Limitations of Computerised Accounting

The TS Inter II year Accountancy syllabus specifically lists the limitations of computerised accounting as its own sub-topic, because it is important for a student — and for a real business owner — to see the whole picture and not only the advantages.

1. High cost of installation. Acquiring suitable hardware, purchasing (or having built) appropriate accounting software, and setting up the necessary infrastructure involves a significant upfront investment that a very small business may find hard to justify.
2. Cost of training. Staff need to be trained to use the software correctly; if the people operating the system are not properly trained, the accuracy and reliability the system is supposed to deliver breaks down at the very first step — wrong data entered confidently is still wrong data.
3. Dependence on power and equipment. A computerised system cannot function during a power failure or when the hardware breaks down, whereas a manual system, however slow, can always continue on paper.
4. Risk of data loss or corruption. Without a disciplined backup routine, a hardware failure, a virus, or accidental deletion can wipe out accounting data that would have been physically safe in bound manual ledgers (subject, of course, to fire or flood risk of its own).
5. System failure and technical faults. Software bugs, compatibility issues, or an unexpected system crash can disrupt work and, in the worst case, corrupt records if not resolved carefully.
6. Risk of unauthorised access and fraud. Without proper access controls and passwords, accounting data on a computer can be viewed, copied or altered by unauthorised persons more easily than a manual ledger kept under lock and key — this is precisely why data security and internal controls (studied later in this chapter) are essential, not optional, in a computerised environment.
7. Resistance to change. Employees used to manual bookkeeping may resist adopting a new system, and the transition period itself can cause temporary disruption or errors as staff adjust.
8. Garbage-in, garbage-out. However accurate the software's calculations are, the output is only as correct as the data fed into it — an error made at the point of entering a voucher is carried through, and often magnified, across every automatically generated report. …