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Accra Institute of Technology (AIT)


Advanced Business School (ABS)
The Effectiveness of Computerized accounting and financial
reporting at HFC Bank
(Cast Study of HFC bank Ghana)

By
Saminu Kanti Suleiman
Index Number
ABS14A00112Y

In partial fulfillment of the requirements Award of Bachelor of


Business Administration (Accounting and Finance)
CHAPTER ONE

General introduction and summary

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.

1.1 Field and subject of study

The field of study of this research project is accounting and the subject area of focus is computerize

accounting

1.2 Background to the Study

Globally, in Ghana, computerization of banking departments plays an increasing important role in

economy and society at large, of which computer applications knowledge is a pre-requisite in every

profession, opportunities are enhanced, whatever be the nature of the profession chosen. The

presence of this small box in day-to- day function is overpowering and it has become the backbone

of all banking accounting systems. Business depends on computers to handle all kinds of

accounting and bookkeeping jobs. Banks use computers to record money deposited and
withdrawn. You can also book and plan your entire travel agenda, including your ticket booking

through e-mail facility, Boyett 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).

The primary objective of an accounting function in an organization is to process financial

information about the activities of the organization and prepare financial statements at the end of

the accounting period. The modern method of accounting is based on the system created by an

Italian monk Fra Luca Pacioli. He developed this system over 500 years ago. This great and

scientific system was so well designed that even modern accounting principles are based on it

(deSantis, 2010)

Organizations seem to have realized that it is in their interest to run business processes while they

are monitored by computerized accounting systems as opposed to manual given the great merits

the former possess over the later. Accounting is a financial method used by businesses to collect,

organize, process and summarize data for reports and statements. Accounting is used to keep track

of business trends and to report on the relevant facts within the business. Computer and business

Software allows more efficient processing and organization of data. Computerized accounting

system refers to the integration of different component systems to produce computerized books of

accounts and computer-generated accounting records and documents.

ttp://www.bir.gov.ph/reginfo/regcas.htm
Computerized Accounting means that the "books" of a business are managed on a computer. Quick

Books, for instance, would be an example of computerized accounting (there are many different

software’s) Using Microsoft Excel to organize a business' financial information is also a manner

of computerized accounting. http://wiki.answers.com. Accountants measure a business entity's

income, expenses and changes in resources. Back in the day, prior to the widespread use of spread

sheet and computer applications, Accountants used journals and ledgers in which they recorded

business transactions, hence, the term keeping the books. As computer applications became main

stream, this keeping of the books accounts has gradually migrated into computerized spreadsheets.

Gradually, Accounting systems dedicated to this function were developed and the term

Computerized Accounting was born http://wiki.answers.com

Computer in commercial and industrial settings have been around for several decades. The banking

industry computer has been used in various areas carrying out their day-to day activities through

automated Teller Machine, electronic funds transfer, electronic data exchange, smart cards, MICR

cheques, local area network, wide area work, point of sales system, electronic home and office

banking, telephone banking, make cheque available program, computerized credit rating, daily

calculation of accounts program, local accounting systems, CD accounting system, saving

accounting system and safe deposit box accounting system. Computer has immensely aided in

banking industry or baking sector in the areas of managerial position, sales department and other

various department in the bank. The use of programmed decision making offers several important

advantages to the firm, since the computer is potentially capable of making better programmed
decision than the human user. One of the most existing things about the information and retrieving

is that they are used oriented, Laura (2003).

Accounting information system being an asset of methods, people, procedures and devices

regularly used to process business transactions, Hermanson 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

computerized accounting system.

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

Transfer, Electronic Data Interchange, Electronic Home and Office Banking.

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

computerization of accounting systems on financial reporting with particular reference to HFC

Bank, laboni Branch.

