TWO FIELDSONE JOB: THE RELATIONSHIP BETWEEN ACCOUNTING AND IT

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TWO FIELDSONE JOBTHE RELATIONSHIP BETWEEN
ACCOUNTING AND IT

• By Jodi L. Benson
• July 2005

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Abstract

• Taking a look at how Information Technology and
  Accounting correlate to each other can show some
  instances as to how important each field is
  nowadays. It is felt to be a duty in light of
  recent scandals to protect shareholders in their
  confidence of the financial documents that are
  disclosed. Some major government regulations
  include the Sarbanes-Oxley Act, COSO, and CoBIT.

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Introduction

• The accounting industry finds it impossible to
  avoid learning important skills pertaining to
  Information Technology .
• The whole accounting field is seen moving towards
  to the online world where these records are
  available around the clock.
• It is necessary to face the challenges like
  improving the security and planning for the
  storage of large amounts of data.

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Accounting Software

• It is needed to understand that in software for
  the accounting field is that certain software
  should be made for specific areas in the market
  itself.
• Have software suitable for their local conditions
  and terminology.
• Ex. Taxes in each state are different
• In purchasing software, remember is that the more
  sophisticated tools used in the software, the
  more it will cost. Again, it is up to the
  business itself where they see themselves going .

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Accounting Software

• Keys to remember in purchasing software
• Keep accounting processes simple
• Has a clear upgrade path
• Make sure that the software you buy is well
  supported
• Check the online capabilities of the software

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The Sarbanes-Oxley Act of 2002

• In light of the recent scandals that occurred in
  the early 2000s Enron, WorldCom, Adelphia,
  Tyco, Rite Aid - Congress had taken a step and
  passed the Sarbanes-Oxley Act of 2002, also known
  as the Act or SOX.
• This law looks to protect investors by improving
  the accuracy and reliability of corporate
  disclosures made pursuant to the securities laws.
• Also in relevance to the internal controls of the
  businesses.

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The Sarbanes-Oxley Act of 2002

• Four major elements
• Public Company Accounting Oversight Board PCAOB
  or Peek-A-Boo which would grow and implement
  reforms that will eventually restore the
  investors confidence in financial reporting and
  auditing process.
• Prohibits audit firms from providing audit and
  non-audit service in a number of areas at the
  same time.
• Requires corporate responsibility of establishing
  audit committees.
• Requires enhanced financial disclosures that
  provides direction for management assessment and
  implementation of internal controls

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The Sarbanes-Oxley Act of 2002

• In the area of information security of the
  Sarbanes-Oxley, it is believed that it revolves
  around the internal controls in one particular
  section even though it is not specifically
  stated.
• Accurate data can only be insured through a
  system that is a confidential system with
  integrity and provides availability.

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COSO and CoBIT

• The Committee of Sponsoring Organizations of the
  Treadway Commission, or COSO
• Lays out an evaluation basis to be used by
  managers to assess the internal controls and
  disclosure requirements, in general.
• The IT Governance Institute established an
  audit-based framework known as the Control
  Objectives for Information and related Technology
  CoBIT
• An interpretation of COSO from an IT perspective.
  

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Accountants and IT

• The IT systems of a company should be relied upon
  as being accurate with the systems being secured
  against unauthorized users and modifications that
  are not permissible.
• There has been a considerable increase in the
  need for accounting professionals with IT control
  knowledge and skills.
• In companies today, they have acquired a shortage
  of well-trained college graduates that have led
  them to cross-train their current staff.

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Accountants and IT

• It is seen by the firms throughout that
  information systems is the second most important
  topic of study for an accounting major, right
  after communication skills of all forms

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Conclusion

• Some industries hope that having a knowledgeable
  employer of graduates with IT control will
  encourage accounting schools to include
  Accounting Information Systems (AIS) or IT
  auditing in their programs.
• From the pressures of deregulations, the
  Sarbanes-Oxley Act, and going back to basics
  eventually clash with shareholders expectation
  for growth and profitability.