COMPUTERIZED ACCOUNTING INFORMATION SYSTEM FOR BUSINESS GROWTH IN ORGANIZATION

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Author

Presented To

Department of Computer Science

CHAPTER ONE

INTRODUCTION/BACKGROUND OF THE STUDY

• Introduction

This chapter presents the background of the study, statement of the problem, objectives of the study, research questions, significance of the study, scope of the study/limitation of the study, and definition of terms.

1.1 Background of the Study

As information technologies grow more progressive, the manual accounting systems have become gradually inadequate for decision needs. Consequently, public and private sector firms in both developing and developed economies view computerized accounting information system (CAIS) as a vehicle to ensure effective and efficient information flow in the recording, processing, and analysis of financial data. Effective and efficient information flow enhances managerial decision-making, thereby increasing the firm’s ability to achieve corporate and business strategy objectives. This in turn, may increase the prospects of the firm’s survival (Platt and Platt, 2012).

Computerized Accounting Information (CAIS) denotes an electronic-based system that processes economic information and sup­ports decision tasks in the context of financial management and control of firm activities (Nicolaou, 2000). Borrowing from Rogers’ conceptual framework, the rate of adop­tion of Computerized Accounting Information (CAIS) is determined by five attributes: (1) relative advantage, (2) compatibility, (3) complexity, (4) trialability, and (5) observability. For example, Computerized Accounting Information (CAIS) that enhances planning and evaluation of the firm’s financial position and performance by processing economic data in a more reliable, relevant, understandable and comparable form to both internal and external stakeholders (Wood and Sangster, 2008) are more likely to be adopted and implemented by firms. Research suggests that CAIS promotes cost-effectiveness, ease of sharing knowledge, thereby improving operations and managers’ decision-making processes.

Chang (2011) asserts that computerized accounting information plays a significant role in enhancing organizational effectiveness in a global competitive environment. Financial statements still remain the most important source of externally feasible information on companies. In spite of their widespread use and continuing advance, there is some concern that accounting practice has not kept pace with rapid economic and high technology changes which invariably affects the value relevance of accounting information. The importance of Chang’s assertion is reinforced by massive accounting fraud in developed countries especially United States of America (USA), rapidly changing business environment and reports by some researchers that value relevance of accounting information has declined. However, a number of researchers claim that accounting information has not lost its value relevance.

Borthick and Clark (2009) believe that accounting exists because it satisfies a need " primarily a need for information. In order to be relevant, accounting data must among others, be quick to respond to users’ (particularly the investors) needs. Generally, investors are not in a situation to directly access the performance of companies in which they intend to invest. They usually depend on financial reports prepared by the management of such organizations. Financial report is one of the best sources of accounting information about a company. Financial reporting is an essential part of disclosure and helps investor to discover investment opportunities. The primary purpose of financial statements is to provide information concerning the financial situation of the company, its operational results, any changes of control in the company and cash flow. Hunton, (2012) study, which investigated the relationship between computerized accounting information system and organizational effectiveness; showed that there was strong relationship between accounting information system and organizational effectiveness, which means access to accounting information will lead to organizational effectiveness.

Access Bank Plc is a full service commercial Bank operating through a network of about 366 branches and service outlets located in major centres across Nigeria, Sub Saharan Africa and the United Kingdom. Listed on the Nigerian Stock Exchange in 1998, the Bank serves its various markets through 4 business segments: Personal, Business, Commercial and Corporate & Investment banking. The Bank has over 830,000 shareholders including several Nigerian and International Institutional Investors and has enjoyed what is arguably Africa’s most successful banking growth trajectory in the last ten years ranking amongst Africa’s top 20 banks by total assets and capital in 2011. As part of its continued growth strategy, Access Bank is focused on mainstreaming sustainable business practices into its operations. The Bank strives to deliver sustainable economic growth that is profitable, environmentally responsible and socially relevant. Over the past 26 years, Access Bank Plc has transformed from an obscure Nigerian Bank into a world class African financial institution. Today, Access Bank is one of the five largest banks in Nigeria in terms of assets, loans, deposits and branch network; a feat which has been achieved through strong long-term approach to client solutions " providing committed and innovative advice.

Access Bank has built its strength and success in corporate banking and is now taking that expertise and applying it to the personal and business banking platform it acquired from Nigeria’s International Commercial bank in 2012. The last two years have been spent integrating the business, investing in the infrastructure and strengthening the product offer. As part of its continued growth strategy, Access Bank is focused on mainstreaming sustainable business practices into its operations. The Bank strives to deliver sustainable economic growth that is profitable, environmentally responsible and socially relevant.