1.2 Statement of the problem

The advancements in information technology have eventually led to the introduction of

Computerized Accounting Systems in corporate reporting to help produce relevant and faithful

representative financial reports for both management and external users for decision making

(Greuning, 2006). The many advantages from the use of these systems have led many to conclude

that Computerized Accounting Systems in Corporate Reporting is the ‘engine of growth’ in

business organizations (Frenzel, 2006).There has been an increase in accounting problems

associated with financial reporting hence killing most business that fall victims of this

circumstance. Here, we pursue the aspects associated with manual accounting in comparison with

computerized accounting in order to find out which system will be in a better position to improve

on the quality of financial reporting and accounting operations of a business.


Modern technology has brought about the use of computer system in all areas of our human

endeavor’s, in 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

of special software packages; accountants summarize transactions in standard formats by financial

records and organize data in special formants employed in financial analysis. Despite most high

profile companies having 100% computerized accounting systems; there are still difficulties in

tracking down errors and at the same time, time consuming, Adetayo 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

evaluate the financial reporting with accounting packages.

1.4 Objectives of the study

The objectives of the study were:-

a) To evaluate the strength of the computerized accounting system used by HFCBank, laboni

Branch.

b) To find the pros and cons of computerized accounting to financial institutions.

c) To establish the qualities of financial reports generated by computerized accounting systems.

d) To establish the relationship of computerized accounting and financial reporting in financial

institutions in Ghana
1.5 Research Questions

The study was guided by the following 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?

1.6 Scope of the study

1.6.1 Content scope

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

institutions, to establish the qualities of financial reports generated by computerized accounting

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

availability of data for the research work.

1.6.3 Time scope

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.

1.7 Significance of the study

The findings were of great importance in the following ways:-

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

emphasized and well managed in order to pursue the system successfully.


The study was of great benefit to the students who enable to access this information that guide them in

research and equip them with knowledge as far as manual and computerized accounting is concerned and

the importance of computerized accounting as far as financial reporting is concerned.

The various stakeholders like Ministry of Ministry of Finance, Planning and Economic Development,

International Bodies like USAID, World Bank and International Monetary Fund, and Bank of 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

research topic in another period.

1.8 Expected outcome and possible usage

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

programs and computer files.

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

and organization as a whole.


1.9 layout of the thesis

The study was organized into five chapters.

Chapter one discuss the statement of the problem, the objective of the study and its significance

Chapter two will deals with the literature review.

Chapter three spells out the methodology that was employed to carry out the research.

Chapter four discusses and analyze the data collected.

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. Jennifer VanBaren (Computer based Accounting: 1997) defines

computerized accounting as the accounting done with the aid of a computer. It tends to involve

dedicated accounting software by digital spreadsheets to keep track of a business’ or clients

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).

Marivic (2009) described a computerized accounting system as a method or scheme by which

financial information on business transactions are recorded, organized, summarized, analyzed,

interpreted and communicated to stakeholders through the use of computers and computer based

systems such as accounting packages.

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

accounting and hence producing quality and reliable work.


McRae (1998) adds that computerized accounting systems are advantageous in consolidating

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

information to users (Nash and Hearly, 2003).

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 produce computer books of accounts and computer-generated accounting records and

documents. Frank wood (Business Accounting in a computerized environment 2002). According

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

accounting and producing quality reports.

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.

2.1.2 Components of Computerized Accounting Software

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

all documentation and reports can be generated automatically.

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

recording as in the system there is the existence of reference of every transaction.

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

system where data used by one individual becomes in accessible to another.

2.2 Benefits of Computerized accounting systems:

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

making (Mc Bride, 2000).

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

the system (Vanbriefing, 2005).

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

be largely automated by use of systems (Cook, 2001).


Better Record keeping and data Security. Whilst human error can still corrupt your data e.g.

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.

Organization and Accuracy: A Computerized Accounting System enables businesses to stay

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.

Customer accounts) will always be up-to-date.

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.

Distribution: Computerized Accounting Systems allow companies to distribute financial

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

balance sheet. In effect, Computerized Accounting Systems enable financial statements to be

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

improve general business efficiency.

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).

