Professional Documents
Culture Documents
By
Saminu Kanti Suleiman
Index Number
ABS14A00112Y
1.0 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.
The field of study of this research project is accounting and the subject area of focus is computerize
accounting
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withdrawn.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).
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
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
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
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
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
Accounting information system being an asset of methods, people, procedures and devices
regularly used to process business transactions, Hermanson et al, (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
In Ghana, 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 et
al., (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 and Laudon (2001). ICT products in use in the banking industry
include Automated Teller Machine, Smart Cards, Telephone Banking, MICR, Electronic Funds
The banking industry in Ghana has continued to witness tremendous changes linked with the
developments in computerization over the years. HFC 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
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
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
endeavor’s, in Ghana and other African countries workers sees this as an attempt to replace them
and to result them into mass retrenchment or 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
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 et al., (2009). Given that
business enterprise performance in the HFC Bank, laboni Branch in various departments has been
persistently poor, the study intended to establish the factors behind this persistent negative
situation. On the basis of this background the researcher was convinced that there was need to
a) To evaluate the strength of the computerized accounting system used by HFCBank, laboni
Branch.
institutions in Ghana
1.5 Research Questions
a) How efficient is the computerized accounting system that HFC Bank is using?
b) What are the pros and cons of computerized accounting over manual accounting in financial
institutions?
c) What are the qualities of financial reports produced by a computerized accounting system?
d) What are the relationship of computerized accounting and financial reporting in financial
institutions in Ghana?
The study was limited to the computerization of accounting systems and financial reporting . The
research will be centered upon computerized accounting while examining what accounting is The
researcher investigated the to evaluate the strength of the computerized accounting system used
by HFC Bank , laboni Branch, to find the pros and cons of computerized accounting to financial
systems and to establish the relationship of computerized accounting and financial reporting in
financial institutions in Ghana . The other aspect to be examined is financial reporting while
tackling the qualities and or the characteristics of financial reports. It look at financial reporting as
the dependent variable and the computerization of accounting systems as the independent variable.
1.6.2 Geographical scope
The research covered the financial reports of HFC Bank Ghana Limited, laboni branch, in Accra
district Ghana. This particular case study was chosen because it was of convenience to the
researcher in terms of its’ type of business, the researchers’ area of residence, language and
The study covered financial reports generated within the period of 2011 to 2014. This period being the most
recent and given the limited research time frame, the researcher was able to cover reports of more than two
years.
This research was of prime benefit to the management and staff of HFC Bank Ghana Limited, not only for
the laboni branch, laboni for other branches as well, since it 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
research and equip them with knowledge as far as manual and computerized accounting is concerned and
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 Ghanamay
establish the various computer packages used in accounting systems, effects of computerized accounting
systems on business enterprise performance, challenges met by HFC 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
A computerize accounting system records accounting transactions using a benefits of using the
computerized accounting system in financial report risk of improper human intervention with the computer
System effectiveness in increasing the efficiency of the results showed positive impact of computerized
system of the financial departments in the public and this study is expected to be helpful to the accountant
Chapter one discuss the statement of the problem, the objective of the study and its significance
Chapter three spells out the methodology that was employed to carry out the research.
Chapter five deals with the summary, conclusion and recommendations that came out from the study.
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This section of literature review focused on the concept of computerized accounting system in
relation to financial reporting. The literature was presented in the order of the stipulated objectives
of the study.
2.1 Definition Computerized Accounting Systems
computerized accounting as the accounting done with the aid of a computer. It tends to involve
financial transactions. Computerized accounting involves the use of computers to handle large
volume of data with speed, efficiency and accuracy aimed at overcoming the fundamental
however, does not mean change in principle, the principle of accounting remains the limitations of
manual accounting and hence producing quality and reliable work same with day books ledgers
double entry only that the accounting processing is done by computer packages (ACCA, 2007).
interpreted and communicated to stakeholders through the use of computers and computer based
He emphasized that it’s a mechanized process of facilitating financial information inflows as well
as the automation of accounting tasks such as database recording and report generation. Marivic
adds that keeping accurate accounting records is a vital part of any organization. Apart from
helping it to keep its float financially and legal, it is a requirement of funding bodies or donors.
However computerized accounting system involves the use of computers to handle large volume
of data with speed, efficiency and accuracy aimed at overcoming fundamental challenges which
do not change the principle. The principle of accounting remains the limitations of many
information channels meaning that files that were previously been duplicated by several
departments will now be consolidated into single file.A computerized accounting system is a
delivery system of accounting information for purpose such as providing reliable accounting
Computerization of system can certainly help in minimizing some errors when preparing
accounting records (Mike et al, 2006). Other view adds that computerized systems are
advantageous in consolidating information channels meaning that files which had previously been
duplicated by several departments are now consolidated into a single file (Mc Rae, 1998). A
computerized accounting system is a system that uses computers to input, process, store and output
accounting information in form of financial reports. It records all transactions that routinely deal
with the events that affect the financial position and performance of the entity.
Computerized accounting System (CAS) refers to the integration of different component systems
to ACCA (2009), Computerized accounting system involves the use of computers to handle large
volumes of data with speed and efficiency aimed at overcoming physical limitations of manual
2.1.1 Accounting.
As many professional accountants and auditors state - accounting is a language of business which
is accepted in all developed and developing countries, but what exactly is accounting? Well,
accounting has been defined by many authors in various ways. According to Osmond, (2011),
accounting is the way business owners manage their company’s financial information in orders to
make better decision regarding their companies. Meigs & Meigs (1986) also defines accounting as
the art of measuring, communicating and interpreting financial activities. I do agree with both
authors since the meaning derived out of their ideas are similar and state the actual art behind
accounting
Frank wood (2002) defines Accounting as 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. According to Mc Laney and
Atrill (2005), Accounting is the systematic recording, reporting, and analysis of financial
transactions of a business. They further note that the person in charge of accounting is known as
an accountant, and this individual is typically required to follow a set of rules and regulations, such
as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the
financial performance of the business, and look at statistics such as net profit.
Accounting software’s are used to implement computerized accounting system. The computerized
accounting is based on the concept of database; it is basic software which allows access to the data
contained in the database. The following are the components of computerized accounting software.
1. Preparation of accounting documents: Computers help in preparing accounting documents
like cash memo, bills, invoices and accounting vouchers. Here computerized accounting systems
have user defined templates which will provide faster, accurate entry of transaction and therefore
2. Recording of transactions: Everyday business transactions are recorded with the help of
computer software. Every account and transactions is assigned a unique code where the grouping
of account is done at the first stage. This process simplifies the work of recording the transaction.
Marivic (2009) argued that computerized packages will minimize human errors in transactions
3. Preparation of trial balance and financial statements: After recording of transactions, the
data is transferred into ledger accounts automatically by the computer. Trial balance is prepared
by the computer to check accuracy of records, with the help of trial balance; the computer can be
programmed to prepare the statement of comprehensive income and the statement of financial
position.
2.1.3 Factors considered before computerizing the accounts department.
2.1.3 .1 Size and type of business: The method of producing accounts would largely depend on
the above. In a very small company a single person may be able to have a time to produce all the
information or accounts required but as volume of the operations increases, more people in form
of computers may be employed. (Olive and Chapman, Data processing and Information
Technology 1993). In some company’s payroll, invoicing would be a matter of simply paying a
member of staff or copying customer order, whilst in a complex receipts and payments of
company’s operations results the systems to be coped hence need for a study before
computerization.
2.1.3 .2 Timing aspect: Som information requirements are less time critical than other say payroll
and final statements may only be produced once a month, whereas the invoices may be produced
virtually all the time. The timing requirements for information for the accounts department will
have a considerable bearing on the methods and equipment needed to produce it. (Brightman
1980).
