The Effects Of Computerized Accounting System On The Performance Of Banking Industry In Nigeria (Study Of Selected Banks In Enugu Metropolics)

Project and Seminar Material for Accountancy / Accounting

The Effects Of Computerized Accounting System On The Performance Of Banking Industry In Nigeria (Study Of Selected Banks In Enugu Metropolics)


Abstract


The research topic of this study is “The Effect of Computerized Accounting System on the Performance of in Banking Industry – a study of selected banks in Enugu Metropolis. The purpose is to know whether the application of Computerized Accounting System superceeds that of manual Accounting System, and that if computerized Accounting System enhance higher turnover and profitability, and also whether a computerized accounting system is an effective means of keeping accounting records. The study population is 70 persons who are the members of the staff of the three major selected banks. Using the Taro Yamene’s formula the sample size calculated gave (60). The formulated hypothesis were tested using the analysis of variance (ANOVA) statistical technique at 5% level of significance. The researcher also made use of primary methods of data collection which included questionnaire and personal interview. Also the secondary method of data collection used was gotten from official documents of the banks, various research work on computerized accounting system, accounting journals, textbooks and Caritas University Amorji – Nike, Emene, Enugu State library. Based on these, the researcher recommended that banks in Enugu Metropolis should channel most of their resources in the training and development of bankers and Accountants personnel in computerized accounting system related technology such as I.C.T to boost performance in their banking operations and their personnel. Also due to the widespread of computer trends and its dynamics nature, it is recommended that banks in Enugu metropolis who are still battling with manual system should adopt specifically the Computerized Accounting System.


Chapter One


Introduction

1.1 Background of the Study

Today’s modern technology brought into use the computer, this technology is the application of science to gathering, recording, processing and communicating of business information by means of electronic media. Most commonest tool for application is the computer and it involves all the transaction processing system management information system various business support system etc. The computer is a central force in the advancement of various organization. The historical development of computer started with Hollerith punched card of 1880,Goerge Alken calculator and Charles Babbage’ creation of the difference engine.

The computer can be defined as a tool or device which is able to accept facts (data) and figure in a prescribed form, apply prescribed processes to data and supply result of the processes in a specified format as a meaningful information. There are also different types of information depending on the make or type of their functions. The revolution in technology to the computer complements or in the other hand, substitute for ten elements which are: – paper, personal memos, charts, reports, calculators, terminals letter.

Hartzell (2006) defines computer as an electronic machine for processing information automatically and very quickly. The important of computers is the ability to handle vast amount of information and to do other processes with accuracy and speed which cannot be manually undertaken have been recognized and appreciated by financial institutions, hence the trend in the computerized of banking operations.

Tanembaum (2010) sees computer as a machine that can solve problems for people by carrying out instructions given to it.

The American Accounting Association defines accounting as the process of identifying, measuring and communicating economic information to permit informed judgement and decision by users of the information. Accounting is also the establishment, maintenance, collection and analysis of financial position of an organization and any changes that have occurred or may occur overtime.

Omolehinwe (2009) defines accounting as the collection and recording of financial data about an organization whether in the private or in the public sector and analyzing the data so collected to suit the decision that needs to be taken and reporting the relevant information in a summary form to the user in a form that is meaningful to him or her.

Chionye (2003) defines accounting system as the art of identifying, recording, classifying measuring and interpreting in a significant manner the financial transaction of an organization for decision making. Summarizing from time to time the information contained in the record, for its significant presentation and interpretation to interested parties as an aid to decision making.

Accounting system is also defined as a consistent way of organizing, recording, summarizing and reporting financial transactions.

Computerization is the installation of computers as a part of a process of automation.

Banking in Nigeria has witness impressive development in recent time particularly within the last decade in time with growth in economic activities and complexities, banking service have expanded significantly in size and variety due to increased by computerization of banks.


1.2 Statement of the Problem

In spite of the benefit of computer to banking industry and business generally some problem are still left unsolved and new ones have been credited by the use of computer itself problems like;

The use of computer to keep accounting records.

