How can information technology affect financial accounting?

The good affect of information technology is increase the volume of information.  On base of this information technology we are rely on financial data and related financial reports in making decisions, strategic planning and monitoring the financial performance of the organization.

"Information Technology" is a very extensive and exhaustive enabling tool and in today's era almost no field is remained untouched by it . Accounting is also one such field where Information Technology (IT) has made the task of accounting much more faster, precise and easy as well. With the help of IT only it has been possible that an effect of a Journal Entry gets posted into respective ledgers, trial balance and finally to P&L and Balance Sheet without much hassle. IT has also made task of extracting value out of the data much more easier so that we can reach at a logical conclusion and for that Data Analysing and Data Mining techniques can be used effectively. This is helpful for management accounting, decision making, auditing as well as forensic accounting. Also the use of IT for Accounting depends on the output / utility as expected by the end user. For some users, a basic tally software may suffice (example - MSMEs) whereas for some users technically advanced and superior applications like SAP / Tally ERP may be required (example - MNCs). So, the scope and role of IT in accounting is also varying and is not like one size fits all, there are customizations at all levels depending on the expected output. Also we need to be cautious that all the IT Systems works on the GIGO principle (Garbage In Garbage Out) and so for accounting as well the same principle applies. If the initial Journal Entry posted is wrong then the end result (Bal Sheet) will also not be correct. Hence, this enabling technology needs to be used along with the caveats which comes along with it. Best Regards CA Rahul Kalwani

With the Modern Era post 2000 a new world have emerged in the field of scientific and technological development in the Globe.  One of the major one is Information Technology or IT as abbreviation stands.

Today no Business whether small or big can survive the speed and accuracy and results without implementing the tools provided by the Information Technology.

Since Financial Accounting is the heart of any business and all decisions of  business are dependant on better presentation of Financial Statistics, Financial Statements and Financial Analysis, a small manual error in calculations can lead to a major loss making decision.  IT with its available tools in Hardware, Softwares and Technological know how with customization etc. can prove most beneficial for Financial Accounting.  There are variety of Financial Accounting and ERP softwares available in the market depending on each business needs.

Today Information technology and Financial Accounting go hand in hand.  IT is the best available tools to support the right Fianancial Accounting today Globally.

Oracle, SAP, E-Commerce, Cloud, are few examples of IT tools for Financial Accounting in todayès Modern World.