IT in Accounting

In Accounting IT can be used in the form of Accounting Information systems.

They are the oldest and most widely used information systems in business,
which record and report business transactions and other economic events.
Operational accounting systems emphasize legal and historical record-keeping
and the production of financial statements. Basically it follows Transaction
processing systems. Management accounting systems focus on the planning
and control of business operations. Six common purposes of accounting
systems include:
1. Order Processing. Or, sales order processing is an important transaction
processing system which captures and processes customer orders and
produces invoices for customers and data needed for sales analysis and
inventory control.
2. Inventory Control. These systems track and monitor levels of and
changes in inventory. They may be programmed to notify managers if
some threshold level of inventory is reached that requires a decision.
They may also be equipped to handle routine re-order information.
3. Accounts Receivable. Accounts receivable systems keep records of
amounts owed by customers from data generated by customer purchases
and payments.
4. Accounts Payable. Accounts payable systems keep track of data
concerning purchases from and payments to suppliers.
5. Payroll. Payroll systems receive and maintain data from employee time
cards and other work records to produce paychecks and other documents
such as earning statements, payroll reports, and labor analysis reports.
6. General Ledger. General ledger systems consolidate data received from
accounts receivable, accounts payable, payroll, and other accounting
information systems.
How AIS is being UsedAIS typically follows a multitier architecture separating the presentation to
the user, application processing and data management in distinct layers. The
presentation layer manages how the information is displayed to and viewed
by functional users of the system (through mobile devices, web browsers or
client application). The entire system is backed by a centralized database that
stores all of the data. This can include transactional data generated from the

core business processes (purchasing, inventory, accounting) or static, master

data that is referenced when processing data (employee and customer
account records and configuration settings). As transaction occur, the data is
collected from the business events and stored into the systems database
where it can be retrieved and processed into information that is useful for
making decisions. The application layer retrieves the raw data held in the
database layer, processes it based on the configured business logic and
passes it onto the presentation layer to display to the users.
For example-consider the accounts payable department when processing an
invoice. With an accounting information system, an accounts payable clerk
enters the invoice, provided by a vendor, into the system where it is then
stored in the database. When goods from the vendor are received, a receipt is
created and also entered into the AIS. Before the accounts payable
department pays the vendor, the systems application processing tier
performs a three-way matching where it automatically matches the amounts
on the invoice against the amounts on the receipt and the initial purchase
order. Once the match is complete, an email is sent to an accounts payable
manager for approval. From here a voucher can be created and the vendor
can ultimately be paid.
Duties of VP in Accounting
1. Accounts Payable (money out) In order to maintain great
relationships with vendors making sure that everyone gets paid on
time is a vital role. The role of the accounting department includes
keeping an eye on opportunities to save money, for example,
determining if there are discounts or incentives available for paying
certain vendors more quickly. At the very least, AP should be
scheduled to assure that the least amount of money has to go out per
payment, i.e., no late payment charges!
2. Accounts Receivable and Revenue Tracking (money in) Another
critical duty of the accounting department is to account for and track
receivables, including outstanding invoices and any required
collection actions. Accounts receivable is responsible for creating and
tracking invoices. The responsibility here includes assuring that
customers pay those invoices on time, so a system of friendly
reminders is crucial.

3. Payroll Payroll is a critical function of the accounting department

and includes making sure all employees are paid accurately and
timely. In addition, proper tax is assessed and tax payments are on
time with state and federal government agencies.
4. Reporting and Financial Statements The primary reason you collect
data properly in your accounting software is to prepare financial
reports that can be used for budgeting, forecasting and other decision
making processes. In addition, these and other reports are needed for
communication to investors, banks and other professionals that play a
role in the growth of your business.
5. Financial Controls Financial controls include reconciliations,
dividing the responsibilities and following the GAAP standards of
accounting principles, all of which are implemented with view toward
compliance, fraud and theft prevention. The role of the Controller is
to ensure procedures are set up properly to manage that process
without errors.
Information needed by VP to perform his task is
1. Details of customers from the marketing department to know
whether the customer can be classified as a bad debt
2. For preparation of income statement and balance sheet they would
require information from marketing department for sales, HR
department for lay offs and pay slips and production department for
inventory information.

