Functions of Accounting | Role of Accountants | Accounting Process | Problems with traditional view | File-Oriented Systems | Database Approaches

IMPORTANT NOTE:These notes are prepared exclusively for the benefit of the students in the Department of Accounting & Law at the State University of New York at Albany. They are not to be used by others without the permission of J. Gangolly.

Functions of Accounting.

• Traditional Views:
  • Record, Classify, Summarise & Interpret data affecting the organisation's finances.
  • Provide information useful for decision making
• Contemporary View:
• A system for capturing and storing an organization's data in one integrated repository.

The Role of Accountant:

• which events to capture data about,
• what data relating to each event should be captured,
• how that data is to be captured while preventing input errors,
• how the data should be stored to optimize its usability while maintaining its integrity,
• how meaningful reports can be generated on demand in real-time.

The Accounting Process:

Problems with the Traditional View:

• "transactions" orientation as opposed to an "events" orientation:

  Events are very important. In fact, most interaction of users with the accounting system is via events.

• narrow focus on financial data,

  Non-financial information is crucial for decision-making. Accounting system needs to be integrated with the overall information system of the organisation.

  
  
• reporting is periodic and not real-time,

  Often, managers and other users need accounting information in real-time for decision-making.

  
  
• limited accessibility of information,

  Accessibility to accounting information should be on "need-to-know" basis.

  
  
• too high a level of aggregation,

  information should be provided at levels of aggregation appropriate to the decisions.

  
  
• limited flexibility which prevents answering queries that cross functional boundaries.,

  • adaptable to changes in operations
  • adaptable to changes in technology

  
  

Early Computerised Accounting Systems: File-Oriented Systems.

• Each application owns its own data -- duplication/redundancies in data.
• Lack of uniformity of meaning of data -- not possible for accounting applications to share data.
• Difficult to enforce uniform standards ---lack of integrity of data.
• Difficulties in accessing data -- need to know programs to access data.

Database Approach to Accounting Systems:

Advantages of the database approach:

• supports the capturing of financial and non-financial data
• support for real-time rather than periodic reporting
• better controlled accessibility of data
• storage of data in the most disaggregated form
• Uniformity of meaning of data -- supported by a rigorous data model
• Enforcement of access controls easier

Updated on September 7, 1997 by Jagdish S. Gangolly.