2.1.3 .3 Link between applications : S. NORA(Computerization of Society 1981),Where data is
recorded for more than one information requirements different methods of processing it may be
suggested say a transaction in the sales department and accounts department may not only be
needed to be used in their respective departments but all needed by others to amend records. A
manual system would require separate operations to satisfy the requirements whereas a
computerized system would amend them automatically. This ability of computer system to
perform a variety of processing operations on a single pool of data contrast sharply with manual
Different scholars have expressed views on computerized accounting packages as below: A computerized
package can quickly generate all types of records needed by management. Data processing and analysis are
faster and more accurate which meets the manager’s needs for accurate and timely information for decision
The benefits of computer accounting include among others improving reporting to users, better
record keeping and minimized errors. With the system automatically generating reports, a lot of
time will be saved in the long run and unnecessary cost. Few staff will also be needed to operate
In support of above view, computerized accounting is used to maintain journals, ledgers and
prepare financial statements (Meigs and Meigs, 1998). Easy posting transaction to ledger and
principles of double entry to do accounting function using computerized accounting system. It can
entering figures in wrong fields, a good package will reduce this possibility and ensure that there
is a reference for all transactions e.g. for every cheque or receipt entered/created. However, this
does not eliminate all manual work. Vouchers, invoices, receipts etc. will still need to be filed in a
logical order and details of what was entered onto the system should also be recorded on paper.
This will help when you need to track errors, in the annual audit and if disaster strikes and you
have to re-enter all transactions. For record-keeping and compliance with the law, businesses often
must keep financial records for years. It is extremely difficult to keep copies of paper records in
multiple locations, and a catastrophic incident that results in the destruction of paper records can
damage a business in many ways. With a computerized accounting solution, files and important
financial information can be stored online or on off-site data cartridges--or both--giving a business
the level of redundancy that it needs to recover from a catastrophe and ensuring compliance with
all applicable data retention laws. Mc Laney and Atrill (Accounting and Introduction 2005)
Computerized Accounting Systems are important to businesses in various ways. The use of
computers is time-saving for businesses and all financial information for the business is well
organized(Baren, 2010).
Time and Cost Savings: Using a Computerized Accounting Systems saves companies time and
money. The use of a computer makes inputting accounting information simple. Transactions are
entered into the system and the system processes and posts transactions accordingly. Computerized
Accounting Systems reduce staff time preparing accounts and reduce audit expenses as records are
neat, up-to-date and accurate. Better use is made of resources and time; cash flow should improve
through better debt collection and inventory control. More importantly, the system helps present
financial reports on time to aid in the economic decision making process of external users.
organized. When information is entered into the system, it makes finding the information easy.
Employees can look up any financial information whenever it is needed. There is less room for
errors as only one accounting entry is needed for each transaction rather than two (or three) for a
manual system. The accounting records are automatically updated and so account balances (e.g.
Storage and Speed: Storing information is vital to a business. After information is entered into
the system, the information is stored indefinitely. Companies perform backups on the system
regularly to avoid losing any information. The introduction of Computerized Accounting Systems
provides the ability to see the real-time state of the company’s financial position.
information easily. Financial statements are printed directly from the system and are distributed
internally and externally to those needing the information. Reports can be produced which will
help management monitor and control the business, for example the aged debtors analysis will
show which customer accounts are overdue, trial balance, trading and profit and loss account and
prepared and presented to meet the relevance and faithful representation criteria of financial
statements.
Speed and accuracy. With computerized accounting, you reduce the amount of time you have to
spend monitoring and organizing your accounts. The information will be available at your
fingertips, and systemized, so that there are no anomalies, there will be no information missing.
This will help you improve your business efficiency in areas such as customer relations,
production, and employee management. You will have the potential to increase your profits and
Computerized accounting systems have automatic calculations built in and therefore there is a slim
chance of making mistakes calculating invoices. The system automatically calculates inclusive and
exclusive figures. Mc Laney and Atrill (2005) there is an old proverb that begins with the statement
“to err is human.” Although the sentiment of this statement was not originally intended as a
comment on life in the information technology age, it still applies. Humans do make errors. An
absent decimal point or the addition of one too many zeros can drastically alter the accuracy of a
financial report. Computerized accounting systems, on the other hand, are designed to minimize
the existence of such blunders. Additions, subtractions and other calculations are performed by the
machine. This ensures that only the correct total is listed at the end of the general ledger. KJ
Henderson (1999).
cumbersome and time consuming manual processes. In addition to calculations being automated,
many accounting software programs allow various reports, such as year-end and statistical, to be
generated at the touch of a button. A document that once took junior accountant hours to compile
can now be created in a matter of seconds. An additional benefit to automating the accounting
process is the ability to expediently share information. Information regarding business accounts
can be independently entered into an automated system by multiple authorized parties. In addition,
accounting documents, such as financial statements, can be emailed from one colleague to another
businesses to more easily share financial information. For example, if a company with manual
accounting procedures purchases another organization with manual accounting procedures, it may
take weeks or even months to completely integrate the financial data of the two firms. On the other
hand, if both companies utilize compatible computerized accounting systems, all data can easily
be integrated because one program is able to speak to the other. Sangster (Computerized
Accounting 2002)
accounting system can store many years of information. If the audit requires it, the employer can
access information dating from many years back. If, during the audit, the auditor spontaneously
requests an accounting document, the employer can quickly retrieve it from the system instead of
rummaging through storage boxes to locate hard copies. The majority of computerized accounting
systems have features such as order-entry and generation of associated invoices. The employer can
create accounts for their clients, storing their names, addresses, orders and invoices for as long as
necessary. A computerized system also allows the employer to make and print account statements.
Further, many accounting systems have a payroll feature, which enables complete payroll
Reduces fraud and Embezzlements. Computerized accounting software makes it difficult for employees
to steal money from the company. For example, if a payroll employee tries to pay herself more than
the allowed amount, her theft will most likely be discovered because the accounting system stores all
Automated Report Generation. Computerized Accounting software has the ability to generate reports
on demand--something that could take a team of humans hours or days. These reports can be
customized to what the company is spending money on, such as VAT, day-to-day operations, salaries
and marketing. In addition, when used properly, this feature can assist the business in its budgeting
needs, telling executives in a quick and easy to use format exactly where their money is going. Reports
empower executives to make informed decisions, and having instant access to them can only make
Lower cost of operations.Aramenta Waithe (2008) Accounting can become expensive for
businesses, as the level of work can result in the businesses needing to hire an accounting service
on contract or hire several full-time employees. Accounting software eliminates much of the
manual work, which may allow you to reduce your full-time staff and lower your costs. Indeed,
because so many tasks can be automated, a full-time accountant may not be necessary at all.
According to McBride (2000), 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
Frank wood (1999) consented to the speed with which accounting is done and further added that a
computerized accounting system can retrieve balance sheets, income statement or other accounting
reports at any moment. He consented that computerized accounting system allow managers to
the accounting systems as it is a highly integrated application that transforms the business
processes with the performance enhancing features which encompass accounting, inventory
control, reporting and statutory processes. He then says, this helps the company access information
McBride (2000) stated that managers cannot easily satisfy statutory and donor reporting
requirements such as profit and loss account, balance sheet and customized reporting without using
computerized accounting systems. With the system in place, this can be done quickly and with less
effort. Computerized accounting systems ease auditing and have better access to required
information such as cheque numbers, payments, and other transactions which help to reduce the
time needed to provide this type of information and documentation during auditing.
systems. Posting transactions to the ledger, the principle of double entry can largely be automated
when done through the use of computerized accounting system. Although computerized
accounting is highly beneficial to an entity, it is worth noting that it is dogged with a couple of
Meigs (1986) stresses that there is a risk of improper human intervention with the computer
programs and computer files. Employees in the organization may temper with the computer
programs and computer based records for the purpose of deliberately falsifying accounting
information. This may result into distortion of information that would essential be for decision
making. According to Wahab (2003), another threat and limitation of computerized system is the
computer virus. Where a computer virus is a computer code (program) specially designed to
damage or cause irregular behavior in other programs on the computer. The adverse effect is that
it may lead to breakdown of the hardware thus leading to loss of valuable information (for instance
information pertaining loans advanced among others) already saved on the computer.
