COMPUTERIZED ACCOUNTING AND FINANCIAL REPORTING

A CASE STUDY OF STANBIC BANK LIONS PLACE, WAIYAKI

WAY BRANCH NAIROBI, KENYA

BY

MOGIRE MOKUA EDWIN

BBA/30462/111/ DF

SUPERVISOR:

MRS. IRAU FLORENCE

A RESEARCH REPORT SUBMITTED TO KAMPALA

INTERNATIONAL UNIVERSITY IN PARTIAL

FULFILLMENT OF THE REQUIREMENT

FOR THE A WARD OF THE DEGREE

OF BACHELOR OF BUSINESS

ADMINISTRATION

DECEMBER 2013

DECLARATION

I, Mogire Mokua Edwin, declare that this research report is my original work. It has not been

submitted to any other university or higher institution of learning for any award. Any other

author's work has clearly been indicated.

Signature ........................... . Date ...................................... .

APPROVAL

I certify that Mr.Mogire Mokua Edwin carried out this research under my supervision and is

submitted with my approval .

...... .... ~ .. ~ ........... .. .. .. . .. .. ..

Mrs. Irau Florence

Supervisor

Date

ii

DEDICATION

I dedicate this work to my parents, brothers, sisters and my dear friends.

iii

ACKNOWLEDGEMENT

I truly thank God for the knowledge and strength He gave me to accomplish this work

successfully and for the wealth of my family and friends. My sincere appreciation goes to my

supervisor Mrs. Irau Florence for guidance and patience up to this stage of submission.

I am further grateful to my respondents for their time and corporation during my interactions

with them.

Special thanks go to A. Wekesa, F. Tekah, C. Onyuna, A. Fiona, M. Bitagata, Komakech

jimmy and my course mates for their great support.

God bless you all.

As the saying goes"life is like a dark forest but sometimes go" (Vaughan 2005), I am

humbled to go through hectic and stressful life witnessed over the past years.

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TABLE OF CONTENTS

DECLARATION ...................................................................................................................... i

APPROVAL ............................................................................................................................. ii

DEDICATION ........................................................................................................................ iii

ACKNOWLEDGEMENT ..................................................................................................... iv

TABLE OF CONTENTS ........................................................................................................ v

LIST OF TABLES ............................................................................................................... viii

ABSTRACT ............................................................................................................................ ix

CHAPTER ONE. ..................................................................................................................... I

1.0 Introduction ......................................................................................................................... I

I.I Background ......................................................................................................................... 1

1.2 Statement of the Problem .................................................................................................... 2

1.3 Purpose of the Study ........................................................................................................... 3

1.4 Objectives of the Study ....................................................................................................... 3

1.5 Research Questions ............................................................................................................. 3

1.6 Scope of the study ............................................................................................................... 3

1.6.1 Geographical Scope .......................................................................................................... 3

1.6.2 Time Scope ....................................................................................................................... 3

1.6.3 Subject Scope ................................................................................................................... 3

1. 7 Significance of the study ..................................................................................................... 4

1.8 Conceptual Framework ....................................................................................................... 5

CHAPTER TWO: LITERATURE REVIEW ...................................................................... 6

2.1 Introduction ......................................................................................................................... 6

2.2 Accounting .......................................................................................................................... 6

2.2.1 History of Accounting ...................................................................................................... 6

2.3 Computerized Accounting .................................................................................................. 6

2.4 Manual versus Computerized Accounting .......................................................................... 7

2.4.1 Benefits of Computerized Accounting over Manual Accounting .................................... 8

2.5 Financial Reporting and its Qualities .................................................................................. 9

2.5.1 Characteristics of quality financial reports ..................................................................... 10

V

2.6 Areas of application of computerized accounting on other branches ............................... 11

2.6.1 Human resources management... .................................................................................... 12

2.6.2 Staffing function ............................................................................................................. 13

2.6.3 Accounting systems ........................................................................................................ 13

2.6.4 Accounts receivable ....................................................................................................... 14

2.6.5 Accounts payable ........................................................................................................... 14

2.6.6 Payroll ............................................................................................................................ 14

2.6. 7 General ledger ................................................................................................................ 15

2.6.8 Financial management systems ...................................................................................... 15

2.6.8.l Cash management ....................................................................................................... 15

2.6.8.2 Capital budgeting ........................................................................................................ 16

2.6.8.3 Financial forecasting and planning ............................................................................. 16

2.6. 9 Cross functional enterprise applications ....................................................................... 16

2.6.9.1 Enterprise collaboration systems ................................................................................. 17

CHAPTER THREE: METHODOLOGY ........................................................................... 18

3.1 Introduction ....................................................................................................................... 18

3 .2 Study Design ..................................................................................................................... 18

3.3 Area of Study .................................................................................................................... 18

3.4 Target Population .............................................................................................................. 18

3.5 Sample Size and Selection Method ................................................................................... 18

3.6 Research procedure ........................................................................................................... 20

3.7 Data Collection Tools/Methods ........................................................................................ 20

3.8 validity of instrument ........................................................................................................ 20

3.9 Reliability of instrument. ................................................................................................... 20

