ASSESSING THE IMPACT OF ACCOUNTING SOFTWARES IN THE PROCESSING OF ACCOUNTING INFORMATION PDF

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ASSESSING THE IMPACT OF ACCOUNTING SOFTWARE IN THE PROCESSING OF ACCOUNTING INFORMATION...

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CHRIST APOSTOLIC UNIVERSITY COLLEGE, KUMASI SCHOOL OF TECHNOLOGY DEPARTMENT OF INFORMATION AND COMMUNICATION TECHNOLOGY

ASSESSING THE IMPACT OF ACCOUNTING SOFTWARES IN THE PROCESSING OF ACCOUNTING INFORMATION BY: EMMANUEL KOJO ABOAGYE (2019330020) PRINCE OKRAH SIAW (2019330018)

SEPTEMBER, 2021

DECLARATION We hereby declare that, this submission is our work towards the award of Bachelor of Science in Accounting Information Technology and that, to the best of our knowledge, it contains no material previously published by another person or material which has been accepted for the award of other degree of the university, except where due acknowledgement has been made in the text.

Research Prepared by: Name of students

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Date

Emmanuel Kojo Aboagye

2019330020

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Prince Okrah Siaw

2019330018

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Supervisor’s Declaration I hereby declare that the preparation and presentation of the dissertation were supervised in accordance with the guidelines on supervision laid down by Christ Apostolic University College.

Certified by; Supervisor’s Name

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Mr. Benjamin Odoi-Lartey

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Mr. Emmanuel Abaidoo

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(Head of Department)

DEDICATION We dedicate this dissertation first to the Almighty God for His protection and to our parents, Mr. Joseph Siaw and Mr. John Aboagye and siblings who supported us and all who contributed one way or other to the financing of our education and helping make this research project complete and successful.

ACKNOWLEDGEMENT We are very grateful to the Almighty God for seeing us through this level of education and giving us the guidance to write this work. This dissertation, while group work, benefited from the insights and direction from the following. First, our supervisor, Mr. Benjamin Odoi-Lartey exemplifies the high-quality scholarship to which we aspire. He provided insights that guided and challenged our thinking, substantially improving our work. Secondly we extend a warm gratitude to all lecturers of the CAUC school of Technology. Last but not the least, we would like to thank our family and friends for their incessant support and prayers. We are ever grateful to all. Nevertheless, we are jointly and severely responsible for any lapses in the work.

ABSTRACT Accounting takes an important role in operating an organization. Every business must keep track of financial information that relates to its business activities. But as the business grows, acquires new customers, enters new markets and keeps pace with constant changes in information technology, companies need to maintain highly accurate and up-to-date accounting, inventory and statutory records (Igbaria et al, 1997). Accounting software is responsible for evaluating and monitoring a company's financial status, preparing tax papers, and delivering information to assist corporate operations. As a result, the study aims to assess the impact of accounting software’s in the processing of accounting information. The specific objectives were: to examine the impact of accounting software on the accounting information system; to examine the benefits of accounting software on financial reporting; to identify the disadvantages of accounting software on the accounting information system. The descriptive research design was employed in the study. The population used was the manufacturing SMEs in Kumasi Metropolis. The researchers used simple random sampling technique to reduce the possibility of research limitations and the main instrument used for the collection of data was the questionnaire. The primary data collected were analysed using Statistical Package for Social Sciences (SPSS). The study identified a positive impact of accounting software on accounting information systems. This was mainly seen through the software helping to perform work very fast and also making integration and consistency among departments/branches easier and faster. The study revealed that, the reduction in arithmetic errors in financial statements and the accuracy and efficiency of financial reports were the major benefits of accounting software on financial reporting. The study identified lack of IT expertise as the major disadvantage of accounting

software on the accounting information system. . The study therefore concludes that, accounting software’s help in the speedy, reliable and effective processing of accounting information for SMEs. Some of the recommendation is that; organizations should try to include in the implementation of this excellent performance, which are described in accounting principles, the qualities of a well-developed and successful computerized accounting system; periodic maintenance processes of the system should also be conducted in order to guarantee that the system is free of defects, including viruses and fraud, that may affect system operations; it is also important for the staff responsible for transactions to be trained to improve their accuracy and speed.

