Non-Integrated Accounting System

Non-Integrated Accounting System is a method where financial accounting and cost accounting are maintained in two separate sets of books. Financial records are kept for external statutory reporting, while cost records are kept for internal cost control and decision-making. The two systems operate independently, and reconciliation between financial profit and cost profit is periodically required.

📋 Key Features:

• Maintaining Separate Books of Accounts for financial and cost records.
• Use of a Cost Ledger Control Account in the cost ledger to link with financial accounts.
• Independent Recording of financial and cost transactions.
• Mandatory Reconciliation between cost and financial profit figures.
• Detailed preparation of Cost Statements, Cost Sheets, and Cost Reports

🎯 Functional Coverage:

• Detailed Material Accounting for purchases, issues, and consumption.
• Recording Labour Costs separately for financial and cost purposes.
• Overhead Allocation and Apportionment managed within cost ledgers.
• Maintaining Work-in-Progress and Finished Goods Records
• Preparing Cost Sheets, Job Costing Reports, and Variance Analysis
• Conducting Cost Audits based on separate cost data records.

🚫 Inherent Limitations:

• Duplication of Entries between financial and cost books increases workload.
• Delay in Reporting due to the need for reconciliation.
• Increased Administrative Costs to maintain two independent accounting systems.
• Risk of Discrepancies if timely reconciliation is not performed.
• Complex businesses may require Additional Effort to synchronize financial and cost data accurately.

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