| In this article, we seek to identify the tangible | | | | results in general benefits like: |
| business results that a good document | | | | - More efficient and lower cost storage and |
| management system in accounting could produce. | | | | retrieval of documents |
| We look first at the kinds of accounting, then at | | | | - Limiting access to documents only to authorized |
| the documents generated in accounting and finally | | | | persons |
| examine how a document management system | | | | - Minimizing physical movement of documents. |
| could produce business results. | | | | We now look at the specific additional benefits |
| What Is Accounting? | | | | provided by a computerized DMS in different |
| We could see three broad pictures of accounting: | | | | areas of accounting. |
| - Financial Accounting is the recording, classification, | | | | Financial Accounting: There was a time when |
| summarization, interpretation and communication | | | | details from original documents were laboriously |
| of financial information about a business. This | | | | copied to "books of prime entry" like purchase |
| information is used by investors, lenders and tax | | | | and sales registers, cashbook and general journal. |
| officers as well as the managers of the business | | | | The transcription process continued with details |
| - Management Accounting involves identification of | | | | being copied further into ledgers. Then came the |
| key business result areas and developing systems | | | | summarization process, additions, extractions, |
| to measure, analyze and communicate information | | | | listings, classifications and the final accounts - all |
| (not confined to financial information) that helps | | | | done by hand. |
| managers of the business to make informed | | | | Then came computerized accounting and once |
| business decisions for improving the profitability | | | | you entered the data from original documents |
| and growth of the business | | | | into the computer database, all the "books" and |
| - Accounting Practice is the provision of | | | | statements were immediately available. You could |
| accounting related services such as auditing and | | | | print them out, if you wanted, or they could |
| tax consultancy by professional accountants to | | | | remain in digital format in the computer itself. This |
| their clients. | | | | was a big change in managing financial accounting |
| Other terms for accounting, such as cost | | | | documents. |
| accounting (part of management accounting), fall | | | | Management Accounting: Just add a few more |
| under one or other of the above broad | | | | codes to each document, indicating the cost and |
| classifications. | | | | other categories it affected, and enter these also |
| Documents Generated in Accounting | | | | into the computer. You could now sort the |
| Financial Accounting: | | | | transactions by these codes and generate |
| - Sales and Purchase Invoices with supporting | | | | management information. |
| shipping and other documents | | | | Computers also made it possible to generate |
| - Different kinds of evidential documents for cash | | | | extremely elaborate analyses that could not have |
| receipts and payments | | | | been made available in a timely manner under |
| - Documents supporting other kinds of business | | | | manual systems. |
| transactions (like returns of purchased or sold | | | | Managers could now just sit at their computers |
| items) | | | | and review reports that focused on the particular |
| - Documents supporting accounting adjustments | | | | aspects they are interested in. They could also |
| (like year end accounting of accrued expenses | | | | import information into their own worksheets and |
| and income) | | | | process it to analyze aspects not adequately |
| - Contracts, agreements and correspondence that | | | | covered by standard reports. |
| clarify the terms and conditions on the basis of | | | | Accounting Practice: The arrival of computers and |
| which ofthe above documents have been | | | | computerized accounting changed the process of |
| prepared | | | | auditing. Audit trails could be specifically |
| - Transaction records like Purchase and Sales | | | | programmed. Overall tests for reliability, patterns |
| Registers, Cash and Bank Books and General | | | | and trends could highlight problem areas speedily |
| Journal | | | | and accurately. Auditors could then focus on |
| - Ledgers that classify the transactions under | | | | these problem spots. |
| relevant accounts | | | | Tax returns could be prepared extremely fast, |
| - Accounts lists such as Trial Balance, Accounts | | | | based on updated tax laws. Reference materials |
| Receivable and Accounts Payable | | | | were available on computer media for fast |
| - Summary results such as Profit & Loss | | | | access. |
| Account, Funds Flow Statement and Balance | | | | Customer histories were also available in |
| Sheet | | | | computer databases, improving the quality of |
| - Different kinds of analyses to assess the | | | | work. |
| financial position of the business | | | | Billing for time spent on each assignment could |
| Management Accounting: | | | | also be made far easier and accurate, and could |
| - Cost estimates by product, department and | | | | even be automated to a degree. |
| cost element | | | | Arrival of the Web: With the arrival of universal |
| - Cost allocation documents that seek to assign | | | | Internet access and the Web, it was possible to |
| cost elements to cost centers, and then to | | | | enhance the processes: |
| products or services | | | | - Field staff could log in to company databases |
| - Cost reports that compare actual costs against | | | | from anywhere in the world and gather correct |
| original estimates | | | | and up to date information they need |
| - Analytical reports seeking to identify the | | | | - Accounting practice customers could also |
| reasons for variances between actual costs and | | | | similarly log in to their accounts from anywhere, |
| estimates | | | | and check their tax returns and other documents |
| - Breakeven analyses to identify | | | | securely |
| Cost-Volume-Profit relationships | | | | - Communication and where necessary, |
| - Ad hoc analyses highlighting the implications of | | | | collaborative working, could be more effective |
| different business decision alternatives | | | | with the enhanced facilities offered by the Web |
| - Other kinds of documents generated by the | | | | - Web-based specialist service providers could |
| current practices of product life cycle costing and | | | | render services at lower costs than in-house staff |
| activity based costing | | | | in many cases |
| Accounting Practice: | | | | Business Benefits |
| - Audit worksheets for each client and accounting | | | | Speedier processing of routine operations meant |
| year | | | | that managers and staff now had more time to |
| - Audit queries raised and clarifications received | | | | focus on business result areas. And they could do |
| from client's management | | | | this in a more meaningful manner based on |
| - Audited accounts and reports thereon | | | | information generated through elaborate analyses |
| - Tax returns supported by computations of | | | | possible with computers. These changes have the |
| taxable income | | | | potential to increase business volumes. |
| - Documents relating to tax consultancy services | | | | Improved customer relationships could result with |
| - Documents relating to other assignments | | | | the greater access and support provided to |
| received from clients | | | | customers. |
| - Accounting records relating to the practice itself, | | | | It was also possible now to reduce costs of |
| similar to those mentioned under Financial | | | | operations in different ways, including outsourcing |
| Accounting and Management Accounting above, | | | | much of the work to specialist service providers. |
| tailored to the special characteristics of accounting | | | | Greater focus on business result areas, improved |
| practice | | | | customer service and lower costs lead to greater |
| Document Management System in Accounting | | | | profitability and survivability for a business. |
| A good document management system typically | | | | |