Financial Control In A Computerized Accounting System (A Case Study Of First Bank Of Nigeria Plc)

Project and Seminar Material for Accountancy / Accounting

Financial Control In A Computerized Accounting System (A Case Study Of First Bank Of Nigeria Plc)

Abstract

The objective of this study is to examine the need for financial control in a computerized accounting system and attempts that could be made towards the betterment of the system already inexistence and using First Bank of Nigeria Plc as a case study. The project was approached on a systematic basis starting with general view of the scope of study, aims and objectives of the study, significance of the work, and the study plan. The study was followed by an attempt to review the existing literature in the field of accounting system. It also examines the problems encountered in the course of obtaining data for the research topic in question. The findings from the analyzed data show that the frustration of old staff by the management of the bank is the greatest cause of fraud at the bank. Moreover, the inability of law enforcement agents to prosecute fraud committee is also significant cause of fraudulent transactions in the bank, and unauthorized lending by branch managers are frequent types of fraud. This study provides evidence to test some of the predictions that have been made about the impact of computer in accounting.

Chapter One

1.0 Introduction

In the ancient days, human activities were relatively easy. The difficulties posted by nature then, were considerably simply and demanded solutions of man and his way to solve them necessitated the inventors of machines. Since the invention of the first machines, the world has experienced a tremendous degree of advancement in technology and ones for the machine invented for solving complicated problems in the computer. With increasing frequency, it is recognized that an understanding of the computer how it influences accounting operations and it’s benefits to every accounting students and intend to work this world of advancing technology cannot be over emphasized.

Due to the recent intends in accounting operations and the complexity of these operations with the number of task to be performed constantly on the increase, todays accountants are left with no option other than to always device ways by which these increasing tasks could be processed more speedily and accurately so that there will be no loss of information.

With the advert of computer many organizations have computerized their accounting systems, an example of such organization with computerized accounting system is FIRST BANK OF NIGERIA PLC.

1.1 Background of the Study

In the last few decades, business activities have not only grown bigger and very much complex, but things happen even faster than expected, the combination of complexity, size and faster action and reaction generated a view for new management tools, especially tools for converting the large and complex volume of business data into useful and meaningful terms to assist management in decision making.

The processing of business data and the delivery of information using there machines is known as “AUTOMATIC DATA PROCESSING” OR “COMPUTERISED OPERATIONS”.

The effectiveness of computer depends on the ability of the user. Inherently the computer has no creative ability than the screw-driver or any simple machine. The fundamental power is it’s ability absorb a mountain data, manipulate the data, and bring out the results in a summarized meaningful form, quickly accurately for management use.

The entire accounting and management function started in a manual form where the process of accounting data and information was provided in manual form by human beings. This system of providing information manually had it’s short comings later, the use of punched cards was introduced, which involves the use of electromechanically device for the processing of data. This method of processing was later replaced by computer which is made up of processing.

1.2 Statement of the Problems

The computer is know for it’s speed and accuracy in processing information such speed and accuracy have not been achieved manually or by any other device. It is expected that a computerized banking system will facilitate the speed and accuracy of processing transactions of financial nature and also reduces customers waiting time.

This has been achieved by virtue of technology, other countries where customers services and general financial control have been computerized whether it can be established is yet to be confirmed.

The fact of the matter which the researcher intends to study are: –

  1. Of what relevance is computerization accounting system.
  2. Has there been a tremendous change in financial control and the entire system since the establishment of computerized system.
  3. Though benefits are bound could there be limitation of computerizing an organizations accounting system.
  4. What could be done to change the present situation data using electronic devices

Undoubtedly, the computer therefore, can be regarded as the most powerful management tool ever developed. Infact, it has become a tool for most managers who have learnt to use it. This can be seen from the fact that most of our banks, mainly profit oriented organization are operating computerized system now. Therefore, an understanding of the computer of the amount of time and of the step it takes to accomplish a task from the time the idea was taken up until the final output has been received by the uses or accountant has made interface between accounting and the system and programming funding more meaningful to the accountant.

1.3 Objectives of the Study

The need to minimized fraud and improve service to customers is very important today, due to the increasing numbers of new generation banks therefore, the objective of this study is to assess: –

  1. The effectiveness of financial control in a computerized environment.
  2. Whether computerization has minimized the level of fraud.
  3. Whether computerization has improve the profitability performance of the organization, and
  4. Whether it has increase speed in attending to customers needs

And finally, effort will be made to recommend feasible banking organization.

