Integrated accounting is defined by the Chartered Institute of Management Accountants (CIMA) as “a collection of accounting records that offers financial and cost accounts using a common data input for all accounting purposes.” This method requires the maintenance of a single set of accounting records.
The costing section does not keep its own records. All transactions are entered directly into the general ledger via separate daybooks, such as the purchases daybook, the sales daybook, the cash book, the petty cash book, and the journal proper.
All transactions are documented in accordance with the debit and credit card industry’s golden guidelines.
Features of Integrated Accounting System
- An integrated accounting system maintains a single ledger. There is no separate ledger for cost accounts.
- Integrated accounts eliminate the need for two distinct sets of double entries for the majority of transactions.
- In an integrated accounting system, a single Trial Balance serves as the basis for the preparation of Financial and Cost Accounts.
- No profit or loss reconciliation is necessary in an integrated accounting system.
- In integrated accounting, no notional rent or interest is recorded in the books of accounts.
Benefits of Integrated Accounting System
- Book–keeping procedures are simplified, faster, and may lower the likelihood of error in an integrated accounting system.
- Because all cost data is available from a single ledger in an integrated accounting system, there is no delay in obtaining all relevant information.
- A single profit figure is disclosed by an integrated accounting system. As a result, profit or loss reconciliation is not required. There is no ambiguity regarding the profit or loss amount.
- By maintaining a single set of ledgers and avoiding duplication of entries, significant time and money can be saved.
- When an integrated accounting system is in place, a computerised accounting system may be deployed quickly.
- An integrated accounting system simplifies the auditor’s job, which can be difficult by the presence of two distinct ledgers.
- Cost and financial accounting expertise can be pooled to increase efficiency.