Research Key

The Impact of Computerized Accounting System on Book Keeping in the Kumba City Council

Project Details

Department
Banking and Finance 
Project ID
BF08
Price
5000XAF
International: $20
No of pages
51
Instruments/method
Quantitative 
Reference
yes
Analytical tool
Statistical Analysis 
Format
 MS Word & PDF
Chapters
1-5

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ABSTRACT

The issues of misappropriation of public funds and embezzlement are very common with the public sector in Cameroon and some blame can be put on the system of bookkeeping practiced which is vulnerable to human manipulation. This study investigated the impact of computerized accounting system on bookkeeping in Kumba City Council.

The study made use of participant’s observation and participation in collecting data. The main findings indicate that adopting the computerized accounting system (CAS) in accounting practice and bookkeeping has an overwhelming positive impact as well as some negative effects.

However, based on these findings, it is recommended that the Kumba City Council should adopt the use of SAGE100 as CAS and providing training of staff on how to use the Computerized Accounting Software package.

CHAPTER ONE

 GENERAL INTRODUCTION

1.1 Background of the Study

According to Ajao, Oyeyemi, and Moses (2016), bookkeeping is the process of recording all financial transactions in a systematic and logic manner. In the past, in order to draw a report by the directors and auditors, many businesses maintained their records manually in books (Journals, Cash Books, Special Purpose Books, and Ledgers, among others) – hence the term “bookkeeping” came about.

This method of keeping manual records was cumbersome, slow, and prone to human errors of translation from one account to another. Also, processing of data is slow and subject to error (Grabski and Marsh, 1994).There is therefore the need to be very careful when processing data using manual accounting systems.

The work of Waterfield and Ramsing (1998) emphasized that the accounting system in an entity can be a simple manual system where transactions are recorded in a chronological or date-wise manner as debits and credits.

In their study, they described manual accounting system as starting with journalizing of transactions in the general journal and other supporting journals like purchases and sales.

Recordings in the journals mainly have to do with determining which accounts will be debited and which will be credited. From the journals, the general journal transactions are posted to the general ledger and those in other supporting journals are posted to their respective ledgers.

Accounting existed for centuries before computers. Bookkeepers relied on paper ledgers to record debits and credits, revenue and expenses.

Machines began to play a role in the 1800s, then the invention of computers transformed accounting in the 20th century. In those days, due to the small volume of accounting data, accountants found it quite manageable using the manual system.

However, with a substantial increase in the volume of accounting transactions and increase in exposure of information to errors due to complexity of these accounting systems, there was a need for a system which could store and process accounting data with increased speed, storage, and processing capacity.

This led to the development and introduction of accounting software packages.

Dacosta et al. (2012) stated that manual accounting system is slow, raises workload of accountants, and hinders internal control reporting. In addition, manual accounting is repetitive and routine in nature and thus creates boredom.

Gelinass et al. (2005) defined Computerized Accounting System as a computer-based system which combines accounting principles and concepts as well as the concept of information system to record, process, analyze and produce financial information to its users for making economic decisions.

The adoption of Computerized accounting systems brought about information and communication technology in the finance sector. Information Technology (IT) is the automation of processes, controls, and information production using computers, telecommunications, software and ancillary equipment such as automated teller machine and debit cards (Khalifa 2000)

Advances in ICT have created significant changes in the area of financial management and accounting software. It has been proved that a Computerized accounting system has several advantages such as speed, accuracy and reliability of financial information compared to a manual accounting system (Osmond, 2011).

A Computerized accounting system involves the use of computers in processing accounting data into information to facilitate quick decision making through timely preparation of financial reports and financial reporting in this case refers to the way in which financial information is recorded, processed and conveyed to the end users of this information in particular in a simple and convenient way (Weber, 2011).

Before the advent of ICT in accounting practice, these accounting protocols were being performed manually. However, today many accountants and non-accountants prefer to use computer software to record, report and analyze their company’s financial information. This information is collected from transactions and is compiled into financial reports (Weber, 2011).

Alan and Wood (2005) define a Computerized accounting system as a total suit of components that together comprises all inputs, storage, transactions, processing, collecting and reporting of financial transaction data.

A number of Software packages have been developed to assist in the accounting field and some of such packages are QuickBooks, Mind Your Own Business (MYOB), SAGE, Excel etc. Marivic (2009) argued that Computerized packages will minimize human errors in transactions recording.

Book keeping implies that the whole accounting cycle is performed manually on a periodic basis where by trial balances are calculated, journal transactions are entered and financial reports are prepared. Computerized accounting implies that the only thing that accountants do is recording transactions into the computer which processes the other steps of accounting cycle automatically or by a request (Weber, 2011).

McBride (2000) explained that Computerized packages can quickly generate all types of reports needed by management for instance budget analysis and variance analysis. Data processing and analysis are faster and more accurate which meets the managers need for accurate and timely information for decision making.

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).

1.2 Statement of the Problem

Since bookkeeping is performed as a “cut and paste” process, with paper and pencil, or as a direct entry into software, the reality of error is always present. Even the best bookkeepers can make errors. Entering the wrong data or posting to an incorrect account.

These results may display the wrong information to managers or third parties who make financial judgments on this erroneous information. To minimize these risks, many businesses schedule audits on an annual basis.

In Kumba City Council, the accounting system is still manually implemented making the system very vulnerable to human errors of omission, errors of commission and voluntary manipulation of figures.

The consequences on the Council is embezzlement, misappropriation and theft of public funds It is with this regard that many organizations prefer the use of Computerized Accounting System in recording and posting of financial transactions.

1.3  Objectives of the Study

1.3.1  General Objective

The main objective of this study is to investigate the impact of computerized accounting system on bookkeeping in Kumba City Council

1.4.2  Specific Objectives

  1. To examine the accounting system used for book keeping in Kumba City Council.
  2. To outline the challenges encountered with the accounting system practiced in Kumba City Council.
  3. To identify a computerized accounting system to be adopted by the Kumba City Council.

1.4  Research Questions

1.4.1 General questions

What is the effect of computerized accounting system on bookkeeping in KCC?

1.4.2    Specific Questions

  1. Which accounting system is used for booking keeping in Kumba City Council?
  2. What are the challenges faced with the accounting system in Kumba City Council?
  3. Which computerise accounting system suits the book keeping in Kumba City Council?
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