CHAPTER ONE INTRODUCTION 1.0 Background of the Study Accounting takes an important role in operating an organization. Every business must keep track of financial information that relates to its business activities. It also has numerous processes; some simple, others complex and burdensome (Omolehinwe, 2009). But as the business grows, acquires new customers, enters new markets and keeps pace with constant changes in information technology, companies need to maintain highly accurate and up-todate accounting, inventory and statutory records (Igbaria et al, 1997). With a substantial increase in the volume of accounting transactions and increase in exposure of information to errors due to complexity of these accounting systems, there was a need for a system which could store and process accounting data with increased speed, storage, and processing capacity. This led to the development and introduction of accounting software packages (Igbaria et al, 1997). Ordinarily, it is usually advised for firms to report on their financial condition to stakeholders for improved decision-making and other policy initiatives, every organization must operate an accounting software (Chionye, 2013). Whether a firm uses a manual or computerized accounting software is a decision made by the company itself (Runge & Lee, 2012). Accounting software is responsible for evaluating and monitoring a company's financial status, preparing tax papers, and delivering information to assist corporate operations. Managers will struggle to assess performance, identify customer and supplier account balances, and estimate future business success without such software (Stefanou, 2016). Accounting software is a type of computer application that is used to conduct accounting tasks. It's a database-oriented program in which transaction data is kept in a well-organized

database (Abor & Biekpe, 2016). The user interacts with the database through the appropriate interface and generates the needed reports through appropriate data transformations. As a result, all of the essential needs of any database-oriented application in computers are included in the basics of accounting information systems (Longenecker, 2016). It enables users of financial reports see the actual picture of all company endeavors by simplifying, integrating, and streamlining all business operations in a cost-effective and simple manner. Accounting Information Systems were created as a result of advances in information technology to assist in the production of relevant and accurate financial reports for both internal and external decision-making (McCannon, 2012). Accounting information systems automate the accounting process, resulting in increased efficiency and cost savings. It's also more accurate, faster to operate, and less prone to error than the manual version (Frank and Sangester, 2009). Accounting information systems have become the "engine of development" in today's computerized, networked, global corporate world. It has not only changed old paper accounting procedures, but it has also given rise to new sorts of accounting apps for businesses (Rose & Hudgins, 2008). Companies are now developing complete accounting information systems that incorporate all aspects of their organization, including external suppliers and vendors. Accounting information systems have largely supplanted manual accounting in almost all firms and organizations, giving accountants, managers, workers, and stockholders instant access to critical accounting data (Greuning, 2016). Accounting software describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance (Greuning, 2016). It functions as an accounting information system. It may be developed in-house by the organization using it, may be

purchased from a third party, or may be a combination of a third-party application software package with local modifications (Wikipedia, 2016). Accounting software may be on-line based, accessed anywhere at any time with any device which is Internet enabled, or may be desktop based. It varies greatly in its complexity and cost. The market has been undergoing considerable consolidation since the mid-1990s, with many suppliers ceasing to trade or being bought by larger groups (McBride, 2010). Many people believe that accounting software in corporate reporting is the engine of growth in businesses because of the numerous benefits they provide (Greuning, 2016). Accounting software may cost hundreds of dollars to thousands of dollars for large organizations. Accounting software can help you save time while generating financial statements and other reports by automating the process (Saleemi, 2011). When utilizing accounting software, reports are generated quickly. Accounting software generates reports that help managers operate their businesses more efficiently (McCannon, 2012).

1.1 Problem Statement Advances in information technology have led to the use of accounting software’s in corporate reporting to assist in the production of relevant and accurate reports for both internal and external decision-making (Greuning, 2016). Computerized packages, according to McBride (2010), can easily create all sorts of reports required by management, such as budget analysis and deviation analysis. Data processing and analysis are faster and more precise, allowing managers to make better decisions based on accurate and timely data. According to Frank and Sangester (2009), accounting is done quickly via accounting software’s. These software’s can obtain balance sheets, income statements, and other accounting data at any time. He agreed that using an accounting software allows managers to quickly detect and resolve issues.

According to reports, the use of computers in organizational activities has aided management in efficiently controlling and monitoring the optimal use of their limited resources, resulting in improved performance. Organizations are expected to provide faster service to their consumers and accurate data storage with the use of computer technology in recording (McCannon, 2012). Despite the numerous advantages that modern accounting software’s provide, many businesses continue to rely on manual accounting systems, which are typically linked with maintaining a large number of books and mistakes in recording high numbers of transactions. A shortage of skilled knowledge about accounting software’s, as well as high setup and maintenance costs, were among the issues that hinder their usage (Longenecker, 2016). In order for an organization to assess its performance, it need certain critical data that is timely, reliable, and relevant to its consumers. The data must enable fast comparisons between current and prior years' data, as well as provide financial statements for managers and stakeholders to utilize (Saleemi, 2011). As a result, any accounting software must provide accuracy, speed, and minimal operating costs. Nonetheless, many managers want to know if accounting software’s in organizations is (are) beneficial in evaluating the performance of their operations, as well as whether the accounting software’s boosts the organization's revenue and profitability. As a result, the study aims to assess the impact of accounting software’s in the processing of accounting information.

1.2 Objectives of the Study The main purpose of this study is to assess the impact of accounting software’s in the processing of accounting information among Small and Medium Enterprises (SMEs). Based on the background of study and statement of the problem given above the major objectives of this study are;

1. To examine the impact of accounting software on the accounting information system. 2. To examine the benefits of accounting software on financial reporting. 3. To identify the disadvantages of accounting software on the accounting information system.

