Accounting Challenge and Procedure

Accounting Challenge and Procedure
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Accounting Challenge
The accounting system comprises six primary components, which are all integral in monitoring all accounting and business transactions in an organization. These elements are people, software, data, information technology infrastructure, procedures, and internal controls. The diagram below shows the six components of an accounting system and how they relate to one another.
101917520193000 Internal controls and information technology infrastructure
1114425137160Software00Software
42767252520315
38671502758440Data collection0Data collectionleft1558290External and internal resource dataExternal and internal resource data866775209169000344805020345402162175205359038004751615440Data Production0Data Production12192001624965Data collection0Data collection25146001615440Data Processing0Data Processing
990600104775002514599450840023526758318400
25431751079400
4333875165100
2533649101603895725167005People (system users)0People (system users)
Procedures
The most crucial element in an accounting system is the people (accounting system users) who manage the organization's different departments. These department staffs require systemic records (financial information such as income and expenditures) from the accounting system to assess the company's performance over time. Professionals who use the accounting system include accountants, managers, consultants, auditors, chief financial officers, etc. A well-designed accounting system allows management to retrieve valuable and up-to-date financial information and even analyze it to arrive at accurate data for crucial business decisions, from setting sales goals to improving organizational efficiency to even deciding on expanding business operations (Sethy, 2015). Auditors need the data generated by the accounting system to evaluate the organization’s internal controls, compliance with commercial regulations, and financial condition. Consultants may also use the data to determine the efficacy of the company’s pricing structure by examining revenue, sales, and cost data.
The procedures and instructions refer to the methods employed during data collection, retrieval, storage, processing, and generation. These procedures could be automated or manual, while the data could be from internal sources (staff or company performance) and external sources (customers, suppliers, and business partners). During training, they are taught to employees and coded into the account...