The advancements in information technologythroughout the past decades have immensely upgraded the way in which accountingsystems are used. It has become much more easy, efficient and secure to useinformation technology in accounting. It is also affordable for businesses tocomputerise their accounting systems. Despite the main risk of data securitywhen using computers in accounting, the risk is not significant enough tooutweigh all the processes computers have eliminated from accounting systems andthe amount of time and it has saved.
The common use of computerised accountingsystems and software has even changed the way accounting is taught as it hasmade it necessary for accounting students to be familiar with the most popularaccounting systems. Accountants already practicing accounting will need to taketraining courses as part of their jobs to make sure they are always updated onhow to use the software they are working on. Cloud computing has completely changed theidea of being up to date by providing software and hardware with regularautomatic updates. This allows accountants to give their clients a clearer ideaof the state of their accounts at any given moment, allowing them to makedecisions quickly. Cloud computing has also massively reduced the amount ofphysical space needed in offices to store data resulting in reduced costs foraccounting firms and less of a need for employees to come to work. Manyaccountants can now log into portals from home and access all the sameinformation, databases, updates to those databases and software through theircomputers as they would have if they were at work.
These are just some of thebenefits that cloud computing has brought to accounting. However, accountingfirms only started using cloud computing after 2010 and even though it is notvery new anymore there are still risks and even disadvantages that areinvolved. The biggest disadvantage is that cloud computing services cannot beaccessed without an internet connection. Informationtechnology has allowed for accounting to have much more security. Instead offiles having to be stored in file cabinets or lying around on tables, they cannow be safely stored on hard drives and backed up on the cloud, protected bypasswords and encryptions. Password protection for accessing files anddatabases ensures that only authorized people can obtain classified informationwhile encryption and computer security software protects data from beinghacked.
However, even though precautions can be taken to avoid protected datafalling into the wrong hands, there is no guarantee that it will not. This isbecause when a business’s files are backed up using cloud computing, it is likethe business outsourcing their data storage. Despite cloud service providershaving a responsibility to protect all their customer’s data, there areinstances where these service providers are hacked and customers’ protectedinformation and files are released. One of the biggestways technology has impacted accounting is though the introduction ofaccounting software. Accounting software has eliminated the need for paperledgers and hand written financial statements as well as some of thecalculations and steps that used to be involved in preparing accounts. Enteringand processing data is fast and has reduced the amount of time a business takesto respond to changes in their sales performance and make decisions.
Accountants in the past would have to enter all data from receipts manually andcalculate figures themselves. With accounting software, some processes such asthe production of payslips and the calculation of VAT have been completelyautomated. Although accounting software has greatly improved the way accountingworks and is used, it comes with some problems. The price of some accountingsoftware and the extra cost of supporting that software through annuallicensing fees for upgrades can be too much for some small businesses. Anotherdownside to accounting software is that one mistake when entering data willlead to even more mistakes, as calculations are done automatically, it will beharder to spot. Advancements ininformation technology have brought computers to the forefront of financialaccounting.
After 2000, computers had completely transformed how accountantsuse financial systems and even changed how accounting is taught today.Computers have brought the use of accounting software and cloud computing intoaccounting in more recent years.