3.10 Data Management ........................................................................................................... 21

3.10.1 Data Processing ............................................................................................................ 21

3.10.2 Data Analysis ............................................................................................................... 21

3.11 Editing ............................................................................................................................. 21

3.12 Coding ............................................................................................................................. 21

3.13 Limitations during study ................................................................................................. 21

3 .14 Ethical consideration ....................................................................................................... 22

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CHAPTER FOUR: PRESENTATION, ANALYSIS AND INTERPRETATION .......... 23

4. llntroduction ........................................................................................................................ 23

4.2 Findings on the uses of a computerized accounting system .............................................. 23

4.3 Findings on the pros and cons of a Computerized Accounting System ............................ 25

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

System .................................................................................................................................. 27

CHAPTER FIVE: SUMMARY, RECOMMENDATIONS AND CONCLUSION ........ 30

5. 1 Introduction ...................................................................................................................... 30

5.2 Discussion of major findings from the Study ................................................................... 30

5.3 Summary of Findings ....................................................................................................... 31

5.4 Conclusion ......................................................................................................................... 32

5.5 Recommendation ............................................................................................................... 32

REFERENCES ...................................................................................................................... 34

APPENDIX I: (RESEARCH QUESTIONNAIRE) ........................................................... 36

APPENDIX II: TIME FRAME ........................................................................................... 43

APPENDIX III: BUDGET FOR THE STUDY .................................................................. 44

Vll

LIST OF TABLES

Table 1: Showing the category and size of respondents used for the study ............................ I 9

Table 2: Responses on whether, the company uses a computerized accounting system for its operations ................................................................................................................................. 23

Table 3: Responses showing what major tasks are performed by the computerized accounting system ....................................................................................................................................... 23

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

accounting system .................................................................................................................... 24

Table 5: Responses, on the pros of a computerized accounting system .................................. 25

Table 6: Responses, on what the cons of a computerized accounting system are ................... 25

Table 7: Responses on preferences between manual computerized accounting systems ........ 26

Table 8: Responses on reasons for preference of the option chosen in table 7 above ............. 26

Table 9: Showing findings on what the qualities of financial reports generated by a

computerized accounting system are ........................................................................................ 27

Table 10: Showing findings on whether transactions pass unauthorized and why .................. 28

Table 11: Shows con-elations between computerized accounting and financial reporting in

Stanbic Bank ............................................................................................................................ 29

viii

ABSTRACT

This study was based on computerized accounting and financial reporting at Stanbic Bank,

Lions Place, Waiyaki Way Branch. The objectives of the study were; to determine the uses of

a computerized accounting information system, to find out the pros and cons of computerized

accounting to financial institutions, and to establish the qualities of financial reports

generated by computerized accounting system. The researcher used qualitative and

quantitative research designs with a sample of size 80 respondents. Both primary and

secondary data were used and the data collection methods were questionnaires, observation

interviews and investigative procedures.

The study established that computerized accounting had a great impact on quality of financial

reports and that many financial statements were generated through the computerized

accounting system. The findings shows a strong significant positive relationship between the

variables (r=0.861**, p>0.01) which implies that computerized accounting and financial

reporting at Stanbic Bank Kenya are strongly related.

The computerized accounting system is of a great importance to the running of the company

but is also associated with its own weaknesses that hinder efficiency in the company's

business environment. A continuous culture of utilizing a computerized accounting system is

recommended.

ix

CHAPTER ONE

1.0 Introduction

The study pursued the concept of computerized accounting and financial reporting. The main

reason for the research is to establish the relationship between computerized accounting

systems and the quality of financial reporting with the help of waiyaki way branch Nairobi,

Kenya.

This chapter looks at the background of the study, the statement of the problem, purpose of

the study, study objectives, research questions, the scope of the study in terms of geography,

content/variables and time, significance of the study and the conceptual framework.

1.1 Background

The impact of computer technology on organizations and society is increasing as new

technology evolves and existing technologies expand. Interaction and cooperation between

machines are rapidly growing to cover more and more aspects of organizational systems.

From traditional uses in payroll and bookkeeping functions, computerized systems are now

penetrating complex managerial areas ranging from the design and management of automated

factories to the evaluation of mergers and acquisitions of stanbic bank is operating in a world

where a fundamental shift is occurring in the world economy. We are moving progressively

further away from world in which national economies were relatively isolated from each

other by barriers to cross border trade and investment, distance, time zone, language , and

national differences in government regulations, culture and business and towards a world in

which national economies are merging into and independent global economic system. Stanbic

bank used to have a manual system of management but due to globalization and the needs to

increase its quality and accuracy in financial reporting, it has put in place computer machine

that assist the organizations to achieve and attain its goals and objectives.

Individuals and companies day by day hire accountants to help them carry out the

mathematical requirements of accounting and balancing of books. Before the introduction of

information technology into accounting, these accounting protocols were being performed

manually. However, today many accountants and non-accountants like to use computer

software to perform these duties, (Osmond, 2011).

