Efficiency Of Accounting Softwares In The Preparation Of Financial Statements
The study focuses on assessing the impact of the use of Accounting software in the preparing financial statement of commercial banks in Nigeria. The centre of attention was on three commercial banks namely GT bank, FCMB and First Banks; all in the Benin City, Edo State. A stratified sampling technique was used to select this sample. The Banks were stratified as follows: computerized and networked bank computerized but not networked and partially computerized. The main objectives of this work is to explore how Accounting software have forever changed many aspects of business and accounting practices especially in preparing financial statement and to consider the main reasons for the reluctance of some Commercial banks to adopt and utilize this new capability. The focus of the research was on areas that the researchers considered very critical in accounting software. These areas include: the need for accounting software, the cost-benefit analysis of a change to accounting software, financial and non-financial benefits of accounting software, factors considered before choosing accounting software and challenges associated with the use of accounting software and how these challenges can be overcome. The research concluded that the advantages of a accounting softwarefar outweigh its associated challenges as it has impacted the financial reporting of the banks positively. Hence, there is the need for businesses, particularly commercial banks to adopt a Accounting software. Recommendations were that commercial banks should make a meticulous effort to migrate onto the Terminus 24, a accounting software that the government of Nigeria has introduced, as it comes with added advantage to serve as a platform in which all the commercial banks in the country are networked to each other to facilitate faster and efficient banking.
This study was about the efficiency of accounting softwares in the preparation of financial statements in selected banks in Benin City, Edo State. The chapter presented the background of the study, statement of problem, objectives of the study, research questions, and the significance of the study.
1.1. Background of the Study
The increasing globalization of the world economy precipitated organizations the world over to compete in the global marketplace leading to emergence of a new set of accounting challenges such as multiple currencies and follow a horde of accounting and tax rules. Thus, a more refined accounting software packages competent of managing international accounting intricate issues is increasingly in need (Adhikari, Lebow & Zhang, 2004). However, the great technology advancement has rendered the options of using the accounting information from a strategic point of view. The adoption of Accounting Software becomes major aspect in determining the survival, growth and success of an organization as firms require more information, be it monetary or non-monetary, to deal with a higher scale of uncertainties in the competitive market and require data processing capacity and system to ameliorate to suit their information needs (Van de Ven & Drazin, 1984) in this global economy era.
In the world of digitalization today, the digitalization of accounting is the need of hours. With the preface of computerized accounting systems with latest accounting software, many benefits and advantageous factors such as speed and accuracy of operation, simplicity and reliability of operation etc. have change the fate of the accounting world globally. Accounting software is a class of computer programs which enable you to manage your business’s financial transactions. Using accounting software assists organizations to utilize the available resources in their accounting departments efficiently and effectively and also aid to reduce costly bookkeeping or accounting mistakes. In the field of accounting and finance, the use of manual reporting of financial statements has been replaced by the use of computer software to facilitate quick reporting and easy processing and storage of financial information, hence due to facilitation of accounting software, preparation and access of financial statements and use of accounting procedures has been made easy (Kharuddin et al., 2010). In the present business world, the failure to apply and use computer software indicates that financial information may not be accurate, delays in financial reporting, and that financial information may not be stored for a long time
Accounting is the systematic art of recording, classifying and summarizing in a significant manner and in terms of monetary, transactions and events which are, in part at least, of financial character, and interpreting the results thereof. Accounting can also be referred to as an information system that measures, processes and communicates financial information about an economic entity. Advancements in information technology have significantly improved accounting systems and transformed economic life, (Adefila, 2008). Computers and other digital technologies have increased office productivity and general performance facilitating the rapid exchange of documents, research, collaboration with far-flung partners and the collection and analysis of data. Information technology gave all sorts of individual economic actors the new valuable tools for identifying and pursuing economic and business opportunities.
Financial Statements deals with the application of computers to process financial transaction, such as retrieve, transmit and manipulate data. This could also be described as anything that renders data, information, or perceived knowledge in any visual format through any multimedia distribution mechanism, (Shanker, S. 2013).
Accounting takes a vital role in operating an organization. All businesses must keep track of their financial information that relates to its business activities. It also has numerous processes; some easy, others complicated and burdensome. However as the business increases, acquires new clients or customers, enters new markets and keeps pace with constant changes in information technology, organizations need to maintain highly accurate and updated accounting, inventory and statutory records (Igbaria et al, 1997). With a substantial increase in the volume of accounting transactions and increase in exposure of information to errors due to complexity of these accounting systems, there was a need for a system which could store and process accounting data with increased speed, storage, and processing capacity. This led to the rise in the development and introduction of accounting software packages (Igbaria et al, 1997).
