Computer Application In Accounting: A Case Study Of The Computerized Ledger System Of Nigerian Bottling Company Plc Onitsha Plant
This work examines the problems of computer Application in Accounting as it effects computerized ledger system of Nigerian Bottling Company Plc. Onitsha Plant. It is shown that there is adequate in design, effective and efficient in operation. Data was collected from primary and secondary sources, using observation, and questionnaires for the first and reference materials in the later. The data analyzed confirmed that no computer application elaborate, can on itself guarantee efficient administration, nor can it be fill proof against fraudulent acts, pressure from by personnel, overriding decision by management are but a few handicaps to a well intentioned computer application. It is therefore the intention of the researcher to highlights certain remedies or strategies, that can also be adopted to minimized sort coming of the computerized ledger system and this is discussed in chapter five of this research study.
1.1 Historical Information
The Nigeria Bottling Company Plc is a main of a range of soft drink and is known to be the longest of a soft drink.
The company was in corporated on 22nd of November 1951 in Lagos and since then, they have spread it network of branches all over Nigeria. At present, it has an issue over N20 million Naira. The company is jointly owned and managed by Nigerian and foreigners but the majority of shares are owned by Nigerians.
The Onitsha branch (plant) of the company, which was established in January 1978, and it is the main focus of this research work. The plant has an average production rate over 50,000 crated drinks per day. The brand soft drinks manufactured by the company are:
Coke products: (1) Cokes, Fanta Orange, Sprite and Krest Soda, other are: Krest Tonic, Krest Bitter Lemon. Ginger all, Fanta Lemon and Fanta Chapman. The newest product in the market now is Fanta Black and diet coke. The Onitsha Plant is mange by Mr. Steve Okolo-Solo while the personnel manager is Mr. Marshall Enudi, slaes manager Mr. Ishaka Salami and the financial manager Mr. Samusi Kasaki
1.1.2 Background to Computerized Accounting Systems in Nigeria
The introduction of Computerized Accounting Systems (CAS) in Nigerian public institutions dates back to 1992 when the government took measures to computerize various aspects of its financial management functions and moving from a manual accounting system toward a computerized system. Ever since, performance in the financial sector has improved significantly (World Bank, 2002).
Some aspects of accounting practices which have been computerized include; accounts payable, accounts receivable, general ledger, cash management, purchase order and payroll. The main computerized accounting system used by public institutions in Nigeria is EPICOR (formerly PLATINUM). After the implementation of the system, all accounting staff received training on how to use the system (World Bank, 2002).
1.2 Statement of the Problem
In the past decade, the government has taken various measures to improve efficiency in accounting practices. Among the measures taken by the government to improve efficiency in accounting practice in public institutions was the introduction of computerized accounting systems such as; Tally, Pastel and Epicor. The introduction of computerized accounting systems aimed to improve speed, accuracy and reliability.
However, despite of the many benefits of using computerized accounting systems, in many public institutions, incidences of accounting malpractice, delays in preparation of financial reports, financial misreporting and fraud have been reported (CAG, 2012). This casts a shadow of doubt on whether the introduction of computerized accounting systems have helped to improve efficiency in accounting practices.
Although many studies have been conducted on the impact of CAS in accounting practices in public institutions, little studies have been conducted on the impact of computerized accounting systems on payroll accounting in urban water and sewerage authorities. As a result, there is a knowledge gap that needs to be addressed. It is the objective of this study to fill that gap.
1.3 Objectives of the Study
1.3.2 Main Objectives
The study aimed to assess the impact of computerized accounting systems (CAS) on performance of accounting by focusing on Nigerian Bottling Company PLC. Onitsha plant as a case study.
1.3.2 Specific Objectives
- To assess extent of adoption of CAS in accounting practice in NBC Onitsha
- To assess performance of accounting after adoption of CAS
- To identify the effect of adoption of CAS in accounting practice
- To identify challenges facing adoption of CAS in accounting practice
1.4 Research Questions
The study was guided by the following research questions
- To what extent have NBC Onitsha adopted CAS on accounting practice?
- What is the level of performance of accounting after adoption of CAS?
- What are the positive impacts of adoption of CAS on performance of accounting?
- What are the challenges facing adoption of CAS on performance of accounting?
1.5 Significance of the Study
The findings of this study will contribute to the existing body of knowledge on the impact of CAS on performance of accounting in NBC Onitsha in Nigeria and help stakeholders in the accounting professional to become aware of the extent of adoption of CAS on performance of accounting as well as the positive and negative impacts of adoption of CAS on performance of accounting in Nigerian Bottling Company PLC. Onitsha.
Also, findings of this study serve as a stimulant and stepping stone for future researchers and academicians by suggesting areas where further studies need to be conducted on the same or similar topics.
1.6 Limitations of the Study
Due to shortage of time to conduct a fully and intensive study, the researcher had to limit the scope of the study so as to finish the study within time specified by academic calendar of the university, also the issue of limited funding emerged as one of limitation during the study.
