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FINANCIAL CONTROL IN A COMPUTERIZED ACCOUNTING SYSTEM CASE STUDY OF ZENITH BANK PLC


Project topic for Banking And Finance department

CHAPTER ONE

INTRODUCTION

This chapter discusses the background to the study, statement of the problem, purpose of the study, research objectives and questions guiding the study, significance and scope of the study and the definition of key terms.

1.2       Background

In Nigeria, 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 Banks use computers to record money deposited and withdrawn.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, 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, 2001).

The primary objective of an accounting function in an organization is to process financial information about the activities of the organization and prepare financial statements at the end of the accounting period. The modern method of accounting is based on the system created by an Italian monk Fra Luca Pacioli. He developed this system over 500 years ago. This great and scientific system was so well designed that even modern accounting principles are based on it (deSantis, 2010).

Organizations seem to have realized that it is in their interest to run business processes while they are monitored by computerized accounting systems as opposed to manual given the great merits the former possess over the later. Accounting is a financial method used by businesses to collect, organize, process and summarize data for reports and statements. Accounting is used to keep track of business trends and to report on the relevant facts within the business. Computer and business Software allows more efficient processing and organization of data. Computerized accounting system refers to the integration of different component systems to produce computerized books of accounts and computer-generated accounting records and documents ttp://www.bir.gov.ph/reginfo/regcas.htm

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

Computer in commercial and industrial settings have been around for several decades. The banking industry computer has been used in various areas carrying out their day-to day activities through automated Teller Machine, electronic funds transfer, electronic data exchange, smart cards, MICR cheques, local area network, wide area work, point of sales system, electronic home and office banking, telephone banking, make cheque available program, computerized credit rating, daily calculation of accounts program, local accounting systems, CD accounting system, saving accounting system and safe deposit box accounting system. Computer has immensely aided in banking industry or baking sector in the areas of managerial position, sales department and other various department in the bank. The use of programmed decision making offers several important advantages to the firm, since the computer is potentially capable of making better programmed decision than the human user. One of the most existing things about the information and retrieving is that they are used oriented (Laura, 2003).

Accounting information system being an asset of methods, people, procedures and devices regularly used to process business transactions (Hermanson, 1987), information is therefore much more useful when it is conveyed through a proper reporting system which gives it good qualities such as accuracy and reliability among others and this can be achieved by use of computerized accounting system.

In Nigeria, computers are rapidly changing the nature of work of most accountants and auditors with the aid of special software packages, accountants summarize transactions in standard format employed in financial analysis. These accounting packages greatly reduce the amount of tedious manual work associated with data management and record keeping. A growing number of accountants and auditors with extensive computer skills are specializing in correcting problems with software or developing software to unique data management and analytical needs (Horald, 2005).

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 & 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.

The banking industry in Nigeria has continued to witness tremendous changes linked with the developments in computerization over the years. Zenith Bank to re-examine their service and delivery systems in order to properly position them within the framework of the dictates of the dynamism of computerization (Woherem, 2000). The quest for survival, global relevance, maintenance of existing market share and sustainable development has made exploitation of the many advantages of computerization through the use of automated devices imperative in the industry. This situation will be seriously investigated and we looked for significance of computerization of accounting systems on financial reporting with particular reference to Zenith Bank, Enugu Branch.

1.3       Statement of the Problem

The advancements in information technology have eventually led to the introduction of Computerized Accounting Systems in corporate reporting to help produce relevant and faithful representative financial reports for both management and external users for decision making (Greuning, 2006). The many advantages from the use of these systems have led many to conclude that Computerized Accounting Systems in Corporate Reporting is the ‘engine of growth’ in business organizations (Frenzel, 2006).There has been an increase in accounting problems associated with financial reporting hence killing most business that fall victims of this circumstance. Here, we pursue the aspects associated with manual accounting in comparison with computerized accounting in order to find out which system will be in a better position to improve on the quality of financial reporting and accounting operations of a business.

Modern technology has brought about the use of computer system in all areas of our human endeavor’s. In Nigeria and other African countries, workers see this as an attempt to replace them and to lose their jobs (Iyabi, 2007). They always believe that where computers are installed will require less human effort to perform the desired operation. In the advert of computers, the work of accountants and auditors has changed rapidly with the aid of special software packages; accountants summarize transactions in standard formats by financial records and organize data in special formants employed in financial analysis. Despite most high profile companies having 100% computerized accounting systems; there are still difficulties in tracking down errors and at the same time, time consuming, (Adetayo, 2009).

 1.4      Objectives of the study

The general objectives of the study is to assess the financial control in a computerized accounting system.

The specific objective are:

To evaluate effectiveness of financial control in computerized accounting system of Zenith Bank Plc.

To determine the role of financial control in promoting accountability in computerized accounting system of Zenith Bank Plc.

1.5       Research Questions

The study was guided by the following research questions:-

How effective is financial control in computerized accounting system of Zenith Bank Plc.?

What is the role of financial control in promoting accountability in computerized accounting system of Zenith Bank Plc.?

1.6       statement of Hypothesis

The following hypothesis were texted in the course of the study:

H01 : Financial control is not significantly effective in the computerized accounting system of Zenith Bank Plc.

HA1 : Financial control is significantly effective in the computerized accounting system of Zenith Bank Plc.

H02 : Financial control does not play any significantly role in promoting accountability in computerized accounting system of Zenith Bank Plc.

HA2 : Financial control plays a significantly role in promoting accountability in computerized accounting system of Zenith Bank Plc.

1.7 Significance of the study

The findings will be of great importance in the following ways:-

This research was of prime benefit to the management and staff of Zenith Bank Nigeria Limited, not only for the Enugu branch, Enugu for other branches as well, since it will enable them identify and understand the risks and problems associated with computerized accounting and financial reporting and how best to combat such problems.

This information was of great importance to other business companies and bodies that have adopted and those that are yet to adopt the system of computerized accounting in knowing the pressure points to be emphasized and well managed in order to pursue the system successfully.

The study will be of great benefit to the students who enable to access this information that guide them in research and equip them with knowledge as far as manual and computerized accounting is concerned and the importance of computerized accounting as far as financial reporting is concerned.

The various stakeholders like Ministry of Ministry of Finance, Planning and Economic Development, International Bodies like USAID, World Bank and International Monetary Fund, and Bank of Nigeria may establish the various computer packages used in accounting systems, effects of computerized accounting systems on business enterprise performance, challenges met by Zenith Bank in using accounting system and subsequently come up with recommendations at various levels of leadership to avert/ improve the negative situation.

The study may enable management to understand the significance of preparing quality and reliable financial reports.  The study point out weakness in the accounting system which management needs to address.  Other researchers may use the report as literature review in order to improve on their research topic in another period.

1.8       Scope of the study

The study was limited to the computerization of accounting systems and financial reporting.

The study covered financial reports generated within the period of 2019. This period being the most recent and given the limited research time frame, the researcher was able to cover reports of more than one years.

1.9       justification of the study

1.10     Definition of Terms

Computer:  IBM defines a computer as a machine that can by following a controlled sequence of instructions perform both logical and arithmetic operations with data [Leedy, 1980] and can also record results for either immediate or future reference.

Hardware: The machine that processes the information stored in the memory. 

Information: Information is data that has been organized and processed so that it is meaningful. The value of information is the benefit produced by the information minus the cost of producing it. 

Input/Output: These are the devices used in keying in data in a computer or retrieving data from the computer. 

System: A system is a set of two or more interrelated component that interacts to achieve a goal. 

Software: The programmes used by the computer in carrying out a specific operation. 

Terminal: The point at which information can enter or retrieved from a computer communication network.


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