THE INFLUENCE OF COMPUTERIZED ACCOUNTING SYSTEMS ON THE PERFORMANCE OF MFIS IN BUEA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Today’s modern technology brought into use computers. This technology is the application of science to gathering, recording, processing, and communicating of business information by means of electronic media. Most common tool for application is the computer and it involves all transaction processing system. Management information system, various business support systems etc. The computer is a central force in the advancement of various organizations. The historical development of computer started with Hollerith punch card of 1880, George Alken calculator and Charles Babbage’ creation of the difference engine.

The Cameroon microfinance sector has made remarkable progress during the last 10 years, due to the dynamism of the main actors who are the state, the MFI and development partners (Fotabong 2008)

Business organizations should adopt a suitable accounting package in order to derive benefits from it (Mike et al 2006) for instance a small business, personal finance organizer like quicken, Micro soft money and quick books are usually good enough to handle accounts of small businesses. It is however noted that the way accounting data is entered, processes and stored has considerably changed.

Computers are now being used extensively in office administration to perform the routine clerical work. Today, most large and medium sized organizations are almost totally dependent on their computers.

Computers have created a “global village” in which people can communicate with others all over the world as if they were living next door. It as well includes the various services and applications association with the above equipment and software, in activities such as video conferencing and distance learning.

Computers have brought ease with which activities are carried out globally. With attributes such as speed, accuracy, cost, backup consistency and reliability. 

It is no longer necessary to have huge rooms full of ledgers and records; there is accuracy and efficiency in keeping records, minimum cases of omission and loss of accounting records using computers.

In Buea, many MFIs have adopted the use of computers in many sections of their activities such as recording of daily transactions, recording of customer’s savings (accounting details), preparation and presentation of their yearend financial reports etc. Therefore, the researcher focuses on investigating the influence of computerizes accounting systems on the performance of MFIs in Buea in order to show how much or how little computerized accounting systems influence the performances of MFIs.

1.2 STATEMENT OF PROBLEM AND JUSTIFICATION OF STUDY

As information technologies grow progressively, the manual accounting systems have become gradually inadequate for decision needs (Brecht and Martin 1996). Consequently, public and private sector firms in both developing and developed economies view CAIS (Computerized accounting systems) as a vehicle to ensure effective and efficient flow in the recording, processing, and analysis of financial data. Effective and efficient information flow enhances managerial decision making thereby increasing the firm’s ability to achievecorporate and business strategy objective (Mason, McCartney, and Sherer 2011).

Although the computerized accounting system is important, there are many MFIs which have not implemented this system, this eventually has led to incidences of accounting malpractices of financial statements, misrepresentation of financial information which results into distorted information. Furthermore, it has prompted fraudulent activities perpetuated by accountants or accounting practitioners in the institution. All these challenges pose negative repercussions to the overall financial performance of MFIs. In light of these challenges, this study examines the influence of computerized accounting systems in the performance of MFIs in Buea.

The experience of advanced countries is that managing complex financial management information systems (FMIS) projects requires considerable management skills. However, this is typically in short supply in distribution control systems (DCs). Top managers may not be computer literates. The consequence is often the binding constraints, when introducing FMISs, its not the technical capacity to create them but the capacity to manage them. (Keating and Frumkin 2003). In most MFIs, funds from customers are poorly managed and their accounting systems are in poor order. Many MFIs do not have qualified accountants and have problems preparing accurate and timely financial reports, which is one of the customers and stakeholder requirements.

In spite of the benefits of computer to MFIs and business in general, some problems are still left unsolved and new ones have been created using computers itself. Problems line;

The use of computers to keep accounting records.

Another problem is the displacement of labour hands in the accounting department and its union implications and the problem of low turnover (volume of operation) and profitability in MFIs.

Most financial institutions in Buea such as P&T CREDIT UNION, Community Credit Company (CCC) etc. have put in place systems that strive to manage their information in order to ensure proper cash management, and excellent portfolio quality, to deliver a strong financial performance thusenhancing customer value and boosting customer growth. May MFIs use computerized financial information system (CFIS) and information and communication technology (ICT) internally to support their business operations and externally to deliver financial services to clients. poor information management register to be one of the contributing factors to the low financial performance levels of MFIs and yet CFIS engineers the performance and growth to most financial institutions (BOU, 2014)

Despite the above, the effectiveness of computerized information system (CIS) management in microfinance institutions has remained unknown as the performance of MFIs are still poor (BOU, 2018). Therefore, this study sought to examine the influence of computerized accounting systems on the performance of MFIs using the case study P&T CREDIT UNION BUEA.

1.3 RESEARCH QUESTIONS

• What is the influence of computerized accounting on the performance of microfinance institutions in Buea?

• Are there any relationships between manual and computerized accounting systems in MFIs?

• What are the effects of using computers to keep accounting records?

• How has the activities of MFIs impacted the economy of Cameroon (Buea)?

• To what extent does the quality of financial reports of MFIs influence the decision of potential investors and their customers?

• What are the challenges faced by MFIs as a result of using computerized systems?

1.4 OBJECTIVE OF STUDY

The main objective of the study is to assess the influence of computerized accounting systems on the performance of MFIs in Buea. The specific objectives are;

• To determine the relationship between the application of manual Accounting system and the computerized accounting system.

• To find out whether the influence of computerized accounting system enhances higher turnover (volume of operation) and profitability in MFIs.

• To examine the effect of using computers to keep accounting records.

• To identify the effect of data storage on the performance of P&T CREDIT UNION BUEA.

• To identify the challenges faced by MFIs in using computerized accounting systems.

• To make recommendations on how to solve the challenges faced.

1.5 HYPOTHESIS OF STUDY

• There is no relationship between the application of the computerized and manual system in the accounting system of MFIs.
• The influence of computerized accounting systems does not enhance higher turnover and profitability in MFIs.
• There is no effect in using computers to keep accounting records.

FURTHER READING: ACCOUNTING PROJECT TOPICS WITH COMPLETE MATERIALS