A large number of businesses are still using outdated accounting software solutions that were developed using legacy software that was discontinued many years ago. Not only can it compromise one’s business, but it could also pose a massive threat to business executives who recommend this software to their clients. More importantly, it could result in huge fines or even jail sentences.
Many of these applications in the market today have been developed using technologies that are long past their “sell-by” date. They are not only unstable, but also susceptible to corruption. A good example is Visual Basic version 6, a programming language with its last release mid-1998. Microsoft ended mainstream support for it nearly ten years ago and the Visual Basic team is committing to “It Just Works” compatibility for Visual Basic 6.0 applications on Windows Vista, Windows Server 2008 including R2, Windows 7, and Windows 8 – a huge risk to any business.
There is an onus on the accounting software vendor supplying dated software and related technologies to disclose this to their clients. Businesses purchasing accounting software traditionally have at least a five-year view, but should desktop operating software vendors decide not to ship the Visual Basic version 6 components with new releases – then products developed with those technologies will simply be unusable.
Good corporate governance means company executives have a responsibility to ensure that the software products they or their accountants are using, are developed with reliable, approved technologies.
If one is considering a new accounting software application, first check what database the product uses and what technology it has been developed in, and make sure that it retains data for life just in case one needs it later.
In South Africa, the law requires close corporations to retain their financial records for fifteen years, while companies need to keep it for at least seven years and SARS expects all companies to retain records for a period of at least five years from the date of submission. Therefore an accounting software solution that retains data for anything less is theoretically non-compliant.
We all know that accountants often opt for one of the perceived market leaders when recommending financial or accounting software. However, companies need to realise that when their accountants recommend software, may be held personally liable in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act).
Ignorance of the law is not an excuse. Penalties for not complying with the FAIS Act include fines of up to R10 million or imprisonment for up to ten years.
Interestingly, South Africa has been an early adopter of the IFRS reporting standards. So it is important to ensure that one’s enterprise resource planning (ERP) system is IFRS compliant. Functionality such as the catering of deferred revenue should be a prerequisite. When it comes to best practice, one would look at solutions that have integrated workflow and process or authorisation-type functionality during the procurement process, for example.
A new era in accounting software is dawning and the move to cloud computing is inevitable. The days of an accounting software vendor dictating how one should run one’s business is a scourge of the past. There is a clear trend toward modifiable accounting software at both ERP and SME level. If a business has a specific feature request that would redefine their business, why shouldn’t they be able to contact their financial software provider and have it developed ?
Traditionally, software users were tied down to their computers, but with true browser-based cloud computing they can access their ERP system using any device or browser. This is particularly functional for approvals in the workflow process or simple customer account analysis.
The ability to create software at the “speed of thought” and to keep ahead of the pack is what it’s all about. Cloud computing is redefining the way in which we do business, especially with the advent of mobile devices such as tablets and smartphones.
Whether businesses should migrate to the cloud completely or whether they should continue to keep an on-premise solution is debatable, however.
This depends on one’s definition of cloud computing. Cloud computing should be defined as browser-accessed solutions that are hosted locally, with an ISP or as a Software as a Service (SaaS) offering.
This is an exciting juncture in the industry with clients becoming more technologically savvy and less tolerant of aged technologies. There is a greater demand for business-defining features than ever before and this is having a fundamental effect on business regardless of size.
Author: Stephen Corrigan