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Accounting Systems

By Wayne Spivak and Susan Honig

Today there are many computerized accounting systems on the market, from inexpensive systems, retailing for $100, to expensive, with retail prices over $10,000. With this abundance to choose from, it is sometimes difficult to decide which is the right one for you. For example, you or your client is in the middle of reviewing a trial balance, when questions arise in relation to the sales account. Who made a particular sale? What was on the invoice? What promotional or marketing strategy prompted the sale? Has the customer paid the bill? You don't know the answers but do not want to leave the current on-screen report to find the answer, if indeed an answer can be garnered from the accounting system.

The heart of any accounting system is the data contained within its structure. One purpose of an accounting software package is to make the task of entering, compiling, and auditing data, not just accounting data, easier. All the major accounting systems, regardless of cost or functionality, provide the user with the accounting database. The user, however, is not always given the tools to get all the needed information. Standard reports provided by most computerized accounting systems are geared toward the financial report, not management information.

Traditional accounting systems utilize a flat or relational database, which preclude creating reports based on ad-hoc queries. With today's quest for information, and critical time constraints, accounting professionals require the ability to easily drill down through the accounting data for answers.

Client-Server Systems as a Solution

A client-server computer system, as defined by industry standards, is a computer system that contains a host (server) computer and at least one workstation (client). The computer system has multiple duties, with the host computer acting as traffic agent for file management, access, printing, and communication, while the workstation actually runs the program and does the number crunching locally.

Client-server as defined by Dr. Tsay in the November 1994 issue of The CPA Journal is a system that "...contains at least two common characteristics: cooperative processing and flexible end-user applications." An accounting system is the perfect product to run in a client-server environment. It requires large databases, which must be maintained in a central location, while many users are able to run multiple programs aimed at entering or retrieving information.

Most programs can run in a simple form of client-server relationship. However, products that are written to exploit this unique computing environment are capable of providing the end-user with complex information at the drop of a keystroke.

The Traditional Accounting Package

In the traditional accounting packages and the new breed client-server systems, users will find many similarities, both basic and advanced. A full fledged accounting system contains the five areas of accounting: general ledger, accounts payable, accounts receivable, inventory, and payroll. It is the robustness and functionality of the programs that distinguish the low-end systems, such as, One Write Plus and Peachtree for Windows, from the high-end systems, Macola Accounting System, Navision Accounting System, and Platinum Accounting System. (See Exhibit 1). Robustness means that the computer system is powerfully built, suited to endurance, and marked by richness and fullness. Functionality refers to that designed for or adapted to a particular function or use. The following are distinguishing characteristics of robustness and functionality:

* Ease with which information is pulled from the accounting data base,

* Quantity of information that can be kept in the database,

* Intensity of use, e.g., total number of daily transactions,

* Ability to modify and customize--

* source code to add new fields

* output (i.e., format invoices, statements, checks, etc.)

* reports and

* ad-hoc queries and reports.

Low-End Accounting Systems

Why low-end? Simply answered, the cost! These packages retail for under $200 each. They provide a full accounting solution--general ledger, accounts receivable, accounts payable, inventory, and payroll. At this low price, certain functionality and robustness are sacrificed by the vendors for a larger percentage of market share. These packages are not made to handle large databases or heavy daily usage. They are not built for a client-server environment, but can, to some extent, be utilized in one. For example, One Write Plus will only operate in a client-server or network environment when users are performing tasks for different companies.

Both the One Write Plus DOS package and Peachtree for Windows are popular low-end accounting systems. With thousands of installations throughout the United States, odds are that if you are a CPA in public practice, one of your clients uses at least one of these products. Both packages are static systems. Static relates to an inability to change or modify the database or underlying programs to perform functions that the programmers did not write or envision. Being static, these accounting systems do not permit the normal end user to change screens or underlying computer code to fit their specific company business format. There are, however, third party applications available for Peachtree. Hard compromises must be made to successfully utilize these programs. Common computing dogma stipulates that the company user dictate the business practice and the computer follows in step. While every attempt has been made by the creators of these programs to follow generally accepted accounting and business standards, most clients' businesses, however, don't. These systems do, nonetheless, have the ability to modify or create certain reports through their report writers and can provide a sound basis for many companies to run their businesses.

High-End Accounting Systems

Why high end? Again, simply, price. Software packages in this category often retail for $800 to over $1,500 per module. The average installation costs in the neighborhood of $6,000 to $10,000, just for the accounting software.

High-end accounting systems provide partial to full utilization of the client-server model. These software packages are designed to be used in mid-sized businesses and are capable of handling large databases, with high daily volume. In addition, some of these packages provide full fledged manufacturing modules, something the low-end systems can never

Installation of these software packages, low- and high-end, entail significant amounts of time, energy, and money. While high-end systems require more time and effort, the same procedures must be followed implementing a $100 accounting system. The cost associated with the installation and implementation of an accounting system can easily dwarf the money spent for the software. Average costs for implementing a high-end financial accounting system can be anywhere from $5,000 to $20,000. (See "Guide to Computer Implementation" by Wayne Spivak in the February 1994 issue of The CPA Journal.)

The following paragraphs provide three examples of high-end systems. The Macola Accounting System, right off the shelf provides partial utilization of the client-server model. Both Navision and Platinum Accounting Systems provide full utilization, with the ability to retrieve data with ad-hoc queries. In the discussion that follows, the three systems are examined as to --

* ability to modify the existing database

* stock reports and report writers

* power contained within the product v.s. ease of use

* ability to retrieve data not contained in "canned" reports i.e., ad-hoc queries

Macola Accounting System V6.0x. The Macola Accounting System is an award winning accounting system, based on Microfocus COBOL. In its client-server model, Macola uses the Btrieve database engine, which runs in either a stand-a-lone mode or on Novell Netware. An optional Structured Query Language (SQL) engine is available which permits access to Macola's databases through its new report writer.