1.3 Research Questions The following research questions guided the study. 1. What is the impact of accounting software on the accounting information system? 2. What are the benefits of accounting software on financial reporting? 3. What are the disadvantages of accounting software on the accounting information system?

1.4 Significance of the Study The study is important for developing institutions since it will address issues concerning = accounting software’s. It is equally important for the organization's management, since the research will aid them in strategizing on how they may both profit from this development. The research also aims to give insight into how accounting software’s may benefit business organizations, as well as to assist entrepreneurs, managers, and other decision-makers in appreciating the importance of accounting software’s in making efficient and successful choices. Accounting software’s are required in almost every company organization, and because accounting plays such an important part in the administration of all businesses, it is critical that suitable rules are put in place to guarantee that these systems are used efficiently and effectively. Finally, the research contributes to the existing body of knowledge and serves as a useful resource for students, academics, institutions, corporate executives, and people interested in learning more about accounting software’s.

1.5 Scope of the Study The study focuses on the impact of accounting software’s in the processing of accounting information. The geographical scope of the study is the Ashanti Region of Ghana. SMEs within the region were used as the respondents of the study.

1.6 Limitations of the Study As with all studies, limitations exist and must be acknowledged. First of all, time did not allow the researcher to glean information from all the SMEs and all institutions under NBSSI. Also, some of the respondents might not be willing to disclose information on their businesses. Again, the outcomes were based on the information solicited from the respondents and such might be subjected to human errors, omissions and possible misstatements. However, in spite of the above, the researcher ensured that the research met all the relevant requirements for a scientific research and thereby reducing errors to the barest minimum.

1.7 Organisation of the Study The study is presented in five chapters. Chapter one gives an introduction to the study, the background, the problem statement, research questions and the research objectives. It includes the purpose and significance of the study. Chapter two is based on literature review and theoretical framework of the study. Chapter three describes the research design that was used, the target population, the sampling procedure, the data collection procedure, data processing and analysis. Chapter four defines the actual sample used and its characteristics. It also presents, analyzes and discusses the findings of the study. Chapter five gives the summary and conclusion of the study as well as recommendations based on the key findings of the study.

CHAPTER TWO LITERATURE REVIEW 2.0 Introduction In this section, relevant literature relating to the discussion of the topic alongside theories are reviewed and discussed.

2.1 Accounting Systems Accounting is used by every firm since it is widely understood that corporations must disclose certain financial and management information to economic customers, and accounting is, of course, an important instrument in the corporate decision-making process (Weber, 2010). Accounting is a vital element of every organization, therefore companies must keep accurate books of accounts. “Accounting may be separated into two groups: those who use manual accounting and those who use computerized accounting systems” (Weber, 2010). Manual Accounting System: Employees complete the whole accounting cycle manually on a regular basis, including drafting trial balances, journalizing transactions, and preparing financial statements. Waterfield and Ramsing (2008) pointed out that an accounting system can be as simple as a manual one based on the general journal (where transactions are recorded chronologically as debits and credits), general ledger (where the activity from the general journal is summarized by account number), and other journals needed to run a business, such as purchase, payment, sales, and receipts (Amidu, Effah & Abor, 2011). A manual accounting system generally contains at least the following, as shown in figure 1 below: Chart of accounts, General journal, General ledger, Subsidiary ledgers (accounts receivable, inventories, and fixed assets), Transaction reports, and financial statements (Amidu, Effah & Abor, 2011).

It appears to be simple at first glance, and it is, but when hundreds or millions of transactions are involved, the situation changes significantly. Due to the large number of transactions that must be completed in the accounting cycle, this procedure has become regular, and even a minor error or inaccuracy might cause the cycle to restart from the beginning in order to locate and fix the error (Grabski & Marsh, 2014). Despite the advantages of manual accounting systems, such as the relative low cost of labor and resources, reliability, independence from machines, and the availability of skilled workers, the disadvantages of manual accounting systems include reduced speed, increased accountant workload, slower internal control reporting, routine work, and others, such as the issue of backups (Noor & mahamad, 2013). Computerized Accounting System: According to Gelinas et al. (2015), a computerized accounting system is a computer-based system that integrates accounting principles and ideas with the notion of an information system to record, process, analyze, and create financial data for users to make economic choices. According to Mohd (2012), a computer accounting system (CAS) in connection to business organizations has become a significant instrument for improving the efficiency of the organization and supporting its competitiveness by delivering financial and accounting information to management. This data is utilized to make various judgments about planning, control, performance assessment, and other matters (Stefanou, 2016). The usage of CAS is critical in most emerging economies for performing tasks successfully and efficiently. Accounting systems have existed for centuries, but the arrival of commercial technology and computerized accounting systems has completely changed the game. As a result, in order to guarantee that CAS can be used to its full potential, acceptability and the system's impact on performance are critical (Stefanou, 2016). Paper ledgers, manual spreadsheets, and

handwritten financial statements have all been converted into computer systems that can swiftly di...