1

Business owners use accounting to record, report and analyze their company's financial

information and in doing this, companies often generate several pieces of financial

information from business transactions, and compile this information into general ledgers and

journals, (Osmond, 2011). Historically, accounting was a manual process using paper books

and documents for financial information. Business technology has created significant

advances in the area of financial management and accounting software.

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

regularly used to process business transactions, Hermanson et al, (1987), infmmation 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.

1.2 Statement of the Problem

Due to the fact that most businesses are becoming multinational co operations, as a result of

globalization, thus expanding there operations in more than one nation, is inevitable with the

notion of expansion, this multinational corporations are not satisfied with the efficiency and

effectiveness of traditional system of financial reporting that used to confine the financial

report of these business within a limited national boundary. Sylvia Hearing (1991).

Much as some organizations have adopted the new technology. For example computerized

accounting to simplify their financial reporting tasks, nevertheless, its effectiveness and

efficiency has not been precisely measured, simply because most organizations thought that

by adopting computerized accounting will assist the accounting management and other users

of stanbic bank to examine their books of accounts i.e. statement of comprehensive income,

statement of financial position and cash flow statement etc, it will enable them to become

compliant and competitive as compared to the use of the traditional system of preparing

financial reports which require 11!crge number of human resource and ledger books where they

record business transactions. Wuburoko E. S (2001).

Since, 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.

2

1.3 Purpose of the Study

The study sought to establish the relationship between computerized accounting systems and

quality financial reporting.

1.4 Objectives of the Study.

i. To determine the uses of a computerized accounting information system.

11. To assess the pros and cons of computerized accounting to financial institutions.

m. To establish the qualities of financial reports generated by computerized accounting

systems and its areas of applications.

1.5 Research Questions

1. How useful is a computerized accounting system?

ii. What are the pros and cons of computerized accounting over manual accounting in

financial institutions?

iii. What are the qualities of financial reports produced by a computerized accounting

system and its area of application?

1.6 Scope of the study

1.6.1 Geographical Scope

The research covered the financial reports of Stanbic Bank Kenya Limited, Lions Place,

waiyaki Way branch, Nairobi. This particular case study was chosen because it is 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.

1.6.2 Time Scope

The study covered financial reports generated within the period of 2011 to 2012. This period

being the most recent and given the limited research time frame, the researcher was not be

able to cover reports of more than two years.

1.6.3 Subject Scope

The research was centered upon computerized accounting while examining what accounting

is, the difference between manual and computerized accounting, the pros and cons of

computerized accounting, characteristics of financial reports generated as a result of

computerized accounting, and areas of application of computerized accounting on other

3

branches. The other aspect to be examined is financial reporting while tackling the qualities

and or the characteristics of financial reports.

1.7 Significance of the stndy

a) This research paper will be of prime benefit to the management and staff of Stanbic Bank

Kenya Limited, not only for the Lions Place, Waiyaki Way branch, Nairobi but for other

branches as well, since it will enable them identify and understand the 1isks and problems

associated with computerized accounting and financial reporting and how best to combat

such problems.

b) This information will also be 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.

c) The study will also be of great benefit to the students who will be able to access this

information that will 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.

4

1.8 Conceptual Framework

The conceptual framework according to Amin (2005), it considers the general area of

research, specific area of research and how do the two variables relate that is computerized

accounting and financial reporting.

Independent variable dependent variable

Computerized accounting Financial reporting

•!• Saves time •!• Understandability

•!• Accuracy •!• Relevant and materiality

❖ Cost •!• Reliable

•!• Security . •!• Comparable and consistent

•!• Level of output •!• Objectivity

Source: Mc Entee, Arts conceptualization

5

2.1 Introduction

CHAPTER TWO

LITERATURE REVIEW

This chapter discusses and reviews similar or related researchers and literature published by

other authors' articles, books, journals, reports and previous dissertations related to the topic

in question and its variables in order to give an insight into the study as well as expressing the

need for this study.

2.2 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.

Accounting also it refers to the process of identifying, measuring and communicating

economic information to permit informed and rational decisions, Omonuk (2009).

2.2.1 History of Accounting

Osmond, (2011), states that; Accounting is several centuries old and that Luca Pacioli, an

Italian friar from San Sepulcro, is the father of accounting. Pacioli is credited with developing

the double entry bookkeeping system in 1494 using debits and credits to manage a company's

financial information. His system included ledgers and journals where financial information

was kept relating to business transactions. Pacioli's accounting system is still in use today,

even by the various computerized accounting programs in the industry.

2.3 Compnterized Accounting

Before we can explore studies about computerized accounting, there is need to know what

exactly a computer means. Waburoko, (2001) define computer as a general purpose machine,

which can receive, store, manipulate and output information. It is therefore agreeable that a

6

computer is an electronic device that operates and runs under the control of instructions or

commands stored in its own memory unit, accepts data through input, stores it, processes the

data and produces output.

Computerized accounting is defined by Alan & Frankwood (2005) as a total suit of

components that together comprises all inputs, storage, transactions, processing, collecting

and reporting of financial transaction data. Computerized accounting system involves the use

of computers in processing accounting data into information to facilitate quick decision

making through timely preparation of financial reports and financial reporting in this case

refers to the way in which financial information is recorded, processed and conveyed to the

end users of this information in particular.

