Research undertaken by the IT faculty of the Institute of Chartered Accountants suggests that most businesses use some form of computerised book-keeping and accounting system. Such systems vary enormously in terms of functionality and cost, ranging from simple cashbook systems for a few tens of pounds to sophisticated multi-user packages costing tens of thousands of pounds or more. While even some of the most basic products can produce management accounts, few can cope with the complex disclosure requirements of the annual report and accounts, and it is advisable to call upon the services of a chartered accountant in order to ensure these requirements are met.

Generally, small and medium-sized companies will use a firm of accountants to convert their year-end account balances into the required format. This used to be a manual process involving long calculations and hand drafting of text. From the early 1980s, practising firms started to make widespread use of computerised accounts production systems that automated the process. Because of the need to ensure compliance with extensive rules and regulations, accounts production packages need to offer a combination of automation and flexibility. The ideal package would automate the production of accounts by adapting intelligently to the account balances and non-financial information, while at the same time allowing for easy but controlled editing of text and formats where required.

Usually packages provide a compromise between the two" the more automatic they are the less easy they are to edit, and vice versa. Suppliers selling automatic but inflexible packages will tell you that allowing users to edit the accounts wastes time and destroys the quality control that master formats can provide. Those selling flexible but less automated packages say that much of the benefit of automating 95 per cent of the accounts can be wasted if changing the last 5 per cent is impossible or very time-consuming. The choice often depends on how a practice wishes to present accounts for its clients.

Many packages work by combining a spreadsheet-style formatting program with a database to hold the text and variable information. This enables the program to place figures and text into the formats, while on-screen forms are used to enter any information that is not derived from the account balances. Some programs go beyond just allowing the input of the data, and use a question and answer format to help support the various decisions on disclosure that the accountant must make.

Integration is a key element of accounts production software. First, the accountant has to get the figures from the client's accounting system into their accounts preparation package. This used to mean printing a trial balance from the client's system, recoding it to match the accountant's system, and manually reposting the balances. However, it is now much more common for a translation utility to allow automatic import of the client balances into the accountant's system.

Once obtained, the account balances are the raw material for many tasks the accountant must perform" year-end accounts, tax returns and audit working papers, for example. Increasingly, as new services are adding to and replacing traditional compliance services, accountants need to make maximum use of the accounts figures. Products now allow graphic presentation of the figures and even comparisons with industry averages.

Sage has created the biggest ripples in the hitherto rather stagnant waters of accounts production software. It has taken over four leading suppliers" Audit 2000, Hartley, CSM and Apex. This has almost halved the number of major players in the market. However, there are still dozens of independent suppliers, and further details can be found in the Practice Management Systems Yearbook produced by the Institute of Chartered Accountants' IT faculty.

Among the larger and better known are Viztopia Accounts Production from Viztopia Software, Iris Accounts Production from Transaction Technology, Finax Professional from Solution 6, and Working Papers and Client Accounts Production from Caseware.

Accounts preparation software automatically combines account balances with the additional year-end information to produce a set of accounts pages. Some programs use third-party software as the basis for the formatting operation. For example, Paula is based on Microsoft Word, while VT Accounts works within Microsoft Excel. However, the majority of packages operate as independent programs, and include their own report generation facilities.