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This research study will give emphasis on the accounting packages of Australia. The details regarding the history and development, market analysis, competitive advantage of the accounting software/packages will be discussed. The adoption of the computerised accounting from the traditional manual process will also be highlighted by sharing the reasons for this transformation. At last the issues and recommendations to overcome the barriers in the accounting packages will be figured out in this report.
Accounting is the oldest and indispensable part of the management. As per Wood (2012), financial accounting is the systematic approach to record, measure, classify and summarize the transactions by communicating and interpreting the results effectively to the users. Maintaining the daily accounts, publishing the financial statements are the compulsory requirements of the business. The globalisation of the business has increased the volume and that has influenced the development of the computerised accounting packages. In this context, Marivic (2015) states that automated accounting system are the process of maintaining the daily accounts by utilising the computers. Moreover he has also given emphasis on the use of the computerised accounting system in order to bring sped, efficiency, accuracy and fairness in maintaining the accounts. Wood (2012) included the benefit of using the computerised accounting system which integrates the business process with the added features like inventory control, reporting, statutory maintenance etc. Australian Security and Investment Commission state that the organisations operating in the country must disclose the true financial reports in order to verify the operations by the Government. The modernisation of the business and technology along with the increase in the volume and international transactions influence the software companies to develop the accounting software for the corporations. Wilson (2014) considers the risk of the intervention of the human being that is associated with the computer programs in maintaining the accounts. The tempering of the files or data by the employees are the possible incidents which can be happened and that can falsify the financial statements.
Review of Literature
History, Development and Adoption
Accounting packages/software is developed aligning with the theories that are developed by the Australian scholars in the platform of the international community based on the accounting historians. Carneige and Potter (2011) states that during the period starting from 1966, the professional bodies, scholars formed the Australian Accounting research Foundation (AARF) which develops the Accounting Standard Boards and Public Sector Accounting Standards Board that works jointly by developing the accounting standards related to the private and public sector of Australia. More specifically the Australian Accounting Standard also contributes in the development of the international standards based on the accounting for the International Accounting Standards Committee (IASC) The objective for the accounting standards is to bring fairness in the financial statements produced by the organisations. The presentation of the financial statements as per the accounting standards and Corporation Act is helping the investors, employees, regulators to analyse the financial position of the organisation. The globalisation of the business and rapid development of the technology influence the introduction of accounting packages in the market which facilitate the users to maintain the daily accounts efficiently. Accounting and the use of computers are now interrelated with each other which help to track the assets, transactions and other calculations for managing the business of an organisation. From the research it has been observed that the first modern computer in Australia was sold to a business that is private for the sake of accounting in the period 1960 (Halabi et al, 2010). The technology that was used for developing the number system, calculations was operated in the model of Univac-1. From the research, it is confirmed that during the period of 1960, the need for the automation in the accounting packages are developed (Gomes et al, 2011). Though the globalisation of the business has increased the potential of the organisation and on the other hand it has also brought complexities in managing the operation. This can be proved from the transition of the accounting packages where the centralised intelligence systems are transformed in to the shared networks to bring the flexibility in processing the transactions. Adoption can be observed from the research that involves the Client-server networks, local area networks browser-server networks into the new accounting packages which support the multi-dimensional database, location flexibility, multiple users across the world etc. The programs like COBOL, FORTRAN and RPG that were used to develop the accounting packages are replaced with the new programs in order to support the globalised business forms (Dyt and Halabi, 2013). The research claimed that it is the digital revolution that influences the developers to modify the accounting packages. The business approaches in Australia are adopting new technologies to move their platform towards cloud. From the report of Infosys, it is observed that 81% of the business has moved towards the cloud technology in the production and operation areas of the business. It is clear from the research that other business in Australia is planning to automate their business process to reduce the fixed cost and to bring more efficiency in the business process. It is true that development in the accounting packages by using the cloud technology saves the time and brings more fairness in the financial statements.
Market Size and Leaders
MYOB, Intuit and Xero are the three big players which are ruling the accounting software market of Australia. The Australian accounting software market is dominated by Xero with 65% of the market share followed by Sage and Intuit. It is very clear that each and every business requires to maintain their accounts as per the policy of the Government and also to attract funds for them. This has widened the opportunities of the accounting software companies to flourish. The need of book keeping, cash flow management, preparing the invoice, designing the budget, publishing the financial statements etc. requires the accounting packages. It has been observed that these three firms without any shyness are criticising the rivals in front of the public. The company MYOB has raise their total market share from $AU831.7 to $AU833.8 million with a price range from $3 to $4 per share in the IPO. New Zealand based company Xero has invested $250 million on the area to develop the software due to the increase demand of the clients nearly around 4, 00,000 across the 180 countries. Other firm that is Intuit which is a US giant are also playing an important role in the accounting software industry in Australia by recruiting 60 employees and acquiring data extraction company Invicto for developing the accounting software in Australia (Hexber, 2015).