Individuals and companies both big and small manage their money and assets one way or

another. They hire accountants to help them carry out the mathematical requirements of

accounting and balancing their books. Before the introduction of information technology into

accounting, these accounting protocols were performed manually. Today many accountants

and non-accountants like to use computer software to perform these duties.

2.4 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

7

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).

2.4.1 Benefits of Computerized Accounting over Manual Accounting

Time: Paper works are involved in manual accounting; all the accounting activities are

cmTied 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. Hearing,(1991).

Accuracy: I also agree with Hearing (1991) 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,

8

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

Gelinas and Sutton, (2002). 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 te1ms of cheap work force but its output actually overweighs its cost.

Level of output: Gelinas and Sutton, (2002) 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.

2.5 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.

9

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.

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:

2.5.1 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 Comelab. Information can only be useful to end users if they

are able to understand it.

Relevant & Material: Relevance is the capacity of inf01mation 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)

10

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.

2.6 Areas of application of computerized accounting on other branches.

Patricia Seybold and Ronnie Marshak (1998), in the new Yark times books, how to create a

profitable business strategy for the internet and beyond, maintained that computerized

accounting control is concerned with present performance and future objective and goals of

the organization and can be subdivided into different functional areas. During the study the

researcher also identified other functional areas used by the banks as;

11

2.6.1 Human resources management.

The human resource management involves the recruitment, placement, evaluation,

compensation, and development of the employees of an organization. The goal of human

resources management is effective and efficient use of the human resources of a company.

Thus, human resources information systems are designed to support; planning to meet the

personal needs of the business, development of employees and programs.

Originally, businesses used computer based information systems to; produce pay cheques and

payroll reports, maintain personnel records analyze the use of personnel in business

operations.

Many films have gone beyond these traditional personnel management functions and have

developed human resources information systems that also support recruitment selection and

hiring, job placement, performance appraisals, employees benefits analysis, training and

development and health safety and security.

Online human resource management system may involve recruiting of employees through

recruitment sections of corporate web sites. Companies also using commerce recruitment

services and databases on the World Wide Web, posting messages selected internet

newsgroups, and communicating with job applicants via e. mail.

These websites are full reports, statistics, and other useful human resource management

information such as job reports by industry or listings of the top recruiting markets by

industry and profession. Of course you may also want to access the job listings and resource

database of commercial recruitment companies on the web.

They also analyze career development status of each employee to determine whether

development methods such as training programs and periodic pe1formance appraisals should

be recommended. Computer based multimedia training programs and appraisals of employee

job performance are available to help support this areas of human resource management , for

example, personnel records keeping systems keeps track of additions, deletions and other

changes to the records in a personnel database. Changes in job assignments and compensation

and or hiring and terminations are examples of information that would be used to update the

personnel database.

12

Another example is an employee skills inventory system that uses the employee skills data

from a personnel database to locate employees within a company who have the skills required

for specific assignments and projects.

Through this completely electronic process, employees can use their web browsers to look up

individual payroll and benefits information online, right from their desktop, personal

computers, mobile computers, or intranet kiosks located around a worksite.

It also serves as a superiors training tool. Employees can easily download instructions and

processes to get the information or education they needs. In addition employees using new

technology can view videos over the intranet on demand. Employees can also use their

corporate intranets to produce automated pay sheets, the online alternative to time cards.

These computers have made viewing.

2.6.2 Staffing function.

The staffing function must be supported by information systems that record and track human

resources within accompany to maximize their use. Human resource management systems in

the bank also help human resources managers plan and monitor employee recruitment,

training and development programs by analyzing the success history of present programs.

They also analyze the career development status of each employee to determine whether

development methods such as training programs and periodic perf01mance appraisals of

employee job performance are available to help to support these areas of human resources

management.

2.6.3 Accounting systems

Accounting information systems are the oldest and most widely used in business. They record

and report business transactions and other economic events. Accounting information systems

are based on the double entry bookkeeping concept, which is hundreds of years old and other

more recent accounting concepts such as responsibility accounting and activity based costing.

The researcher also found out that, computer based accounting systems records and reports

the flow of funds through an organization on an historical basis and produce important

financial statements such as balance sheets and income statements. Such systems also

produce forecasts of future conditions such as projected financial statements and financial

budgets.

13

A firm's financial performance like that of stanbic bank is measured against such forecasts by

other analytical accounting reports.

Operational accounting systems emphasize legal and historical record keeping and the

production of accurate financial statements. Typically, these systems include transactions

processing systems such as order processing, inventory control, accounts receivable, accounts

payable, payroll, and general ledger systems.

Management accounting systems focus on the planning and control of business operations.

They emphasize cost accounting reports, the development of financial budgets and projected

financial statements and analytical reports comparing actual to forecasted performance.

2.6.4 Accounts receivable

Accounts receivables systems keeps records of amounts owed by customers from data

generated by customers purchases and payments. They produce invoices to customers,

monthly customer statements, and credit management reports. Computer based accounts

receivable systems stimulate prompt customer payments by preparing accurate and timely

invoices and monthly statements to credit customers. They provide managers with reports to

help them control the amount of credit extended and collection money owed. This activity

helps to minimize profitable credit sales while minimizing losses from bad debts.

