Why Is Documentation Important to Accounting Information Systems?

by Sheila Shanker; Updated September 26, 2017
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Documentation is important to any system implementation, and an accounting system is no exception. Documenting is usually done on paper or online with explanations as why a certain decision was made over others. Documentation is usually standard within a firm and is done the same way each time a new system is implemented, making it easy to read and research any issue.

Troubleshooting

The importance of an accounting system documentation is clearly visible when something goes wrong and people need to figure out how to fix it. For example: An accounts payable system is adding a weird tax to certain vendors. The easiest way to find out the cause of this issue is to review documentation to see how the system was set up and why. This is crucial when a system is first put to use and people are finding unexpected issues. Maybe a report is asking for information that doesn't exist. Looking into the documentation would help in fixing the problem by showing where this information is set up within the system.

Decisions

Documentation of an accounting system should present decisions as a system is implemented. Many systems allow for lots of flexibility and, along with the flexibility, come decisions. For example, documentation would show who decided how many digits an account should have, and the reasons why that decision was made. This is quite important when a firm undergoes major changes and new management wants to understand decisions made by people no longer there. Maybe those decisions were wise; maybe not. But at least there is some documentation of decisions made for the firm.

Changes

When a system needs to be updated with a new version or a new module, having proper documentation can help in making this process go faster. This is crucial if an accounting program was designed specifically for a company. Any technical details are very important when considering compatibility with other software and any changes needed to the program. For example, you may need a fixed asset module and you want that module to transfer information to the general ledger.The documentation should give you clues as to whether you can do that, and if so, what needs to be done. Usually, information technology (IT) folks use documentation for technical information.

Format

Good documentation for accounting systems are usually a combination of flowcharts and text. Many times, a data diagram shows how a system was developed and implemented better than text. These can be a bit complicated to understand, so make sure your documentation has a legend so you can follow the concepts.

Other formats for documentation are in the form of questionnaires, where specific questions are asked and answers are documented. Based on answers, reports and other accounting system issues are resolved. Many times documentation has both flowcharts and questionnaires.

Considerations

Many firms document how and why a certain accounting system was selected instead of others. That can give users a really good idea of what the thinking was then, even if none of the decision makers are around for questions.Since a system implementation can be expensive, minutes of meetings are usually available to document the decision process. Maybe free training was offered by one vendor that was more attractive than another. So, even before a system implementation is under way, documentation should be available as well.

About the Author

Sheila Shanker is a certified public accountant based in California. She writes online courses for professionals seeking CPE hours and has also published the book "Guide to Non-profits: From the Trenches." Her articles have been published in national magazines such as the "Journal of Accountancy," "Architecture Business and Economics" and "Veterinary Economics." Shanker holds a Master of Business Administration.

Photo Credits

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