Q.Explain the data security and internal control measures that should be followed in a Computerised Accounting System.

This essay question, tied directly to the limitations of computerised accounting studied earlier, asks a TS Inter II year Accountancy student to explain the concrete safeguards a business should follow.

A Computerised Accounting System must be run with proper data security and internal control measures, precisely because electronic accounting data can, if left unprotected, be accessed, copied or altered far more easily than a bound manual ledger — this is directly connected to the risk of unauthorised access studied earlier as a limitation of computerised accounting.

The first safeguard is password protection: access to the accounting software, and often to specific parts of it, should be protected by passwords issued individually to authorised users, ensuring that only people entitled to view or alter accounting data can log in and do so, and that any action taken can, if needed, be traced back to the individual whose password was used. Closely related to this is the assignment of clearly defined access rights, or levels of authorisation, so that a data-entry clerk may be permitted only to enter vouchers, a supervisor may be permitted to review and approve entries, and only a senior accountant or the business owner may be permitted to alter closed periods or view certain sensitive reports; restricting access in this way is a basic internal control that limits the damage any single error or dishonest act can cause. A third essential safeguard is a regular, disciplined backup of data — taking copies of the accounting data onto a separate storage medium, ideally kept at a different physical location — which protects the business against total loss of its accounting records due to hardware failure, a virus, accidental deletion, or physical damage such as fire or theft; backup is the single most important safeguard against the risk of data loss. A fourth safeguard is the audit trail that good accounting software maintains internally, recording who entered or altered a particular piece of data, and when, so that any later dispute or suspected error or fraud can be traced back to its source, much as a …

Students often mention only 'password' as the sole safeguard; the syllabus expects the fuller set of controls — access rights, backup, and audit trail — as …