Auditing - Mechanized Accounting

In the traditional manual system of accounting, a lot of steps were involved in recording the Accounting transactions. In the present day business scenario a lot of information can be fetched in very less time, without spending a lot of workforce and resources. Therefore, various machines are doing the work of recording and presenting accounting transactions.

Advantages of Mechanized Accounting

  • It saves time and cost in recording accounting transactions.
  • Machines works very efficiently, hence chances of errors are reduced.
  • It enhances speed of work.
  • Accounting through machines is neat and legible.
  • Without any delay final accounts can be prepared any time.
  • Cost of internal control system and Internal Check can be minimized.
  • Desired number of copies of any record is easily available.
  • Past year's data and record can be reproduced in desired form without any delay.

Disadvantages of Mechanized Accounting

Mechanized Accounting comes with its own set of disadvantages. A few of them have been mentioned below −

  • Wrong punching of data at initial stage will produce wrong results.
  • Loose cards and sheets maintained under it are not acceptable by court.
  • It is very difficult to locate and rectify error in it.

Mechanized Accounting and Auditor

An Auditor should consider the following points while conducting audit of mechanized accounting records −

  • He must verify original data punching.
  • Scrutiny of internal control system is must.
  • He must ensure that actual and authorized accounting transactions shall be recorded.
  • He must obtain explanation, if any, required in any entry.
  • He requires certificate whether machines are in order and working properly or not.