Improvement in operational efficiency. A computerized accounting system eliminates many

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

in just a few moments. KJ Henderson (1999)

Compatibility. The implementation of a computerized accounting system also allows various

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)

Storage and Retrieval of information. Sangster (Computerized accounting 2002), a computerized

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

processing, including the generation and printing of checks and reports.

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

saved transactions. Sangster (Computerized accounting 2002).

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

success more likely. Sangster (Computerized accounting 2002).

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

information for decision making.

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

easily identify and solve problems instantly.


Indira (2008) pronounced the improvement in business performance as a result computerization of

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

faster and takes quicker decisions as it also enhances communication.

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.

According to Carol (2002), it is easy to do accounting functions using computerized accounting

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

pitfalls some of which are shown as below;

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

in financial institutions information such as customers’ accounts, previous financial report,

information pertaining loans advanced among others) already saved on the computer.

2.2.1 Limitations of Computerized accounting.

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

2000; Burgess 1997).

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

as to why organizations do have computers. Accounting systems costs have decreased

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.

If businesses can't afford these costs, they will be left behind.

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

leads to loss of data hence taking more time to be retrieved

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

encryption on wireless connections.

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

affected by the hackers.

Converting from manual to computerized accounting system before converting from manual to

computerized accounting system, planning is of great importance. S. NORA (Computerization of

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).

Recommend 2 ways of changing a manual system to computerized system. Direct or parallel

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.

2.3. Manual versus Computerized Accounting

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,

their benefits and shortcomings, and their comparison.


Whereas computerized accounting has been defined by Alan & Frank (2005) as a total suit of components

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

statement reports and other routines.

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

an extra effort to find and correct the mistake.

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

designed to record and report financial information electronically, (Osmond, 2011).


2.3.1 Benefits of Computerized Accounting over Manual Accounting

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

request. Magdalene M, (2010)

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

thousands of calculations simultaneously and accurately as compared to manual accounting where by

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

and hinder effective decision making.

2.4 Financial Reporting and its Qualities

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

according to the legal and professional framework of a specific locale.

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

referred to as an “account”; expression of one’s responsibility over a particular activity.


Van (2005) defines financial reporting as the process of presenting financial information or data

about a company’s financial position, operating performance and its flow of funds for an

accounting period.According to Indira (2008), timeliness is also another important characteristic

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

performance during a period management discharge it’s stewardship responsibility to owners. It

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,

competitors and general public.

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,

verifiability, neutrality, comparability, consistency and understandability considered as secondary

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

financial statements (Romney et al 2008).

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

once in every calendar year.The process of periodically providing general-purpose financial

information to people outside an organization is termed financial reporting (Greuning, 2006).

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

resources, and how prior mistakes will be avoided) (Beaver 1978).


The end product of financial reporting is a financial report. This financial report generally

consists of:

 Statement of financial position at the end of the period

 Statement of comprehensive income for the period

 Statement of cash flows for the period

 Notes to the accounts (Greuning,2006)

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

generates financial reports with the stated qualities below:

2.4.1 Characteristics of quality financial reports

Understandable: Naturally the information produced must be understandable. A guideline is to

provide information that people, who are willing to understand it, can understand it: professionals

or nonprofessionals. As a business owner, you have to think of the different accounting

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

grounds that it may be difficult for certain users to understand.

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

to relevance Derrell V. (2010)

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

that occurred in your business.


Comparable & Consistent: Furthermore, comparability relates to the ability of information to be

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

companies and over time.

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

a true and fair view of financial statements.

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

has representative faithfulness. Relevance is also a very important characteristic of quality.


Frankwood indicates that financial information is relevant if it is capable of making a difference

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.

2.5 Relationship Between Computerized Accounting and Financial Reporting

Computerized accounting on financial reporting is linked to benefits applying computer system

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).

Quality of financial reports is assured with computerized accounting system as compared to

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

making (Kwarijuka, 1998).

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

Computerized accounting is faster and efficient in processing information. As the properties of

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

reports enable constantly updating the system.

