Identifying Key Features and Advantages/Disadvantages of Xero Accounting Software

A report has been prepared on the xero software and a brief overview of the same has been given. The advantages and disadvantages of using the same as an accounting software has been using the screenshots and how the same is being used in the given business scenario. The second case study is on Mining Support Services (MSC), which is one of the specialist in software designing for the mining industry. Since it has many critical data, back up and software so the requisite internal control processes has been discussed. Along with the same, the disaster recovery planning (DRP) procedure of the company has been discussed along and recommendations have been given for what are the changes in control that are required.

Xero is one of the widely used web based accounting software in the industry for accounting and financial report preparation and book keeping purposes. All the given transactions of the business for the given period can be recorded in the software and various reports can be generated through it for the decision-making by the users of financial statements (Belton, 2017). It was established in 2006 and is generally being used by small businesses. It helps in connecting with the partners and give the financial overview and visibility of the given business in a consolidated manner. Even the people with no accounting knowledge find it easy to operate the software as it converts some of the most complex and standardised transactions into the easiest transactions and in a user-friendly manner. More than 475000 businesses are using it as of now (Boccia & Leonardi, 2016).

There are a number of number of features that the software has to offer to the user, some of which are mentioned below:

1. It is an effective tool in giving multiple types of dashboards and summary to the management, which helps them in decision-making. This is real time and the dashboard can be seen as and when the input data is being entered(Alexander, 2016).

1. It is helpful in the way that no manual activity and efforts are required for bank reconciliation and it helps in tracking the bankbooks and the cashbooks simultaneously.

1. It is one of the effective tool of inventory management and no separate set of skills of software is required for inventory tracking and inventory management. It gives an overall view of opening inventory, purchases, sales, closing inventory both in units as well as prices, thus helping in avoiding confusion and fuss(Werner, 2017).

1. In the modern era and with Goods and Service tax going global, it has become inevitable for the businesses to take care of GST payments and reconciliation and abide by the GST laws and regulations. This is one of the additional features, which has been introduced some while ago, thus helping businesses in GST reconciliation.

1. Since this is an online accounting tool, the data is being automatically preserved in cloud and no risk of loss of data is there as back up is always present(Dichev, 2017).

1. One of the most important and critical features of the software is financial reporting. It helps in preparing all the financial closing books of accounts like the profit and loss account, the balance sheet, the statement of changes in equity etc.

Some of the major advantages of the software is mentioned below:

1. This is a one-stop tool for accounting, booking and consolidation, no additional software is required. It helps in both the day to day operational transactions like creating and sending invoices, attaching the files and supporting to the given journal entry, invoicing and booking of payments as well as it helps in consolidating the final books of accounts like that of balance sheet and the profit and loss account(Fay & Negangard, 2017).
2. It is relatively cheap than other such software is available in the market and is used extensively by the small businesses. It is apt and appropriate for their use, as they cannot afford high priced software’s like those of SAP and ERP for accounting.
3. It has a painless set up and set up costs and efforts is next to zero unlike the case of SAP where the chart of accounts are to be prepared and a lot of effort and time is required. Furthermore, it has an editing feature, which makes it even faster, and accurate in case an incorrect transaction has been posted and it needs to be corrected(Farmer, 2018).

Some of the major disadvantages of the accounting tool are as follows:

1. However, it is easy to use and apply but it is not suitable for large business houses considering the complexity of transactions there.
2. Since this is a much-consolidated tool occupying less space, navigating between the tabs and different windows is difficult in case the correction is required in the books of accounts(Jefferson, 2017).
3. The customization of the vendor and the customer report is restricted as a result of which the businesses only need to use the reports which is only inbuilt and since there is an option of exporting all the reports to excel the chances of manipulation increases.

In the given case, the scenario for Mining Support Services (MCS), a mining industry software specialist has been given as to how they keep up with their back up and the DRP plan and what can be changes in the control.

