The Effect of Computerized Accounting Systems on Accounting Practices in the Kumba Town Cooperative Credit Union

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International: $20
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Analytical tool
Descriptive statistics
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This study focuses on assessing the Effect of Computerized Accounting systems on Accounting Practices in the Kumba Town Cooperative Credit Union. The researcher used both primary and secondary data. The primary source of data used is the information from the workers of the Kumba Town Cooperative Credit Union while the secondary sources of data include articles and other important write-ups in various journals.

The sample size was 10 reasons being that the credit union has a limited number of workers. Some questionnaires were administered which helped to gather some data from the field, these questionnaires were administered to workers of Kumba Town Cooperative Credit Union. The data gotten were presented with the use of some charts and tables.

The data were analysed using the t-test for two mean with unequal variances. The main findings revealed that; out of the three variables (computerized accounting system, accounting practices, and manual accounting systems), a computerized accounting system has a positive effect on the recording of accounting transactions.

From the analysis, the researcher concluded that computerized accounting system has a very positive effect on accounting practice and the researcher recommends the Institutions that train accountant should do well to include the study of computerized accounting systems as part of their courses to ensure that accountants are equipped with both accounting and the required Information Technology skills. The Kumba Town Cooperative Credit Union should add more accounting software to make their work even easier.

Keywords: Computerized Accounting Systems and Accounting Practices.



1.1 Background to the Study

Accounting systems are improving every day and this is thanks to the introduction of Computerized Accounting. This has transformed the nature of accounting practice in the world today, and this is why it is widely acknowledged that Computerized Accounting Systems play an important role in the field of accounting. Accounting is generally called the language of business. It processes business activities into reports and communicates the results to top management and other stakeholders.

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 (de Santis, 2010).

It is important to realize that for the information to be of any use to management or external users, it has to be targeted at a specific decision. It is in this sense that the information may be said to be relevant to the decision. The relevance of accounting information is judged in relation to the user’s situation. Also, accounting information signifies faithfulness, consistency, and trustworthiness. As stated by Mandadur R. and Maurice H in their book, Accounting Information System [1976] page 9, one way of ensuring reliability in accounting information is to ensure adherence to accounting principles.

Also R. W. Hilton and S. J. Swearing-in perception of initial uncertainty as a detriment of information value [pg. 109-119] stipulated that “the value of any accounting information depends on its accuracy and its ability to reduce uncertainty”.

The accounting practices of any financial institution refers to the method by which its accounting policies are implemented and adhered to on a routine basis, typically by an accountant and/or auditor or a team of accounting professionals. Accounting practice is intended to enforce a firm’s accounting guidelines and policies. It exists as the daily recording of financial data that is important to the evolution and monitoring of the firm’s economic activities. Accounting practice should ideally be extremely consistent since there are a large number of business transactions that must be dealt with in exactly the same manner in order to produce consistently reliable financial statements. Examples of good accounting practice are:

  • Always using the same calculation to determine the amount of overtime paid to employees.
  • Always issuing billings to customers on the same day that goods are shipped to them.
  • Always paying supplier invoices on the day when they are due.
  • Always using the same depreciation method for the same class of fixed assets.

The development of a high level of accounting practice calls for the routine examination of any departures from the mandated process flow so that errors can be spotted and underlying causes corrected. This level of self-examination is only possible if the accounting staff has a sufficiently high level of training to understand;

  • The proper process flow
  • When a departure from the authorized process has occurred
  • How to devise a systemic correction to an error
  • How to ensure that the change is properly implemented in the process on a go-forward basis

Accounting practice also calls for continual installation and updating of the best practices, so that both the efficiency and effectiveness of the accounting processes are improved over time. Every financial institution has numerous processes; some simple, others complex, and cumbersome. But as the business grows, acquires new customers, enters new markets, and keeps pace with constant changes in information technology, companies need to maintain highly accurate and up-to-date accounting, inventory, and statutory records.

This is where a Computerized Accounting System helps simplify, integrate, and streamline all the business processes, cost-effectively and easily, and helps present the true picture of all the business undertakings to users of financial reports. With the decrease in the price of computers and accounting programs, this method of keeping books is becoming popular (Raymond and Bergeron, 1992). At present, there has been enormous progress in accounting to meet the needs brought about by Computerized Accounting System those duties that required manual tedious and time-consuming methods can now be done using computers which make work faster, more reliable, accurate, and precise.

Computerized Accounting Systems are software programs that are stored on a company’s computer, network, server, or remotely accessed via the internet. Computerized accounting systems allow you to set up income and expense account, they also can be used to manage pay bills and prepare budgets.

Accounting Software is application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. Thus, these software packages allow the whole accounting system to be run on a computer hence the name Computerized Accounting System. (Daniel Bricklin, 1985). It functions as an accounting information system. Accounting software can range simple, single-entry programs, double-entry systems that can process accounts receivable, account payable, and inventory among other functions.

The Institute of Management Accountants (IMA) and the American Institute of Certified Public Accountants (AICPA) report the need for computer and information technology concepts to be part of the knowledge, skills, and abilities of the accounting professionals. Both say accounting professionals should be able to apply productivity improvement software and applications such as spreadsheets and accounting-specific software. They should be able to interpret, integrate and implement information technology. Reasons why, this study seeks to bring out the part played by Computerized Accounting System on Accounting Practice.

1.2 Problem Statement and Justification of the Study

The advancements in information technology have eventually led to the introduction of a computerized accounting system on accounting practice to help produce relevant and reliable accounts for users of financial statements for decision making. Before now, all accounting transactions were done manually which is hectic and time-consuming giving reasons for the need to shift from manual to a computerized system. Some years back accounting software was used in private sectors only but recently the Government of Cameroon also decided to install Accounting software’s in her public sectors.

In the Kumba Town Cooperative Credit Union, they practice the Computerized Accounting System with the use of the ALPHA MICRO FINANCE Accounting Software. So this study is to research the positive effects of Computerized Accounting Systems implemented in the Kumba Town Cooperative Credit Union (KUTCCUL).

This research is centered in Kumba Town Cooperative Credit Union which is located in the South West Region of Cameroon. The research is intended to discover the extent to which Computerized Accounting System has affected the Accounting Practice in the Kumba Town Cooperative Credit Union.

The study covers the period from the creation of Alpha Micro Finance to the present. This research will target the workers of the Kumba Town Cooperative Credit Union.

1.3 Research Questions

  1. What is the effect of Computerized Accounting System on Accounting Practice?
  2. What is the effect of the implementation of a Computerized Accounting System on the recording of accounting transactions?
  3. What is the effect of Computerized Accounting System on the timely preparation of financial reports?
  4. What is the effect of the Computerized System on the preparation of the union’s budget?
  5. What are the challenges that Kumba Town Cooperative Credit Union faces in adopting a proper Computerized Accounting Systems?

1.4 Objectives of the Study

The primary objective of the study is to assess how Computerized Accounting Systems have affected Accounting Practice in the Kumba Town Cooperative Credit Union.

The specific objectives of the study are;

  1. To evaluate the effect of a Computerized accounting system on the recording of accounting transactions.
  2. To evaluate the effect of Computerized Accounting System on the timely preparation of financial reports.
  3. To also evaluate the effect of the Computerized Accounting System on the preparation of the union’s budget.
  4. To identify the challenges that Kumba Town Cooperative Credit Union faces with adopting proper Computerized Accounting Systems.
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