EXECUTIVE SUMMARY

This study was based on computerized accounting and financial reporting at SUPERIOR
SPIRITS PVT. LTD. 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 15 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 SUPERIOR SPIRITS PVT. LTD 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.

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 INTRODUCTION TO TOPIC

This study pursues the concept of computerized accounting and financial reporting. First and
foremost, where as accounting itself refers to the process of identifying, measuring and
communicating economic information to permit informed and rational decisions, Omonuk
(2009), 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. In pursuit of the topic mentioned above, this chapter brings forth
the introduction to the research paper as it tackles 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, and eventually the significance of the
study.

Background
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).
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), information is
therefore much more useful when it is conveyed through a proper reporting system which gives
it good qualities such as accuracy and reliability among others and this can be achieved by use
of computerized accounting system.

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Statement of the Problem
The advancements in information technology have eventually led to the introduction of
Computerized Accounting Systems in corporate reporting to help produce relevant and faithful
representative financial reports for both management and external users for decision making
(Greuning, 2006). The many advantages from the use of these systems have led many to
conclude that Computerized Accounting Systems in Corporate Reporting is the ‘engine of
growth’ in business organizations (Frenzel, 2006). There has been an increase in accounting
problems associated with financial reporting hence killing most business that fall victims of
this circumstance. Here, we pursue the aspects associated with manual accounting in
comparison with computerised 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.

Purpose of the Study

The study seeks to establish the relationship between computerized accounting systems and
organizational performance especially on quality financial reporting.

Scope of the study

1. Content scope

The study was limited to the computerization of accounting systems and financial reporting .
The research will be centered upon computerized accounting while examining what accounting
is. The researcher investigated the to evaluate the strength of the computerized accounting
system used by SUPERIOR SPIRIT PVT. LTD., to find the pros and cons of computerized
accounting to financial institutions, to establish the qualities of financial reports generated by
computerized accounting systems and to establish the relationship of computerized accounting
and financial reporting. The other aspect to be examined is financial reporting while tackling
the qualities and or the characteristics of financial reports. It look at financial reporting as the
dependent variable and the computerization of accounting systems as the independent variable.

2. Geographical scope

The research covered the financial reports of superior spirit pvt. Ltd, Noida branch. This
particular case study was chosen because it was of convenience to the researcher in terms of

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its’ type of business, the researchers’ area of residence, language and availability of data for
the research work.

3. Time scope

The study covered financial reports generated within the period of 2015 to 2018. This period
being the most recent and given the limited research time frame, the researcher was able to
cover reports of more than two years.

Significance of the study

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

This research was of prime benefit to the management and staff of Superior Spirit Pvt. Ltd,
since it enable them identify and understand the risks and problems associated with
computerized accounting and financial reporting and how best to combat such problems.

This information was of great importance to other business companies and bodies that have
adopted and those that are yet to adopt the system of computerized accounting in knowing the
pressure points to be emphasized and well managed in order to pursue the system successfully.

The study was of great benefit to the students who enable to access this information that guide
them in research and equip them with knowledge as far as manual and computerized accounting
is concerned and the importance of computerized accounting as far as financial reporting is
concerned.

OBJECTIVES

The objectives of the study were:-

a) To evaluate the strength of the computerized accounting system used by SUPERIOR
SPIRIT PVT. LTD.
b) To find the pros and cons of computerized accounting to financial institutions.
c) To establish the qualities of financial reports generated by computerized accounting
systems.
d) To establish the relationship of computerized accounting and financial reporting in
financial institutions.

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 LITERATURE REVIEW

Introduction
This chapter discusses and reviews similar or related researches 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.
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.

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.

Computerized 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
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.

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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. Jennifer VanBaren (Computer based Accounting: 1997) defines
computerized accounting as the accounting done with the aid of a computer. It tends to involve
dedicated accounting software by digital spreadsheets to keep track of a business’ or clients
financial transactions. Computerized accounting involves the use of computers to handle large
volume of data with speed, efficiency and accuracy aimed at overcoming the fundamental
however, does not mean change in principle, the principle of accounting remains the limitations
of manual accounting and hence producing quality and reliable work same with day books
ledgers double entry only that the accounting processing is done by computer packages
(ACCA, 2007).

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

financial information on business transactions are recorded, organized, summarized, analyzed,
interpreted and communicated to stakeholders through the use of computers and computer
based systems such as accounting packages.

He emphasized that it’s a mechanized process of facilitating financial information inflows as

well as the automation of accounting tasks such as database recording and report generation.
Marivic adds that keeping accurate accounting records is a vital part of any organization. Apart
from helping it to keep its float financially and legal, it is a requirement of funding bodies or
donors. However computerized accounting system involves the use of computers to handle
large volume of data with speed, efficiency and accuracy aimed at overcoming fundamental
challenges which do not change the principle. The principle of accounting remains the
limitations of many accounting and hence producing quality and reliable work.