1.4 Hypothesis

Hypothesis can be defined as an assumption or statement which may or may not be true concerning one or more population or organization e.g. FIRST BANK OF NIGERIA PLC.

Statement Of Hypothesis

Null hypothesis denoted by

  • Ho: Computerization has improved financial control.
  • Hi: Computerization has not made any impact in financial control.

Reference will be made in chapter four when analysis and presentation of data to this statement.

1.5 Significance of the Study

There are number of reasons why this research could be useful.

The reason are: –

  1. A study of a number of computer applications in accounting might have as a lesson for accountants about the reasons for success or failure in the development and implementation of the computer system.
  2. It will help financial institutions to anticipate some of the likely problems they might encounter with their computer system.
  3. A knowledge of the improvement of accounting system in financial institutions.
  4. The researcher is also convinced that the research would serve as an important material to provide a useful framework for further research on this topic.
  5. A more academic significance of this study is that it provides evidence to test some of the predictions that have been made about the impact of computer in accounting.

1.6 Scope of the Study

Though the entire banks in Nigeria are almost computerized, the study will specially look at the case as relevant to the FIRST BANK OF NIGERIA PLC Kaduna main branch.

The researcher will also like to critically observe the impact of computerization on the customers waiting time during paying and withdrawal of cash or under going any transactions with FIRST BANK OF NIGERIA PLC.

1.7 Historical Background of the Case Study

The history of First Bank of Nigeria Plc date back to 1984 when the bank of British West African (First Bank of Nigeria Plc) opened it’s branch office in Lagos.

First Bank of Nigeria Plc, leading financial institution in Nigeria with over hundred years of banking operation experienced in the industry. It was founded by a shipping magnate from Liverpool, Sir Alfred Jones.

It commenced operation as a small bank in the office of Elder Dumpster Company in London on the 31st March, 1894 with head office in Liverpool. The bank was originally incorporated as Bank of British West African in 1894 with an Authorized Share Capital of £100,000 divided into 10,000 ordinary shares of £10 each.

First Bank was listed on the exchange in March 1971. In December 1896, a branch was opened in Accra Gold Coast (Ghana) while was established in Sierra-Leone in 1898. The second branch in Nigeria was opened in the old Calabar in 1900 and two years later. It services had extended to the Northern Nigeria with it Northern Regional Branch at Kaduna, the branch has experienced phenomenal growth over the years with a share capital of 55.6 million naira in 1980, which rose to 269 million naira (including a bonus reserve of 53.8 million naira) in 1995 of 500 million naira in 1998. The banks total assets currently stand at 59.82 billion naira. At the commencement of operation in 1984, it had a staff of six (6) comprising of three (3) Europeans and three (3) Africans. But today, the bank is virtually Nigerianised.

In it’s determination to identify with aspirations of the country, in it’s march towards national development, the bank has had to continually adjust it’s organizational structure and corporate entity. It started with West Africa countries, the bank was incorporated locally in 1969 to became Standard Bank of Nigeria Limited. This was in response to the dictate of companies decree of 1968 and thereafter, the participation of Nigerians in the management of the bank become a corporate policy. Further changes in the name of the bank were made in 1979 and 1992 to First Bank of Nigeria Limited and also to First Bank of Nigeria Plc respectively.

FBN, has diversified into a wide range of banking activities and services including merchant and international banking.

In December 2005, First Bank acquired it’s merchant banking subsidiary, FBN (Merchant Bankers) Limited and MBC International Bank Plc, following Central Bank of Nigeria’s inspired consolidation in the banking industry. Today, the bank boast of magnificent Head Office in Lagos with a branch network of 300 with a large number of staff and a diversified loan portfolio to various sector of the economy.

1.8 Definition of Terms

(i) Financial Control:

This is the regulation of flow of money through the enterprises and in particular with ensuring that cash is always available to pay debts when fall due.

(ii) Fraud:

This is an act of deliberate omission or commission for personal benefits. It is also a deceitful behavior perpetrated for the purpose of enriching oneself, party, family or friends it is often carried in various ways such as:-

  • Inflation of price
  • Embezzlement
  • Mismanagement
  • Subversion of facts
  • Pilfering and stealing
(iii) Computer:

This is defined as electronic machine that accepts data (in raw form) and instruction through special input devices and after processing it’s internal memory, produces a meaningful output. Another definition of computer according to the oxford dictionary, computer is an electronic machine that can be supplied with a program and can store and recall information and perform various processes on it.. It can also be defined as an electro-machine device which is capable of accepting data, processing data and bring out result meaningfully and useful as information.