December 19, 1988: Access Bank was issued a banking license February 8, 1989: Access Bank was incorporated as a privately owned commercial bank May 11, 1989: Access Bank commenced operations at its Burma Road, Apapa Head Office March 24, 1998: Access Bank became a Public Limited Liability Company November 18, 1998: Access Bank listed on the Nigeria Stock Exchange February 5, 2001: Access Bank obtained a Universal Banking License from the Central Bank of Nigeria

1.2 Statement of the Problem

Poor accounting information jeopardizes administrative effectiveness, which makes managers of business organizations malnourished administratively in Nigeria. The consequence of this has been the current distressed syndrome that many organizations face. Many organizations need to learn to manage their intellectual assets (i.e. knowledge) in order to survive and compete in the ‘knowledge society’. Effective knowledge of accounting information system is taken for granted in many business organizations and this in turn affects their level of growth. Many companies fold up because of ineffective accounting information system and lack of professional training of its members of staff and management of accounting practice. It is in view of these problems that this study is set to focus on the relevance of computerized accounting on business growth.

1.3 Objectives of the Study

The following are the objectives of the study:

1. To identify the relevance of computerized accounting information system for business growth.
2. To find out the various application of accounting information system by banks.
3. To identify the benefits of having an efficient computerized accounting information system
4. To find out the role of information technology in enhancing the efficiency of accounting information system.

1.4 Research Questions

1. What is the relevance of computerized accounting information system for business growth?
2. What are the various ways of applying accounting information system by banks?
3. What are the benefits of having an efficient computerized accounting information system?
4. What is the role of information technology in enhancing the efficiency of accounting information system in Access Bank Ikot Ekpene branch.

1.5 Scope/Limitations of the Study

This study covers The relevance of computerized accounting information system for business growth in organization using Access Bank, Ikot Ekpene as a case study.

In the course of carrying out the study, some challenges were encountered by the researcher that stood as limitation to the study and they include:

Financial Factor: Inadequate funds affected researcher had to travel long distances for the distribution of the research questionnaire forms.

Time Factor: This affected the reduction in the size of the sample used for the study because the researcher had only less than two months to complete the study.

Material Factor: Shortage of relevant material for literature review posed

1.6 Significance of the Study

The significance of the study is that it will bring to light the importance of computerized accounting information systems and the benefits associated with it. The study will also serve as a useful reference material to other researchers seeking information pertaining the subject.

1.7 Definition of Terms

Accounting: The activity, practice, or profession of maintaining the business records of a person or organization and preparing forms and reports for tax or other financial purposes

Efficiency:  The ability to do something well or achieve a desired result without wasted energy or effort

Information: Definite knowledge acquired or supplied about something or somebody.

Organization: A group of people identified by a shared interest or purpose, e.g. a business

Accounting Information: the collection, storage and processing of financial and accounting data that is used by decision makers.

Computerized Accounting information: A computer based method for tracking accounting activity in conjunction with information technology resources.

Information technology: The study or use of systems (especially computers and telecommunications) for storing, retrieving and sending information.

END NOTES

Borthick, A. F & Clark, R. L. (2009). Making accounting information systems work: An empirical investigation of the creative thinking paradigm. Journal of Information Systems, 4(3), 48-62.

Chang, Y. W. (2011). Contingency factors and accounting information system design in Jordanian companies. Journal of Accounting Information System, 8. 1-16.

Hassan, K.A., (2010). The impact of information technology on the bank performance (Nigeria in perspectives). Retrieved on Available from .

Hunton, J. E. (2008). Blending information and communication technology with accounting research, Accounting Horizons, 16(1), 55-67.

McGuckin and Doms, R.H.A.D., M. (2006). The effect of technology use on productivity growth, economic innovation and new technology, Prentice-Hall, Englewood Cliffs, NJ.

Nickels, W.G., J.M. Mchugh and M. S.M, (2012). Understanding business. 6th Edn., Boston: McGraw-Hill, Inc.

Platt, H., & Platt, M. (2012). Corporate board attributes and bankruptcy. Journal of Business Research, 65(8), 1139-1143

Wood. F., Sangster, A (2008) Business Accounting 1, Eleventh Edition. Financial Times Man­agement