Internal Control System in a Computerized Accounting Environment

Internal Control System in a Computerized Accounting Environment


Internal Control System in a Computerized Accounting Environment


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Chapter One of Internal Control System in a Computerized Accounting Environment



Internal control for its vital role in accounting has been viewed and elaborately examined from various standpoints. Internal control system is aimed at improving accountability for actions. The accuracy and liability of records, the safeguarding of assess and the overall efficiency of operations. The primary air why auditors make use of computer in carrying out auditing task is to ensure accuracy, efficiency and reliability in his work as an auditor. His reason had been made more formidable with the emergency of computer revolution ignited by the internet and World Wide Web. Auditors now operate in a highly competitive and changing global auditing environment. According to mull champ who adopted the standard definition which defines internal control the whole system of the management in order to carry on the business of the enterprises, in an orderly and efficient manner. The common point in the definition that worth noting are: 1. Internal control system assists management in running the company’s business in orderly and organized manner. 2. Internal control gives a broad meaning extending beyond the accounting and financial applications. As mentioned earlier, the definition is remarkably close in describing the meaning of internal control. It is however to promote operational efficiency dynamism and creation role in the control of the business structure. The world is shaped with the advancement in technology that moderate and modernization the homes and business today. The telephone, automatic teller machine satellite, computers and many other technologies are no longer tales from the moonlight but one actually being used to harness information. In recent times, the Nigerian economy has influenced a number of technological evolutions. Computer technology is one of such evolution while the greater number of users enjoys the favours of these life made easy trends, audit and security practitioners are constantly being challenged by their applications. Dependence on computers today in business circle is not by choices. The computer among organization various types of computer’s have been introduced to substantially enhance human efforts in industrial commercial official and domestics activities. Data are captured, stored, processed, analyzed, transmitted and reported with computers. Accountancy which is generally known as the language of business is no exception and has been affected by those changes in technology. The manual book keeping process is given way to computerization in both private and public sectors of the Nigerian economy. All system both manually operated or computerized, whether profit oriented or not operates within conditions of resources constraints. This mass embraces is not without its attendants problems. As a result, various steps are taken and procedures established to ensure maximizing the use of these resources in achieving organizational goal and objectives. Apart from the problem of scarce resources, organizations run a high risk of fraud and errors steps are required therefore to minimize this risk by establishing operating rules and regulations. Internal control represents all such techniques, policies, rule and procedures which the management of an organization has developed for its day to day operations. An evaluation therefore involves considering carefully how good the system in uses is the needs of the organization. According to Adeniji A.A (2001), “Traditional control comprises all the coordinated methods and measures adopted within a business to promote operational efficiency and encourage adherences to prescribed management policies”.

While statement of auditing defines internal control thus, “Internal control includes not only internal checks and internal audit, but the whole system of control financial and efficient manner which ensures adherences to management policies, safeguards the assets and secure as far as possible the completeness and accuracy of the records.


It is true that many have responsibility in a organization but the accountant is held liable or accountable for te financial irresponsibility of others as well as his own. This feature is a cause for concern because, control of this nature may not be an easy task as the accountant may not have all the time to check every transaction of financial orders. With the advent of computerized accounting systems, in the management of funds practice fraudulent are now on the increase due to the less of audit trail by the auditors eventually leading to failure of many businesses. Thus, a good internal control system that encompasses the whole the system of control both financial and administrative to carry on the business of the enterprise in an orderly manner has to be put in place to bring sanity to the entire organization.


The purpose of this study are as follows; 1. To examine the internal control system in a computerized environment and see whether it provides records that will form reliable base for the preparation of account and safeguard the assets and make recommendations for further improvement. ii. To identify the strength and weakness of internal control system and corrective recommendations where necessary.
iii. To find out the role of computer in the accounting system of an enterprise.


a. Is your system computerized? b. Is the use of password enforced in the use of computer? c. Is the procedural control effective? d. Who takes charge of the outputs? e. Is the computer very effective in detecting errors? f. Does the computer facilitate in decision-making?

g. Do you think that computer assisted decision making is more accurate than the normal system or the one not aided.


It is an indispensable fact that business in a particular and the world at large have been greatly affected by thee enry of computer. Almost everything is going computerized and the earlier all business organization embrance the use of computer the better. Alos efficient in providing accurate information at a high speed =, with minimum cost that the computer becomes useful accounting tools. It is known fact the until the values of a thing (computer) ios made known to people, they would hardly desire to associate with such a thing. With this study, the principle involved in the internal contol system in a computerized accounting environment will result in the efficient executing environment will result in the efficient execution of the business of the organizations concerned. Even many business organizations which are complacement in their business with the use of computers could be triggered into actions with a view to computerizing the enterprises.

Finally, it is hoped that this study will serve as a reference material to both students and other researchers interested in a similar discourse.


The study focuses on recording processing and financial control to ensure the conformity of the role and regulations relating to control process.


As a result of time money and materials, the study could not cover all the geographical areas of the country where Guiness have depots with computerized accounting system for samples. Examples of such areas are Abuja, Lagos, Ibadan and Ondo. There is no reason however to believ that geographical location could have a significant differential impact on the major focus of the research. The selection rocess of the companies for the study was not completely random although were to administer the question to randomly selected departments in Guiness Nigeria PLC concerned. It was also observed that some of the respondents were reluctant in giving out te information required. Most of them finally agreed after much persuation and on the condition of anonyinity.


Below are some terms that need to be defined as one progress in the course of this study: 1. Accounting System Accounting system is able to records, procedures and equipment that routinely deal with the events affecting the financial performance and position of the entity. In other words, an accounting system comprises documents, journals, ledgers and financial reports. 2. Accounting Control Accounting control comprises the method and procure that are mainly concerned with the authorization of transactions, the safeguard of assess and the accuracy of the financial record. 3. Management Management is a specific group of people who control and direct the resources of the organization towards achieving organizational objectives. 4. Responsible Official A responsible official is an employee of the company who at least is a supervisor. 5. Manual labour A manual is a human labour. 6. Complacement It is a way of showing satisfaction in one’s own situation. 7. Replete To be filled up and completed. 8. Financial irresponsibility It means unwise spending 9. Accounting It means instrument used in gathering accounting information. 10. Internal control

It means a measure against unwanted behavior or attitude.




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