2.6.5 Accounts payable

An accounts payable system keeps track of data concerning purchases from and payments to

suppliers. They prepare cheques in payment of outstanding invoices and produce cash

management reports. Computer based accounts payable systems help to ensure prompt and

accurate payment of suppliers to maintain good relationships, ensure a good credit standing,

and secure any discounts offered for prompt payments. They provide tight financial control

over all cash disbursements of the business. They also provide management with information

needed for analysis of payments, expenses, purchases, employee expense accounts, and cash

requirements.

2.6.6 Payroll

Payroll systems receive and maintain data from employee time cards and other work records.

They produce paycheques and other documents such as earning statements, payroll reports,

14

and labour analysis reports. Other reports are also prepared for management and government

agencies. Computer based payroll system help business make prompt and accurate payments

to their employees, as well as reports to management, employees and government agencies

concerning earnings, taxes, and other deductions. They may also provide management with

reports analyzing labour costs and productivity.

2.6.7 General ledger.

General ledger systems consolidate data received from accounts receivable, accounts payable,

payroll, and other accounting information systems. At the end of each accounting period, they

close the books of a business and produce the general ledger trial balance, the income

statement and the statement of financial position of the firm, and various income and expense

reports for management. Computer based general ledger systems help businesses accomplish

these accounting tasks in an accurate and timely manner. They typically provide better

financial controls and management reports and involve fewer personnel and lower costs than

manual accounting methods.

2.6.8 Financial management systems

Computer based financial management systems support financial managers in decisions

concerning; the financial or financing of a business and the allocation and control of financial

resources within a business. Major financial management system categories include cash and

investment management capital budgeting and financial forecasting and financial planning.

2.6.8.1 Cash management

Cash management systems collect information on all cash receipts and disbursements within

accompany on a real time or periodic basis such information allows the bank to deposit or

invest excess funds more quickly and thus increase the income generated by deposited or

invested funds. These systems also produce daily, weekly, or monthly forecasts of cash

receipts or disbursements (cash flow forecasts) that are used to spot future cash deficits or

surplus. Mathematical model frequently can determine optimal cash programs and

determining alternative financing or investment strategies for dealing with forecasted cash

deficits or surpluses.

15

2.6.8.2 Capital budgeting

The researcher found out that, capital budgeting process involves evaluating the profitability

and financial impact of proposed capital expenditures. Long-term expenditure proposals for

plants and equipments can be analyzed using a variety of techniques. This application makes

heavy use of spreadsheets models that incorporate present value analysis of expected cash

flows and probability analysis of risks to determine the optimum mix of capital projects for a

business.

2.6.8.3 Financial forecasting and planning

In an interview with the financial manager, he found out that financial analysts typically

excel and other financial planning software to evaluate the present and projected financial

performance of a business. They also help determine the financial needs of a business and

analyze alternative methods of financing. Financial analysts use forecasts concerning the

economic situation, business operations and types of financing available, interest rates, and

stock and bond prices to develop an optimal financing plan for the business. Microsoft

software excel (ms excel) can be used to build and manipulate financial model. Answers to

"what if' and goals seeking questions can be explored as financial analysts and managers

evaluate their financing and investment alternatives.

2.6. 9 Cross functional enterprise applications.

Integration of the enterprise has emerged as a critical issue for organizations in all business

sectors striving to maintain competitive advantage. Integration is the key to success. It is the

key to unlocking information and making it available to any user, anywhere, anytime. Such

systems support business processes, such as product development, production, distribution,

order management, and customer support. Electronic business, in addition includes both front

and back office applications that form the engine for the modern business. It's about

redefining old business models, with the aid of technology, to maximize customer value.

These cross functional enterprise applications are integrated combinations of infmmation

subsystems that share information resources and support business processes across the

functional units of the business enterprise and extend beyond to customers, suppliers, and

other business partners.

Many organizations are using information technology to develop integrated cross functional

enterprise systems that cross the boundaries of business functions in order to re- engineer and

16

improve vital business processes across the enterprise. These organizations view cross the

functional enterprise systems as a strategic way to use information technology to share

information resources, improve the efficiency and effectiveness of business processes and

develop strategic relationships with customers, suppliers, and business partners.

2.6.9.1 Enterprise collaboration systems.

The researcher found out that, stanbic bank uses enterprise collaboration systems that are

cross functional electronic business systems that enhance communication, coordination, and

collaboration among the members of business teams and workgroups. Information

technology, especially internet technologies, provides tools to help collaborate- to

communicate ideas, share resources, and coordinate our corporative work efforts as members

of the many formal and informal process and project teams and workgroups that make up

many of today's organizations. Thus the goal of enterprise collaboration systems is to enable

them to work together more easily and effectively by helping the business to; communicate­

sharing information with each other, coordinate- coordinating our individual work efforts and

use of resources with each other, and to collaborate- working together cooperatively on joint

projects and assignments. The researcher found out that the enterprise collaboration system

may use personal computer workstations networked to a variety of servers on which, project,

corporate and other databases are stored.