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.

3.1 Research Design

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 results from the quantitative study.

3.2 Area of the study

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

Bishop Willis), Garage Street, Bosporus Road and laboni junction.


3.3 The Population of Study

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.

3.4 Sample Size and Selection Method

The researcher used convenient sampling to come up with 15 respondents of the financial

institution as broken down below.

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

Source: Primary 2016

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

purposive identification of the respondents.

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.

3.6 Source of Data

3.6.1 Primary Data

Primary data was obtained through the use of self-administered questionnaire to respondents

following systematic and established academic procedures, as suggested by Nunnally and

Bernstein (1994). Primary data was collected from the respondents that were chosen from HFC

laboni Branch

3.6.2 Secondary Data

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

internet information relating to computerized accounting and financial reporting.

3.7 Data collection method

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

the correct options by ticking the correct answers.

3.7.2. Interview.

Here, questions were determined beforehand while others arise during the course of the

conversation. The interviews were done on individual-oriented basis to allow expression of

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

3.7.3 Key Informant Interviews

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).

3.7.4 Documentary Analysis

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

instrumental especially in comparison analysis and literature review.

3.8 Data collection Procedure

Data collection involved a self-administered questionnaire. The researcher drops the

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

assessed by colleagues and to increase public confidence and reliability.

3.10 Data processing and Analysis

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

and statistical testing.

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,

percentages, and measures of central tendency.

3.13 Limitations faced during the study.

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

success of the research studied.


Inadequate cooperation of respondents in form of refusal and delays in completing questionnaires.

However a number of respondents tried to bring back the questionnaires in time and the researcher

tried to be patience enough to the respondents who delayed in completing questionnaires.

Respondents felt insecure to reveal that they were not empowered but the researcher assured them

that their responses were treated with much confidentiality.

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

work longer hour in order to compensate for the lost time.

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

PRESENTATION, DISCUSSION AND ANALYSIS OF FINDINGS

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,

to establish the qualities of financial reports generated by computerized accounting systems

effectiveness and to establish the relationship of computerized accounting system effectiveness

and financial reporting in financial institutions in Ghana

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

to the number of questionnaires which were returned.

4.1 The nature of respondents

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

study is presented as below. –

Table 1: Showing the nature of respondents

Nature of Respondents Frequency Valid Percent Cumulative Percent

Sex

Male 09 60.0 60.0

Female 06 40.0 100.0

Total 15 100
Age difference

15-30 06 40.0 40.0

31-40 06 40.0 80.0

41 and above 03 20.0 100.0

Total 15 100

Time Spent Working at the Bank

1 Month – 1 Year 01 06.7 06.7

1- 2 03 20.0 26.7

2–3 05 33.3 60.0

3 and above 15 40.0 100.0

Total 15 100

Position

Sales officer 07 46.7 46.7

Loan officer 03 20.0 66.7

Tellers 01 06.7 73.4

Customer advisors 02 13.3 86.7

Accountant 02 13.3 100.0

Total 15 100
Department

Procurement 02 13.3 13.3

Sales 04 26.7 40.0

Administration 01 06.7 46.7

Information and stores 08 53.3 100.0

Total 15 100.0

Source: Researchers field survey, 2016

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

years and above comprised only twenty percent (20%).


As noted / indicated above, the variations in age structure were pointed out as a result of various

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

compared to the rest.

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

administration and store, finance and accounting departments respectively.

4.2 Findings on the uses of a computerized accounting system.

Table 2: Responses on whether, the company uses a computerized accounting system for its

operations.

Response Frequency Percent Valid Percent Cumulative

Percent

YES 15 100 100 100

NO 0 0 00 100

Total 15 100 100

Source: Primary Data 2016


Table 2 above indicates that all the respondents (100%) are in agreement that the company actually

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.