Despite the numerous benefits of Computerized Accounting Systems that can be listed they are
not without challenges. The impediments to implementing a CAS include: lack of time(Proudlock
et al. 1999), owner-manager’s view that the CAS is costly (Head 2000),perception that the
technology is not suited to the nature of the business (ABS 2000), and lack of IT expertise (ABS
Installation costs. S. NORA (Computerization of Society 1981) notes that the cost of installing
computers in an organization is very high as it needs huge sum of money. This is a major hindrance
substantially, but they still can be costly, not only to purchase, but to maintain them as well. Extra
costs for training new employees in the system should be considered along with ongoing customer
service. Charges for customizing reports and other processes can pose limitations on small and
medium-sized businesses that cannot afford these services. Other program costs to consider
include new version upgrades and even hardware that may be required as technology progresses.
Power Failure. S. NORA (Computerization of Society 1981). When dealing with accounting
programs, you should consider electrical power as a major limitation of the system. Without
electricity, most small-business accounting systems are useless -- no data can be input or reports
generated. Any electrical fluctuation can have a negative impact on accounting data, deleting
information and creating confusion. Another consideration that limits the usage of accounting
systems is the network where the program may reside -- if the computer network is not properly
set up, the software cannot be accessed and cannot be utilized. Most organizations are faced with
frequent power failure that slows the rate at which operations are executed in organizations. This
Computer Virus:The major stressing challenges in the whole world are the problem of computer
viruses. S. NORA (Computerization of Society 1981), affirm that computer viruses usually infect
systems introduced via external storage devices which have already been infected. This has led to
loss of data most of which is very costly to get back as it will need experts who are invited to install
and design new packages. System security concerns can pose limitations on accounting software.
Besides worrying about viruses and worms, small-business owners also should be concerned with
unauthorized access of computerized accounting data. IDs and passwords are common minimum
security measures businesses can use to protect the accounting software against intrusion, but they
may not be enough. According to Kiplinger magazine, hacking is very common with small
businesses; however, only one in five small firms owns antiviral software and over half don't use
Computer Hacking S. NORA (Computerization of Society 1981), goes ahead to refer this as to
when individuals make unauthorized access to computerized systems especially via dial-in-lines
or across computer networks. This leads to loss of data and inconveniences to the individual
Converting from manual to computerized accounting system before converting from manual to
Society 1981). Hence need to consider the principle of procedure, costs associated with new
system, feasibility and reliability of the new system. S. NORA (Computerization of Society 1981).
method, however, the choice of the method to use will depend on the nature, resources, objectives
and purposes of the organization. Richard Back and Rueben T. Hurns 1998 suggested that large
scale; complex organizational change can be conceptualized in movement from present to future
state. All this would affect organizational operations positively hence effectiveness.
Accounting is an important part of every company. Businesses are required to keep books on their credits
and debits. So which is best for your business idea - people or software? Well, Weber, M. (2011) emphasizes
that every company applies accounting because it is generally accepted that companies have to reveal
certain financial and management information to the government and public users and of course because
accounting is an indispensable tool in business decision-making process, it has led to the development of
information technologies and many computer products (software in terms of accounting packages) that
make accounting as easy as ABC for those who use them. From this point accounting can be divided into
two basic categories: those which apply manual accounting and those which prefer computerized
accounting systems. This topic therefore targets the main features of manual and computerized accounting,
that together comprises all inputs, storage, transactions, processing, collecting and reporting of financial
transaction data, manual accounting on the other hand implies that employees perform the whole accounting
cycle manually on a periodic basis: they calculate trial balances, journalize transactions, prepare financial
Whether manual or computerized, accounting in itself is known to have a cycle that includes the following
steps: journalizing the transactions, posting them to ledger accounts, preparing trial balance, making
adjustment entries, preparing adjusted to end-of-period trial balance, preparing financial statements and
appropriate disclosures, journalizing and posting the closing entries, and preparing after-closing trial
balance at last, Weber M. (2011). From the first look, it is not very difficult and it is so indeed, but when
there are thousands or millions of transactions to be handled, the situation dramatically changes. Lots of
transactions that must be processed in the accounting cycle make this process routine and even a little
mistake or inaccuracy can cause all the cycle from the very beginning to fail which will therefore require
Manual accounting uses several paper ledgers and journals where accountants record financial information.
The general ledger includes miscellaneous transactions and the aggregate balance of all subsidiary ledgers
and journals. Whereas Manual accounting is very detailed, since accountants must carefully enter
information into physical books, Computerized accounting uses software programs designed from
traditional manual accounting systems and involves the use of computers, spreadsheets and programs
Time: Paper works are involved in manual accounting; all the accounting activities are carried out
on paper manually and obviously, it takes much time and resources for the average business
organization and most especially, a financial institution that still uses the manual system.
Computerized accounting saves a lot of time where in, the employee has to record the transactions
and all the other calculations would be carried out by the software either automatically or by a
Accuracy: I also agree with Magdalene M, (2010) again, that computerized accounting is not only
speedy but also accurate. With a computer being used to collect data and change it into meaningful
information that is used by management to make timely and effective decisions, the computer
carries out the entire data processing through classifying, sorting, calculating, summarizing the
data and production of reports, as stated by Birungi (2000). This entire process helps to minimize
the risk of miscalculations and other human errors that could have emerged as a result of manual
data processing.
Security:With the manual accounting system, every record is on paper and in case of any
uncertainties such as heavy floods, landslides and fire outbreaks, the useful data may all be lost,
and yet with the computerized accounting system and the introduction of internet and networks in
the information technology world, an easy backup and restoration system as well as the use of
passwords to avoid unauthorized parties from accessing the data, keeps the information secure.
Cost : Some arguments may stress that manual accounting can be handled with cheap work force
and resources and that it is reliable as it is done manually with minutes of observations Magdalene
M, (2010). However, the level of competition in the business world of today is tight and even
growing tighter day by day and if a business with an aim of being successful does not consider the
aspect of time especially as far as decision making is concerned, then that business stands to lose.
Computerized accounting in this case may be more costly than manual accounting in terms of
cheap work force but its output actually overweighs its cost.
Level of output : Magdalene M, (2010) also argues that computerized accounting can actually handle
transactions are handled one at a time and even needs much time to do that as well as being characterized
by human errors and mistakes in calculations which may eventually affect the final output of information
According to the Babylon dictionary (1997), financial reporting is the process of preparing and distributing
financial information to users of such information in various forms. Emphasis is made that the most
common format of formal financial reporting are financial statements, which are actually prepared in
accordance with rigorously applied standards defined by professional accounting bodies developed
A financial statement also known as a financial report is a formal record of the financial activities
of a business, person, or other entity, Babylon dictionary (1997). A financial statement also often
about a company’s financial position, operating performance and its flow of funds for an
of quality financial information. This arises as a result of perish ability of accounting information.
To benefit users, financial information must be presented at the right time otherwise it loses
relevance.
According to Frank Wood (1999), financial reporting is all about presenting useful information to
users so that proper decisions can be made. His implication about financial reporting is that
financial information should aid in the evaluation of amounts, timing and uncertainties of cash
flows. Also financial reporting should furnish information about the entity’s economic resources,
claims against those resources, owners’ equity and changes in the resources and claims.
Indira (2008), emphasized that financial reports should provide information about financial
should likewise be useful to managers and directors themselves in making decisions on behalf of
the owners. He argues that accounting information is very necessary if decisions are to be made
accurately and rationally by the various interested parties or users of financial information. These
are broadly classified into external and internal users. Where internal users include management
and employees while the external users include donors, shareholders, creditors, government,
According to Carl’s et al (1999) the quality of financial reports depends on the intended users of
the information and should be evaluated with respect to the needs of the users. Federation of
Accounting Standards Board (FASB) defined quality as a hierarchy of accounting qualities with
relevance and reliability considered as the primary characteristics while representing faithfulness,
characteristics. Reliability, information is said to be reliable if it is free from material errors and
bias and represents faithfully that is purports to represent emphasized Frank wood (1999).