Accounting software describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. It functions as an accounting information system. It may be developed in-house by the organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications (Wikipedia, 2016). Accounting software may be on-line based, accessed anywhere at any time with any device which is Internet enabled, or may be desktop based. It varies greatly in its complexity and cost. The market has been undergoing considerable consolidation since the mid-1990s, with many suppliers ceasing to trade or being bought by larger groups.
In many cases, implementation of accounting software (i.e. the installation and configuration of the system at the client) can be a bigger consideration than the actual software chosen when it comes down to the total cost of ownership for the business. Most midmarket and larger applications are sold exclusively through resellers, developers and consultants. Those companies generally pass on a license fee to the software vendor and then apply charges to the client for installation, customization and support services. Clients can normally count on paying roughly 50-200% of the price of the software in implementation and consulting fees.
With the advent of faster computers and internet connections, accounting software companies have been able to create accounting software paid for on a monthly recurring charge instead of a larger upfront license fee. The rate of adoption of this new business model has increased steadily to the point where legacy players have been forced to come out with their own online versions. Cloud accounting software seems to more rapidly adopt by areas where prices are generally higher due to higher shipping costs and price discrimination practices (Chau, 2001).
The use of accounting software will lessen the data processing time that usually takes a longer time if done manually or by hand and processing can be accelerated significantly and with a better level of accuracy. American institute of Certified Public Accountant (AICPA) has created a new certificate of Certified Information Technology Professional (CITP). The CITP is certification for the accountants who have a broad knowledge in the field of technology and understand how the information system technology can be used in a variety of organizations. This reflects the AICPA recognition of the importance of information technology systems in relation to accounting (Agarwal & Prasad, 1997).
An accounting student is required to be able to follow information technology developments because by understanding and knowing the technology progress and development, students can implement the accounting information system technology, which is expected to make the student more competent, especially in the field of information systems technology. Accounting students are required to become competent accountants, for example, in the field of information systems technology. This is supported by the number of companies that expect accounting graduates to have a good knowledge of accounting, which is supported with specific expertise (soft skills) in the information systems technology field, such as accounting software.
1.2 Statement of the Problem
Since the 1950s, when technology started to be applied in business (Otieno and Oima,2013), most developing countries in the world have abandoned the use of a pen and a paper and started to adapt to the use of accounting software to facilitate generation of quality, quick and accurate financial reports. However, due to other poverty and other related issues, there is lack of consistency coupled with irregularities registered in the field of technology which handicap the regular use of accounting software and computerized accounting system. Studies to evaluate the impact of using this technology to generate financial reports are limited. This study intends to assess the efficiency of accounting software in the preparation of financial statements.
1.3 Objectives of the Study
The following are the objectives of this study:
- To investigate the impact of accounting software on the bank payroll financial preparation and reporting in the banks.
- To examine the associated benefits of accounting software on financial reporting in the banks.
- To identify the disadvantages of accounting software on the accounting information system in the banks.
1.4 Research Questions
Based on the following objectives of the study, the following research questions were postulated;
- To what extent is the impact of accounting software on the banks payroll financial preparation and reporting in the banks?
- What are the benefits associated on the use of accounting software on financial reporting in the banks?
- What are the disadvantages of accounting software on the accounting information system in the banks?
1.5. Research Hypotheses
The following hypotheses were tested in their null form
Ho: There is no significant impact of accounting software on the banks payroll financial preparation and reporting in the banks.
Ho: There is no significant benefit on the use of accounting software on financial reporting in the banks
Ho: There is no significant effect of the disadvantages of accounting software on the accounting information reporting in the banks.
1.6. Operationalization of Variables
Efficiency of accounting software in the preparation of financial statements.
The above topic have two variables, namely; Accounting Software (independent) and financial statements (dependent variables), to be represented as X and Y respectively.
X = Independent (Accounting Software)
Y = Dependent (Financial Statements)
The independent variable (accounting software) will be a constant variable
Elements of (X) Accounting software
X1 = Accounting Software
X2 = Benefits of Accounting Software
X3 = Disadvantages of Accounting Software
Element of (Y) Financial Statements
Y1 = Payroll
Y2 = Financial Reporting
Y3 = Accounting Information System
1.7. Significance of the Study
The following are the significance of this study:
The results from this study will educate on the impact of accounting software on the processing and management of financial statement.
In today’s business environment, most financial accounting systems have been computerized and automated with little or no paper documentation. Technologies have greatly changed the nature of audits which have so long relied on paper documents. Auditors or Accountant performing attest services for clients that process financial transactions electronically therefore need to go extra miles to be professionally and technically competent in order to perform an acceptable audit.
