An Evaluation of Effective Financial Management in a Computerized Accounting System
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Chapter one on An Evaluation of Effective Financial Management in a Computerized Accounting System
Background of the Study
Today’s business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers. Business organizations, especially the banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve. Laudon and Laudon, (1991) contend that managers cannot ignore Information Systems because they play a critical role in contemporary organization. They point out that the entire cash flow of most fortune 500 companies is linked to Information System. The application of information and communication technology concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and concerns to all banks and indeed a prerequisite for local and global competitiveness. ICT directly affects how managers decide, how they plan and what products and services are offered in the banking industry. It has continued to change the way banks and their corporate relationships are organized worldwide and the variety of innovative devices available to enhance the speed and quality of service delivery.
Harold and Jeff (1995) contend that financial service providers should modify their traditional operating practices to remain viable in the 1990s and the decades that follow. They claim that the most significant shortcoming in the banking industry today is a wide spread failure on the part of senior management in banks to grasp the importance of technology and incorporate it into their strategic plans accordingly. Woherem (2000) claimed that only banks that overhaul the whole of their payment and delivery systems and apply ICT to their operations are likely to survive and prosper in the new millennium. He advices banks to reexamine their service and delivery systems in order to properly position them within the framework of the dictates of the dynamism of information and communication technology. The banking industry in Nigeria has witnessed tremendous changes linked with the developments in ICT over the years. The quest for survival, global relevance, maintenance of existing market share and sustainable development has made exploitation of the many advantages of ICT through the use of automated devices imperative in the industry. This study evaluates the response of Nigerian banks to this new trend and examines the extent to which they have adopted innovative technologies in their operations and the resultant effects.
Globally, in United States of America, computerization of banking departments plays an increasing important role in economy and society at large, of which computer applications knowledge is a pre-requisite in every profession, opportunities are enhanced, whatever be the nature of the profession chosen. The presence of this small box in day-to- day function is overpowering and it has become the backbone of all banking accounting systems. Business depends on computers to handle all kinds of accounting and bookkeeping jobs. Banks use computers to record money deposited and withdrawn. You can also book and plan your entire travel agenda, including your ticket booking through e-mail facility, Boyett et al., (2005). It is globally belief that the computers are able to provide useful information if properly fed with a reasonable input or it will result in “Garbage in Garbage out”. The use of computer to carry out a very wide range of activities for work, study and leisure has become part of our everyday life. It is no longer something that you may want to use if you are interested; rather like motor car it is an essential part of our lives, Loudon et al., (2001).
Computerized Accounting means that the “books” of a business are managed on a computer. Quick Books, for instance, would be an example of computerized accounting (there are many different software’s) Using Microsoft Excel to organize a business’ financial information is also a manner of computerized accounting. http://wiki.answers.com. Accountants measure a business entity’s income, expenses and changes in resources. Back in the day, prior to the widespread use of spread sheet and computer applications, Accountants used journals and ledgers in which they recorded business transactions, hence, the term keeping the books. As computer applications became main stream, this keeping of the books accounts has gradually migrated into computerized spreadsheets. Gradually, Accounting systems dedicated to this function were developed and the term Computerized Accounting was born http://wiki.answers.com
Computerization has provided self-service facilities (automated customer service machines) from where prospective customers can complete their account opening documents direct online. It assists customers to validate their account numbers and receive instruction on when and how to receive their chequebooks, credit and debit cards. Computerization deals with the physical devices and software that link various computer hardware components and transfer data from one physical location to another, Laudon and Laudon (2001). ICT products in use in the banking industry include Automated Teller Machine, Smart Cards, Telephone Banking, MICR, Electronic Funds Transfer, Electronic Data Interchange, Electronic Home and Office Banking.
Statement of the Problem
The technological development and the information revolution taking place in the world have forced business firms, banks and organization to use computerized accounting information systems and cope up with these developments. The introduction of the computerized accounting information system led to effective accounting operations for the organizations (Agbim, 2013). A computerized accounting system involves the computerization of accounting information systems which is established in order to facilitate decision making. These are associated with a numbers of benefits like speed of carrying out routine transactions, timeliness, quick analysis, accuracy and reporting. Effective and efficient information flow enhances managerial decision-making, thereby increasing the firm’s ability to achieve corporate and business strategy objectives (Manson, McCartney, and Sherer, 2001). This in turn, may increase the prospects of the firm’s survival (Platt and Platt, 2012).This can be evaluated by the procedures, accounting records and tools used (Keating and Frumkin (2003).
According to Meigs (1999) , in developing information about the financial position of a business and the results of its operations; every accounting system performs the following basic functions: Interpret and record the effects of business transactions, Classify the effects of similar transactions in a manner that permits determination of the various totals and subtotals useful to management and used in accounting reports and Summarize and communicate the information contained in the system to decision makers.
There is a divergence of views on the effectiveness and efficiency of the computerized accounting information system. These divided views focus on either the technical side of the CAISs, or in terms of the adoption and activation of the systems by the users. This in turn shows the need for evaluating these systems in order to develop a clear picture about them.
Objectives of the Study
The study sought to evaluate the effective financial management in a computerized accounting system. Specifically, the study sought to;
1. examine the relationship between effective financial management and computerized accounting system.
2. assess the benefits of computerized accounting systems to an organization.
3. identify the challenges and problems associated with the use of computerized accounting systems.
1. What is the relationship between effective financial management and computerized accounting system?
2. What are the benefits of computerized accounting systems to an organization?
3. What are the challenges and problems associated with the use of computerized accounting systems?
Ho1: There is no relationship between effective financial management and computerized accounting system.
Ho2: Computerized accounting systems has no benefit to an organization.
Significance of the Study
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
Scope/Limitations of the Study
This study is on immorality in churches will cover all forms of immoral activities that exist in churches today with a view of finding a lasting solution to the problem.
Limitations of study
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
Definition of Terms
Evaluation: the making of a judgment about the amount, number, or value of something; assessment.
Financial Management: Financial Management is a vital activity in any organization. It is the process of planning, organizing, controlling and monitoring financial resources with a view to achieve organizational goals and objectives.
Computerized Accounting System: Are software programs that are stored on a company’s computer, network server, or remotely accessed via the Internet allow you to set up income and expense accounts, such as rental or sales income, salaries, advertising expenses, and material costs.
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