Page 338 - Accounting Principles (A Business Perspective)

8. Control of cash

environment somewhat. Small companies generally do not employ systems specialists and programmers. Instead,
these companies use off-the-shelf programs such as accounting, spreadsheet, database management, and word
processing packages. The data created by use of these programs are valuable (e.g. the company's accounting

records) and often sensitive. Thus, controls are also important. In a personal computer environment, the following
controls can be useful:

Exhibit 68: Flow of documents and goods in a merchandising transaction

• Require computer users to have tight control over storage of programs and data. Just as one person
maintains custody over a certain set of records in a manual system, in a computer system one person
maintains custody over certain information (such as the accounts receivable subsidiary ledger). Make backup
copies that are retained in a different secured location.

• Require passwords (kept secret) to gain entry into data files maintained on the hard disk.
• In situations where a local area network (LAN) links the personal computers into one system, permit only
certain computers and persons in the network to have access to some data files (the accounting records, for
example).
Computerized accounting systems do not lessen the need for internal control. In fact, access to a computer by an
unauthorized person could result in significant theft in less time than with a manual system.

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