The first is the risk of losing data as when a business is solely reliant on accounting software if the service is down due to loss of power of the computer is not performing correctly then all the information is locked in and can not be accessed until the problem is rectified. Additionally, if information is not properly backed up, a computer breakage could result in lost financial data.
The information in an accounting system is only as valid as the information put into the system. Since most accounting systems require some manual input of data, financial results could be incorrect unless all input data is reviewed. If there is a tendency to only review the final reports or output of an accounting system, it may be difficult to find faulty information.
Every business has unique aspects that may cause difficulties when it tries to tailor a generic accounting software package to its needs. While customisation is available for many programs, it may cause downtime and potential inaccuracies if not done correctly.
Another disadvantage of accounting software is the cost involved. Beyond the initial outlay to purchase the software there is the cost of maintenance, customisation, training and computer hardware. While time savings may justify the cost, for some businesses it may take years before an accounting software investment pays for itself.
Fraud is another great concern as information stored electronically can be manipulated and accessed if proper controls and security measures are not in place. Strict controls are needed to make sure only authorised personnel use the accounting software and have access to reports.