Computerized Accounting System As An Aid To Efficient Management Of An Organization

Project and Seminar Material for Accountancy / Accounting

Computerized Accounting System As An Aid To Efficient Management Of An Organization


Abstract


This study was carried out to assess Computerized Accounting System as an aid to efficient management of an Organization. A case study was employed because the researcher was more interested in a deeper understanding of the problem other than generalizing the findings across the population. The study population constituted management and employees from the departments of Accounts and information technology and procurement and logistics. The researcher used structured questionnaires as the main data collection method. This instrument was administered to respondents to solicit for information from within the organization. Descriptive statistics such as mean, simple percentages and standard deviation were the statistical instrument the researcher used to analyses the data. The researcher found out that through computerized accounting system can be generated quickly. The benefits were summarized to include Improvement in Business Performance, Accuracy and Efficiency, Simplified Posting of Transactions, Minimized errors, and Easy Auditing. The researcher found out that in order to improve as an aid for efficient management of an organization the strategies discussed should be used and this consists of promoting the use of IFRS and ensuring compliance to the standards, adherence to ISA and IFAC, recruitment of skilled or professional to handle accounting data and lastly use of user friendly software. The researcher recommends that the company needs to acquire a computerized accounting system that suits the organizational needs. Enough resources need to be saved for a tailor made software and system analyst need to be consulted in this important issue.


Table of Content


  • Title Page
  • Declaration
  • Approval
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of Content

Chapter One

1.0 Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of Problem
  • 1.3 Research Objectives
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Definition of Terms
  • 1.8 Organization of the Study

Chapter Two

2.0 Literature Review

  • 2.1 Conceptual Framework
  • 2.2 Components of Computerized Accounting Software
  • 2.3 Benefits of Computerized Accounting Systems
  • 2.4 Quality of Financial Reports
  • 2.5 The Influence of Computerized Accounting System on Organizational Management
  • 2.6 The Appropriate Strategies of Improving Organizational Management
  • 2.7 Theoretical Literature Review
  • 2.7.1 Contingency Theory
  • 2.7.2 Innovation Diffusion Theory
  • 2.7.3 Decomposed Theory of Planned Behavior

Chapter Three

3.0 Research Methodology

  • 3.1 Design of the Study
  • 3.2 Area of the Study
  • 3.3 Sample and Sampling Technique
  • 3.4 Instrument for Data Collection
  • 3.5 Validation and Reliability of the Instrument
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis

Chapter Four

4.0 Results and Discussion

  • 4.1 Results
  • 4.2 Discussion

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendations
  • References
  • Appendix

Chapter One


1.0 Introduction

1.1 Background of the Study

Accounting has long been an organizational function especially with the advent of non-owner managers who need to update what is happening in the organization. Maintaining, preparation and presentation of accounts is crucial for business success as well as organization for effective decision making whether it is a nonprofit making organization or profit making because they have to report to the stakeholders of the organization through good organizational management. However there was inefficient as an aid for efficient management of an organization due to loss of records, delay in preparation of records and its associated problems. This study focused on establishing the influence of computerized accounting systems as an aid for efficient management of an organization.

In most African countries, before the introduction of computerized system of accounting, the manual systems were inaccurate and inconsistent for many organization needs especially reporting of financial information. This is because the system was associated with errors since data was collected, analysed, journalized and a trial balance and balance sheet prepared (Meigs, 1986).

Though most organization have not being doing well in as an aid for efficient management of an organization and accounting records, reports from a comparative survey conducted by Indira (2008) Uganda inclusive indicate that firms have greatly improved on the ways of reporting their financial statements. Computerized accounting system is defined as the application of the computer based software used to input, process, store, and output accounting information. This application is in support of the ever advancing technology that enables firms to use computer programs to perform tasks that were previously done manually.

A computerized accounting system therefore involves the computerization of accounting information systems which is established inorder to facilitate decision making. These are associated with a numbers of benefits like speed of carrying out routine transactions, timeliness, quick analysis, accuracy and reporting.

However many organizations are not enjoying the benefit of computerization of accounting system as they have continued to be inaccurate due to increased number of interruptions due to system failure or breakdown and untimeliness with its reliability left in question(as per European Union Audit Report by National Audit Organization 6 may 2003)

According to Pandey (1998), Financial reporting to the company’s stakeholders for instance the government, public, donors is a statutory obligation for every organization.

Saleemi (1981) defined as an aid for efficient management of an organization as the process of supplying financial information which is reliable, accurate and complete to the various stakeholders for making economic decisions.

This is always inform of financial statements such as statement of comprehensive income, statement of financial position and cash flow statement and other financial annually reports which provide an overview of the company’s current financial strength.


