THE IMPACT OF COMPUTERIZATION OF ACCOUNTING SYSTEM IN A BUSINESS ORGANISATION

CHAPTER ONE

1.1       INTRODUCTION

Computer as an automated sophisticated high technology, has come to have potential significant effect on business profession such as accounting.

With modern days development accountants specialized knowledge and expertise is directed to collecting, collating, interpreting and communicating a wide range of accounting information needed for a sound day-to-day control of the use of resources. The impact o computerization of accounting system in a business organisation can be analysed with positively and negatively  but nevertheless the positive effects are much more than the negative effects.

1.2    BACKGROUND OF STUDY

Accounting practices have changed exceptionally and rapidly in the last decades, particularly because of changes of laws and standards.  Accountants and goes through stages in the preparation of financial statements and other accounts.

First is the dependence on foreign standards such as International Accounting Standards (IAS) Financial accounting Standard  Board, Besides the issuing of Statement of Accounting Standards (SAS), the Nigerian Accounting Standard  Board (NASB) is saddled with two major responsibilities.

These are:

1.           To ensure that financial reporting satisfy legal requirement stipulated in company and Allied Matters Acts of 1990.

2.           To ensure that the prepared financial statements and accounting confirm with international standard (NASB), 1984. Accounting system in a business organisation is changing with new markets springing up such as the proliferation of banking establishment and establishments of new newspaper.

These new establishments usually computerized their operations. Some of them employed Data Base Management system (DBMS) like Newswatch magazine. The employment of computer bring about a reduction in the time taken to process data and produce output, easier access to store data, increasing processing capacity without an increase in staff and an overall improvement in the quality of management information, better management report that are relevant to manager’s work, produced more accurately and on time due to the positive effects of computerization. Coping with effects of computerization in accounting system in a business organisation which brought about changes necessitates the inclusion of courses in data processing, system analysis and designs in the examination of most professional bodies like I.C.A.N and C.I.M.A. Infact, in many companies nowadays where computers are used extensively, their accountants are sent on further training system analysis and design.

1.3    STATEMENT OF PROBLEM

The strategic analysis of problems facing a computerized accounting system and by implication, it means that the accuracy of these statement is very important to be dealt with as it affects the extent of dependability and subsequent utilization of information.

The statement has to do with how computerized accounting system has been able to have impact of effects on the volume of work, quality of services demanded by clients, saving time of customers and to effect changes in cost, revenue and profit of an business organisation.

1.4    PURPOSE OF STUDY

The purpose of this project is to know:

1.           The effects of computerized accounting system, how the computer has become relevant to the practice of accounting in a business organisation, in recording business transactions and events of a financial nature with a view to preparing financial statement and alerting such statements.

2.           Describe the accounting procedure in operation.

3.           Explain the main accounting principles adopted.

4.           Find out if the positive effects of computerization and accounting system in a business organisation are more than the negative effects.

1.5       RESEARCH QUESTIONS

At the end of this research critical examination and analysis would have to been given the following questions

1.           What are the positive and negative effects of computerized accounting system in a business organisation?

2.           What impact has computer played in the accounting system in areas of services, time savings, cost reduction and revenue generated?

3.           How can computer be used to operate on:

(a)          Trading, profit and loss account

(b)         Balance sheet statements

(c)          Statements of sources and uses of finds

4.           What are the accounting procedures in the Guardian Newspaper Limited?

5.           Is the positive effects more than the negative effects.

1.6    HYPOTHESIS

Ho:    There is positive effect of computerization of accounting system in a business organisation.

Ho:    These is no positive effect of computerization of accounting system in a business organisation.

1.7    SIGNIFICANCE OF STUDY

Computer has truly become a part of everyday life, though some people see it on a negative side as making more and more people lazy by taking over their jobs and roles. Despite these waves of criticism, its utilization has continuously increased factors of production in an accounting business organisation. As in most profession, the use of the electronic data processions in accounting has presented two sides:

1.           One that threatens the professional in the field vis-a-vis their roles and

2.           The sides that hold promise to the study problem.

1.8    SCOPE AND LIMITATION OF STUDY

Accounting applications can be broadly divided into three (3) namely:

1.           Financial Accounting

2.           Management Accounting/Administrative Accounting

3.           Additive Accounting

However, because of time constraint, as indicated by the time allowed for this study and because of need to afford detailed and not surface treatment of the effects of computerized accounting system in a business organisation, this study is limited to only financial and management accounting operations of the Guardian Newspaper Limited.

1.9    SUMMARY

The chapter has dealt with the introductory aspect of this research work, issues like statement of problem, purpose of study, background of the study, scope and limitation, others are highlighted.

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