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Increase productivity through networking.


What are the problems encountered in computerized accounting systems and what are some possible solutions? This article will present: 1) the advantages of networking, 2) some strategies to handle large amounts of data, and 3) some networking concepts.

Problems With Single

Station Microcomputers

The proliferation of microcomputers has brought an onslaught of computer solutions which were developed for single station systems. A glut of spreadsheets and database files with no common links has occurred throughout the business community. Redundancy has been allowed to occur because no one person knows exactly where all the information generated is located. The same wheel is being redeveloped and reinvented on a constantly recurring basis within any organization at any given moment. The ability of a network to share information belies some of the true power of a computer system, and consequently there is an increasing need to network information. Local area networks (LANs) have given users the tools for overcoming problems arising from the segregation of information which has occurred with single station microcomputers.

LANs Defined

LANs link groups of information users concentrated in a small geographic area by means of some hardwired networks. However, some LANs make use of local telephone systems or public carriers via modem. There are several popular LANs available in the market which provide a variety of configurations.

LANs would seem to be a feasible solution to the problems of compartmentalized information systems, but because of the difference in their protocols (the methodology by which the message transmission occurs down the line), users of different types of LANs cannot directly share resources. Because of this problem, the next logical step is the creation of a standard interface to all users of networked systems.

The Open System Interface (OSI) is the standard by which all networks will be able to share resources. Once this system is in place, the power of networked solutions and centralized data can emerge. While LANs and OSI do solve the problems of connectivity, there are still the questions as to what can be accomplished with a network, how the system is to be managed, and where the information is located.

Advantages of Networking

Networking can provide several uses and advantages for accounting departments. The main emphasis is on shared resources, the elimination of redundancy and increased productivity.

1) Resource sharing: Resource sharing is a system in which all the users utilize the same devices. This is the main source of real dollar savings from networking. Because only one large machine, known as the file server, is necessary, the users can utilize less expensive smaller machines. Further cost savings can be realized by acquiring only one large disk on the file server instead of buying a hard disk for each user. Additional resources can be shared from pooling one high quality printer instead of having multiple printers.

2) Elimination of redundancy: The elimination of redundancy can be realized by establishing a set of techniques for utilizing the network. A good system to help reduce redundancy is to create subdirectories or drives for specific purposes. Establishing a subdirectory for the development of spreadsheets and programs is a good method to eliminate the chance of accidentally modifying a perfected program. Modifying a copy of an existing applicaion in the development environment will save time, money and frustration.

Another benefit which can be derived by examining other developments is that one may learn more efficient ways to write macros and programs. Another efficient technique of eliminating redundancy is to create a subdirectory of programs and spreadsheets which incorporate standards. Usage of proven standards in the development of programs or spreadsheets assures that all the subsystems will be created similarly and can therefore be easily maintained.

3) Increased productivity: Increased productivity results from developing techniques to use the network more efficiently. Because the file server has a large disk, finding a file can be time consuming. An efficient method to handle this problem is to create a database of file names, their descriptions and a code field which indicates the purpose of that file. By making the code field a key, the database can be searched for by purpose.

It may be a good idea to document the codes so that the users will know what each code means. Knowing where to look for a particular file on a large disk drive can save time and make operations more efficient.

Strategies For Handling


Accounting systems can range from complex systems which integrate journals, ledgers and inventories to single user spreadsheet programs which can be used in cost volume profit analysis, budget planning and control, financial statements, cash flow analysis, pricing strategy and loan amortization. An accounting system may consist of a few spreadsheets or a multitude of jobs, programs, reports and documentation. Since an accounting department can produce a large quantity of data, procedures such as the following are needed to locate and trace the flow of data.

1) Flowcharts: A sound strategy for handling data problems in the network is to create a flowchart of the applications in the department, visually identifying the data inputs to the application programs and the data and report outputs from the applications. This flowchart will allow potential problems to be identified when changes are made to applications. The master flowchart will help identify the order of events in the department.

2) Job assignment schedule: Assignment of tasks can be accomplished by the creation of a job assignment schedule. The job assignment schedule assigns the tasks to be performed, identifies the persons performing those assignments and specifies a time frame in which the job is to be completed. The job assignment schedule must be updated as tasks are completed and subsequent jobs are started. Any exceptions must be recognized and adjustments to the schedule be made.

3) Documentation of reports: Accounting systems generally try to accomplish two objectives: (1) to process day-to-day transactions and (2) to provide useful information within a timeframe in which it can be used. An example of the first objective may be in the form of processing purchase invoices and incorporating general journal entries. The second objective is achieved in the preparation of financial reports. A general rule which can be applied to reports generated by accounting systems is that senior management will require a summarized view of the accounting information (income statements and balance sheets) while lower management will be concerned with more specific details of the accounting data (reconciling and posting).

An accounting department produces a large quantity of reports which need to be distributed. An effective scheme for documenting the distribution of reports is to assign a number to each report and to cross-reference each report with the application which generates that report. Each cross-referenced entry can have a description of the report, where the report is to be distributed and how frequently the report is generated. This type of table can easily be managed by any database. Having each report specifically identified will reduce the chance of misidentifying a report when a problem occurs.

Network Concepts

Some of the major criteria for an efficient operation of a network are: (1) data security; (2) data integrity; (3) data independence; (4) backup systems; (5) crisis management or disaster recovery; and (6) technical support.