17

3.1 Introduction

CHAPTER THREE

METHODOLOGY

This chapter brings forward the methodology of the study and in doing this, the discussion

here under majorly involves the study design, area of study, the population studied, sample

size and the selection method, research procedure, the data collection tools or methods,

validity and reliability of instrument, way of data management, data processing, data analysis,

editing and coding. The researcher points out some of the limitations that may come up

during the study process, and finally the ethical consideration.

3.2 Study Design

Yin (1984) defines the case study research method as an empirical inquiry that investigates a

contemporary phenomenon within its real- life context: The researcher used qualitative and

quantitative research tools based on the findings of the questionnaires and interview guides

that were used to gather the necessary data.

3.3 Area of Study

The area of study was Stanbic Bank Kenya Limited, Lions place, Waiyaki Way branch,

Nairobi.

3.4 Target Population

The population encompassed the accounting staff/tellers, customers, support staff and

management of the case study who actually record and even use the same info1mation

generated as a result of computerized accounting and also because they are the people who

are engaged in the day to day operations of the bank, so they are the right people to give their

views on how computerized accounting aids in production of quality financial reporting. The

sample population constituted 100 people that include, 35 accounting staff, 20 management

staff, 30 customers and 15 support staff.

3.5 Sample Size and Selection Method

The researcher used convenient sampling to come up with 80 respondents of the financial

institution as broken down below by the use of solven formula.

18

n= N/l+N(e) 2

N = Population. (100)

n = Sample size

e2 = Level of standard/ significance, that is

e = (0.05)2

n = 100/ 1 + 100 (0.05)2

n =100/ 1.25

n = 80

Table 1: Showing the category and size of respondents used for the study

Category Size

Management Staff 15

Accounting Staff/Tellers 30

Support staff 10

Customers 25

The purposive technique used above in selection of respondents is not only for its' time and

money saving aspect, but also helps in selection of typical and relevant cases necessary to

equip the study with the required information. Besides, the simple random sampling method

was 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.

19

3.6 Research procedure

Sampling procedure involved the following steps;

► To obtain the total number of respondents on how often they access the financial

reports by use of computerized accounting system from stanbic bank lions place,

waiyaki way branch Nairobi, Kenya.

► Selected population of 100% to be studied took the sample of 18.75% of management

staff, 37.50% accounting staff, 12.50% support staff and 31.25% from customers.

3. 7 Data Collection Tools/Methods

This study was based on data collected from two major categories of sources: primary and

secondary. Where as the primary source of data to be used was 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 involved mainly the organization financial and management

reports. This record inspection was carried out in relevance to the study objectives. Besides,

the study employed the use of interviews, which involves talking or interacting face to face

with the respondents sampled for the study and finding out issues concerning the research

objectives.

3.8 validity of instrument

To ensure validity the study applied the technique by using interviews, questionnaire and

secondary data analysis con- cmTently and this was done through piloting of the data

collection instruments used to collect data. The data collection instrument was designed in

such way that they measure attitudes and opinions of respondents towards computerized

accounting system and financial reporting to the maximum degree possible. Issues developed

from the conceptual framework were compared with issued obtained during interview and

answers obtained from questionnaires so as to ensure construct validity, statistical analysis

such as correlation was used.

3.9 Reliability of instrument

Data reliability is the cornerstone of making successful and meaningful study. In order to

collect reliable data the researcher used interview guide and questionnaires which involves a

20

series of revisions under the guides of the study supervisor to ensure that the field work was

conducted by use of high quality data collection? Also quotes from interviews and statement

from questionnaires was used as references to ensure reliability. In order to measure internal

consistency the researcher used Cranach's alpha methods. The researcher used checklist of

questions when making personal interviews with respondents so as to achieve data

consistency and completeness.

3.10 Data Management

3.10.1 Data Processing

Collection of data researched was followed by sorting, data arrangement and scrutiny for any

arising inconsistencies, so as to obtain an objective and reasonable judgment.

3.10.2 Data Analysis

Data analysis in this case was done quantitatively with statistical techniques such as the

statistical package for social scientists. The use of table, frequencies and percentages was

employed in the analysis so as to ensure accuracy, adequacy and completeness of the study.

3.11 Editing

This was done at the end of each work day. This process was carried out to ensure that the

information given by respondents is accurate and consistent. Editing was done by the

researcher in this respect; every questionnaire that come from the field was scrutinized

thoroughly through cross checking wrong entries and standardizing the information while

checking on the omissions and inconsistencies.

3.12 Coding

This involved translating edited responses into the numerical figures or terms. Coding was

considered as a process or classification by the researcher in preparation for tabulation. A

complete coding schedule was done to ensure that various responses obtained be classified

into meaningful forms so as to bring out those essential patterns clearly.

3.13 Limitations during study

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

21

others that may come up unpredicted. However, as far as costs are concerned, the researcher

had 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 is not

adequate, given unpredicted and uncertain happenings that may hinder timeliness such as

delays and bad weather which the researcher definitely has to bare 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 would only hinder the acquisition of the necessary

information, so the researcher did not get tired as far as wooing the respondents to cooperate

is concerned.

