Has modern accounting systems made a difference in modern organizations? In my opinion, modern accounting systems have made a difference in modern organization.
Modern accounting systems fulfill the basic accounting needs while offering increased accuracy in tracking trends, enabling collaboration and giving quick access to data. Most successful organization are more and more concentrate on the management accounting system innovation, by using both technical model and sociological/behavioral perspectives to improve the value in their management accounting system (Seed, 1990).Computerized solutions offer the traditional transaction processing, classification of data and reporting while simultaneously increasing the range of inputs to give a clearer and more comprehensive picture of the financial health of a company. These features of modern accounting systems let management make better use of resources to increase profits while identifying cost savings and spending less (“Modern Accounting, 2012”).
While some may say accounting systems is overwhelming, modern accounting has made a difference in modern organizations because it allows for continuous improvement and growth, reduce cost, reduce error, and increase value. Management accounting developed as a practical aid to business managers and as a subject for academic teaching and research (Robert W. S, 1993). Management accounting thus explains that “It is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information” (Drury, 2009:3).
Management accounting plays a very important role, where in which it gives the manager sufficient time and relevant information and set targets, monitor performance and systematically improve the efficiency and effectiveness of the organizations in meeting its objectives consistently and adds value by creating operations and process within the organization (Prit, 2009). Modern accounting allows for continuous improvement and growth. In contrast to paper-based accounting systems, where older records are difficult to valuate because the volume of paper increases with the time range of the evaluation, modern systems can easily display old records and trends based on previous years. Managers can consult old budgets and cost data to improve current estimates.
When external conditions change, modern systems have the ability to predict results for different scenarios, allowing management to improve forecasting with predictions for all eventualities. A manager using such systems can continuously improve the accuracy of his forecasting. Modern accounting simplifies the process of setting up accounts and tracking transactions.Because modern accounting systems all this business owners have more time to focus on more productive activities, such as drumming up new business and making vital contacts with suppliers and potential strategic partners. The modern management accounting practices are essentially different from that of traditional management accounting because they enable managers to make sound decisions to minimize cost as well in the same time add value to the products and services by improving the quality of products, which is required by the customers, and reduce waste.In addition, the modern management accounting systems enable the organization as whole to improve the innovative capacity of the organization and flexibility so that it can continually change and improve performance financially as well in its non financial areas of performance (Simpson, 2012).
Modern accounting reduces cost. Modern accounting systems let managers monitor costs in greater detail than before. Such systems give top-level management direct access to data at the working level of the company where the costs are produced and identified.Good historical records provided by the accounting systems allow managers to construct accurate budgets. By controlling such costs and making sure they are within or below budget, managers can reduce costs and increase profits.
Modern accounting allows organizations to reduce cost for wage expenses. Without an accounting system, one may never know if their business is really making a profit or loss; One won't be able to predict cash flow shortages; and worst of all one cannot accurately keep track of those slow paying customers, or those who are not paying at all.Modern accounting help reduced error. While not able to eliminate human error, modern accounting systems have verification capabilities that reduce the frequency of such errors.
Once the data is entered correctly, it is permanently captured and reading errors are eliminated. Programmers can format fields so that the system only accepts data in the correct format. They can impose data verification so the system checks whether the data is reasonable, and rejects it if it isn't.These measures improve the accuracy of reports and the reliability of management forecasts, reducing costly mistakes in operations based on such reports. Mistakes can and do happen with employees that try to maintain daily accounting information.
Modern accounting software includes safeguards to protect entered data from mistakes or errors. Both debit and credit transactions are automatically checked to make sure that there are no data entry errors. This helps to save time and money by not requiring additional data entry work (Simpson, 2012).Modern organization can increase value because of modern accounting.
The value of the goods and services a company offers is based on demand and on how quickly the company can deliver them. With better customer data and increased external inputs, the modern accounting system can better predict sales and track trends. Once sales estimates are in place, modern accounting systems let the company place corresponding orders and track progress quickly and accurately.Faster response to market demands, fewer demand bottlenecks and less overproduction add value to the company's spectrum of products and services. odern management accounting system provides relevant information to all levels of management, financial and other information to make decisions regarding planning, control of operations and identifying opportunities to add value (“Importance of Modern Management Accounting Practices in Modern Business Organizations”, 2009).
In conclusion, modern accounting has made a difference in modern organizations because it allows for continuous improvement and growth, reduce cost, reduce error, and increase value, even though some may say it can be very overwhelming.Modern accounting systems have saved organizations a lot of money. Before, a large company needed a big roomful of accounting clerks to prepare the accounting records manually – and this allowed for more wages disbursement. Using modern accounting system, the same job can be performed by a much smaller group of people, saving a small fortune in wages expense.
Another plus is that modern accounting systems make it easier to operate under a 'perpetual' inventory system - the inventory numbers on the books more closely match the inventory that is actually on hand.
