What do you understand by the term “Integrated accounting” and what advantages does it present compared to other systems of cost and financial accounting?
Integrated accounting means that the cost accounting system is integrated with the normal financial accounts. The financial accounts of a business are kept to record the firm’s position in relation to third parties, and to meet statutory requirements imposed by the companies. Acts and the Income Tax Acts. etc.
Cost accounts are maintained to analyze in detail the statistics shown in the financial accounts, so as to reveal expense and profit by products and sections of the firm. The cost accounts are seldom the concern of third parties, but are intended to assist management in their day-to-day running of the business.
Integration of the two systems into the financial accounts is sometimes found to be convenient. This has the merit of saving clerical cost and avoids the need for reconciliation, but in the design of integrated accounts, it must be ensured that figures are available under the conventional financial headings, for purposes of published accounts, tax return etc.
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