Having discussed the history and essence of Computerized Accounting Systems, it is imperative
to assess the importance of financial reporting in every company. The scenario posed by Enron
and other companies like WorldCom, Tyco, Adelphia, Global Crossing, and Xerox, endears both
management and users of accounting information to pay critical attention to the content of the
The Companies Code, 1963 (179) of Ghana mandates management of every company identified
under the code to prepare and present financial statements to members of the company at least
Financial Reporting can be defined as the process of presenting financial data about a company’s
financial position, the company’s operating performance, and its flow of funds (Rose and Hudgins,
2008). Issues bothering on financial reporting are quite complex and cumbersome. The function
of financial reporting is to make publicly available information which concerns stewardship (for
example, what resources are under control of the organization, and the consequence of their past
use) and management's planning (for example, what are the future plans for the controlled
consists of:
Financial reporting is largely an effort to assess financial performance, that is, how well or how
poorly an entity performed with money entrusted to it, (Sacco, 1998). Financial decisions include
raising and spending money as well as making promises that have financial consequences.
Financial reporting is considered a part of accountability for financial decisions. Exactly, the
quality of financial reporting depends upon how the financial data is handled right from the point
of data collection to the processing stage that leads to the production of meaningful financial
information in terms of reports. As noted by Sacco, (1998) two major models are considered in
this context, manual or computerized accounting. With either system, many types of financial
reports can be generated but a considerable amount of attention is given to the system that
provide information that people, who are willing to understand it, can understand it: professionals
backgrounds of the different types of people who will be reading your reports and match that
accordingly Marquez Come lab. Information can only be useful to end users if they are able to
understand it.
According to Pallai (2007) Understandability as a quality of financial reporting that enables users
to perceive the significance of financial information. He argues that users are assumed to have
reasonable knowledge of business and willingness to study and understand the information.
International Accounting Standards Board adds that information should not be excluded on
Relevant & Material: Relevance is the capacity of information to make a difference in a decision. It is
important to report and disclose information that is relevant for anyone to make a decision. Accounting
information must also deal with things that are significant enough to impact decisions that are made by
those who use the financial reports (Marquez,2011). Since financial statements are for users to make
economic decisions, the information must be relevant to the decisions that those users have to make. .
Whether the information affects the economic decisions of users (materiality) and the nature of information
affect relevance as well. Materiality is one of the assumptions used in financial reporting that contributes
Reliable: also agree with Frank and Alan (1999) that reliability is regarded as one of the main qualities.
People must be able to depend on the figures and the facts printed on your financial statements and to make
sure that they are true. It must be verifiable. Free from error. E.g. you can always look at a receipt to verify
the amount of an expense. As you already know, when you get audited, you must verify all transactions
compared with those of other similar companies, without comparability the accounts would be of little use
Frank and Alan (1999). General Accepted Accounting Principles (GAAP) allow for certain choices of
different accounting methods for depreciation and inventory management. If a financial statement from one
company that was prepared differently from other companies in the industry, or even prepared differently
from previous statements, it is likely that the users will not be able to compare the statements among
Comparability adds a degree of transparency to financial statements by allowing comparisons over time
and among entities. Comparability is affected by consistency of presentation and disclosure of accounting
policies—particularly when comparing items among entities that might use different (but equally valid)
methods like straight-line/ reducing balance depreciation or FIFO/ average cost method. This indicates that
comparable financial statements are not necessarily uniform, but merely allow suitable comparisons.
Derrell V. (2010)
Objectivity: Information which is free from bias will increase reliance the users place on it Frank and
Alan.(1999) The information should meet all the proper user needs and be neutral in that the perception of
measures should not be biased towards the interest of any one user group. The accounts should always show
According to Turner (2000), neutrality is the demand that accounting information should not be
selected to benefit one class and neglect to other. Reliable information is verifiable, neutral and
in decisions made by helping users to form predictions about the outcomes of the past, present and
future events either to confirm or correct prior expectations. Comparability is another characteristic
of quality information. Frankwood (1999) also stresses that users must be able to compare the
financial statements of the enterprise over time in order to identify trends in its financial position
and performance.
while generating financial reports. Computerized accounting systems have been credited for their
quick processing speed and large storage capacity. Using computerized accounting system ensures
up-to-date account balances are available any time for management to make quick decisions
(Lancouch, 2003).
manual systems. The method of inputting and processing data is sophisticated thus accuracy of
data is improved. This means that financial reports will bear minimum errors. Computerized
system will foster accessibility and faster transformation of information stored in computers, hence
financial reports can easily be accessed through online system without delay and timely decision
The use of computer based systems in manufacturing firms will enable employees from various
function areas and branches to generate timely financial reports which enable managers to monitor
business operations and important finance decisions (Wailes, 1999). A computerized accounting
system is a delivery system of accounting information as providing reliable accounting information
to users. So records of expenditure and incomes and assets, liabilities, revenue expenses must be
documented and transferred to general ledger of firm’s financial details to be analyzed for future
financial decisions.
2.6 Conclusion
information continue to change, the accounting system should become flexible enough to meet the
need of users. Automated generation of accounting document like invoices, cheques and statement
of accounting with the larger reduction in the cost of hardware and software and availability of
user-friendly accounting software package with relative cheap maintenance. In order to promote
quality of financial reporting, there is need of feedback regarding the way in which user determines
quality (Mangiameli et al, 1999).Financial reports need provide feedback in order to prepare good
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter describes the methodology that was employed in conducting the study. This chapter
focuses on the description of the procedures that was employed in the study. Mugenda and
Mugenda, (1999) state that this chapter should specify the research design, the study population or
the area in which the study were conducted, the sampling design, the sample size, data sources,
data collection instruments and the validity and reliability of the data collection instruments.
The study used a descriptive study is concerned with finding out the what, where and how of a
phenomenon. Descriptive survey designs were used in preliminary and exploratory studies to allow
researchers to gather information, summarize, present and interpret for the purpose of clarification.
The choice of the descriptive survey research design is based on the fact that in the study, the
research is interested on the state of affairs already existing in the field and no variable were
manipulated. This study therefore enables to generalize the findings to a larger population. The
main focus of this study was quantitative. However some qualitative approach was used in order
to gain a better understanding and possibly enable a better and more insightful interpretation of
The area of study was HFC Bank Ghana Limited, laboni branch, Labadi District –la Municipality
is a third-order administrative division and is located in labadi District, Accra Region, Ghana.
Laboni Town has a number of streets which include labono estate, High Street (named after one
of the town's most prominent secondary schools, coffee Street, Bishop Willis Street (named after
This population encompassed the accounting staff/tellers, support staff and management of the
case study who actually record and even use the same information generated as a result of
computerized accounting.
The researcher used convenient sampling to come up with 15 respondents of the financial
Table 3.1 Showing the category and size of respondents used for the study
Category Size
Management Staff 2
Accounting Staff/Tellers 10
Support staff 3
Total 15
The purposive technique above was used in selection of respondents not only for its’ time and
money saving but also helps in selecting of typical and relevant cases necessary to equip the study
with the required information. Besides, the simple random sampling methods were used to select
a sample of respondents without any bias from the accessible population. Each party of the target
population in this case has an equal opportunity of independence as far as expression of their
opinions is concerned.
3.5 Sampling and Sampling technique
The samples used in the study were selected using purposive sampling which is a function of non-
probability sampling. Under purposive sampling technique, the researchers purposely choose who, in their
opinion are thought to be relevant to the research topic. In this case, the judgment of the researcher was
more important than obtaining a probability sample. The process of sampling in this case involved was
The sample size was therefore selected from all the different department and the subjects of the study
include more particularly on the management staff, accounting staff / bank tellers and support staff who
were directly dealing with the day to day management of the bank since they were the ones conversant with
the relationship between computerized accounting and financial reporting in the commercial bank.
