, examination of past transactions, and simulation—often using sample or fictitious transactions—to test the accuracy and reliability of the system.

Accountants may also be responsible for preparing several types of documents. Many of these (e.g., employees' salary and wage records) also serve as inputs for the accounting system, but many are needed to satisfy other reporting requirements (e.g., employee salary records may be needed to support employee claims for pensions). Accountants also provide data for completing income tax returns.

What is the accountant's role in decision making? Accountants have a major role in providing information for making economic and financial decisions. Rational decisions are usually based on analyses and comparisons of estimates, which in turn, are based on accounting and other data that project future results from alternative courses of action.

External or financial accounting, reporting, and auditing are directly involved in providing information for the decisions of investors and creditors that help the capital markets to efficiently and effectively allocate resources to enterprises; internal, managerial, or management accounting is responsible for providing information and input to help managers make decisions on the efficient and effective use of enterprise resources.

The accounting information used in making decisions within an enterprise is not subject to governmental or other external regulation, so any rules and constraints are largely self-imposed. As a result, in developing the data and information that are relevant for decisions within the enterprise, managerial accountants are constrained largely by cost-benefit considerations and their own ingenuity and ability to predict future conditions and events.

But accounting to external users (financial accounting, reporting, and auditing) has many regulatory constraints—especially if the enterprise is a "public" corporation whose securities are registered (under the United States Securities Acts of 1933 and 1934) with the Securities and Exchange Commission (SEC) and traded publicly over-the-counter or on a stock exchange. Public companies are subject to regulations and reporting requirements imposed and enforced by the SEC; to rules and standards established for its financial reports by the FASB and enforced by the SEC; to regulations of the organization where its securities are traded; and to the regulations of the AICPA, which establishes requirements and standards for its members (who may be either internal or external accountants or auditors).

If the entity is a state or local governmental unit, it is subject to the reporting standards and requirements of the Government Accounting Standards Board. If the entity is private and not a profit-seeking unit, it is subject to various reporting and other regulations, including those of the Internal Revenue Service, which approves its tax status and with which it must file reports.

Largely as a result of the governmental regulation of private profit-seeking businesses that began in 1933, an increasingly clear distinction has been made between managerial or internal accounting and financial accounting that is largely for external users. One important exception to this trend, however, was the change adopted in the 1970s in the objectives of financial reporting such that both managerial and financial accounting now have the same objective: to provide information that is useful for making economic decisions.

But it must be recognized that although the financial accounting information reported to stakeholders comes from the organization's accounting system, its usefulness for decision making is limited. This is because it is largely historical—it reflects events and activities that occurred in the past, not what is expected in the future. Even estimated data such as budgets and standard costs must be examined regularly to determine whether these past estimates continue to be indicative of current conditions and expectations and thus are useful for making decisions. Thus historical accounting information must be examined carefully, modified, and supplemented to make certain that what is used is relevant to expectations about the future.

But it also must be recognized that accounting can and does provide information that is current and useful in making estimates about future events. For example, accounting provides current-value information about selected items, such as readily marketable investments in debt and equity securities and inventories, and it provides reports on what the organization plans to accomplish and its expectations about the future in budgets and earnings forecasts.

Who uses accounting information for decision making? The information developed by the accountant's information system can be useful to:
- Managers in planning, controlling, and evaluating their organization's activities
- Owners, directors, and others in evaluating the performance of the organization and determining operating, compensation, and other policies
- Union, governmental, regulatory, taxing, environmental, and other entities in evaluating whether the organization is conforming with applicable contracts, rules, laws, and public policies and/or whether changes are needed;
- Existing and potential owners, lenders, employees, customers, and suppliers in evaluating their current and future commitments to the organization
- Accounting researchers, security analysts, security brokers and dealers, mutual-fund managers, and others in their analyses and evaluations of enterprises, capital markets, and/or investors

The services that accounting and the accountant can provide have been enhanced in many ways since the 1970s by advances in computers and other information technology. The impact of these changes is revolutionizing accounting and the accounting profession. But the changes have yet to reach their ultimate potential. For example, accounting in the 1990s began to provide current-value information and estimates about the future that an investor or other user would find useful for decision making.

The availability of computer software and the Internet greatly enhanced the potential for data and information services. Such changes create opportunities for accounting and accountants and also will require substantial modifications in the traditional financial accounting and reporting model.

What is the profession of accounting? At the core of the profession of accounting is the certified public accountant (CPA) who has passed the national CPA examination, been licensed in at least one state or territory, and engages in the practice of public accounting/auditing in a public accounting or CPA firm. The CPA firm provides some combination of two or more of four types of services: accounting, auditing, income tax planning and reporting, and management advising/consulting.