Macola requires end users to either contract with an approved Macola developer or purchase its source code to make changes. Since Macola is written in COBOL, adding fields to any database or changing screens is a time consuming effort and requires highly skilled programmers. Generally, this is also true with changing reports. Macola uses a more traditional model of client-server technology, with most of the computer processing done at the file server. While the accounting system and its programs are sound, robust, and functional, the end user will not be able to enjoy the more advanced features found in other client-server systems without purchasing third-party add-ons. Although it is rumored that version 7.0x will have more client-server capability without these additional purchases, ad-hoc queries and custom report generation are limited. Also, Macola Version 6.0x, in its off-the-shelf form doesn't support the drill-down features of the more advanced client-server programs.

Macola supports two report writers. The DOS based standard report writer permits queries based on either pre-defined data dictionaries or on particular files. The report generator is slow and awkward, but gets the job done. The new report generator, part of Macola's new version 7.0x, requires the end user to purchase an SQL server. The new powerful report writer enables ad-hoc queries on specified files and data dictionaries, plus the ability to link together files. Used exclusively in a Windows environment, this report writer enables end users to crunch numbers utilizing windows based spreadsheets through the use of Open Data Base Connectivity (ODBC) drivers. Both report writers require additional training or a better than average understanding of drafting computer queries to operate. While this may deter some, the added benefits are worth the effort.

Navision Accounting System. Utilizing this company specific, client-server model, Navision has been able to put together a true 32-bit product permitting larger amounts of data to flow while increasing the speed of the program, which then enables and empowers the end user to get at the data hidden within the accounting system. Navision offers a Form Designer, Report and Dataport Designer, Table Designer, and Application Builder.

Within Navision's development applications, the user is given the ability to modify any data entry screen on the fly. Not only can the end users modify a screen, but this modification can then be assigned to specific users. Report writing is also done in a similar manner. One helpful attribute of Navision is that upon completion of the development cycle, the new programs can be implemented in real time. This means everyone does not have to log out of the accounting system--a big time saver!

Built into this product is the ability to utilize ODBC products and C based programming objects. The results of these attributes are a wider range of tools available by end users to access their data. An additional feature is Navision's connectivity with Microsoft's Internet Information Server, which will permit Internet and companywide document management systems--Intranet--access to Navision's database.

Platinum Accounting System. Platinum has several different versions of its accounting program. It has entered into close association with Microsoft Corporation to provide a solution tied to Microsoft's SQL server on its Windows New Technology (NT) platform. This association with NT, permits several
new features.

With Platinum written for SQL server, the ability to modify the database is inherent in SQL server. The ability to cross-
pollinate object linking and embedding (OLE) compliant products, such as Excel and Word, enables the end user to read and write information from Platinum's databases. There are a variety of tools, that come either with Platinum, SQL Server, or third party publishers that allows the users of Platinum to modify databases, reports, or screens. Since Platinum is a client-server product, it has the capability to drill-down through the data to find answers to who, what, and when questions.

Security Issues

Security is a major issue in the corporate structure, especially when it comes to sensitive financial data. Who has access, to what areas, and how can the company enforce their security requirements? Each of the accounting systems handles security differently.

In the low-end products, security is handled on either a module-by-module basis, or on the level of permitted data entry. An example would be a user being allowed to enter orders, but not print invoices. Security in these products is simple, but it does work.

In the high-end systems, the ability to keep individuals out of the system is more complex. From limiting the ability to enter specific menu choices (Macola) to the full extent of both the software and Windows NT security features (Platinum), security can be set at a high level. Navision, with its ability to have multiple data entry forms, can further customize the security issues, by eliminating sensitive fields from data entry screens where the information is not needed by the end users.

Consider the Benefits

Is the added cost of client-server accounting systems worth the benefits? Examine the advantages provided by this new paradigm.

* Instant reports--YES! The ability to instantly query your data to find answers to everyday managerial problems makes a strong case for migration to client server packages.

* Ease of use by other accounting tools --YES! The ability to seamlessly port your data to spreadsheets, word processors, and other databases without the need of programmers.

* Multiplatform accessibility--YES! The ability to have clients on different platforms, and on both local area networks, and wide area networks.

Several of the high-end accounting systems mentioned, as well as others not included here, are now positioned to permit access by Internet users. Companies have the ability to open their purchasing and order processing departments to their clients and vendors as never before. Electronic Data Interchange (EDI), as we know it today, will cease to exist. All this has been made possible by the advent of client-server architecture. *

Wayne Spivak, is president of SBA*Consulting®, Bellmore, NY, and a member of the adjunct faculty--Department of Economics and Accounting, Lehman College, CUNY. Susan Honig, CPA, is an assistant professor, Department of
Economics and Accounting, Lehman
College, CUNY.

In Brief

To Pull Down or Not

The authors address the scope and meaning of client-server. They then review five accounting system software packages, including the requirements, benefits, and costs of each thus of which can take advantage of client-server systems. The emphasis is on what
to consider and why and how to choose. A user's choice of an accounting application should be based on need and the benefits that each of the systems provide, not cost.

The advantage of client-server accounting is flexibility and the ability to drill down to detail to find answers. But there is a price to pay for that ability.

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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