Data Security

A major concern which must be addressed when operating on a network is the security of data. While this function is established by the software being utilized, the administrative functions must also be addressed. The main questions are: Who are the users and what functions do they perform? Which users will be able to update the data? Which users will be able to only view the data? Who will be allowed to extract data and how will that task be accomplished?

Security should be a program and not a project, which means that security is an ongoing concern. The security program should embrace new technologies to prevent what hackers are trying to do. Since it may be impossible to achieve 100% perfection, the cost of the security measures must be justified by the benefit they provide. All users must be kept informed as to what changes are being made, and the management staff should be involved in the security issue. The success of a security system will be a function of how well it is accepted.

Data Integrity

Data integrity is a set of mechanisms and procedures which seeks to provide consistency and a standard method of access view to error-free data. Consistency may be achieved by means of reasonableness checks and range checks when adding or modifying data in the system. Standards for data storage and retrieval come in the form of establishing procedures to identify a record in the database. Determination of whether set or unique record identification is necessary is a key element in data storage and retrieval.

Data Independence

Another important network concept is data independence. Data independence is a set of networking considerations which segregates data by purpose and by utilization. Since information requested from the system is constantly changing, modification to databases will happen on a repetitive basis. Consequently, physical separation of user views and databases is necessary so that changes will not have widespread effects on programs which use that structure. Forming database relations by using a common field between two databases is the preferred method of accomplishing physical separation. A general rule for establishing relations is that if there is enough additional information which can logically stand alone, then a relation should be created. Otherwise an existing database's structure should be modified.

Back-up Systems

Backing up of data and methods for recovering data from backup systems are of prime concern to any computer system. Backing up on a network should be done at "quiet times." Quiet times are periods during which there is no activity of updating to databases on the network.

Backing up can take two forms: (1) a full back-up where every file on a disk pack is backed up or (2) a partial back-up of selected files. The full back-up is generally used to save program configurations and the partial back-up is generally used to save data.

The back-up procedure must also take into account when the data was last updated. If there are some data which have already been backed up and have not been updated, there is no need to back up identical data. Rotation of back-ups with off-site storage of archived copies of critical data is vital. Off-site storage of data and programs may be achieved by the department administrator taking copies home on floppy disks or tape. The rotation of data back-up will be part of any disaster recovery program.

Disaster Recovery or Crisis


Disaster recovery must be formulated for any computer system. Disasters may take the form of fire, water, earthquake or computer virus. A computer virus is a diabolical program which replaces part of the bootstrap program with itself. The virus program contains programmed instructions to do detrimental tasks like erasing files. Even though a LAN does not use a telephone carrier, a virus is still a threat since it can be introduced from a floppy disk.

Viruses make the archiving of programs and backing up of data combined with the monitoring of the system even more critical than ever. A written set of procedures should also be kept in off-site storage. Since disasters do not occur very often, written procedures will be indispensable. These procedures should describe where the programs and data are located and how to reload databases. It is also a good idea to identify the organizations in the area having code compatible machines. If previous arrangements are made, certain functions like payroll will have to take place on time without interruption.

Technical Support

Technical support is an important aspect when considering a network. Even if there is an in-house data processing department, there will be those times when the network will experience transmission problems either due to hardware failure or noise in the line. The latter will apply especially if the network is utilizing a local carrier via modem. One should not hesitate to contact the local carrier if there is a suspected noise in the phone system due to lightning storms in the area or other problems. The local carrier will usually provide technical assistance in solving these types of problems.


In general, a networked accounting system will be only as good as the procedures which have been established for that system. Following are some of the suggested procedures to ensure smooth operation of a network system.

(1) Exceptions in the system must be followed up by the system administrator or the personnel in charge of that function. Corrective actions made to the system must be documented and personnel must be advised as to changes in the system.

(2) The administrative personnel must still follow up to get the feedback from the user group to determine if the changes made to the system have not affected other functions of the system and to ensure that the changes made are correct. Feedback is critical to the smooth operation and the integrity of the system. Without feedback there is no way of evaluating the effectiveness and performance of the system.

(3) Management by exception is not a proper technique for determining the performance of an information system. By the time a problem has been identified, data integrity may have been jeopardized. Constant monitoring of the system is required for the system to perform in the manner intended. Unfortunately the rule as to how a network should be defined and established is that there is no rule. Since an accounting system on a computer is a model of the company itself, (and every company will have its own philosophy of how to conduct business), there can be no rigid rules for guidance. The techniques presented are proven methods in practice which help to eliminate redundancy, ensure smooth operations, manage large quantities of data, maintain data integrity, and prevent loss of information.

Timely evaluation of accounting procedures and a set of procedures which ensures data integrity are successful ingredients to integrate users in a networking situation. The fact that data entered from one user (e.g. a journal entry) will be used as input to other processes (e.g. a balance sheet) poses a problem of data management as well as an accounting challenge. With the advent of the computer, it is becoming more and more imperative that personnel and managers of accounting departments become adequately trained in the management of networking systems as well.
COPYRIGHT 1990 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:accounting systems
Author:Yallapragada, RamMohan R.; Bonvillain, Thomas M.
Publication:The National Public Accountant
Date:May 1, 1990
Previous Article:Time and billing software grows up.
Next Article:Electronic filing; a case study.

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