Primary data was obtained through the use of self-administered questionnaire to respondents
Bernstein (1994). Primary data was collected from the respondents that were chosen from HFC
laboni Branch
Secondary data was used to support the empirical findings of the study. These other sources of
data (Literature review) major used to back up the arguments and findings in chapter four and five.
The secondary data were obtained from laboni Bank journals, text books, brochures, library and
This study was based on data collected from two major categories of sources: primary and
secondary. Whereas the primary source of data were used in the questionnaire, to collect more
information and clarify on some information, it majorly constituted structured and open-ended
questions focusing on the research objectives and control questions to check correctness and
consistency. The secondary data source involves were mainly the organization financial and
management reports. This record inspection was carried out in relevance to the study objectives.
Besides, the study employ the use of interviews, which involve talking or interacting face to face
with the respondents sampled for the study and finding out issues concerning the research
objectives
3.7.1. Questionnaire.
This was one of the major instruments that were used to collect data. The researcher used both
open and closed questions which was required specific answers. Questions were printed in clear
and simple language possible for the respondents to understand. The respondents were selected
3.7.2. Interview.
Here, questions were determined beforehand while others arise during the course of the
personal view points. The researcher used face to face interviews because of the following reasons;
provision of firsthand information, rich data collection, cost effective, speedy and ability to clarify
the questions, clear doubts and could add new questions where it was necessary
Face to face interviews were carried out with the top management and clients to cross check the
response from the questionnaire. These were designed in a way that more specific and truthful
answers were got. These help to capture information, not provided by the questionnaires. The
method used Interview guide to capture the respondents‟ views. This method was preferred
because of its flexibility and ability to provide new ideas on the subject (Kothri, 1990).
Secondarily data from materials such as textbooks, newspapers, journals and internet were used to
back up primary information and relate the findings to other approaches already in existence. The
method used document checklists and guides to get views from other writers which were
questionnaires physically at the respondents‟ places of work. The researcher leaves the
questionnaires with the respondents and picks them up later. Each questionnaire was coded and
only the researcher knows which person was responded. The coding technique only was used for
the purpose of matching returned, completed questionnaires with those delivered to the
respondents.
3.9 Ethical Considerations
The researcher was protected by the statutory rights of the participants investigated and avoided
undue intrusion, obtain informed consent and protect their privacy rights .The researcher was
framed research questions objectively so as to widen the scope of the study and maintain
confidence in the research process. The researcher was sensitive of social and cultural differences
and considers conflicting interests. Lastly the researcher endeavored to report all findings
completely, and objectively with full information on methodologies to allow research work to be
Data analysis is the science of examining raw data with the purpose of drawing conclusions about
that information. The collected data were analyzed using quantitative analysis which majorly
involved six major activities namely, data preparation, counting, grouping, and relating, predicting
Data preparation involved all forms of manipulations that were necessary for preparing data for
further processing e.g. coding, categorizing answers to open-ended questions, editing and checking
as well as preparation of tables; counting included the mechanical task of registering the
occurrence and frequency of the occurrence of certain answers or research items; grouping and
presentation involved ordering of similar items into groups and this was resulted in distribution of
data presented in the form of tables and graphs; relating involved cross-tabulation and statistical
tests to explain the occurrence and strength of relationships; predicting is a process of extrapolating
trends identified in the study into the future and this statistical method helped the researcher
complete this task and finally statistical testing; this refers to the stage where test of significance,
inference, hypotheses and correlation are employed during the process of analysis.
Also data collected was mostly quantitative, and it was analyzed by descriptive analysis techniques. The
descriptive statistical tools such as SPSS will help the researcher to describe the data and determine the
extent used. Content analysis was also used to analyze qualitative data. The findings were presented using
tables and charts, percentages, means and other central tendencies. Tables were used to summarize
responses for further analysis and facilitate comparison. For this study, the researcher was interested in
establishing the relationship between computerized accounting and financial reporting of deposit taking
HFC Bank in laboni Municipality. These were generated quantitative reports through tabulations,
Some HFC Bank staff denied the researcher information as they failed to believe that the research
was purely academic. As a result, the researcher was able to get information from such HFC Bank.
Poor time management by employees of the HFC Bank also hindered the data collection process.
Some employees came late as they had other things to besides working at the HFC Bank office,
others did not keep appointments leading to failure to get responses from them in the end.
Resource constraints in form of human, time and technical but the researcher worked hard for the
However a number of respondents tried to bring back the questionnaires in time and the researcher
Respondents felt insecure to reveal that they were not empowered but the researcher assured them
Cost of the research/study: just like any other research, costs are normally unavoidable and these
may include, transport costs, airtime costs, typing, printing and binding costs among others that
may come up unpredicted. However, as far as costs are concerned, the researcher has to acquire
soft loans from friends and relatives so as to meet the costs of the research.
Time required to carry out the research: the time required to carry out the research were not
adequate, given unpredicted and uncertain happenings that may hinder timeliness such as delays
and bad weather which the researcher definitely has to bared with and try as much as possible to
Uncooperative respondents: as usual, not every respondent during research is completely willing
to cooperate positively towards the demands of the researcher, some are even hostile. However,
giving up on the respondent only hinder the acquisition of the necessary information, so the
researcher not get tired as far as wooing the respondents to cooperate is concerned.
CHAPTER FOUR
4.0 Introduction
The following chapter reports on the findings of the study that was carried out to evaluate the
strength of the computerized accounting system effectiveness used by HFC Bank , laboni Branch,
to find the pros and cons of computerized accounting system effectiveness to financial institutions,
The study was carried out in HFC Bank, Ghana branch as was deemed one of the giant financial
institutions in Ghana sharing a wide coverage and perhaps largely preferred various organizations
and individuals as regards transacting businesses. The chapter also presents the biographic
characteristics of respondents.
In the presentation of findings, tables and figures will be constructed using frequencies and percentages
to describe and analyze the findings to draw meaningful conclusions. Of the 20 questionnaires which
were distributed, the researcher received back 15 questionnaires. The research was analyzed according
This includes mainly background information of the respondents. Among the cranial socio-demographic
characteristics considered in the research study included Sex Distribution, Age differences, sex distribution,
Time spend working with HFC Bank (G) Limited bank, Position held / responsibility, educational levels,
as well as Department of the respondents. The biographic data of respondents which is in the research
Sex
Total 15 100
Age difference
Total 15 100
1- 2 03 20.0 26.7
Total 15 100
Position
Total 15 100
Department
Total 15 100.0
From the study findings Table 1 analyses the sex composition of respondents in the study area.
Most of the respondents (60%) were males with females constituting slightly over forty percent
(40%). Socio-cultural expectations of the society reason more males engage in financial and
calculative businesses or institutions than females. These argue that females tend not to prefer
offering science as well as mathematical education they are thus left for men hence men execute
what they have acquired in class by serving or working in such financial institution. To the
researcher, females were fewer than males because they prefer largely offering arts in higher
institutions of and therefore have largely ended as social workers, secretaries to mention but a few
From the study findings, the study population was mainly composed of people from different age
groups. Respondents aged between 15 – 30 years comprised of forty percent (40%), those aged
between 31 – 40 years comprised of slightly over forty percent (40%) where as those aged forty
factors, the major one being the fact that people lying in the age bracket of 15 – 30 are the youth
who now days largely engage in high / advanced institutions of learning a warning them satisfying
qualifications a long side fresh brains thus are largely opted for by such efficiency yearning
financial institutions. This thus explains why those falling between 15 – 30 years and many
Others in the bracket of 31 – 40 and above were fewer because these qualified earlier thus cannot
easily cope up with the ever increasing modern systems of finance handling especially due to
current usage or utilization of modern information and technology equipment and methods.
