The concept of accounting software broadly falls under Accounting Information System (AIS) and is now defined as computer software used for recording and processing accounting transactions within handy modules: accounts receivable module; accounts payable module; trial balance module; payroll module; and general purpose financial report module (Hall 2012). The accounting software may be created in-house by the business or acquired from a third party software developer. The accounting software or packages hugely varies based on cost and complexity. In modern business world, packaged accounting software is not only restricted to recording and processing of financial data, but also provides functional modules used for managerial decision processes intended to bring competitive edge. The account software in Australia has undertaken a remarkable change over years due to advancement in technology. However, this research paper attempts to review the existing literature of accounting software and packages in Australia based on their historical development, use, challenges, and adaptability, using examples of business accounting practices from scholarly journal articles, books, and conferences. Also, the literature review seeks to explore the current market size, leaders, and competitive edge due to adoption of accounting software or packages in Australia. The current challenges and gaps identified in the existing studies would be used to develop pertinent recommendations for future improvement of accounting software or packages.
The origin of accounting software can be traced back to 1959 when IBM developed “9PAC”, a first report generation “language”, which allowed users to store and access structured data from relational databases from their computers (Scott 2015). The companies started to invest in the development of proprietary accounting systems designed to specific requirements, as jobs were done in batches. As computers advanced in capability, ideas to develop generalized accounting systems with flexible functionalities became feasible in 1973, with development of SAP RF that handled a wide range of business operations for faster financial decision processes with limited intermediaries. Peachtree accounting system was introduced to simplify data stores with intention of enabling users to derive more value (Honig 1999). In 1981, Peachtree introduced its first and expanded integrated office suite with spreadsheet and word processor. In addition, Intuit introduced Quicken product in 1983, which introduced a new dimension of accounting applications with friendly user interface. In 1993, Teleware launched a striking accounting package which caught the attention of Best Software. In few years, the Australian publisher of Teleware product acquired the company and in 1999, Teleware was changed its name to MYOB Limited.
The adoption of accounting software in Australia is occurring at a faster pace. According to Dinham (2014), Xero, a New Zealand accounting Software Company, conducted a study involving 1,622 small businesses and found that Australian small businesses are further ahead in the adoption of accounting software compared to other countries. Many Australian businesses are adopting accounting software systems to reduce tedious paperwork, often characterized by errors of omission and commission, time-wasting and costly. The accounting process starts with several ledgers, sales ledger, purchase ledgers, cash book, petty cash ledgers, and then to trial balance and adjusting entries, and finally to financial reports. Manual accounting involves a lot of paperwork and many bookkeepers. The accounting software system is easy and quick to use as it requires just inputs to correct accounts and reports are automatically generated. The effectiveness and efficacy of accounting software are major factors leading its adoption by ever-growing number of businesses.
Competition is increasing in the Australian accounting software market. The largest number of customers for accounting software in Australia is small and medium sized businesses. The biggest players in Australian accounting software market include Xero, Intuit and MYOB. These companies have taken the accounting software to cloud computing. Xero has the biggest share of accounting software market in Australia, with emphasizes in cloud accounting software. The company offers the best accounting software for small and medium size businesses. The company has identified gaps in users of desktop accounting software. The companies were facing challenges because their departments are not autonomous units. The accounting departments are entrusted in collecting, processing, and maintaining accounting books, but the challenge with desktop accounting software could not reconcile all the accounting reports from other departments due to incompatible formats and duplication (Svejvig 2011). Thus, reconciliation annual accounts became tedious, time-consuming, errors and inconsistency. The use of desktop accounting system and data redundancy was the source of the challenge. Many businesses in Australia are using cloud accounting software to its integrative capabilities.
Xero accounting software uses a model of software as a service (SaaS). It provides a free API for third party vendors and customers to integrate other applications on a single unified ledger in the cloud. SaaS is the capability to provide users with applications operating on a cloud infrastructure and operated through a thin user interface, such as simple web browser. Cloud computing has transformed the landscape of IT by bringing enhanced cost effectiveness, faster time-to-market, innovation, and scale to demand. However, the lack of security is a major concern for the users on cloud accounting software. Even with the existing security measures, such as firewalls, users are still not feeling secure of non-authorized access by foreign parties. The reason for this concern is that cloud computing lacks security standards and cloud providers use their own proprietary security standards and technologies. There is a risk of cyber crimes to information assets associated with cloud computing. In solving these challenges of cloud accounting software, an Identify Management (IDM) measures to carry out authentication of services and users based on characteristics and credentials (Bertion, Paci and Ferrini 2009). Information-centric security is an approach extended to control data and security in the cloud. The data needs to be self-defending and describing, in any computing environment. Through Trusted Computing framework, information-centric security is possible. According to Song et al. (2000), predicate encryption is required for computing systems to allow software to run and compute on an environment characterized by cipher-texts (Song, Wagner and Perrig 2000). With these security measures, future cloud accounting software would be the most versatile system for competitive advantage, efficiency, information security, and cost effectiveness.
In conclusion, accounting software has seen a remarkable history of development since the invention of computer language; from simple programs to complex computing systems. Australia has three biggest accounting software providers that compete in a market characterized by ever-growing small and medium sized businesses. Xero, Intuit and MYOB have dominated Australian accounting software market by integrating account software into cloud, as way of solving challenges associated with desktop accounting software. However, there are security threat challenges related to cloud computing. The strategies to deal with security threat facing cloud computing include authentication measures, information-centric security, and predicate cryptography.