EFFECTS OF COMPUTERISED ACCOUNTING METHOD AND CONTROL SYSTEM ON PRODUCTION

By

OJO CHRISTIANA

Presented To

Department of Accountancy

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF STUDY

Accounting is the art of recording, classifying, and summarizing in a sufficient manner and in terms of money, transactions, and events which are of a financial character and interpreting the results thereof.

The effects of computerized accounting is very easy to see in that, once the system is developed and install information, on any aspect of accounting is that financial information can be safely stored and retrieved as the need arises, for instance, manager of a firm may want the particulars of a debtor who has been owing for the past six (6) months and the computer will simply produce the information in just a matter of seconds, a work which could take about two weeks or more to accomplish where only manual systems of recording transactions is being used. It no gain saying that modern businesses are growing bigger and more complex everyday.

Manual system of recording financial information is no longer coping with the rate of sophistication and competition in these modern industries. Management needs timely information for planning and it is only computerized accounting method and control system that can supply all the needed financial information immediately at the close of accounting period. Many institution both commercial and private, especially banks are finding it increasing difficult to process their financial dated speedily and accurately enough to satisfy their numerous customers. Lack of effective method of financial information in any modern organization hinders management plans and the resultant effect is poor productivity and a negative goal of every firm which is to maximize profit.

The dream of most of our commercial and private firms today is computerized accounting method and control system. Firms are tired of hiring auditors to audit financial statement of the firm due of some certain vital accounting documents might be missing or improper records are kept. For effective and efficient production, management needs timely information for planning and forecasting, computerized Accounting System can give an effective solution to these problems.

1.2 STATEMENT OF THE PROBLEM

This study entitled the "Effects of Computerized Accounting Method and Control Systems on Production" attempt to determine the effects of automated accounting system on production.

There are numerous problems associated with the use of human labour alone to process accounting information. In many cases errors such as errors of commission and omission, aver-statement and under-statements of account have set organization back on their courses. Sometimes these mistakes are not discovered until a considerable loss has be caused to the firm. In calculations involving fractions many firm has loss a substantial sum of money due to error of miscalculation and the resultant effect on over all production in decrease in efficiency which many organization strive to attain. We have seen a good number of occasion where the trial balance or the balance sheet could not balance either because the account was over stated or under stated which subsequently lead to setting up of a suspense account.

Another problem associated with banks is the time wastage on cashing or cheque depositing or withdrawal on an account; we must have witnessed at one time or the other in the commercial banks where the customers were lamenting because of the delay on the part of the bank workers to give the customer timely service. It is said that time is money and as such no person would like to spend a whole at bank just to withdraw money, a thing which could be done with five minutes if the accounting system is computerized.

The researcher is also looking into the problem of difficulty in assembling accounting information especially when subjected to pressures are bound to make mistakes which in many occasion made firm to suffer loss. Also human being is subject to fatigue and any work done under such condition is likely to contain errors.

In summary. Based on the problems identified above , the use of clerical effort alone to process accounting information will produce result full of errors which eventually leads to of profits., inadequate information for management planning, loss of time and general decrease in over all economic growth of the nation. These as enumerated are not surmountable if appropriate system is applied and only that can provide adequate solution is computerized accounting system.

1.3 PURPOSE OF THE STUDY

By purpose of the study the researcher means the prime objective he has in mind. One of the objectives is to create awareness on the use of computer to process accounting information and the ultimate benefits accruing there from.

Many people and organization have the notion that if business transactions are computerized, it will lead to more unemployment problems but it is not true. Country like the USA has a far lesser unemployed graduates than Nigeria, yet USA has computerized almost everything they do including business and non business aspect of life, making use of digital and non digital computers.

Again there are numerous benefits currently enjoyed by the organization using computerized accounting system, every other organizations, both the big and small ones should equally share in such benefits, since what is good for the is also good for the gender.

The question is "how can small firms which cannot afford to buy a computer of their own enjoy the benefits of using computer to process their business transactions?" the answer has already been stated in earlier part of this chapter and that is by commercializing the use of computers to process accounting information in which case firms which cannot own a computer can enjoy the services of a commercial computer centers. To that this objective is taken to the appropriate quarter where it can be implemented, the researcher intend to include in his recommendation, a plea to be made known to the state and federal government to set the pace by establishing commercial computer centre , at least in each state of the federation. And to also carry out intensive and extensive advertisement both on radio and television, the benefits a firm will enjoy and the over all benefits to the nation of using a computerized accounting systems in process business transaction.

Another objective which the researcher intends to achieve is to firms which can afford to buy computer, to own one for the processing of their business transactions.

1.4 SIGNIFICANCE OF THE STUDY

At the end of this research work, we would be able to appreciate the fact that various business organization today, especially our banking sector need computerized accounting system for effective and efficient production. There are no two ways about it, if banks and other commercial enterprises are to cope with ever increasing number of customers and volume of transactions. To the banks the use of automated accounting system will not only enable them to process any volume of transactions but also process them within a given time much faster than would have been, the case if human labour alone is used. This is what is meant by effectiveness and efficiency in operation.

On the side of the individual who enjoys the services of banks and other organizations, this study will enable them to appreciate the use of computers in banks and other firms because computerized accounting would make it possible to be attended to timely and efficiently.

Now, if the individual bank and organization which will make use of computerized accounting system will enjoy effectiveness and efficiency in their operation and individual who makes use of the services of the bank will enjoy satisfactory services, the over all effects in the country is increase in profitability, effectiveness and efficiency in production and a general increase in the Gross National Product (GNP). This study will equally bring to light the fact that citizens can enjoy easiness in their lives, you can when people go to bank with in five minutes they are attended to and so they will have sufficient time to plan for other things.

This study is likely to be a future relevant material to students and researcher who maybe writing on related issues.

Also in various management positions will find this work very helpful as it will provide them with necessary information for a successful business. Every manager wants to succeed in his or her endeavor, the researcher hopes that the result of the project will be of immense benefits to such manager as it will avail them the opportunity of knowing how computerized accounting system can be used to run their business successfully.

1.5 SCOPE AND LIMITATION OF THE STUDY

The researcher intends to find out the effects of using data processing equipment to process accounting information.

One of the limitations of this study is lack of local related literatures based on local technology. As a result of this most of the literatures reviewed are foreign results with foreign fundamentally foreign ideologies.

Another limiting factor is the time constraint, since this project is expected to be completed within a space of three to four months, the researcher will not delve into studying the effects of computerized accounting system on other banks and enterprises but he might make reference to them.

For the purpose of understanding by the intending users of this work, the researcher will review only the data processing procedures being used by union bank Nigeria, Enugu. This study would concern itself strictly with the effects of computerizations on production generally in terms of processing information.

The last but not the least limiting factors is finance. As a student, the researcher would carry out his findings to the extent he can finance the project.

1.6 DEFINITION OF TERMS

In this study there are certain terms that need definition for the purpose of understanding and clarity they are.

Production

Production as used in this project refer to the standard of efficiency of operation in an organization which will in turn increase or decrease profit.

Computer

Computer is an electronic machine that can store, organize and find information, do calculation and control other machines it is also device or set of devices which work under the control of a stored program automatically accepting and processing data to produce information.

Accounting

Accounting can be defined as recording, classifying, analyzing, interpreting and summarizing of financial transaction in such a way that the financial position of a business man can be know at any point in time.

System

System is an organized set of ideas or a particular way of doing something

Research

Research is simply the process of arriving at dependable solution to problem through the planned and systematic collection, analysis and interpretation of data.