1.8. Scope of the study
This study is on the efficiency of accounting software in the preparation of financial statement in 5 selected banks in Benin City which are First bank, Guaranteed Trust Bank, Diamond Bank, Access bank and First City Monument Bank.
1.9. Definition of terms
Describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance.
Accounting Information System:
Is a structure that a business uses to collect, store, manage, process, retrieve and report its financial data so that it can be used by accountants, consultants, business analysts, managers, chief financial officers (CFOs), auditors and regulatory and tax agencies.
Is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements
Is a formal record of the financial activities and position of a business, person, or other entity.
The research understudy shall encompass 5 chapters, which are as follows;
- Chapter one shall comprise the introduction and body of the topic;
- Chapter two entails the literature review, empirical framework, conceptual framework and theoretical framework;
- Chapter three consists of the research methodology and design, research instrument, sample and sampling size;
- Chapter four entails data presentation and analysis, while
- Chapter five shall be the concluding part, which includes the summary of findings, conclusion and recommendation.
Summary, Conclusions and Recommendations
This chapter presents the summary of major findings arising from the data analysis, makes appropriate recommendations for the effective adoption and management of Accounting software among commercial banks in Nigeria. The study is concluded at the last section of this chapter.
The research was organised to assess the impact of the use of Accounting software in financial reporting of commercial banks in Nigeria. The study also had another objective of bringing out the problems encountered in the use of a Accounting software. Advancement in technology is now the order of the day. Businesses are constantly looking for cost-effective, economic and efficient ways of satisfying customers’ needs. Thus, there is the need for businesses to be abreast of the current issues in technology to enhance their business. This is to help gain a competitive advantage over their competitors especially in this era where there are more banks springing up.
One of the ways to reduce cost in business processes, is to ensure that resources allocated are well utilised to obtain maximum benefits at minimum cost. Thus with the use of a resource (input) like a Accounting software, it is expected that, the accounting system will be able to generate relevant and useful reports (output) for making economic decisions by users. Accounting software are therefore used by these organisations in order to generate timely and accurate reports through a fast and efficient processing of accounting data.
Firstly, it was observed that, commercial banks in general decide to adopt Accounting software due to various reasons. Such reasons included the need to be efficient and effective in the operations of the banks, the ever-growing operations of the banks, and the quest to produce more accurate and timely reports. It was evident that the single most important factor considered by the banks in their accounting software adoption was the pursuit of efficiency and effectiveness in operations. This finding confirms the assertion made by Waterfield et al (1998). It is however contradictory with Raymond and Bergeron (1992) who argued that businesses implement accounting software because of the advent of low cost microcomputers among other reasons.
It was further observed that, speed of a accounting software served as the major factor considered before choosing a particular accounting software. Other factors included: accuracy, storage, and timeliness. This confirms the assertion of Baren, 2010.
It was also observed that, there are numerous benefits both financial and non-financial which are derived from the use of a Accounting software. Amongst the non-financial benefits are: time saving, improved quality of accounting information, minimized mathematical error, improved report to stakeholders and provision of a better way of keeping accounting records. The financial benefits include reduction in tax liability by the way of enjoying capital allowance, reduction in labour cost, audit expenses, clerical expenses and stationery expenses.
However it must be emphasized that aside the capital allowance, measuring the exact reduction in labour cost, audit expenses, clerical expenses and stationery expenses from the face of the financial statement was a great challenge to this research, as the absolute values on the face of the financial statement for the three years spanning from 2007 to 2009 kept escalating. Ratios that were also computed to ascertain the percentage changes of these expenses also did not follow a regular pattern. This led to the conclusion that the only period that these cost reductions can be accurately measured is the year in which the organisation computerised its operations. For the subsequent years these cost reductions were measured by making estimates of the cost savings made by the organisation with the introduction of the accounting software.
The data analysis section provided the various problems and challenges that come handy with the use of a Accounting software. The most challenging problem was the high cost involved in the design and implementation of a accounting software and its maintenance thereof. This confirms what Head (2000) said about cost as a challenge to Accounting software. Secondly there is the possibility of a computer failure which is mostly caused by a software failure, hardware malfunction and lastly, virus attack. The challenges encountered included: inadequacy in information technology expertise, the high amount of time needed at the implementation stage; the non-suitability of technology to business operation, instability in power system. This confirms the assertions of, Burgess (1997), Proudlock et al. (1999), and ABS (2000).
It is also worth noting that, training courses are organised during orientation for users on how to use the Accounting software. On the issue of safety and security of the accounting software, it is only the authorised users of the accounting system who are allowed to have access to the system; additional control measures which include: logins passwords that are changed frequently, login profiles that are not shared, and audit trials which are enabled to trace usage of the system are used by the banks. These measures have all been put in place to check and control the use of the accounting system.