From the above table, Respondents were asked about their duration of stay/work in the study area
that is HFC Bank. It was hoped that the workers / respondents time of the stay on work influenced
their impact in the area. Those who had stayed longer in the study area were further believed to
have witnessed several changes, trends and patterns of work / services offered by the institutions
to its clients (6.7%) slightly low ten percent had stayed / worked HFC Bank for a period of only
0ne month to one year. Only twenty percent (20%) of the respondents had worked with HFC Bank
for a period of 0ne - two years while the rest of the respondents (20%) and 33.3% had worked /
stayed with HFC Bank for a period of two to three year and three and above years respectively.
Hence those over two years were more knowledgeable than those below two years.
As indicated from the above table, among the background characteristics of respondents that were
noted by the researcher was the position of responsibility, respondents held in the area of study.
Slightly less than a half of the total number of respondents 46.7% were working as sales officers,
6.7% worked as tellers/ cashiers, other 13.3% were working as accounts, 20% were also working
as credit/ loans officers, and 13.3% were also working as customer advisors/ front desk attendants/
assistant administrators.
To the researcher, sales officers participated more than any other officers because they were easily
found less busy compared to the rest of HFC Bank employee who hardly got time to respond to
the researchers’ request. However, other respondent’s views were equally important even when
they did not have enough time to respond to the researcher. From the study findings, Slightly over
thirty three point three percent (53.3 %) respondents were found working at the information and
data management equipment, and equally the same number (46.7%) of respondents were from
Table 2: Responses on whether, the company uses a computerized accounting system for its
operations.
Percent
NO 0 0 00 100
runs and maintains a computerized accounting system for its operations. This positive response is
of great significance to the study since it enabled deeper research into the topic in question.
Table 3: Responses showing what major tasks are performed by the computerized
accounting system.
Data summary 9 60
Data analysis 11 73
Entering/Recording of data 12 80
Table 3 above is showing the major tasks stated by the majority of the respondents .It is also
evident by the percentage differences above that the respondents mostly appreciate the ability of
the system to carry out data entry (80%), security (86%) and production of financial statements or
The research also aimed at finding out what type of financial statements are produced by the
computerized accounting system and as we can see in table 4 above, are the various reports of the
financial kind that the respondents pointed out during the study. All the financial statements named
above rank highly in percentages of interviewee responses. This reveals that the stated financial
flows and the Income statement), are the most commonly generated financial reports produced by
the system at the bank. As seen above, the study findings on the use of a computerized accounting
system and data entry, processing and reporting are paramount. In the first case, we can reveal that
the case study actually employs the use of a computerized accounting system for its operations as
per the findings of the research and the tasks performed by the system among other found out
include those summarized in table 4 above. While the system performs several tasks in the bank,
the end results zeroed to financial reports generated by the system as shown in table 4 above.
Percent
Findings indicate that 53.3% respondents out of 15 that were interviewed agreed that HFC Bank
actually has a computerized accounting system and 46.7% strongly agreed. This implies that there
Table 6: Showing whether HFC bank provides training to staff in computerized accounting
system
Percent
Findings indicate that 73.3% respondents out of 15 that were interviewed agreed that HFC Bank
provides training to its staff in computerized accounting. 26.7% strongly agreed. This implies that
decision making.
Percent
Valid Agree 9 60 60 60
Findings in table 7 reveal that 60% of the respondents agreed, 6.7% disagreed, 13.3% were not
sure, while 20% strongly disagreed that the computerized accounting system provides timely
information for decision making in HFC Bank. The largest number of respondents selected HFC
Bank agreed that there is timely information and the implication is that timely decisions are made
as a result.
Table 8: Showing whether computerized accounting has enhanced the quality of financial
Percent
Valid Agree 9 60 60 60
Table 8 reveals that 60% of the respondents agreed, 13.7% were not sure, while 26.7% strongly
agreed with the fact that the computerized accounting system has enhanced the quality of reports
in HFC Bank. It can also be noted from the table above that the largest number of respondents
selected at HFC Bank agreed that the quality of financial reports has actually been improved with
Table 9: Showing whether HFC Bank has qualified staff in dealing with computerized
accounting system.
Percent
Total 15 100
Table 9 reveals that 66.7% of the respondents agreed, 6.6% disagreed, while 26.7% strongly agreed
that HFC Bank has qualified staff that can manipulate the computerized accounting system
operations. The impression reflected is that most of the staff at HFC Bank is computer literate.
Table 10: Showing whether the computerized accounting system maintains error free
records.
Percent
Findings as per table 10 reveals that 33.3% of the respondents agreed that the computerized
accounting system maintains records free from error, 6.7% were in disagreement, 26.7% were not
sure while 33.3% of the respondents strongly agreed. According to the ratios of the respondents,
one can conclude that the Computerized accounting system being used at HFC Bank is accounting
Table 11: Showing whether computerized accounting has eased the transaction processing
in HFC Bank.
computerized accounting system has facilitated transaction processing in HFC Bank. None of the
respondents that were interviewed indicated was not sure, disagreed or strongly disagreed. This
implies that high levels of efficiency and effectiveness are achieved with the accounting system.
Table 12: Showing whether the staffs that work in the current system have sufficient
Table 12 reveals that 46.7% of the respondents agreed, 6.7% were in disagreement, 33.4% were
not sure while 13.3% strongly agreed with the fact that the staff have sufficient experience in using
the computerized accounting system. This implies that computer input errors are not so common
in the system since most of the workers are experienced with the system.
Table 13: Showing whether the expected benefits obtained from applying a computerized
Valid Agree 9 60 60 60
Findings from table 13 revealed that 60% of the respondents agreed, 6.7% disagreed, and 13.3%
were not sure, while 20% strongly agreed that implementing a computerized accounting system is
Table 14: Showing whether Administration can access daily reports on activities in a
Table 14 revealed that 53.3% of the respondents agreed to the fact that HFC Bank administration
can access on a daily basis reports on activities using the computerized accounting system, 6.7%
responded contrary, 13.3% were not sure while those who strongly agreed were 26.7%. Because
the biggest percentage agreed, this implies that report generation and production concerns in HFC
bank were solved with the introduction of the computerized accounting system.
Table 15: Showing whether HFC bank can measure the performance of its staff in the light
Valid Agree 6 60 40 40
Table 15 can reveal that of the 15 respondents that were interviewed, 40% agreed that HFC bank
can measure evaluate staff performance using the computerized accounting system. Only 6.7%
disagreed, 20% were not sure about it where as those who strongly disagreed were 13.3%.Looking
at the outcome, the biggest percent contend that staff performance appraisal can be done in light
with the computerized accounting system and this may be used to improve on the efficiency of
employees.
Table 16: Showing whether the computerized accounting system provides enough
Table 16 can reveal that of the 15respondents that were interviewed, 46.7% agreed that HFC Bank
can measure evaluate staff performance using the computerized accounting system. Only 6.7%
disagreed, 13.3% were not sure about it where as those who strongly disagreed was 13.3%.Looking
at the outcome, the biggest percent contend that staff performance appraisal can be done in light
with the computerized accounting system and this may be used to improve on the efficiency of
employees.
Table 17: Showing whether the computerized accounting system is more efficient and flexible
Table 17 can reveal that of the 15 respondents that were interviewed, 53.3% agreed that the
computerized accounting system is more efficient and flexible than the manual system. Only
13.3% of those interviewed strongly disagreed while 33.4% strongly agreed. This result indicates
that the computerized accounting system has enhanced efficiency in work flows and is also flexible
to the users.
Table 18: Showing whether the computerized accounting system provides easy storage,
Table 18 revealed that 46% of the respondents agreed, 13.3% were not sure while 40% of the
respondents strongly agreed to the fact that the computerized accounting system provides easy
storage, reference and access to information. This implies that costs associated with manual storage
have been minimized in HFC bank with the introduction of the computerized accounting system.