Major Response (Tasks) Frequency (out of 15) Percent

Data summary 9 60

Data analysis 11 73

Entering/Recording of data 12 80

Reporting (financial statements) 13 86

Data security(password protection) 13 86

Source: Primary Data 2016(N=15) 14

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

reports also standing at a percentage of 86%.


Table 4: Responses, showing the financial statements (reports) generated by the

computerized accounting system.

Response (reports) Frequencies out of 15 Percentage (%)

Statement of comprehensive income 13 86

Statement of financial position 14 93

Statement of cash flows 14 93

Income statement 15 100

Source: Primary Data 2016 (N=15)

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

statement (Statement of comprehensive income, Statement of financial position, Statement of cash

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.

Table 5. Showing whether HFC Bank has a computerized accounting system.


Response Frequency Percent Valid Percent Cumulative

Percent

Valid Agree 8 53.3 53.3 53.3

Strongly agree 7 46.7 46.7 100.0

Total 15 100 100

Source: Primary Data 2016.

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

is actually a computerized accounting system in HFC Bank.

Table 6: Showing whether HFC bank provides training to staff in computerized accounting

system

Response Frequency Percent Valid Percent Cumulative

Percent

Valid Agree 11 73.3 73.3 73.7

Strongly agree 4 26.7 26.7 100.0

Total 15 100 100

Source: Primary Data 2016.

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

majority of the employees have attained training in computerized accounting.


Table 7: Showing whether computerized accounting system provides timely information for

decision making.

Response Frequency Percent Valid Percent Cumulative

Percent

Valid Agree 9 60 60 60

Disagree 1 6.7 6.7 66.7

Not sure 2 13.3 13.3 80

Strongly Agree 3 20 20 100.0

Total 15 100 100

Source: Primary Data.2016

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

reports in HFC Bank

Response Frequency Percent Valid Percent Cumulative

Percent

Valid Agree 9 60 60 60

Not sure 2 13.7 13.7 73.7

Strongly agree 4 26.7 26.7 100.0


Total 15 100 100

Source: Primary Data 2016.

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

the introduction of a computerized accounting system.

Table 9: Showing whether HFC Bank has qualified staff in dealing with computerized

accounting system.

Response Frequency Percent Valid Percent Cumulative

Percent

Valid Agree 10 66.7 66.7 66.7

Disagree 01 6.6 6.6 73.3

Strongly Agree 04 26.7 26.7 100.0

Total 15 100

Source: Primary Data 2016.

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.

Response Frequency Percent Valid Percent Cumulative

Percent

Valid Agree 5 33.3 33.3 33.3

Disagree 1 6.7 6.7 40

Not sure 4 26.7 26.7 66.7

Strongly agree 5 33.3 33.3 100.0

Total 15 100 100

Source: Primary Data 2016.

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

HFC Bank and perfect.

Table 11: Showing whether computerized accounting has eased the transaction processing

in HFC Bank.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 10 66.7 66.7 66.7

Strongly agree 05 33.3 33.3 100.0

Total 15 100 100

Source: Primary Data 2016.


Findings from the above table11 revealed that 66.7% agreed, 33.3% strongly agreed that the

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

experience that keep pace with a computerized accounting system.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 7 46.7 46.7 46.7

Disagree 1 6.7 6.7 53.4

Not sure 5 33.3 33.4 86.7

Strongly agree 2 13.3 13.3 100

Total 15 100 100

Source: Primary Data, 2016

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

accounting system are greater than the cost of obtaining it.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 9 60 60 60

Disagree 1 6.7 6.7 66.7


Not sure 2 13.3 13.3 80

Strongly agree 3 20.0 20.0 100.0

Total 15 100 100

Source: Primary Data 2016.

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

very beneficial compared to the costs involved in obtaining the system.

Table 14: Showing whether Administration can access daily reports on activities in a

computerized accounting system.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 8 53.3 53.3 53.3

Disagree 1 6.7 6.7 60

Not sure 2 13.3 13.3 73.3

Strongly agree 4 26.7 26.7 100.0

Total 15 100 100

Source: Primary Data 2016.