Weaknesses in MCS’s backup and DRP procedures

Some of the major weaknesses in the MSC’s backup and DRP procedures are mentioned below:

1. The company’s data centre is installed in the basement of the building, that increase the risk of losing all the IT data, and the backup of the companies in case there is a flooding or any other natural calamity, the ground floor, and the basement are the main areas, which face many consequences of natural calamities. This poses a risk on both the data back up as well as how the data, which is lost in a calamity, can be recovered(DeZoort & Harrison, 2016).
2. The company’s operational staff is working for 5 days a week over two shifts and all the programming staff, which is located in the same building, has access to the data centre and all the critical and private data. All of them are authorised to test the new programs and make the changes to the programs when the operational staff is not around. This poses a huge risk on the security of the data and thus it may be modified or changed and there might be a scenario that no one comes to know of the same and thus the business may face the consequences as a whole(Kuhn & Morris, 2016).
3. Programmers do respond to the oral requests made by the customers and make changes to the program accordingly. This might land MCS into legal and regulatory issues in future if the respective businesses suffers a loss due to this and they put a legal claim on MCS. Thus, absence of written change request is a huge risk(Raiborn, et al., 2016).
4. System and programming documentation is being done only when the time is available and thus no proper data backup is available. This is due to huge work demands and less capacity of the company but this shows that the company has no adequate back up of the data and there are huge chances that the data and information once lost, might not be available or recovered in future.

There are a number of changes, which are warranted in the control measures. Some of them are:

1. The company should ask for change requests in the programs and software coding in written from the clients. This will help in having the proper supporting and thus reiterate the same to the client in case of any issues.
2. The company should be taking the data back up every day or probably twice or thrice a week as many important and critical client data is at disposal of the company and it needs to be properly preserved for future(Sithole, et al., 2017).
3. The company should be planning to relocate the data centre from the basement to the first floor or second floor of the building, as it would help the cause in case of floods or in case of other natural calamities in the future.
4. Lastly, the company should be making the records and maintaining the same in the chronological manner as it would help to retrieve the information anytime in future and should also plan of insuring the data such that the loss can be minimised(Chron, 2017).

References

Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp. 411-431.

Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat International ltd.

Boccia, F. & Leonardi, R., 2016. The Challenge of the Digital Economy: Markets, Taxation and Appropriate Economic Models. s.l.:Springer.

Chron, 2017. five-common-features-internal-control-system-business. [Online]
Available at: https://smallbusiness.chron.com/five-common-features-internal-control-system-business-430.html
[Accessed 07 december 2017].

DeZoort, F. & Harrison, P., 2016. Understanding Auditors sense of Responsibility for detecting fraud within organization. Journal of Business Ethics, pp. 1-18.

Dichev, I., 2017. On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), pp. 617-632.

Farmer, Y., 2018. Ethical Decision Making and Reputation Management in Public Relations. Journal of Media Ethics, pp. 1-12.

Fay, R. & Negangard, E., 2017. Manual journal entry testing : Data analytics and the risk of fraud. Journal of Accounting Education, Volume 38, pp. 37-49.

Jefferson, M., 2017. Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland. Technological Forecasting and Social Change, pp. 353-354.

Kuhn, J. & Morris, B., 2016. IT internal control weaknesses and the market value of firms. Journal of Enterprise Information Management, 30(6).

Raiborn, C., Butler, J. & Martin, K., 2016. The internal audit function: A prerequisite for Good Governance. Journal of Corporate Accounting and Finance, 28(2), pp. 10-21.

Sithole, S., Chandler, P., Abeysekera, I. & Paas, F., 2017. Benefits of guided self-management of attention on learning accounting. Journal of Educational Psychology, 109(2), p. 220.

Werner, M., 2017. Financial process mining – Accounting data structure dependent control flow inference. International Journal of Accounting Information Systems, Volume 25, pp. 57-80.