Table 19: Showing whether computerized accounting system has simplified most of the
According to the findings in table 19, HFC bank by introducing the computerized accounting
system has simplified most of its accounting requirements. 46.7% of the respondents agreed, 6.7%
disagreed, 13.3% were not sure, and 33.3% strongly agreed. This implies that there is proper
Risk management 12 80
User friendly 14 93
Effective auditing 14 93
Speed 15 100
carried out. However, among the several advantages pointed out, those shown above are the most
prominent as reflected by their high percentage responses. It is therefore clear that the system
actually performs its operations very well as far as auditing, balancing, communication, user
friendliness, speed and the time saving factor as per the high percentage of response on these
factors shown in the table thus guaranteeing effectiveness and efficiency of business operations.
Table 21: Responses, on what the cons of a computerized accounting system are.
Eye strains 12 80
Earlier on, the study was able to find out a number of appreciations of the system; however, the
respondents were also keen on stating some disadvantages of the system as shown in table 21. It
is also important to note that there were not really many disadvantages revealed by the research as
shown on the table above. This does not only show that the system is of higher advantage to the
bank but it is also notable that most of the system cons regardless of their response-percentage
variances, are not of a financial nature and actually contribute less to disrupt the effectiveness and
Manual Accounting 0 0
Total 15 100
From the findings, it is clear that all the respondents interviewed, prefer computerized accounting
to manual accounting. This is seen in the percentage differences shown in table 4.6 above, with
respondents. This shows that the use of a computerized accounting system is much more effective
and efficient as compare to the manual accounting option, as far as business operation, running,
management and reporting is concerned. Much as the respondents stated their independent
preferences in table 20 above, the researcher went forward to find out the reasons for the preference
chosen above. Eventually, computerized accounting became the most outstanding option and the
reasons for its preference as per response, are shown in table 23 below.
Table 23: Responses on reasons for preference of the option chosen in table 20 above.
Simplifies work 9 60
manual accounting because of the latter’s aspects of less paper work, the ability to easily track
transactions, simplifying of work and the time saving factor, which are all key to today’s business
operations
System
In this section, the researcher aimed at finding out from the respondents, the qualities of financial
reports, how often the respondents access the financial reports and whether transactions that lead
to the production of these reports pass through authorization, as shown in the findings below.
Table 24: Showing findings on what the qualities of financial reports generated by a
Comparable 11 73
Understandable 12 80
Consistent 14 93
Reliable 14 93
Material 14 93
Table 23 above, shows the qualities or characteristics of a computerized accounting system that
the researcher was able to find out from the respondents. The findings above are majorly solid to
the aspects of these financial reports being consistent, reliable and material as indicated by their
high response percentages of 93% above. This shows that the system is not only accurate as far as
calculations of figure that appear in the reports are concerned but is also produces trustworthy
results and cannot be manipulated when it comes to reporting. It is also important to note that the
aspects of materiality, consistency and reliability as pointed out above, among other qualities of
reports generated through computerized accounting is concerned, are the major weaknesses of a
manual accounting system and it is the reason as to why financial reports generated in a
computerized manner are much more preferred as compared to those generated the manual way,
Table 25: Chart 1: Showing findings on how often the respondents’ access financial reports.
In order to find out whether the respondents have access to financial reports, the researcher deemed
it necessary to find out how often they get access to these reports. As a result, the findings shown
on table 25 above indicate that actually 93% of the respondents have frequent access to the reports.
This also indicates that the respondents’ opinions as far as financial reports are concerned are
articulate.
Table 26: Showing findings on whether transactions pass unauthorized and why.
YES 0 0
SOME 15 100
NO 0 0
Total 15 100
All Banks have got different and various modes of operation as far as supervision and chain of
command are concerned. It is right from the beginning point of a single transaction that a company
will either make a gain or a loss that eventually has to appear in the periodic financial statements.
In this case, every company treats their chain of transaction differently and with this factor in
question, the researcher deemed it necessary to find out the authority of transactions in the case
study where respondents were meant give their independent opinions. However, from the findings,
it is clear that some transactions may pass by authorization and others pass unauthorized. The
reasons given for this option all zeroed to one conclusion that transaction differ in nature especially
in terms of the amount of monies the transaction requires. As far as the case study is concerned,
any transaction beyond the amount of Ghana Shillings Twenty Five million (25,000,000) has to
be authorized by the bulk tellers in charge whereas transaction below that amount of money can
be carried out between the teller and the client without any authorization unless the client or
customer is actually borrowing a loan from the bank. This indicates that the company has put in
place risk management strategies so as to reduce on the level of risks associated with the business
When the researcher asked whether computerized accounting has relationship on financial
Yes 10 66.7
No 3 20
Total 15 100
The above table shows that 66.7% of the respondents responded Yes while 6.7% said No and only
20% were not sure therefore it implies that the relationship of computerized accounting system
4.5.2 The relationship between computerized accounting systems effectiveness and financial
reporting.
reporting in manufacturing firms under this objective the researcher used Person correlation
coefficient to establish the relationship between the variables. (Computerized accounting system
Table 10: Shows correlations between computerized accounting effectiveness and financial
Correlations
accounting correlation
N 15 15
correlation
N 15 15
From the table above, findings shows a strong significant positive relationship between the
variables (r=0.861**, p>0.01) which presupposes that if management of HFC Bank ensures proper
86.1%.Therefore 13.9% is the gap that needs to be closed by HFC Bank and this is majorly due to
short falls of the computerized accounting system. This has been linked to the benefits of applying
computer systems while generating financial reports and with computerized accounting system
data balances are available anytime to aid management make decisions (Lancouch 2003).
Therefore there exists a positive correlation between timeliness and accuracy meaning that the
5.0 Introduction
This chapter presents a summary of major findings on computerized accounting and corporate
fraud and the relationship between them, gives conclusion, recommendations based on the findings
The results from the study confirm that computerized accounting performs several unique tasks in
a company which are satisfactory. This is indicated by the tasks noted down by respondents in the
Quick Financial Reports: The researcher found out that through computerized accounting
system, financial reports can be generated quickly. This side with McBride (2000) view that
computerized accounting system can generate different types of reports needed by management
for instance profit and loss reports, and VAT reports among others. It was observed that the
quickness in generation of the reports is due to the fact that through computerized accounting, data
processing and analysis are faster and more accurate hence managers can instantly access different
system is a highly integrated application that transforms the business processes with its
performance enhancing features. Thus accounting functions, inventory control and statutory
reporting can be easily done resulting into faster access to business information.
Accuracy and Efficiency: Due to expansions, business transactions increase and such transactions
can only be recorded and maintained accurately. The study revealed that the firm can handle large
volumes of accounting data with ease which was the same view pointed by McBride (2000).
Computerized accounting can handle data many times greater than humans hence cost effective.
manual systems. The accountant emphasized the advantage that accounting functions such as
record keeping, double entry principle are simplified with computerized systems. Cook (2002) also
echoed that accounting functions such as posting transactions are simplified. However there should
be accuracy in entering data otherwise human errors in inputting data results into inaccurate
financial reports.
Minimized errors: The researcher observed that with computerized accounting systems,
arithmetic errors are remarkably reduced this is because computerized accounting performs the
accounting does not have intelligence to eliminate or correct errors made by humans during data
simplified because all sets of transactions are easily availed to them hence saving time and costs.
The study showed that the company (case study) actually makes use of a computerized accounting
system. This is evidenced by the results given by the respondents in agreement with the use of the
system in the company. Where the uses of a computerized accounting system are; the system’s
ability to perform data entry, data processing, data security and data reproduction or reporting such
as the generation of financial statements/reports. All these functions of the system have enabled
the bank run its operations smoothly in a much more effective and efficient manner.
Findings revealed that there is a computerized accounting system in HFC Bank. According to
results, 41.5% of the 14 respondents that were interviewed strongly agreed that there is actually a
computerized accounting system 58.5% agreed. Findings also revealed that the computerized
accounting system has enhanced the quality of financial reports and helps to maintain error free
records while providing easy timely information for decision making, easy transaction processing
as well as easy storage, reference and access to information. The study also revealed that over the
time, staff of HFC Bank has since gain sufficient experience in dealing with the computerized
accounting system as daily activity reports can automatically generated on a daily basis. This
according to the findings has improved operational efficiency and effectiveness amongst the staff.