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

of a computerized accounting system.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 6 60 40 40

Disagree 1 6.7 6.7 46.7

Not sure 3 20 20 66.7

Strongly agree 2 13.3 13.3 80

Strongly disagree 2 13.3 13.3 93.3

Disagree 1 6.7 6.7 100

Total 15 100 100

Source: Primary Data.2016

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

information for internal and external control.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 7 46.7 46.7 46.7

Disagree 1 6.7 6.7 53.4

Not sure 2 13.3 13.3 66.7


Strongly agree 3 20 20 86.7

Strongly disagree 2 13.3 13.3 100.0

Total 15 100 100

Source: Primary Data 2016

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

than the manual system.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 8 53.3 53.3 53.3

Strongly agree 5 33.4 33.4 86.7

Strongly disagree 2 13.3 13.3 100.0

Total 15 100 100

Source: Primary Data 2016

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,

reference and access to information.

Response Frequency Percent Valid Percent Cumulative Percent

Valid Agree 7 46.7 46.7 46.7

Not sure 2 13.3 13.3 60

Strongly agree 6 40 40 100.0

Total 15 100 100

Source: Primary Data 2016.

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

accounting requirements of HFC Bank.

Response Frequency Percent Valid Percent Cumulative Percent


Valid Agree 7 46.7 46.7 46.7

Disagree 1 6.7 6.7 53.4

Not sure 2 13.3 13.3 66.7

Strongly agree 5 33.3 33.3 100.0

Total 15 100 100

Source: Primary Data 2016

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

accountability for the activities of HFC Bank.

4.3 Findings on the pros and cons of a Computerized Accounting System

Table 20: Responses, on the pros of a computerized accounting system.

Response (pros) Frequencies (out of 15) Percentage (%)

Risk management 12 80

User friendly 14 93

Easy communication (funds transfer) 14 93

Easy balancing of daily transactions 14 93

Effective auditing 14 93

Speed 15 100

Time saving 15 100

Source: Primary Data 2016


Table 20 above shows the advantages of a computerized accountings system as per the study

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.

Response (cons) Frequencies Percentage (%)

Old computers hinder speed 8 53

Computer virus threats and data loss 9 60

Long training period 10 66

Eye strains 12 80

Chances of system failure 12 80

Source: Primary Data 2016 (N=15)

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

efficiency of the financial operations of the business.


Table 22: Responses on preferences between manual computerized accounting systems.

Preferences Frequencies Percentage (%)

Manual Accounting 0 0

Computerised Accounting 15 100

Total 15 100

Source: Primary Data 2016 (N=15)

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

computerized accounting standing at 100% and manual accounting at 0% of preference by the

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.

Less paper work 8 53

Simplifies work 9 60

Easy tracking of transactions 11 73

Time saving and speed 14 93

Source: Primary Data 2016 (N=15)


Responses on table 23 above show that computerized accounting is much preferred instead of

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

4.4 Finding on the qualities of Financial Reports generated by a Computerized Accounting

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

computerized accounting system are.

Response (qualities) Frequencies Percentage (%)

Comparable 11 73

Understandable 12 80

Consistent 14 93

Reliable 14 93

Material 14 93

Source: Primary Data 2016 (N=15)

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,

which is actually an outdated system of operation.

Table 25: Chart 1: Showing findings on how often the respondents’ access financial reports.

How to get access to the financial


reports
percentages of the respondents

Once a year Frequently Never


Series1 5% 93% 2%

Source: Primary Data 2016

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.

Response Frequencies Percentage (%)

YES 0 0

SOME 15 100

NO 0 0

Total 15 100

Source: Primary Data 2016 (N=15)

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

operations which may lead to losses.

4.5 The relationship of computerized accounting systems effectiveness on financial reporting

4.5.1 Computerized accounting system effectiveness and financial reporting

When the researcher asked whether computerized accounting has relationship on financial

reporting of the firm, the following responses were obtained:

Table 27: Responses on the relationship of computerized accounting on financial reporting

Responses No. of respondents Percentage (%)

Yes 10 66.7

Not sure 2 6.7

No 3 20

Total 15 100

Source: Primary Data 2016

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

effectiveness on financial reporting in the firm.

