Computerised packages and internal controls

Published on June 30, 2019   22 min

Other Talks in the Series: Accounting Records and Accounts

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Hello, this is Huw Morgan from the Alliance Manchester Business School. This is the 11th talk in a series of lectures on accounting records. This session, identifies the typical internal controls that a growing business requires discussing the benefits and risks associated with computerized accounting and the continuing importance that accounting principles play in the recording of financial information.
We've seen in earlier sessions how a manual bookkeeping system includes methods to minimize the risk of misstatements and errors. Session 3 introduced the idea of the trial balance as a way to check the arithmetical accuracy of the double entry process. In Session 8, we saw how a manual inventory records system would be checked for accuracy by undertaking periodic stock counts to confirm quantities. Session 9 outlined how control accounts summarize the numerous entries made from the sales and purchase day books into the sales and purchase ledgers and that as an arithmetic check on totals. Despite these existing controls in a manual system, errors may still exist and even if any business these days can afford a PC to help with the more mundane aspects of processing accounting transactions, the use of computers will never guarantee that the accounting records are error free. Before we look into how computers can assist in the preparation of accounts, let's first consider the possible errors that could arise from a manual accounting system and how to correct them.