It was however, established from the respondents that management sometimes overrides the
controls in place to generate reports that portray optimistic corporation financial positions. This
finding was arrived at with 61% of the 15 respondents that were interviewed agreed with the fact
that management is found of practicing such an illegal maneuver. This revelation shows a
dangerous position on the state of affairs of HFC Bank as quality and accuracy of financial reports
5.2.2 To finds out the pros and cons of computerized accounting system to financial
institutions. According to the findings of the study, a computerized accounting system is of a great
importance to the running of the company but is also associated with its own weaknesses that
sometimes hinder efficiency in the company’s business environment. The most prominent values
of the system being: ability to carry out automatic financial auditing and transaction balancing,
easy communication, user friendliness, speed and the time saving factor. With all these values at
hand, it is clear that the system actually performs its operations very well as far as guaranteeing
The irregularities of the system however, count in as well. These majorly include risks of system
failure and eye strains among others. Most of these weaknesses of the system can actually be
combated easily in order to reduce on the business risks that may come up as a result. For example,
system failure can be solved through consistent upgrading of the system and the aspect of eye
strains can be controlled by avoiding long working hour on computers and operation through
working shifts. Otherwise, it is notable from the findings that the system is actually more of an
asset than a liability to the company’s business operations and it would therefore be necessary for
other financial institutions that have not yet implemented this system, to adopt the idea of
system.
From the findings, financial reports generated through computerized accounting are mainly
consistent, reliable and material among other qualities. These most prominent qualities of financial
reports generated through computerized accounting make the system much more unique to the
manual accounting system especially where accuracy in financial calculations and reliability in
reporting count. It is one of the strongholds as to why 100% of the respondents prefer a
computerized accounting system to the manual accounting system. With this in mind, it is worth
5.2.3 To find out the pros and cons of computerized accounting to financial institutions
The findings revealed that computerized accounting is not only advantageous but is also associated
with some weaknesses. However, the study results indicate that advantages of a computerized
accounting are much more paramount than its disadvantages. This reflects a positive response in
accounting. The study findings also identified a number of qualities or characteristics of reports
generated through computerized accounting. It is evident that most of these qualities are unique to
those of the reports generated through manual accounting, thus making the latter system much
preferable.
5.4 CONCLUSION
From the findings, response is high that the company (case study) runs its financial operations,
right from the beginning point of data entry, data processing and security to the end point of data
reporting of a financial nature in a computerized manner. It is therefore fair to conclude that HFC
5.4.2 To find out the pros and cons of computerized accounting to financial institutions
The results revealed that much as a computerized accounting system has got satisfactory
advantages, it also comes with its disadvantages. However, the study findings show that the
advantages of computerized accounting are more paramount as compared to its disadvantages even
as far as financial reporting is concerned. This therefore zeroes to the computerized accounting as
system.
The study also established a number of qualities of financial reports generated through
computerized accounting. From these findings however, it is evident that reports produced through
manual accounting have also got their own strengths characteristically but all the same, financial
reports generated through computerized accounting have much more paramount and unique
qualities that still leave computerized accounting as a better option to financial reporting.
5.5 RECOMMENDATION
systems that provide easy preparation of financial reports. As seen from the earlier chapter,
computerized accounting systems perform enormous tasks which if performed correctly provide
To find out the pros and cons of computerized accounting to financial institutions: The
computerized accounting system has got its own strengths and weaknesses while in operation.
However, the study findings show that the system is actually more of an asset than a liability to
the company’s business operations and it would therefore be necessary to recommend that other
financial institutions that have not yet implemented this system, get to adopt the idea of
system. In the business world of a financial nature, daily financial operations have reported several
weaknesses such as errors and intentional figure manipulations being common to financial reports
generated through the manual accounting system. However, the introduction of a computerized
accounting system as far as the study was concerned, brought with it qualities of financial reports
that are very unique to those reproduced manually. This gives a strong stand for a company that is
in need of smooth operations and reliable reporting, the computerized accounting system is
recommended.
From the findings and summary, the researcher recommends that first and fore most, the company
needs to acquire a computerized accounting system that suits the organizational needs. Enough
resources need to be saved for a tailor made software and system analyst need to be consulted in
this important issue. There should also be routine system maintenance programs put in place so
that the system can get rid of shortfall such as viruses, fraud among others that may affect the
system operations. This should be done so that the system can operate to the expectation of
On the management point of view, it is important that staff for handling transactions is trained so
as to improve on the accuracy and speed in posting. With increased improvements and versions of
accounting packages, staff needs constant and continuous training by the authorized dealers of the
packages so that they remain well acquainted with the knowledge and experience of the package.
In addition to the training, it is important to constantly appraise the staff to check which staff is
failing the system as regards reporting unbiased financial information. The company needs more
internal audit reviews to appraise and check the strength of the instituted controls within the
system. The computerized accounting system is prone to fraud in cases where physical cash is
involved. Without internal audit reviews, there may arise cases of teaming and lading fraud that
may pass unnoticed. It is therefore important external auditors come in once in a while to do audit.
There is need to increase the security levels in the internal control system. Management needs to
ensure that requisitions are authorized; cheque payment, vouchers and other source documents are
approved. On recording, it is important to have a clerk to enter the data which is then updated yet
by another person preferably one with more experience and expertise. Management can also
consider the option of using a networked system linking all the system in the finance and
accounting department. This is because the current system uses standalone personal computers. In
this way, errors and fraud possibilities are minimized thus improving on the quality of financial
reports.
There is need for more to be undertaken to establish the role of management in promoting the
quality of financial reporting. There is need to explore whether computerized accounting can be
run alongside the manual system. Therefore there is need to investigate if the two systems can be
used concurrently.
More research on business process re-engineering and how essential can be used in computerized
There is need for more research on how accounting records can be maintained in providing in
Dear respondent,
I am a final year student in Accra Institute of Technology conducting a purely academic study as a partial
requirement that leads to the award of the degree of Bachelor of Business Administration.
The research is on computerized accounting and financial reporting. The answers provided will be treated
with utmost confidentiality and only for academic purposes. I therefore kindly request you to respond
Thank you.
1. Sex
a. Male
b. Female
2. Age of respondent
a 15-30
b 31-40
c 41 and above
b) 1 - 2
c) 2– 3
d) 4 and above
4. Position held / responsibility…………………………………………………………
5. Department
c) Administration d) Sales
(a)Yes
(b) No
……………………………………………………………………………………………… ........
………………………………………………………………………………………………………
……………………………………………………………………………………............................
............................................................................................................................................................
3. List down the names of financial statements prepared by your organization/company through
computerized accounting:
............................................................................................................................................................
............................................................................................................................................................
decision making
HFC Bank .
system.
Bank
The staff that work in the current system have sufficient experience that
accounting system.
HFC Bank can measure the performance of its staff in the light of a
a) ................................................................................................................................................
b) ................................................................................................................................................
c) ................................................................................................................................................
d)........................................................................................................................................................
b) ..........................................................................................................................................
c) ..........................................................................................................................................
d) ..........................................................................................................................................
e) ..........................................................................................................................................
3. What would you prefer; (please tick in one box of your preference below)
Computerized accounting
Manual accounting
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
1. What are the qualities or characteristics of financial reports generated by the computerized
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
3. Do all transactions pass unauthorized? (Please tick in one box of your preference below)
Yes Some No
3above.
............................................................................................................................................................
………................................................................................................................................................
.………...............................................................................................................................................
.………...............................................................................................................................................
.………...............................................................................................................................................
reporting.
In this section, the respondent is required to tick any one option for each statement below:
Statements SA A U DA SD
the users.
The financial reports can be prepared at regular intervals with much ease
…………………………………………………………………………………………………….
…………………………………………………………………………………………………….