Analysis of trends indicates that the demand for auditing services has peaked and that most of the growth experienced by public accounting firms is in the consulting area.

Accounting career paths, specializations, or subprofessions for CPAs who join profit-seeking enterprises include being controllers, chief financial officers, or internal auditors. Other career paths include being controllers or chief financial officers in not-for-profit or government organizations and teaching in colleges and universities. Students should note that non-CPAs also could enter these subprofessions and that certificates, but not licenses, could be earned by passing examinations in several areas, including internal auditing, management accounting, and bank auditing.

How do environmental changes impact the accounting profession? Numerous changes in the environment make the practice of accounting and auditing much different in the new century than it was in the 1970s. For example, professional accounting firms now actively compete for clients by advertising extensively in various media, a practice that at one time was forbidden by their code of professional conduct. Mergers of clients have led CPA firms into mergers as well, such that the Big Eight is now the Big Five and the second-tier group has been reduced from twelve firms to about five. Another result of competition and other changes has been that some of the largest employers of CPAs now include income tax and accounting services firms such as H&R Block and an American Express subsidiary.

Competition among CPAs also has led the SEC to expand its regulatory and enforcement activities to ensure that financial reports are relevant and reliable. From its inception, the SEC has had legal authority to prescribe the accounting principles and standards used in the financial reports of enterprises whose securities are publicly traded, but it has delegated this responsibility to the accounting profession. Since 1973, that organization has been the FASB, with which the SEC works closely. But since the FASB is limited to performing what is essentially a legislative function, the SEC has substantially increased its enforcement activities to ensure that the FASB's standards are appropriately applied in financial reports and that accountants/auditors act in the public interest in performing their independent audits—for which the Securities Acts have given the CPA profession a monopoly.

How does a student prepare for the accounting profession? Persons considering entering the accounting profession should begin by doing some self-analysis to determine whether they enjoy mathematical, problem-or puzzle-solving, or other analytical activities; by taking some aptitude tests; or by talking with accounting teachers or practitioners about their work.

Anyone interested in becoming an accounting professional should expect to enter a rigorous five-year education program and to earn a master's degree in order to qualify to enter the profession and to sit for the CPA examination. To build a base for rising to the top of the profession, students should select courses that help them learn how to think and to define and solve problems. The courses should help them to develop analytical (logical, mathematical, statistical), communication (oral, reading, writing), computer, and interpersonal skills. The early part of the program should emphasize arts and sciences courses in these skill-development areas.

The person should begin to develop word-processing, data-processing, and Internet skills long before entering college and should expect to maintain competence in them throughout his or her professional career. These skills greatly enhance and facilitate all phases and aspects of what accounting and accountants attempt to do. What can be done is limited only by technology and by the sophistication of the system, its operators, and users.

BIBLIOGRAPHY
Hansen, Don R., and Mowen, Maryanne M. (2000). Management Accounting, 5th ed. Cincinnati, OH: Southwestern College Publishing.

Kimmel, Paul D., Weygandt, Jerry J., and Kieso, Donald E. (2000). Financial Accounting, 2d ed. New York: Wiley.

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Accounting Information Systems

Accounting Information Systems (AIS's) combine the study and practice of accounting with the design, implementation, and monitoring of information systems. Such systems use modern information technology resources together with traditional accounting controls and methods to provide users the financial information necessary to manage their organizations.

AIS Technology

Input The input devices commonly associated with AIS include: standard personal computers or workstations running applications; scanning devices for standardized data entry; electronic communication devices for electronic data interchange (EDI) and e-commerce. In addition, many financial systems come "Web-enabled" to allow devices to connect to the World Wide Web.

Process Basic processing is achieved through computer systems ranging from individual personal computers to large-scale enterprise servers. However, conceptually, the underlying processing model is still the "double-entry" accounting system initially introduced in the fifteenth century.

Output Output devices used include computer displays, impact and nonimpact printers, and electronic communication devices for EDI and e-commerce. The output content may encompass almost any type of financial reports from budgets and tax reports to multinational financial statements.

Management Information System (MIS)

MISs are interactive human/machine systems that support decision making for users both in and out of traditional organizational boundaries. These systems are used to support an organization's daily operational activities; current and future tactical decisions; and overall strategic direction. MIS's are made up of several major applications including, but not limited to, the financial and human resources systems.

Financial applications make up the heart of an AIS in practice. Modules commonly implemented include: general ledger, payables, procurement/purchasing, receivables, billing, inventory, assets, projects, and budgeting. Human resource applications make up another major part of modern information systems. Modules commonly integrated with the AIS include: human resources, benefits administration, pension administration, payroll, and time and labor reporting.