4.5.2 The relationship between computerized accounting systems effectiveness and financial

reporting.

To establish the relationship of computerized accounting system effectiveness on financial

reporting in manufacturing firms under this objective the researcher used Person correlation
coefficient to establish the relationship between the variables. (Computerized accounting system

effectiveness and financial reporting)

Ho: computerized accounting systems effectiveness has an effect on financial reporting

Ha: computerized accounting systems effectiveness has no effect on financial reporting

Table 10: Shows correlations between computerized accounting effectiveness and financial

reporting in HFC Bank.

Correlations

Computerized accounting Financial reporting

Computerized Pearson 1.00 .861**

accounting correlation

Sig (2-tailed) . .000

N 15 15

Financial Reporting Pearson .861 1.00

correlation

Sig (2-tailed) .000 .

N 15 15

**.Correlation is significant at the 0.01 level (2-detailed)

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

computerized accounting, the quality of financial reporting will surely be increased by

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

responses on accuracy and timeliness are consistent to with each other.


CHAPTER FIVE

DISCUSION, RECOMMENDATIONS AND CONCLUSION.

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

and areas for further research.

5.1 Summary of findings

To determine the use of a computerized accounting system.

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

questionnaire on this variable.

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

information which leads to easy and quick decision making.


Improvement in Business Performance: As pronounced by Indira (2008) that computerized

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.

Simplified Posting of Transactions: There is no need to have huge paper documentations as in

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

computations automatically. However the researcher also established that computerized

accounting does not have intelligence to eliminate or correct errors made by humans during data

entry but can only detect errors.


Easy Auditing: The researcher was informed that when external auditors come, there work is

simplified because all sets of transactions are easily availed to them hence saving time and costs.

5.2.1. To determine the use of a computerized accounting system.

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

generated become highly doubtable.

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

effectiveness and efficiency of business operations is concerned.

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

establishing it so as to improve on operations in terms of effectiveness and efficiency.


5.2.2 To establish the qualities of financial reports generated by a computerized accounting

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

to recommend a computerized accounting system for business operations especially in of the

financial nature as compared to the outdated manual accounting system.

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

the adoption of the use of computerized accounting.

5.3.3 To establish the qualities of financial reports generated through computerized

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

5.4.1 To determine the use of a computerized accounting system.

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

Bank Ghana Limited actually make use of a computerized accounting system.

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

more of an asset than a liability to business operations and reporting.

5.4.3 To establish the qualities financial reports generated by a computerized accounting

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

To determine the uses of a computerized accounting system. I strongly recommend that

financial institutions should continuously adopt a culture of utilizing computerized accounting

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

the company with accurate, efficient and timely reports.

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

establishing it so as to improve on operations in terms of effectiveness and efficiency.

To establish the qualities of financial reports generated by a computerized accounting

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

management and other users.

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.

5.6 Areas of further study

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

accounting to achieve better goals in firms.

There is need for more research on how accounting records can be maintained in providing in

depth exposure to accounts and quality of financial reports

APPENDIX 1 (RESEARCH QUESTIONNAIRE

QUESTIONAIRE ON COMPUTERISED ACCOUNTING AND FINANCIAL REPORTING

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

appropriately to the following questions.

Thank you.

SECTIONA: Background of the respondent

1. Sex

a. Male

b. Female

2. Age of respondent

a 15-30

b 31-40

c 41 and above

3. Time spent working with HFC Bank (G) Limited bank

a) 1 year1 Month – 1 Year

b) 1 - 2

c) 2– 3

d) 4 and above
4. Position held / responsibility…………………………………………………………

5. Department

a. Procurement b. Information and stores

c) Administration d) Sales

SECTION ONE: THE USE OF A COMPUTERIZED ACCOUNTING SYSTEM

1. Does your organization/company employ the use of a computerized accounting system?

(a)Yes

(b) No

2. What are the major tasks performed by the system?

……………………………………………………………………………………………… ........