1.2 Statement of Problem

The Computerized Accounting Information Systems (CAIS)is an information system that is developed to make the performance of accounting functions more effective. Computerized Accounting Information Systems (CAIS) is a tool which, when integrated into the field of Information and Technology systems (IT), were developed to help in the management and control of issues related tancial activities. But the high progress and spread in technology has opened up the possibility of producing and practicing accounting information from a management strategic perspective. Due to its importance for all firms, the adoption of CAIS could be highly important for medium-sized and small, particularly those which work under the conditions of uncertainty in the competitive market.

In spite of the benefit of computerized systems to the organizations and businesses in general, most of enterprises still does not adopt CAIS and prefer to use manual accounting without detriment to quality. Non-adoption of CAISs has negatively affected organizations as they cannot enjoy those benefits inherent with the use of CAISs. This has negatively affected the operations of SMEs to such an extent that some of them have even failed to survive. Randall and Horsman (2004) found that the lack of CAISs use contributed to organizations failure. Furthermore, lack of CAISs usage results in poor decision making by SMEs as information from their records is mainly in form of incomplete records. Incomplete records make it even harder for sound decisions to be made as they require an expert in accounting to interpret them into information, a deficient which often lacks in some organizations.

However failure to adopt and implement Accounting Information Systems is the reason why most companies fail to make sound decisions as their information keeping tend to be haphazard as the firm grows.

Therefore, the aim of this study is to assess Computerized Accounting System as an aid to efficient management of an Organization.


1.3 Research Objectives

The purpose of this study is to assess Computerized Accounting System as an aid to efficient management of an Organization. Specifically, the objectives include:

  1. To establish the accounting systems being used.
  2. To determine the benefits of computerized accounting system being used.
  3. To identify the appropriate strategies for improving computerized accounting system

1.4 Research Questions

This project is designed to tackle the following reach questions;

  1. What are the currently used accounting systems in the organization?
  2. What are the benefits of computerized accounting system being used?
  3. What are the the appropriate strategies for improving computerized accounting system?

1.5 Research Hypothesis

The following hypotheses were formulated to guide the study the hypothesis is to be tested at 0.5 alpha levels.

  • HO1: There is no significant influence of Computerized Accounting efficient management of an Organization
  • HA1: There is a significant influence of Computerized Accounting efficient management of an Organization

1.6 Significance of the Study

The study will enable management to understand the significance of preparing quality and reliable good organizational management.

The study will point out weakness in the accounting system which management needs to address.

Other researchers will use the report as literature review in order to improve on their research topic in another period.


1.7 Definition of Terms

Computerized Accounting System:

Is an accounting information system that processes the financial transactions and events as per Generally Accepted Accounting Principles (GAAP) to produce reports as per user requirements.

Efficiency:

Is the ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste. “Efficiency is thus not a goal in itself.

Management:

Is the administration of an organization, whether it is a business, a non-profit organization, or a government body.


1.8 Organization of the Study

This study is divided into five chapters. The first chapter is the introduction which contains the background, research problems and objectives. The second chapter is the literature review and the third chapter is the research methodology. In the fourth chapter, the researcher analyses the data and discusses the results. The fifth chapter is the last chapter which presents the summary, conclusion and recommendations.


Chapter Five


5.0 Summary, Conclusion and Recommendations

5.1 Summary

This study focused on Computerized Accounting System as an aid to efficient management of an Organization. The researcher found out that through computerized accounting system can be generated quickly. The benefits were summarized to include Improvement in Business Performance, Accuracy and Efficiency, Simplified Posting of Transactions, Minimized errors, and Easy Auditing. The researcher found out that in order to improve as an aid for efficient management of an organization the strategies discussed should be used and this consists of promoting the use of IFRS and ensuring compliance to the standards, adherence to ISA and IFAC, recruitment of skilled or professional to handle accounting data and lastly use of user friendly software.


5.2 Conclusion

The study revealed that computerized accounting system actually have an influence on the quality of good organizational management for publication purposes. During the study, it was found out that the organization runs a fully computerized accounting system using the information generated by system.


5.3 Recommendations

  1. From the findings and summary, the researcher recommends that first and foremost, the company needs to acquire a computerized accounting system that suits the organizational needs. Enough resources need to be saved for a tailor made software and system analyst need to be consulted in this important issue.
  2. 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.
  3. On the management point of view, it is important that staff for handling transactions is 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.
  4. The company 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 teaming and lading fraud that may pass unnoticed. It is therefore important external auditors come in once in a while to do audit.
  5. There is 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.
  6. Management can also consider the option of using a networked system linking all the system in the finance and accounting 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 good organizational management.

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