AIS - Information System in Context

AISs cover all business functions from backbone accounting transaction processing systems to sophisticated financial management planning and processing systems. Financial reporting starts at the operational levels of the organization, where the transaction processing systems capture important business events such as normal production, purchasing, and selling activities. These events (transactions) are classified and summarized for internal decision making and for external financial reporting.

Cost accounting systems are used in manufacturing and service environments. These allow organizations to track the costs associated with the production of goods and/or performance of services. In addition, the AIS can provide advanced analyses for improved resource allocation and performance tracking.

Management accounting systems are used to allow organizational planning, monitoring, and control for a variety of activities. This allows managerial-level employees to have access to advanced reporting and statistical analysis. The systems can be used to gather information, to develop various scenarios, and to choose an optimal answer among alternative scenarios.

Development

The development of an AIS includes five basic phases: planning, analysis, design, implementation, and support. The time period associated with each of these phases can be as short as a few weeks or as long as several years.

Planning—project management objectives and techniques The first phase of systems development is the planning of the project. This entails determination of the scope and objectives of the project, the definition of project responsibilities, control requirements, project phases, project budgets, and project deliverables.

Analysis The analysis phase is used to both determine and document the accounting and business processes used by the organization. Such processes are redesigned to take advantage of best practices or of the operating characteristics of modern system solutions.

Data analysis is a thorough review of the accounting information that is currently being collected by an organization. Current data are then compared to the data that the organization should be using for managerial purposes. This method is used primarily when designing accounting transaction processing systems.

Decision analysis is a thorough review of the decisions a manager is responsible for making. The primary decisions that managers are responsible for are identified on an individual basis. Then models are created to support the manager in gathering financial and related information to develop and design alternatives, and to make actionable choices. This method is valuable when decision support is the system's primary objective.

Process analysis is a thorough review of the organization's business processes. Organizational processes are identified and segmented into a series of events that either add or change data. These processes can then be modified or reengineered to improve the organization's operations in terms of lowering cost, improving service, improving quality, or improving management information. This method is appropriate when automation or reengineering is the system's primary objective.

Design The design phase takes the conceptual results of the analysis phase and develops detailed, specific designs that can be implemented in subsequent phases. It involves the detailed design of all inputs, processing, storage, and outputs of the proposed accounting system. Inputs may be defined using screen layout tools and application generators. Processing can be shown through the use of flowcharts or business process maps that define the system logic, operations, and work flow.

Logical data storage designs are identified by modeling the relationships among the organization's resources, events, and agents through diagrams. Also, entity relationship diagram (ERD) modeling is used to document large-scale database relationships. Output designs are documented through the use of a variety of reporting tools such as report writers, data extraction tools, query tools, and on-line analytical processing tools. In addition, all aspects of the design phase can be performed with software tool sets provided by specific software manufacturers.

Reporting is the driving force behind an AIS development. If the system analysis and design are successful, the reporting process provides the information that helps drive management decision making. Accounting systems make use of a variety of scheduled and on-demand reports. The reports can be tabular, showing data in a table or tables; graphic, using images to convey information in a picture format; or matrices, to show complex relationships in multiple dimensions.

There are numerous characteristics to consider when defining reporting requirements. The reports must be accessible through the system's interface. They should convey information in a proactive manner. They must be relevant. Accuracy must be maintained. Lastly, reports must meet the information processing (cognitive) style of the audience they are to inform.

Reports are of three basic types: A filter report that separates select data from a database, such as a monthly check register; a responsibility report to meet the needs of a specific user, such as a weekly sales report for a regional sales manager; a comparative report to show period differences, percentage breakdowns and variances between actual and budgeted expenditures. An example would be the financial statement analytics showing the expenses from the current year and prior year as a percentage of sales.

Screen designs and system interfaces are the primary data capture devices of AISs and are developed through a variety of tools. Storage is achieved through the use of normalized databases that assure functionality and flexibility.

Business process maps and flowcharts are used to document the operations of the systems. Modern AISs use specialized databases and processing designed specifically for accounting operations. This means that much of the base processing capabilities come delivered with the accounting or enterprise software.

Implementation The implementation phase consists of two primary parts: construction and delivery.

Construction includes the selection of hardware, software and vendors for the implementation; building and testing the network communication systems; building and testing the databases; writing and testing the new program modifications; and installing and testing the total system from a technical standpoint. Delivery is the process of conducting final system and user acceptance testing; preparing the conversion plan; installing the production database; training the users; and converting all operations to the new system.