Dyt and Halabi, (2013) states that small medium enterprise is one of the competitive space for the for the accounting software companies in Australia. The companies like Xero, US giant Intuit upgraded their system to support the business operation. The online sharing model are the key potentials of the software companies Currently intuit has archived 55% of the market share in the online model followed by Sage which is around 33%. In this perspective, Australian based company MYOB has also started their modifications from desktop content to online support in order to attract the SMEs in Australia and New Zealand. As per Craft (2016) the online support system of MYOB in the accounting packages attracts 1, 70,000 clients which has recorded the growth rate around 46%. To achieve the competitive advantage the accounting companies used to select the strategies like merger, partnerships in order to meet the client’s requirement efficiently. In this respect, MYOB has acquired BankLink for providing innovative solutions to their clients.
Issues with the Accounting Software and Packages
As per Baba (2013), the major threats for the users of the accounting software are the harm caused by the malware that include the viruses like worms, Trojans etc. The major infections which are evidenced are the restrictions in accessing the accounts, copying the files, corruption in the hardware etc. which are negative impact of the online accounting software. The organisations are facing the security threats in carrying out the transactions and from the market research reports it is found that nearly 44% of the companies are facing the software infections due to the malicious codes. The financial losses are increasing and nearly 60% of the companies in Australia are facing this issue as per the report of Australian Government (Hutchings, 2012). It has been observe that SMEs are facing the issues regarding their selection of the software packages for their business. The management or the owner sometimes confused while selecting the right software for the business. Softwares with multiple functions can bring complications in operating the business.
Generally there are two research methods which are primary and secondary. In this research study consideration of the secondary sources which includes the journals, business magazines and text books are followed. Secondary sources include the information which are already available and based on the different views this report is being prepared. The data collection for this report is done by conducting the secondary research from the business magazine, journals and relevant books relating to the accounting packages in Australia. All the research questions are discussed by following the relevant articles of the authors.
Based on the discussion it is clear that that the use of the accounting packages or software will facilitate the business by managing the operation in an effective manner. The speed, accuracy and flexibility are the key potentials of the accounting packages. Addition to the benefits there are some issues like virus attack, fraudulent activities like hacking which are affecting the business. Thus it is recommended for the software companies to ensure protection in their products or packages. The admin password or payment gateways should be protected in order to overcome the risk associated with the softwares.
Baba, W., 2013. Financial Accounting: an International Introduction. Create Space Publishing.
Carnegie, G.D. and Potter, B.N., 2010. Accounting history in Australia: a survey of published works, 1975–99. Australian Economic History Review, 40(3), pp.287-313.
Craft, S., 2016. MYOB stays fighting fit in competitive accounting software ring [Online] Available: https://intheblack.com/articles/2016/07/01/myob-stays-fighting-fit-in-competitive-accounting-software-ring, Accessed as on 22.9.16
Dyt, R. and Halabi, A.K., 2013. Empirical evidence examining the accounting information systems and accounting reports of small and micro business in Australia. Small Enterprise Research, 15(2), pp.1-9.
Gomes, D., Carnegie, G.D., Napier, C.J., Parker, L.D. and West, B., 2011. Does accounting history matter?. Accounting History, 16(4), pp.389-402.
Halabi, A.K., Barrett, R. and Dyt, R., 2010. Understanding financial information used to assess small firm performance: An Australian qualitative study. Qualitative Research in Accounting & Management, 7(2), pp.163-179.
Hexber, A., 2015. The cloud accounting supremacy war in Australia. [Online] Available: http://www.businessinsider.com.au/charts-the-battle-for-supremacy-in-australias-cloud-accounting-market-2015-4, Accessed as on 22.9.16
Hutchings, A., 2012. Computer security threats faced by small businesses in Australia. [Online] Available: http://www.aic.gov.au/publications/current%20series/tandi/421-440/tandi433.html, Accessed as on 22.9.16
Wilson M, R., 2014. The Routledge Companion to Accounting Education. Routledge.
Wood, F., 2012. Business Accounting 2. Pearson Education.