Another problem is the displacement of labour hands in the accounting department and its union implication and the problem of low turnover (volume of operation) and profitability in banks.


1.3 Objectives of the Study.

The objectives of this study are:-

  1. To determine he relationship between the application of the manual accounting system and the computerized accounting system in the banking system.
  2. To find out, whether the effect of computerized accounting system enhances higher turnover (volume of operation) and profitability in banks.
  3. To examine the impact of using computer to keep accounting records.

1.4 Research Questions.

To be able to achieve the above purposes, some questions would be asked which help the researcher to gather the necessary information needed, they are:

  1. Are there any relationship between the manual accounting system and the computerised accounting system in the banking industry?
  2. Also can computerized accounting system enhance high turnover and profitability in banks?
  3. Finally, What are the effects of using computers to keep accounting records?

1.5 Hypotheses of the Study

In order to ensure the verification and validation of the primary data gathered through administration of questionnaires. A research hypothesis is formed comprising the null hypothesis (Ho) and the alternative hypothesis (Hi).

Hypothesis One
  • Ho: – There is no relationship between the application of the Computer and manual system in the accounting system of banking industry
  • Hi: – There is a relationship between the application of the Computer and manual system in the accounting system of the banking industry.
Hypothesis Two
  • Ho:- The impact of computerized accounting system does not enhance higher turnover and profitability in banks.
  • Hi:- The impact of computerized accounting system enhances higher turnover and profitability in banks.
Hypothesis Three
  • Ho:- There is no effect of using computer to keep accounting
  • Hi:- There is an effect of using computer to keep accounting records.

1.6 Significance of the Study.

Most banks have growth and continuity as part of their objective, and such objectives are best realized by an efficient management, as well as effective computerized accounting system. This has made it possible for banks to gain inherent advantage while minimizing risks involved in their daily operations.

This research project will therefore be of immense advantage or benefit to the management of banks, computers and other business organization using computerized accounting system. Hence, the theories and concept contained therein can be infused into their management system.

This research will also contribute to enhance efficiency in the following ways;

  1. Speedy and accurate decision making through the use of computerized accounting system.
  2. Improvement in the delivery and quality service.
  3. The banks profitability will be improve.

Firstly, in the realm of academic, the project will be very useful to wide audience as it applies to courses in accountancy, banking and finance as well as executive development courses, management seminars and supervisory workshop conducted in colleges and universities.


1.7 Scope and Limitations of the Study.

The scope of the study is restricted to examining the effect of computerized accounting system on the performance of banking industries such as, Diamond bank plc, Eco bank plc and First bank plc all in Enugu metropolics of Enugu state.


1.8 Definition of Terms

Audit Trial:

A technique that made it possible to retrace processing of data in all other to charge, add or delete records in a file.

Blocking:

the storage of more than one term in a record.

Complier:

A programming system applied by a manufacturer to convert a programme written in an automatic language into machine language.

Expert System:

A computer system which embodies some of the experienced and specialized knowledge of an expert. it enables a non-expert to achieve comparable performance to an extent in the field.

Application Packages:

These are computer programmes written for the purpose of carrying out specific task for individuals or organizations with similar or related needs.


Chapter Five


5.0 Summary of Findings, Conclusion and Recommendation

5.1 Summary of Findings

The effect of computerized Accounting system on the performance of banking industry, was the study carried out by the researcher in this research exercise. Selected banks in Enugu Metropolis formed the focus of this study.

The researcher study in consideration of its objectives had made some useful findings from the data collected through personal interviews, questionnaire administration and library research and also from the hypothesis formulated and tested.

Based on the outcome of the investigation, a summary of the findings made are as follows:-

* There is a relationship between the application of the computer and manual system in the accounting system of the banking industry. This was found to be true because the application of a computerized accounting system in banking operations aids quick customer services decision making process and quality performance than in manual accounting system. Also, the installation of accounting software in the computer, processes data and creates reports much faster than manual system which is slow.