McRae (1998) adds that computerized accounting systems are advantageous in consolidating
information channels meaning that files that were previously been duplicated by several
departments will now be consolidated into single file.A computerized accounting system is a
delivery system of accounting information for purpose such as providing reliable accounting
information to users (Nash and Hearly, 2003).

Computerization of system can certainly help in minimizing some errors when preparing
accounting records (Mike et al, 2006). Other view adds that computerized systems are
advantageous in consolidating information channels meaning that files which had previously
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been duplicated by several departments are now consolidated into a single file (Mc Rae, 1998).
A computerized accounting system is a system that uses computers to input, process, store and
output accounting information in form of financial reports. It records all transactions that
routinely deal with the events that affect the financial position and performance of the entity.

Computerized accounting System (CAS) refers to the integration of different component

systems to produce computer books of accounts and computer-generated accounting records
and documents. Frank wood (Business Accounting in a computerized environment 2002).
According to ACCA (2009), Computerized accounting system involves the use of computers
to handle large volumes of data with speed and efficiency aimed at overcoming physical
limitations of manual accounting and producing quality reports.

Components of Computerized Accounting Software

Accounting softwares are used to implement computerized accounting system. The

computerized accounting is based on the concept of database; it is basic software which allows
access to the data contained in the database. The following are the components of computerized
accounting software.

1. Preparation of accounting documents: Computers help in preparing accounting

documents like cash memo, bills, invoices and accounting vouchers. Here computerized
accounting systems have user defined templates which will provide faster, accurate entry of
transaction and therefore all documentation and reports can be generated automatically.

2. Recording of transactions: Everyday business transactions are recorded with the help of
computer software. Every account and transactions is assigned a unique code where the
grouping of account is done at the first stage. This process simplifies the work of recording the
transaction. Marivic (2009) argued that computerized packages will minimize human errors in
transactions recording as in the system there is the existence of reference of every transaction.

3. Preparation of trial balance and financial statements: After recording of transactions,

the data is transferred into ledger accounts automatically by the computer. Trial balance is
prepared by the computer to check accuracy of records, with the help of trial balance; the
computer can be programmed to prepare the statement of comprehensive income and the
statement of financial position.

Benefits of Computerized accounting systems:

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Different scholars have expressed views on computerized accounting packages as below: A
computerized package can quickly generate all types of records needed by management. Data
processing and analysis are faster and more accurate which meets the manager’s needs for
accurate and timely information for decision making (Mc Bride, 2000).

The benefits of computer accounting include among others improving reporting to users, better
record keeping and minimized errors. With the system automatically generating reports, a lot
of time will be saved in the long run and unnecessary cost. Few staff will also be needed to
operate the system (Vanbriefing, 2005).

In support of above view, computerized accounting is used to maintain journals, ledgers and
prepare financial statements (Meigs and Meigs, 1998). Easy posting transaction to ledger and
principles of double entry to do accounting function using computerized accounting system. It
can be largely automated by use of systems (Cook, 2001).

Better Record keeping and data Security: Whilst human error can still corrupt your data
e.g. entering figures in wrong fields, a good package will reduce this possibility and ensure
that there is a reference for all transactions e.g. for every cheque or receipt entered/created.
However, this does not eliminate all manual work. Vouchers, invoices, receipts etc. will still
need to be filed in a logical order and details of what was entered onto the system should also
be recorded on paper. This will help when you need to track errors, in the annual audit and if
disaster strikes and you have to re-enter all transactions. For record-keeping and compliance
with the law, businesses often must keep financial records for years. It is extremely difficult
to keep copies of paper records in multiple locations, and a catastrophic incident that results
in the destruction of paper records can damage a business in many ways. With a computerized
accounting solution, files and important financial information can be stored online or on off-
site data cartridges--or both--giving a business the level of redundancy that it needs to recover
from a catastrophe and ensuring compliance with all applicable data retention laws. Mc Laney
and Atrill (Accounting and Introduction 2005)

Computerized Accounting Systems are important to businesses in various ways. The use of
computers is time-saving for businesses and all financial information for the business is well
organized(Baren, 2010).

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Time and Cost Savings: Using a Computerized Accounting Systems saves companies time
and money. The use of a computer makes inputting accounting information simple.
Transactions are entered into the system and the system processes and posts transactions
accordingly. Computerized Accounting Systems reduce staff time preparing accounts and
reduce audit expenses as records are neat, up-to-date and accurate. Better use is made of
resources and time; cash flow should improve through better debt collection and inventory
control. More importantly, the system helps present financial reports on time to aid in the
economic decision making process of external users.

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

organized. When information is entered into the system, it makes finding the information easy.
Employees can look up any financial information whenever it is needed. There is less room for
errors as only one accounting entry is needed for each transaction rather than two (or three) for
a manual system. The accounting records are automatically updated and so account balances
(e.g.
Customer accounts) will always be up-to-date.

