Decentralized Accounting

Decentralized Accounting 

a system of accounting under which most of the accounting operations (sometimes including compilation of the balance and of accounting reports) are done in separate divisions of the enterprise. Under decentralized accounting the functions of the main accounting office consist of verifying the accounts of these divisions, giving instructions to the accounting workers, and doing the accounting for centralized operations, including compiling the bookkeeping of balances and reports. Since the decentralized accounting system reduces the possibility of the division of accounting labor involved in the accounting and its mechanization and increases the overall volume of accounting procedures and their cost, it is relatively rarely used in practice. Usually, decentralized accounting is practiced in those sections of an enterprise that encompass a variety of operations (housing and utilities, public transportation, capital construction, and other areas, as well as in an enterprise’s independent sections territorially separated from its center (such as purchasing points or agencies, subsidiaries of large-scale offices and chain stores, and distribution warehouses or bases of trade organizations).