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![](/i/favi32.png) Financial Accounting for Decision Makersfinancial-accounting-for-decision-makers-ninthnbsped-9781292251356-1292251352 compress12
CHAPTER 1
INTRODUCTION TO ACCOUNTING
The
accounting information system
should have certain features that are common to all
information systems within a business. These are:
■
identifying and capturing relevant information (in this case, financial information);
■
recording, in a systematic way, the information collected;
■
analysing and interpreting the information collected; and
■
reporting the information in a manner that suits the needs of users.
The relationship between these features is set out in Figure 1.4.
Systems error!
Almost one in five large businesses have suffered financial losses as a result of errors in
spreadsheets, according to F1F9, which provides financial modelling and business fore-
casting to large businesses. It warns of looming financial disasters as 71 per cent of large
British businesses always use spreadsheets for key financial decisions.
The company’s new white paper entitled
Capitalism’s Dirty Secret
showed that the abuse
of the humble spreadsheet could have far-reaching consequences. Spreadsheets are used in
the preparation of British company accounts worth up to £1.9 trillion and the UK manufacturing
sector uses spreadsheets to make pricing decisions for up to £170 billion worth of business.
In total, spreadsheet calculations represent up to £38 billion of British private sector
investment decisions per year, data harvested through YouGov found. Yet 16 per cent of
large companies have admitted finding inaccurate information in spreadsheets more than
10 times in 2014.
Grenville Croll, a spreadsheet risk expert, said of the findings: ‘Spreadsheets have been
shown to be fallible yet they underpin the operation of the financial system. If the uncon-
trolled use of spreadsheets continues to occur in highly leveraged markets and companies,
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