(iv) Accounting:

This is the act of recording, classification, analyzing and summarizing in a significant manner and in terms of monetary, transaction and events which are in part at least of financial characters and interpretation of result there of. It is also an information system that process and communicates the data of managerial transactions about economic entity.

(v) System:

IT means the methods of unifying personal activities, machine and materials to accomplish the objectives of the enterprises.

(vi) Data:

These are the raw facts and figure that are not correctly being used in a decision process and they usually take the form of historical records that are record and filled without immediate intend to reference for decision making.

(vii) Bank:

According to the encyclopedia of banking and finance, the term “Bank” in it’s broadest senses may be applied to any organization engaged in any or all of the various function of Bank i.e. receiving, collecting, transferring, paying, lending, investing, dealing, exchange and servicing. (Safekeeping of deposits, custodianship, agency, trusteeship) of money and claims both domestically and internationally.

Chapter Five

5.0 Summary, Conclusion and Recommendation

5.1 Summary

The research aimed at looking into the need for financial control in a computerized accounting system and attempts that could be made towards the betterment of the system already inexistence and using First Bank of Nigeria Plc as a case study, the project was approached on a systematic basis starting with general view of the scope of study, aims and objectives of the study, significance of the study, the scope of the study, plan or presentation of the study.

These as followed by an attempt to review the existing literature in this field of the study, that is literature review. Accounting system was looked at in this chapter from the point of view of scholars who has created impact in the accounting system world.

This is followed by a look at the meaning of computer accounting system. The major research was done in chapter three (3) which started with research methodology. The sources of data collection (primary and secondary) and was finally followed by the conclusion.

These was followed by presentation and analysis of data. It started with an introduction, followed by computerized accounting system and its application in First Bank of Nigeria plc. Another aspect which was also discussed in this computerized system for the effectiveness of its goal.

5.2 Conclusion

As the topic of this research work right stated, financial control in a computerized accounting system has been practically demonstrated in the study.

This research has been carried out with the limited available resources, the fact here can be depended upon for further research study.

It is the conviction of the researcher that First Bank of Nigeria Plc has been able to drive more than its counterpart due to its effective accounting operation fully computerized. Computerization has been of tremendous help to the bank, though the fact remains that a let is yet to be done towards ensuring “a perfect and most effective financial control of First Bank of Nigeria Plc”, as quoted by the computer analyst of First Bank of Nigeria Plc, Kaduna Regional Office.

From the research data collected from different staffs of First Bank of Nigeria Plc and the field survey on fraud in the bank. The research concluded the following:-

  1. The frustration of old staff by the management of the bank is the greatest cause of fraud at the bank.
  2. That the bank does not adequately reward fraud revealers.
  3. Poor management in terms of inadequate supervision, inadequate control and favouritism are the significant causes.
  4. The inability of law enforcement agents to prosecute fraud committee is also significant cause of fraud in the bank.
  5. The experience staffs are being preferred for promotion because of proper qualification and higher seats at various levels of the bank than the experience old staffs.
  6. That unauthorized lending by branch managers are frequent types of fraud in the bank.

5.3 Recommendations / Findings

In the cause of this study, a number of factors were to have constituted difficulties and hence limitation of computerized accounting system towards effective financial control in First Bank of Nigeria Plc. The researcher therefore will prefer the following recommendations:-

  1. Every organization that desire to have proper functional progress in the particular area will be completely disrupted. In this case, more qualified personnel computer specialist or analyst should be employed or consulted for more chances of efficiently.
  2. At all times, the management must create an atmosphere of love and harmony between computers and personal in the organization. That is, the computerized system should not replace the human labour or else they will hinder the development or progress. This can be done by retraining its existing staff, other then recruiting new staff and disposing the existing ones.
  3. One of the most important consideration is deciding on an application package is its relevance to the particular organization. If generalized programmes are brought from the computer vendor, they are not built to specification as such more often than not the user.
  4. The organization must have update, as regard any new application package developed. This is possible by subscribing to computer manufacturing companies. Each time a new package is developed. The name, title and operation (work ability) is seat to the user in brochure form.

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