ACCOUNTING IN COMPUTERISED ENVIRONMENT

OBJECTIVES

Introduction Meaning Features Terms Difference Advantages And Disadvantages Functions (Market) Scope And Experiences in Banking Components Information Security Internet And WWW

Introduction

Manual accounting (olden days) Accounting machines (mechanical calculator) Second World War (use computer & peripherals, maintenance of accounts & preparation of financial statement). PC have become household commodity.

Meaning
a) b) c) d)

Accounting System perform functions: Captures Business transactions in form accounting entries. Accounting entries used to prepare financial statements. Financial statements prepared based on accounting standards. Financial reports prepared from data available in financial statements.

Computer

General purpose machine. Converts raw facts into information. Storing sets of instructions. Electronic information processing device. Receiving inputs. Generating outputs with high speed and accuracy.

Definations

Hardware-Physical components. Software-instructions that tells what to do . Software programmes - set of instructions. Programme - set of software. Computer peripherals-printer, video, monitor, keyboard, disk drive etc. Programmer-computer software professional. Computer Software-instructions of programmer in computer language in form of computer programme.

Computer performs

Mathematical calculations. Complicated mathematical equations. Repeated complicated calculation without error.

CLASSFICATION
1.ANALOGUE COMPUTERS: Process data. Continuous form. Scientific & Mechanical fields. 2. DIGITAL COMPUTERS: Accept data. Convert data into result by arithmetic operation with help of computer programmes. Used in Computerised Accounting.

Special purposes
3. HYBRID COMPUTERS: Features of both digital and analogue computers combined to create. Eg: guided missile system.

FEATURES
1. 2. 3. 4. 5.

Speed Accuracy Informative Reports Economy Single Stand Alone Unit or a Multiple Use (LAN,WAN,MAN etc).

TERMS IN CA
1.

2.

3. 4.

DATA: facts, observations, assumptions or occurrences. RECORD: group of data items related to an object of data processing. DATA FILE or FILE: pre-arranged order. SYSTEM: various components that process data.

DIFFERENCES BETWEEN
COMPUTERISED AND MANUAL ACCOUNTING. Data stored in Computer are not Visible and thus, the Trail of Events is Difficult to Establish. Accounting Data can be Manipulated to Generate Various other Reports/Statements.

1.

2.

ADVANTAGES
1. 2. 3. 4. 5.

Accurate, High Speed and Low Cost of Operation. Availability of Various Reports from Same Accounting Data. Error-free Accounting. Automatic Completion of all Records by Feeding Only One Entry into the Computer. Multiple Set of Printouts Available.

DISADVANTAGES
1.

2. 3. 4.

5.

Requirement of Special Programme & Professional. Qualified Staff Required for Operations. Costly Computer Peripherals & Stationery. Regular back-up is Required as Data may be Lost for Various Peasons. Computer Viruses.

FUNCTIONS PERFORMED
1.

Various C A Software in market: Tally versions Ex, accounting software. Bank 2000 for accounting needs of bank. b@NKS-24 core banking solution. A.U.D.I.T.O.R and A.U.D.T.I.M.E. Cash basis S/W for professionals and their accounts. MEFCOMP accounting S/W for professional. Quick FA.

TAILOR A/C S/W

a. b. c.

d.
e. f.

Maintenance of all statutory books. Generate various reports. Conversion of currency as per instruction. Process of finalisation of accounts. S/W maintains accounts of all branches and head office. S/W capable giving profit earned by entity productwise, area-wise etc & help management in planning.

SCOPE & EXPERIENCES IN BANKING

1. 2. 3.

4.
5. 6. 7. 8. 9.

Computerised Bank Operations. Computerised Accounting. Accepting Deposits. Lending. Remittances. Clearing of Cheques. Standing Instructions. Centralised Banking. Automated Banking.

QUESTIONS LIKE
1.

2.

3.

COMPLETE AUTOMATION WHY IT IS REQUIRED? THE NEED OF CENTRALISED INFRASTRUCTURE. A HAPPY CUSTOMER.

THE CORE BANKING COMPONENTS

Set of integrated core banking. To fit the institutions individual business requirements. Easily re-configured (change). Protecting the organisations strategic investment and maintaining a unified business approach.

CORE BANKING COMPONENTS INCLUDE

Core Bank Financial Institution Infrastructure. Core Bank Product Build. Core Bank Customer Management and Customer Overview. Core Bank Account Administration. Core Bank Payments. Core Bank Management Information.