3.14 Ethical consideration

Ethical consideration deals with ones behaviors and relationship with particular people or

group people and it guides a researcher on what should be done. During data collection, the

researcher sought the consent of the respondents to participate willingly before it starts. The

researcher obtained a letter of introduction from the college of applied economics and

management science of Kampala international university introducing him to the relevant

people meet the respondents and seek consent of respondents to participate in the interview.

All the respondents were handled with kind and respect for confidential information to be

acquired.

22

CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION

4.llntroduction

This chapter presents empirical findings in reference to the research questions in chapter one.

The findings below were obtained from both the primary and secondary data sources. They

were presented and analyzed using frequency tables and percentages to establish a

relationship between the variables.

4.2 Findings ou the uses of a computerized accounting system.

Table 2: Responses on whether, the company uses a computerized accouutiug system

for its operations.

Response Frequencies ( out of 15) Percentage ( % )

YES 80 100

NO 0 0

Total 80 100

Source: Primary Data

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) Frequencies Percentage ( % )

Data summary 48 60

Data analysis 58 73

Entering/Recording of data 64 80

Reporting (financial statements) 69 86

Data security(password protection) 69 86

Source: Primary Data (N=80)

23

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 Percentage ( % )

Statement of comprehensive income 69 86

Statement of financial position 74 93

Statement of cash flows 74 93

Income statement 80 100

Source: Prima,y Data (N=80)

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.

24

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

Table 5: Responses, on the pros of a computerized accounting system.

Response (pros) Frequencies ( out of 15)

Risk management 64

User friendly 74

Easy communication (funds transfer) 74

Easy balancing of daily transactions 74

Effective auditing 74

Speed 80

Time saving 80

Source: Primary Data

Percentage(%)

80

93

93

93

93

100

100

Table 5 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 6: Responses, on what the cons of a computerized accounting system are.

Response (cons) Frequencies Percentage ( % )

Old computers hinder speed 42 53

Computer virus threats and data loss 48 60

Long training period 53 66

Eye strains 64 80

Chances of system failure 64 80

Source: Primary Data (N=80)

Earlier on, the study was able to find out a number of appreciations of the system; however,

the respondents were also keen on stating some disadvantages of the system as shown in table

6. 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

25

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 7: Responses on preferences between manual computerized accounting systems.

Preferences Frequencies Percentage(%)

Manual Accounting 0 0

Computerized Accounting 80 100

Total 80 100

Source: Primary Data (N=80)

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 7

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 7 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 8 below.

Table 8: Responses on reasons for preference of the option chosen in table 7 above.

Reasons for preference Frequencies Percentage ( % )

Less paper work 42 53

Simplifies work 48 60

Easy tracking of transactions 58 73

Time saving and speed 74 93

Source: Primary Data (N=80)

Responses on table 8 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

26

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 9: Showing findings on what the qualities of financial reports generated by a

computerized accounting system are.

Response (qualities) Frequencies Percentage ( % )

Comparable 58 73

Understandable 64 80

Consistent 74 93

Reliable 74 93

Material 74 93

Source: Prima,y Data (N=80)

Table 9 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.

27

Chart 1:Showing findings on how often the respondents' access financial reports.

80 RESPONDENTS REPRESENTING

(100%}

100 _,.

90 ./

BO /

70 // ~-----

60

50

40 - ;'

30

20-/ ------

10 __,, 0 -!L--==--==--===-----====-------·

ONCE A YEAR FREQUENTLY NEVER

FREQUENCY

Source: Primary Data

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 chart 9 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 10: Showing findings on whether transactions pass unauthorized and why.

Response Frequencies Percentage ( % )

YES 0 0

SOME 80 100

NO 0 0

Total 80 100

Source: Primary Data (N=80)

All companies 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

28

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 Kenya Shillings One million (1,000,000) 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.

Table 11: Shows correlations between computerized accounting and financial reporting

in Stanbic Bank.

Correlations

Computerized Financial reporting

accounting

Computerized accounting Pearson correlation 1.000 .861 **

Sig (2-tailed) .000

N 80 80

Financial reporting Pearson correlation .861 1.000

Sig (2-tailed) .000

N 80 80

**.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 Stanbic 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 Stanbic Bank and

this is majorly due to short falls of the computerized accounting system.

29

CHAPTER FIVE

SUMMARY, RECOMMENDATIONS AND CONCLUSION

5. 1 Introduction

This section of the study reviews and discusses the major findings of the study, drawing

conclusions and recommendations in light of the findings according to the study objectives.

5.2 Discussion of major findings from the Study

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.

To find 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

30

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.

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 I 00% 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.

5.3 Summary of Findings

To determine the use of a computerized accounting system.

The results from the study confirm that computerized accounting perfmms 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.

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.

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

31

of the reports generated through manual accounting, thus making the latter system much

preferable.

5.4 Conclusion

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 Stanbic Bank Kenya Limited actually make use of a computerized

accounting system.

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.

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.