………………………………………………………………………………………………………

……………………………………………………………………………………............................

............................................................................................................................................................

3. List down the names of financial statements prepared by your organization/company through

computerized accounting:

............................................................................................................................................................

............................................................................................................................................................

Apply a tick where applicable using the following key.

SA – Strongly Agree, A – Agree , NS – Not Sure, D – Disagree SD – Strongly disagree


SA A U DA SD

HFC Bank has a computerized accounting system.

HFC Bank provides training to staff in computerized accounting system.

Computerized accounting system provides timely information for

decision making

Computerized accounting has enhanced the quality of financial reports in

HFC Bank .

HFC Bank has qualified staff in dealing with computerized accounting

system.

The computerized accounting system maintains error free records.

Computerized accounting has eased the transaction processing HFC

Bank

The staff that work in the current system have sufficient experience that

keep pace with a computerized accounting system.


The expected benefits obtained from applying a computerized accounting

system is greater than the cost of obtaining it.

Administration can access daily reports on activities in a computerized

accounting system.

HFC Bank can measure the performance of its staff in the light of a

computerized accounting system.

The computerized accounting system provides enough information for

internal and external control.

The computerized accounting system is more efficient and flexible than

the manual system.

The computerized accounting system provides easy storage, reference

and access to information.

Computerized accounting system has simplified most of the accounting

requirements of HFC Bank

SECTION TWO: THE PROS AND CONS OF COMPUTERIZED ACCOUNTING AS FAR AS

FINANCIAL REPORTING IS CONCERNED.

1. What are the advantages of computerized accounting systems?

a) ................................................................................................................................................

b) ................................................................................................................................................

c) ................................................................................................................................................

d)........................................................................................................................................................

2. What are the disadvantages of computerized accounting systems?


a) ..........................................................................................................................................

b) ..........................................................................................................................................

c) ..........................................................................................................................................

d) ..........................................................................................................................................

e) ..........................................................................................................................................

3. What would you prefer; (please tick in one box of your preference below)

Computerized accounting

Manual accounting

3.1 Please give reasons for your preference ticked above:

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

SECTION THREE: THE QUALITY OF FINANCIAL REPORTS GENERATED BY 30

COMPUTERIZED ACCOUNTING SYSTEMS.

1. What are the qualities or characteristics of financial reports generated by the computerized

accounting systems in your organization?

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

2. How often do you get access to the financial reports?


Once a year Frequently Never

3. Do all transactions pass unauthorized? (Please tick in one box of your preference below)

Yes Some No

Please give reasons for your choice of answer in Qn.

3above.

............................................................................................................................................................

………................................................................................................................................................

.………...............................................................................................................................................

.………...............................................................................................................................................

.………...............................................................................................................................................

SECTION FOUR) The relationship of computerized accounting systems and financial

reporting.

Do you think computerized accounting has an impact on financial reporting?

Yes Not sure No

In this section, the respondent is required to tick any one option for each statement below:

Apply a tick where applicable using the following key.

SA – Strongly Agree, A – Agree , NS – Not Sure, D – Disagree SD – Strongly disagree

Statements SA A U DA SD

Financial reports are timely generated for decision making purposes by

the users.
The financial reports can be prepared at regular intervals with much ease

as a result of computerization of the accounting systems.

Arithmetic errors in the financial reports have greatly reduced due to

computerized accounting systems.

Keeping of records and maintenance of accounting data have become

easy and simple to perform.

The stakeholders can greatly rely on the reports generated because of

accuracy and quality of the financial reports.

There is a guaranteed quick speed of processing financial statements.

Others (please specify):………………………………………………………………………

…………………………………………………………………………………………………….

…………………………………………………………………………………………………….

Thanks for your cooperation.

God bless you.