IT in Finance
Financial Information Systems support financial managers in decisions
concerning the financing of the business and the allocation and control of
financial resources. Key areas for financial information systems include:
1. Cash and Securities Management. Information systems collect
information on all cash receipts and disbursements within a company on a
realtime or periodic basis. Further, many businesses invest their excess
cash in short-term marketable securities and these portfolios can be
managed by systems software.
2. Capital Budgeting. The IS assists the capital budgeting process by
helping to evaluate the profitability and financial impact of proposed
capital expenditures.

3. Financial Forecasting. The financial information system package of the

organization will have a variety of statistical forecasting packages to
provide analytical techniques that result in economic or financial
forecasts of national and local economic conditions, wage levels, price
levels, and interest rates.
4. Financial Planning. Financial planning systems use financial planning
models to evaluate the present and projected performance of a business or
of one of its divisions or subsidiaries. They also help determine the
financing needs of a business and analyze alternative methods of
financing.
Duties of VP in finance
1. Financial Reporting-Vice presidents of finance are also responsible for
composing and issuing the financial reports given out by the company to
investors, regulatory agencies and other stakeholders. Many of these
documents require that one or more top-ranking executives sign their
names, testifying to its accuracy.
2. Auditing-As part of the monitoring of the organization's finances, vice
presidents of finance must conduct regular audits of expenditures, assets
and liabilities, making sure the recorded figures are verifiable and
accurate.
3. Planning-One of the more amorphous duties of the vice president of
finance is planning for the company's financial future. This can take
various forms, including drawing up short- and long-term plans, as well
as coordinating with other top executives about the company's direction.
4. Risk Management-Vice president of finance is generally responsible for
oversight of the risks the organization is taking. This can include
outlining possible financial risks and weighing the comparative benefit of
certain potential courses of action.
5. Build External Relationships-Vice presidents of finance are expected to
represent the organization and build outside relationships with
stakeholders with a financial interest in the organization's health. These
can include banks, stockholders and members of the community.
6. Fundraising-The vice president of finance will supervise the raising of
funds. This can include working out methods of attracting investors or
donations and deciding how the money will be spent.
Direct and coordinate line of business financial planning and budget
management functions

 Recommend benchmarks for measuring the financial and operating

performance
Monitor and analyze monthly operating results against budget
Oversee daily operations of the finance and accounting department
Manage the preparation of all financial reports
Manage the preparation of financial outlooks and financial forecasts
Prepare financial analysis for contract negotiations and product
investment decisions
Ensure compliance with local, state, and federal budgetary reporting
requirements
Work with department managers to develop five year business plans
Assist in establishing short- and long-range departmental goals,
objectives, policies, and operating procedures
Design, establish, and maintain an organizational structure to effectively
accomplish the departments goals and objectives
Serve on planning and policy-making committees
Serve as primary government liaison relative to financial issues
Coordinate financial audits and provide recommendations for procedural
improvements
Information needed by VP to perform his task is
The finance department use past financial reports to measure the organisation's
annual performance, employees bank account information to pay salaries or
wages, the businesses bank statement to revise where the business is
overspending and government corporation tax information to be able to forecast
how much they will be taxed on profits. And all these information is needed by
VP to know whether the reports prepared by his department are acceptable.
Following are information needed from other departments1. Income statement and balance sheet prepared by accounts department
is needed to know the current standing of the business and also for
posting of this information in its financial report and also the policies
followed by its accounts department for preparation of these
statements.
2. For preparation of the budget and forecasts information from the
marketing regarding the sales projection and also accounts receivable

and payable from the accounts department and also future manpower
requirements from the HR department.
3. Future requirement from the manufacturing department for an asset is
needed for fundraising.