CORE BANKING BENEFITS

CRM strategy , customer database and customer administration. Cost savings and improved customer service. Support portfolio growth (flexiblity , capability). Deliver speed to market (online in real-time). Increases productivity and reduction of errors. Multi-bank and single-bank operation (languages ,strategies). Support multi-currency operations. Increased business & operations (24*7). Management information ,operational data, risk management and profitability analysis. Resulting cost reduction and increased operational resilience. Provide data structures and user-exists , thus reducing maintenance and upgrade costs.

TECHNICAL ARCHITECTURE OF CORE BANKING

Powerful server installed at centralised data centre (HUB). Every branch will have a branch server. Each user at each branch will have terminal. These terminals will be connected to branch server. The branch servers will be connected to central server (HUB). The branches and the Host will be connected through a dedicated line.

SYSTEM LAYERS

Presentation layer: Delivery layer: (interface b/w front-end and OS.) Application layer: (driven by system triggers and parameters and environment settings.) Database layer: (interfaces to database using appropriate call levels and languages.).

TRANSACTION PROCESSING
1.

2.

3.

Primary update method: (customer related operations.) Secondary update method: (used external transaction records.) Batch processing (daily interest updating and statistical reports.)

ONLINE PROCESSING
1. 2. 3. 4.

Majority of transactions are processed online. Examples include: Account & customer creation Financial transactions Enquiries Maintenance.

FURTHER ONLINE PROCESSING

1. 2. 3.

Online Day Journal used for internal transaction record posting. Sent by requested programs. Updating programs.

ONLINE PROCESSING - BENEFITS

Basic functions are separated to certain areas. Allows a flexible system and eases change. Caters to all types of instruction requirements. Optimises transaction throughput. No downtime for Day-end or batch processing. Entries Database and all the transactions are always available.

CORE BANKING SOLUTIONS

Core banking solutions work on two software: 1. B@ncs24 software that take care of all the transactions that have been put through at the branches. 2. The Finance 1 software takes care of postings in the General Ledger. The interface for the postings between B@ncs24 and Finance 1, concisely , what is known as GLIF (General Ledger Interface File).

INFORMATION SECURITY

Responsibility of every employee in organisation. Protecting information assets of bank. Maintaining the security of data. Accepted policies of bank. Take care of various aspects of information security.

WHAT IS INFORMATION SYSTEM SECURITY?

Access control systems and methodologies Computer operations security E-mail and internet access Application and systems development Business continuity and disaster recovery planning Telecommunications and network security Physical security Cryptography Security management practices Law, investigations and ethics.

STANDARD PRACTICES FOR USAGE OF PCs AND LAPTOPS

1. 2.

3.

Users are responsible , measures to restrict physical & logical access to desktops. Hardware and software configured securely as per the guideline of the bank. User should not change the hardware configuration settings ,applications installed. Additional S/W can be install only after getting it vetted by the competent authority. User should not install any applications or software on their desktop. User should not connect modems to the machines or use internet or any external networks. Passwords selected should be minimum 8 characters combination of alphabets and digits. Passwords should be changed at least once every month. Protection measures.

4. 5. 6.

7.

MEASURES
To prevent the risk of unauthorised access: Log out of applications or turn off the desktop. Enable the screen saver with password protection. Core banking do not leave the terminals in the middle of a transaction. Disable the sharing of folders in the desktop with other users over the network.

PASSWORD MANAGEMENT POLICY

1. Password Usage: User is responsible for all activities in computer accounts. Level security measures Authentication through valid passwords at both OS level & application level. Have a good password management . Not to allow anyone else to operate their accounts.

2. Password Construction:
User should choose passwords that are easy to remember but difficult to guess. Guidelines for password construction are: Name (that should not used) Personal information (should not be used) Common words (should not be used) Word or number patterns (should not be used) Any words preceded or followed by digit (should not be used) Strong passwords minimum length 8 characters mix of numerals and capital letters. Create complex ,that is take known word or phrase and convert it using numerals, special characters and capital letters.

3. Password Protection: Users should not share passwords. Users should ensure that nobody is watching when they are entering the password into the system. User should not keep written copy of password in easily locatable place. Users should change their password regularly. Users who have been authorised to use the smart cards or privaate keys should safeguard them carefully as compromising the same could have wide ramifications.

INTERNET AND WORLD WIDE WEB - INFLUENCES ON BANKING

Internet , e-mail and e-commerce.