Impact of Mandatory IFRS

Question: Discuss about the Impact of Mandatory IFRS. Answer: The history of the accounting packages can be traced back to the late 1950s when the IBM Corporation developed the first accounting program called 9PAC. This software enabled the users to store, access and retrieve accounting data from massive databases found in the computers. The development of 9PAC accounting software triggered other corporations to have in interest in accounting software development. These companies heavily invested their resources in the production of proprietary accounting programs that aimed at providing accounting solutions to the challenges that most of the organizations were experiencing. In late 1950s, most of the accounting jobs were performed in batches, a situation that resulted in poor management of accounting information of the organizations and as such, this situation created the demand for accounting software in Australia that could allow faster computation of data and integration of technology in accounting and computation of financial data. As tech nology advancement led to increased capability of computers, the ideas to design efficient accounting system with versatile functionalities became feasible in the late 1970s. The development of 9PAC was followed by the invention of other accounting software such as SAP RF, which had the capability of handling diverse business operations to enhance faster accounting as well as financial decision procedures with minimal bureaucracies. In 1981, new accounting software called Peachtree was introduced in the Australian market. This software enabled the users to simplify and compute financial and accounting data with the objective of increasing the value of such information to the business organizations. A year later, Peachtree software was upgraded to an integrated office suite that contained computer packages such as word processor and spreadsheet which contributed to the easier computation of accounting data. Moreover, another Australian company known as Intuit developed Quicken software in 1983. This accounting system revolutionized the accounting industry by introducing a user-friendly interface which gave the accountants easier time while handling data on this accounting application. The Australian company known as Delaware developed its accounting package by the name Delaware which was later ranked as the best accounting software for the year due to its striking accounting features and its ability to handle diverse financial tasks at the same time. In 11999, this organization was rebranded and changed its brand name from Delaware to MYOB Limited. The adoption of accounting software in Australia The introduction and use of accounting packages in Australia is taking place at a faster rate. In the recent 20112, a New Australian accounting application Development Corporation known as Xero carried out research that involved more than 1600 SMEs (Small sized businesses) to find out the rate of the use of accounting software in Australia. According to the results of this company, the Australian SMEs are leading in the adoption of accounting system across the globe. Australian small business enterprises use accounting packages at a higher rate than SMEs from other countries. Adoption of integrated accounting system in the operations of the Australian SMES has significantly reduced tiresome paper, which is associated with time wasting, high costs of processing accounting data and high incidences of errors of omission and commission. The accounting functions involve processing of ledger books such as purchase ledger, petty cash ledger purchase ledger and sales ledger. This step is fol lowed by balancing of books of accounts and adjusting the financial entries in these books. The last step of accounting processing is preparation and presentation of the manual report by the chief accountant to the chief executive of the organization. The accounting packages help the accountants to carry out this process in few steps with a lot of ease and accuracy. The manual accounting system is inefficient and unreliable as it involves many bookkeepers and a lot of paperwork, which leads to increased errors of omission and commission. Unlike the manual accounting system, the accounting software system is effective and easy to use because it only requires financial data inputs to make adjustments on entries. Also, it automatically generates financial accounting reports. The versatility, efficiency, and effectiveness of the the accounting packages are the key factors that have contributed to the dynamic growth of many business organizations and increase the number of SMEs in Australia. Australian accounting software leading companies Australian accountings system market is experiencing stiff competition. The accounting systems in Australia are mainly utilized by the SMEs, which are the main customers for the accounting software developers. The key players in the accounting software market of Australia are MYOB, Xero, and Intuit companies. The three corporations have upgraded the accounting technology to cloud computing, Xero Company is the leading accounting software corporation in Australia and has the biggest market share in this country. This company has continuously aligned its operations with the technological trends in the market to ensure that it produces system software that has the capability of addressing the ever-changing needs of the small and medium-sized business firms. Another factor that has given this Xero a competitive advantage over other market players is using application of effective marketing strategies. The company uses e-commerce marketing techniques such as the use of social media platfo rms, use of its website to market products and publishing relevant information concerning its products on blogs. Such strategies have helped the company to a unique niche in the market and reach out to its target customer at a relatively low cost. Also, the company uses social media sites such as Facebook, Twitter, and Google to network and engage with its clients. This strategy has helped it to get crucial feedback from the potential customers whose it use in decision making and development of strategic plans. Gaps in the accounting software market The three Australian firms have identified gaps in the market for desktop accounting applications. The accounting departments of most of the business organizations are tasked with the responsibility of gathering, computation and maintenance of accounting data. However, the desktop accounting application has limitations in accomplishing such tasks because it has no capability of reconciling all the accounting information from all the departments of the organization due to the presence of incompatible formats as well as duplication of information. Therefore, the majority of the business companies in Australia have started to embrace cloud accounting due to its capability of integrating accounting reports from different departments of the organization. Xero accounting package utilizes SaaS (Software as a Service) model, which offers a free API to customers and third-party vendors to enable them integrate other software in a single integrated ledger within the cloud computing system. Saa S model helps the users to utilize applications integrate into the cloud network and work within a small user interface. Cloud computing technology has significantly revolutionized the IT sector by introducing faster and cost effective innovations. Challenge The main challenge with this technology is insecurity, which is a major concern for most of the cloud accounting system users. Despite the existence of security frameworks such as firewalls, the cloud accounting users still feel insecure of unauthorized access to the information on this system by third parties. The cloud technology does not have well-defined security standards, and the providers of this technology are compelled to utilize their proprietary security measures and technologies. Lack of network security in cloud technology makes the accounting and other crucial information of the business to be vulnerable to cyber crimes such as identity theft, hacking, and other cyber related crimes. The cloud accounting software developers can adopt various security strategies in addressing the challenge of insecurity which is associated with cloud computing technology. For instance, they can utilize IDM (Identity Management) technique in authentication of users and services based on t heir credentials features. Also, these companies can control data and enhance security on cloud technology by uses information-centric security technique. Moreover, the cloud accounting users can use predicate encryption as security measures for cloud technology. This technique allows the cloud accounting application to run and execute accounting functions in an environment free from security threats. Application of these security measures in cloud accounting system will lead to enhanced information security, versatility, cost effectiveness and competitive advantage in the Australian business organization. The idea of accounting software originates from AIS (Accounting Information System). Accounting software refers to the computer software that is utilized for tracking, recording, and processing of financial and accounting transactions of a business organization. The accounting packages vary depending on their respective features, complexity, and cost. In the modern business environment, the accounting packages are not only restricted to n the processing of accounting information but also offers functional packages that play a crucial role in managerial decision-making with the objective of giving a competitive advantage to the business organization. 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