The findings of the study also revealed that, the commercial banks used Accounting software to generate reports. Such reports include: trial balance, profit and loss account, balance sheet, and statement of cash flow.
The study revealed that because of the numerous benefits that are associated with accounting software more importantly its ability to produce and present relevant and faithful representative financial reports to end users, the government of Nigeria is assisting all Commercial banks to migrate onto a common accounting software known as Terminus 24 through the Millennium Development Account. This is going to serve as a platform in which all the commercial banks in the country are going to be networked to each other to facilitate faster and efficient banking.
Undoubtedly, with the adoption of Accounting software, problems and challenges such as; high purchase, installation and maintenance cost, computer failure, inadequate information technology expertise and time involving are to be expected. However, the advantages from the use of a accounting software far outweigh the problems and challenges as it has impacted the financial reporting of the banks positively. Hence, there is the need to adopt a accounting software and more importantly for all commercial banks to make the effort to migrate onto the Terminus 24 as it comes with added advantage of being networked with other commercial banks.
Based on the empirical findings of the study, the following recommendations are offered to commercial banks in particular, and the players in the banking industry.
- The government, through ARB Apex Bank should reinforce its computerisation
policy for the commercial banks.
- Results of this study demonstrated that, no records have been kept that provide information on the financial benefits derived by the banks. It is therefore recommended that managements of the various banks should take appropriate measures to document the financial benefits (reduced labour cost, audit expenses, and stationery expenses) derived from the use of Accounting software.
- To other commercial banks who intend to adopt Accounting software, it is recommended that, they undertake a more detailed cost-benefits analysis so as to identify the various significant benefits that come along with Accounting software.
- Software failure is a problem whose ultimate solution would be to change the software in use. However the ultimate solution would be migrate onto the Terminus 24 as it is well developed by the experts in the field to best suit banking operations and there would be constant monitoring of the system to alleviate all issues with the failure of the software.
- Institutions that train accountant should do well to include the study of accounting software as part of their courses to ensure that accountants are equipped with both accounting and the required Information Technology skills. In this area, it is recommended that management could enroll their employees on Business Information Technology programme.
- The design and implementation of a accounting software involves lot of time especially with the test period (trial and errors). Thus the best way to reduce the time involved is to test the accounting system in stages instead of having to wait and finish the whole project before testing it.
- With the issue of cost, the best way to avoid incurring a high cost in the use of a accounting softwareis to pursue a low cost leadership strategy. Here, the manager tries to increase productivity but does so with a minimum cost. For example, instead of the bank going in for brand new computers which are quite expensive, the bank could opt for slightly used computers which are equally good. On the issue of cost involved in training personnel, the bank could decide to recruit people with expertise in both accounting and Information Technology. It is hoped that the banks and other companies wishing to adopt a accounting software would take a look at these recommendations in order to overcome these problems and challenges to be able to enjoy the full benefits of using a Accounting software.
Efficiency Of Accounting Softwares In The Preparation Of Financial Statements
The Complete Material will be Sent to You in Just 2 Steps
Quick & Simple…
Make a Mobile Transfer or POS Payment of ₦3,000 to any of the Account Below
|Account No.: 0811003731|
|Name: Samphina Academy|
|Account Type: Current|
|Account No.: 1225513212|
|Name: Samphina Academy|
|Account Type: Current|
Or CLICK HERE To Pay With Debit Card
|FOR CLIENTS OUTSIDE NIGERIA|
|CLICK HERE To Pay With Debit Card ($15)|
|GHANA – Make Payment of 60 GHS to MTN MoMo, 0553978005, Douglas Osabutey|
Send the Following Details on WhatsApp ( 08143831497) After Payment
- Payment Details
- Email Address
- Efficiency Of Accounting Softwares In The Preparation Of Financial Statements
The Complete Material Will Be Sent To Your Email Address After Receiving Your Details
T & C Apply
This research material “Efficiency Of Accounting Softwares In The Preparation Of Financial Statements” is for research purposes and should be used as a guide in developing your research project / seminar work. For no reason should you copy word for word (verbatim) as samphina.com.ng will not be liable for any who copied the material.
The aim of providing this material is to reduce the stress of moving from one school library to another all in the name of searching for research materials. This service is legal because, all institutions permit their students to read previous projects, books, articles or papers while developing their own works. According to Austin Kleon “All creative work builds on what came before”.
samphina.com.ng is only providing this material “Efficiency Of Accounting Softwares In The Preparation Of Financial Statements” as a reference for your research. The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own research. Use it as a guidance purpose only.