Components of a Computerised Accounting System

A computerised accounting system is not just software — it is a combination of five inter-dependent components, and all five must work together for the system to function correctly.

1. Hardware. The physical equipment on which the system runs — the computer (CPU, monitor, keyboard), printer, scanner, an uninterrupted power supply, networking equipment where several computers share one database, and storage devices for keeping backups.
2. Software. Two layers are involved: the operating system that runs the computer itself, and the accounting application that actually performs the recording, posting and reporting functions. The accounting software is what most people mean when they say 'accounting package'.
3. People. The human users of the system — the data-entry operator who keys in vouchers, the accountant who reviews and reconciles the output, the auditor who checks it, and the system administrator who controls who is allowed to do what. A system is only as reliable as the people operating it and the access rights given to each of them.
4. Procedure. The documented set of instructions describing how a transaction should be entered, verified, authorised and reported — for example, who may pass a payment voucher above a certain amount, or how often a backup must be taken. Procedures turn a piece of software into a controlled accounting system.
5. Data. The raw material of the whole system — the source documents (sales invoices, purchase bills, receipts, payment vouchers, bank statements) that are converted into vouchers and entered into the software. Without accurate source data, even the most sophisticated software will produce unreliable reports. …