Tool sets are a variety of application development aids that are vendor-specific and used for customization of delivered systems. They allow the addition of fields and tables to the database, along with ability to create screen and other interfaces for data capture. In addition, they help set accessibility and security levels for adequate internal control within the accounting applications.

Security exists in several forms. Physical security of the system must be addressed. In typical AISs the equipment is located in a locked room with access granted only to technicians. Software access controls are set at several levels, depending on the size of the AIS. The first level of security occurs at the network level, which protects the organization's communication systems. Next is the operating system level security, which protects the computing environment. Then, database security is enabled to protect organizational data from theft, corruption, or other forms of damage. Lastly, application security is used to keep unauthorized persons from performing operations within the AIS.

Testing is performed at four levels. Stub or unit testing is used to insure the proper operation of individual modifications. Program testing involves the interaction between the individual modification and the program it enhances. System testing is used to determine that the program modifications work within the AIS as a whole. Acceptance testing ensures that the modifications meet user expectations and that the entire AIS performs as designed.

Conversion entails the method used to change from an old AIS to a new AIS. There are several methods for achieving this goal. One is to run the new and old systems in parallel for a specified period. A second method is to directly cut over to the new system at a specified point. A third is to phase in the system, either by location or system function. A fourth is to pilot the new system at a specific site before converting the rest of the organization.

Support The support phase has two objectives. The first is to update and maintain the AIS. This includes fixing problems and updating the system for business and environmental changes. For example, changes in generally accepted accounting principles (GAAP) or tax laws might necessitate changes to conversion or reference tables used for financial reporting. The second objective of support is to continue development by continuously improving the business through adjustments to the AIS caused by business and environmental changes. These changes might result in future problems, new opportunities, or management or governmental directives requiring additional system modifications.

Attestation

AISs change the way internal controls are implemented and the type of audit trails that exist within a modern organization. The lack of traditional forensic evidence, such as paper, necessitates the involvement of accounting professionals in the design of such systems. Periodic involvement of public auditing firms can be used to make sure the AIS is in compliance with current internal control and financial reporting standards.

After implementation, the focus of attestation is the review and verification of system operation. This requires adherence to standards such as ISO 9000-3 for software design and development as well as standards for control of information technology. Periodic functional business reviews should be conducted to be sure the AIS remains in compliance with the intended business functions. Quality standards dictate that this review should be done according to a periodic schedule.

Enterprise Resources Planning (ERP)

ERP systems are large-scale information systems that impact an organization's AIS. These systems permeate all aspects of the organization and require technologies such as client/server and relational databases. Other system types that currently impact AISs are supply chain management (SCM) and customer relationship management (CRM).

Traditional AISs recorded financial information and produced financial statements on a periodic basis according to GAAP pronouncements. Modern ERP systems provide a broader view of organizational information, enabling the use of advanced accounting techniques, such as activity-based costing (ABC) and improved managerial reporting using a variety of analytical techniques.

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Choose the Right Accounting Software for Your Business

Do you need accounting software for your business? Sometimes, it may be quite confusing when it comes to choosing the right accounting software for your company. There are so many brands around which make the whole matter more complex. The fact that you are reading this article is because you know that good accounting software can really assist your business in many ways. It can help simplify your finances and make all accounts accountable. However, if you choose the wrong software, it will only complicate things further.

If you go to search engines and conduct a search, you can find many different types of accounting software with many different features. Before you purchase any accounting software, you need to first understand what your business needs. Some software is meant for personal use and those may not have the feature that you want. So, it is important to focus on software that is meant for business finance rather than personal finance. With this in mind, it will narrow down your choices and make selection much easier.

In this article, let me share with you some tips to choose the right accounting software for your business.

The first step that you should take is to find out what accounting software is on the market. The best way to do this is to use search engines. Just search for "Accounting Software" on Google and it should return you some choices for your selection.

Visit the different websites and read reviews about the software that you are interested in. You can also ask your business associates, friends or family members for recommendation. You should gather as much information as you can at this point of time.

Once you have gathered enough information for the various products, the next step is to list down all the software you found out about. Do a deeper research for each one of them. Find out exactly what are the features that each product is offering. Also look out for anything special that may make a product stand out.

After you have done your research, it is time to eliminate any product that does not impress you. You should also take the cost of each product into your consideration before purchasing. Some products are just over-priced and they are not worth spending on.

Last but not least, once you have decided on particular software, do ask the company to provide you with a demo version so that you can try it out yourself. With the demo version, you will be able to know the ease of use and see whether the features that it provides are suitable for your business.

Sumber : Pankaj Govil

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