Technology is extremely beneficial for companies needing to use and follow generally accepted accounting principles (GAAP) in business. GAAP software represents specific types of technology that a company can use to record financial information electronically. Choosing the best GAAP software can involve items such as cost, use, and availability for upgrades in the future. The use of technology in today’s business environment allows for both small and large companies to use accounting software. In some cases, a public accounting firm may be helpful in deciding which software is best for the company.
Though technology costs may continue to decrease for certain software or hardware as technology improves, GAAP software can sometimes be cost prohibitive. For example, small companies do not usually have the resources necessary to fully implement an accounting software package. When cost becomes an issue, a company may decide to choose GAAP software that starts small and then add other pieces onto the initial package. For example, a small business may start with one or two accounting software modules at low cost and then purchase more as the company grows. Larger companies can also use the software technology in a similar manner, starting small and getting more pieces as necessary.
The use of GAAP software can also affect the choice for technology in a company’s business activities. In some cases, there may be recommended GAAP software from public accounting firms or the Financial Accounting Standards Board (FASB), the organization responsible for creating GAAP. These recommendations are most important for companies that work in technical industries that have specific accounting processes for business information. A company may need to use the same accounting software as its public accounting firm, for example, so the transfer of information is easier than using a different software system. The use of a brand-name software system may be best if the company providing the technology has a competitive advantage in the market.
GAAP rarely stays the same in the long term; FASB constantly makes adjustments to improve the financial reporting of companies. Therefore, the GAAP software a company uses must also be able to stay upgraded for changes in accounting principles. The technology company behind the software must have the ability to upgrade software for new accounting principles without shutting down the entire system. In some cases, getting each module updated at different times may actually be the best option here. This can help avoid costly upgrades that may create difficult business continuity situations with the accounting software.