1.7 Definition of Terms Accounting
As many professional accountants and auditors state – accounting is a language of business which is accepted in all developed and developing countries, but what exactly is accounting? Well, accounting has been defined by many authors in various ways. According to Weber (2011), accounting is the way business owners manage their company’s financial information.
Sacco (2008) defines accounting as a process through which financial information is recorded, organized, summarized, analyzed, interpreted, and communicated. This implies that accounting is concerned with the design of an organization’s record keeping system, the preparation of financial documents, analysis and interpretation of financial documents.
Computerized accounting is defined by Wilson (2010) as a total suit of components that together comprises all inputs, storage, transactions, processing, collecting and reporting of financial transaction data. Before the introduction of information technology into accounting, accounting protocols were performed manually. Today accountants use computer software to perform these duties.
Computerized accounting system refers to the method or scheme by which financial information on business transactions are recorded, organized, summarized, analyzed, interpreted and communicated to stake holders through the use of the computer and computer-based systems such as the internet and accounting software. This facilitates the automation of accounting tasks (Bretcht and Martin, 2006).
Meigs and Kay (1998) defined a Computerized Accounting System (CAS) as a system that uses computers to input, process, store and output accounting information the inform of financial reports. The author also adds that accounting system records all transactions that routinely deal with events that affect the financial position and performance of an entity.
Marivic (2009) described a computerized accounting system as a method or scheme by which financial information on business transactions are recorded, organized, summarized, analysed, interpreted and communicated to stakeholders through the use of computers and computer based systems such as accounting packages. He emphasized that it’s a mechanized process of facilitating financial information inflows.
Conclusion and Recommendation
5.1 Discussion of major findings from the Study
5.1:1 The use of a computerized accounting system on performance of accounting
The study showed that the NBC Onitsha (case study) actually make use of a computerized accounting system. This is evidenced by the results given by the respondents in agreement with the use of the system in the NBC Onitsha. Where the uses of a computerized accounting system are; the system’s ability to perform data entry, data processing, data security and data reproduction or reporting such as the generation of financial statements, water billing, payroll report. All these functions of the system have enabled the NBC Onitsha to run its operations smoothly in a much more effective and efficient manner.
5.1.2 To establish the qualities of payroll reports generated by a computerized accounting system.
From the findings, payroll reports generated through computerized accounting are mainly consistent, reliable and material among other qualities. These most prominent qualities of financial reports generated through computerized accounting make the system much more unique to the manual accounting system especially where accuracy in payroll calculations and reliability in reporting count. It is one of the strongholds as to why most of the respondents prefer a computerized accounting system to the manual accounting system. With this in mind, it is worth to recommend a computerized accounting system for business operations especially in of the financial nature as compared to the outdated manual accounting system.
5.1.3 Overall Findings
From the findings summarized above, it indicate that adoption of CAS in accounting practices has both, positive and negative impacts. The positive impacts include; simplification of payroll processing, timely preparation of payroll, accuracy of payroll and traceability of payroll deductions. The negative impacts include; risk of fraud and requirement of additional training for users and additional costs.
- From the findings and summary, the researcher recommends that first and fore most, the NBC Onitsha needs to acquire a computerized accounting system that suits the organizational needs, enough resources needed to be saved for a tailor made software and system analyst need to be consulted in this important issue.
- There should also be routine system maintenance programs put in place so that the system can get rid of shortfall such as viruses, fraud among others that may affect the system operations, this should be done so that the system can operate to the expectation of management and other users.
- On the management point of view, it is important that staff for handling transactions are trained so as to improve on the accuracy and speed in posting. With increased improvements and versions of accounting packages, staff needs constant and continuous training by the authorized dealers of the packages so that they remain well acquainted with the knowledge and experience of the package. In addition to the training, it is important to constantly appraise the staff to check which staff is failing the system as regards reporting unbiased financial information.
- The NBC Onitsha needs more internal audit reviews to appraise and check the strength of the instituted controls within the system. The computerized accounting system is prone to fraud in cases where physical cash is involved. Without internal audit reviews, there may arise cases of ghost workers fraud that may pass unnoticed. It is therefore important external auditors come in once in a while to do audit.
- There is a need to increase the security levels in the internal control system. Management needs to ensure that requisitions are authorized; cheque payment, vouchers and other source documents are approved. On recording, it is important to have a clerk to enter the data which is then updated yet by another person preferably one with more experience and expertise. Management can also consider the option of using a networked system linking all the system in the finance , accounting and Human Resources department. This is because the current system uses standalone personal computers. In this way, errors and fraud possibilities are minimized thus improving on the quality of financial reports.
- The accounting staff should rotate regularly in different accounting section by doing so it will be difficult for person to be tempted to commit frauds by using the knowledge and experiences he / she has in a specific section
- Although there is accuracy and speed in transmitting information concerning payroll between other departments and payroll section the management should keep updating with new information technology.
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