* It is evident that the impact of computerized accounting system enhances higher turnover and profitability in banks.

Through this was corroborated by the test carried out, it was observed that some banks in Enugu Metropolis are yet to take advantage of the excellent benefits provided by it, as such this reports from banking operations carried out have remained uninterested and unreliable.

* It is evident that the computerized accounting system is an effective means of keeping accounting records.

This is because computerized accounting system provides a means for them to record; very high volume of transactions with the great speed and financial and prepare a wide range of detailed financial report. It also provides management with current account balance information since balance is posted as the transactions occur.

Other findings include:

  1. The application of computerized accounting system is effective in strengthening the control system and accountability in banks.
  2. There is co-ordination in the entire banking operations through the use of computerized accounting system.

5.2 Conclusion

Computerized Accounting System which is technically known as Electronic Data Processing [EDP] accounting system is an integrated, computer – based used machine system which allows the user to enter the transaction into the program once and all accounts are updated as necessary. It is also a specialized machine system use in gathering information. It also provides information for decision making functions and has been of tremendous benefits not only in banks also to all manner if firms and organizations. Computerized accounting system has helped in facilitating the provision of timely, quick customer service delivery, accurate and reliable information, required by them ie. (banks and other firms and organizations).

It has also brought about quality performance in banking operations by abiding by the accounting instructions and guidelines which help them to minimize risk/challenges that are likely to be encountered in the course of their duties as well as evolves adequate measures to combat such challenges and achieve success.

Though the cost of maintenance and designing an effective computerized accounting system and the purchase of the associated facilities needed for it is high, if the banks are well committed to improving their performance and enhancing higher quality of work performed for higher profitability, they should go for it as well as ensure that the recommendations are rigidly followed.


5.3 Recommendations

From the findings of this study the following recommendations are therefore made to enhance the performance by banks in their banking operations in Enugu metropolis.

The recommendations are:-

  1. Banks in Enugu metropolis should take advantage of the excellent benefits derivable from the adoption of well designed computerized accounting system. This will help them to achieve a high and acceptable standard of quality in the performance of their banking operations.
  2. Banks in Enugu metropolis should channel reasonable proportion of their efforts and resources to the training and development of their bankers and accountants personnel (manpower development) through seminars, workshops and the use of computer. Accounting system so as to promote efficiency in banking operatives and in their statement of financial position ensure accurate timely and much easier and reliable for use.
  3. Due to the dynamic nature of computerized Accounting system, and in line with the present global computer trends of events which is now widespread and mostly known as
  4. Computer Age”. It is recommended than banks and other firms and organizations that are still in the operations of manual system of accounting to adopt specifically the computer based/Electronic Data processing (EDP) accounting system and this will in no small way aid in quick customer services delivery, produce a wide range of detailed report at short interval and provide management with current information to support decision making and aids collection storage, retrieval, communication and adequate security of information from unauthorized persons or fraudulent purpose and for the purpose of efficient performance and management and the achievement of the terms of their objectives.
  5. Banks in Enugu Metropolis should as a matter of necessity and duty strive to incorporate the attributes of a well developed and effective computerized accounting system in the implementation of these quality performance that are stated in form of accounting principles which are important because they provide the conceptual guidelines for application of the basic accounting system. Also they give the measurement, recording and reporting phases of their accounting information processing cycle.
  6. They way computer trends is widespread, the way also computer frauds and problems is also widespread I recommend that “Green Computing” strategies to be use to reduce to problem the computer have on our environment. Green Computing involves reducing the electricity consumed and environmental waste generated when using a computer strategies that support green computing include recycling, regulating manufacturing process, extending the life of computers and immediately donating or properly disposing of replaced computers.

The Effects Of Computerized Accounting System On The Performance Of Banking Industry In Nigeria (Study Of Selected Banks In Enugu Metropolics)


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