32

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.

33

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Network, Scotland.

17. Wuburoko E.S, (2001): "Introduction to information technology" (second edition),

I.A.CE, Makerere University, Edsoft computer institute.

18. Sylvia Hearing, (1991), "computerized accounting" 3'd edition, published by Prentice

Hall, Englewood cliffs.

19. Patricia Seybold, Ronnie marshak, customers.com (1998), "How to create a

profitable business strategy for the internet".

20. Mc Entee, schebert and Fisk (2010) "computerized accounting" by Glencoe/ Mc

Graw- Hill. Owen.

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APPENDIX!

(RESEARCH QUESTIONNAIRE)

KAMPALA INTERNATIONAL UNIVERSITY

QUESTIONNAIRE ON COMPUTERIZED ACCOUNTING AND FINANCIAL

REPORTING

Dear respondent,

The researcher is a bachelor student in Kampala International University carrying a research

on the Impact of Computerized accounting and Financial Reporting on Stanbic Bank in

Kenya a case study of Lions Place, Waiyaki Way Branch Nairobi 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 in advance.

SECTION A: PROFILE

(Please tick the most appropriate box).

1. Age

i) 26-30 years. □

ii). 31-35 years □

iii) 35-40 years.

iv) 40- and above

2. Sex: i) Male D ii) Female D

3. Marital status:

□

□

i) Single. D ii) Married D iii) Widow/ widower D

36

4. What is your highest academic qualification?

i) 'O' level. D ii) Diploma. D iii) Bachelors DegreeO

iv) Masters Degree □ v) Others-specify ................................................... .

5. Position held in the bank.

i) Accountant staff D ii) Management staff D iii) Support staff D

6. Length of time served.

i) 0- 5 years

iii) 11- 15 years

□

□

ii) 6- 10 years D

iv) 15- and above D

7. Has a client, how often do you access financial reports?

i) Once a year D ii) Frequently D iii) Never □ SECTION B: THE USE OF A COMPUTERIZED ACCOUNTING SYSTEM

(Please tick in one box of your preference below)

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

system?

i)Yes D ii)No D

2. Has computerized accounting system helped you in getting improved banking

services?

Yes D No □

37

(Tick the most appropriate box)

How compute1ized accounting Strongly Agree Strongly Disagree

has improved banking agree disagree

services

Saves time

Security

Level of out put

Accuracy

Cost

if other please

specify ......................................................................................................................................... .

3. Which of the following financial statements prepared by your organization/company

through computerized accounting?

i) Statement of comprehensive income D ii) Cash flow statement D

iii) Statement of financial position D iv) All the above D

38

4 Areas of application of computerized accounting systems.

(TICK THE MOST APPROPRIATE BOX)

Areas of application of Strongly Agree

computerized accounting agree

systems

Record keeping

Decision making

Research development

Human resource and

personnel management

Communication

if other please

Strongly Disagree

disagree

specify ......................................................................................................................................... .

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SECTION C: THE PROS AND CONS OF COMPUTERIZED ACCOUNTING AS

FAR AS FINANCIAL REPORTING IS CONCERNED.

(Please tick in one box of your preference below)

1. Reasons of using computerized accounting system in stanbic bank as compared to the

manual system of management.

(TICK THE MOST APPROPRIATE BOX)

Reasons of using Strongly Agree Strongly Disagree

computerized accounting over agree disagree

manual system

Saves time

Reduces paper work

Reduces cost

Neatness

Coordination

if other please

specify ......................................................................................................................................... .

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2. Problems with the previous manual system of management.

(TICK THE MOST APPROPRIATE BOX)

Problems with the previous Strongly Agree

manual system of agree

management

Time wastage

A lot of paper work

Increases cost

Untidiness

Insecurity

if other please

Strongly Disagree

disagree

specify ................................................................................................................................... .

3. What would you prefer?

i) Computerized accounting □ ii) Manual accounting 0

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SECTIOND: THE QUALITY OF FINANCIAL REPORTS GENERATED BY

COMPUTERIZED ACCOUNTING SYSTEMS.

1. Qualities or characteristics of financial reports generated by the computerized accounting

systems in your organization.

(TICK THE MOST APPROPRIATE BOX)

Qualities of financial Strongly Agree Strongly Disagree

reporting. agree disagree

Understandable

Reliable

Comparable and consistent

Relevant and materiality

Objectivity

if other please

specify ......................................................................................................................................... .

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

i) Once a year □ ii) Frequently D iii) Never D

3. Do all transactions pass unauthorized?

i) Yes □ ii)Some D iii)No □

4. What can say about computerized accounting and quality financial reporting in the stanbic

bank as compared to manual system of management?

i) Good □ ii)Fair D iii) Bad □

Thank you.

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Activity

Proposal writing

Data collection

Data analysis

Submission

APPENDIX: II

TIME FRAME

Time Frame in months

1&2

X

X

43

3&4

X

X

APPENDIX: III

ITEM: BUDGET FOR THE STUDY

Activity A mount in Kenya shillings.

Typing and printing 2,500

Literature collection 7,000

Binding 3,500

Total 13,000

44