Storage and Speed: Storing information is vital to a business. After information is entered
into the system, the information is stored indefinitely. Companies perform backups on the
system regularly to avoid losing any information. The introduction of Computerized
Accounting Systems provides the ability to see the real-time state of the company’s financial
position.

Distribution: Computerized Accounting Systems allow companies to distribute financial

information easily. Financial statements are printed directly from the system and are distributed
internally and externally to those needing the information. Reports can be produced which will
help management monitor and control the business, for example the aged debtors analysis will
show which customer accounts are overdue, trial balance, trading and profit and loss account
and balance sheet. In effect, Computerized Accounting Systems enable financial statements to
be prepared and presented to meet the relevance and faithful representation criteria of financial
statements.

Speed and accuracy. : With computerized accounting, you reduce the amount of time you
have to spend monitoring and organizing your accounts. The information will be available at
your fingertips, and systemized, so that there are no anomalies, there will be no information

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missing. This will help you improve your business efficiency in areas such as customer
relations, production, and employee management. You will have the potential to increase your
profits and improve general business efficiency.

Computerized accounting systems have automatic calculations built in and therefore there is a
slim chance of making mistakes calculating invoices. The system automatically calculates
inclusive and exclusive figures. Mc Laney and Atrill (2005) there is an old proverb that begins
with the statement “to err is human.” Although the sentiment of this statement was not
originally intended as a comment on life in the information technology age, it still applies.
Humans do make errors. An absent decimal point or the addition of one too many zeros can
drastically alter the accuracy of a financial report. Computerized accounting systems, on the
other hand, are designed to minimize the existence of such blunders. Additions, subtractions
and other calculations are performed by the machine. This ensures that only the correct total is
listed at the end of the general ledger. KJ Henderson (1999).

Improvement in operational efficiency: A computerized accounting system eliminates many

cumbersome and time consuming manual processes. In addition to calculations being
automated, many accounting software programs allow various reports, such as year-end and
statistical, to be generated at the touch of a button. A document that once took junior accountant
hours to compile can now be created in a matter of seconds. An additional benefit to automating
the accounting process is the ability to expediently share information. Information regarding
business accounts can be independently entered into an automated system by multiple
authorized parties. In addition, accounting documents, such as financial statements, can be
emailed from one colleague to another in just a few moments. KJ Henderson (1999)

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

businesses to more easily share financial information. For example, if a company with manual
accounting procedures purchases another organization with manual accounting procedures, it
may take weeks or even months to completely integrate the financial data of the two firms. On
the other hand, if both companies utilize compatible computerized accounting systems, all data
can easily be integrated because one program is able to speak to the other. Sangster
(Computerized Accounting 2002)

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

computerized accounting system can store many years of information. If the audit requires it,

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the employer can access information dating from many years back. If, during the audit, the
auditor spontaneously requests an accounting document, the employer can quickly retrieve it
from the system instead of rummaging through storage boxes to locate hard copies. The
majority of computerized accounting systems have features such as order-entry and generation
of associated invoices. The employer can create accounts for their clients, storing their names,
addresses, orders and invoices for as long as necessary. A computerized system also allows the
employer to make and print account statements. Further, many accounting systems have a
payroll feature, which enables complete payroll processing, including the generation and
printing of checks and reports.

Reduces fraud and Embezzlements: Computerized accounting software makes it difficult for
employees to steal money from the company. For example, if a payroll employee tries to pay
herself more than the allowed amount, her theft will most likely be discovered because the
accounting system stores all saved transactions. Sangster (Computerized accounting 2002).

Automated Report Generation. Computerized Accounting software has the ability to generate
reports on demand--something that could take a team of humans hours or days. These reports
can be customized to what the company is spending money on, such as VAT, day-to-day
operations, salaries and marketing. In addition, when used properly, this feature can assist the
business in its budgeting needs, telling executives in a quick and easy to use format exactly
where their money is going. Reports empower executives to make informed decisions, and
having instant access to them can only make success more likely. Sangster (Computerized
accounting 2002).

Lower cost of operations: AramentaWaithe (2008) Accounting can become expensive for
businesses, as the level of work can result in the businesses needing to hire an accounting
service on contract or hire several full-time employees. Accounting software eliminates much
of the manual work, which may allow you to reduce your full-time staff and lower your costs.
Indeed, because so many tasks can be automated, a full-time accountant may not be necessary
at all.

According to McBride (2000), computerized packages can quickly generate all types of reports
needed by management for instance budget analysis and variance analysis. Data processing
and analysis are faster and more accurate which meets the managers need for accurate and
timely information for decision making.

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Frank wood (1999) consented to the speed with which accounting is done and further added
that a computerized accounting system can retrieve balance sheets, income statement or other
accounting reports at any moment. He consented that computerized accounting system allow
managers to easily identify and solve problems instantly.

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

of the accounting systems as it is a highly integrated application that transforms the business
processes with the performance enhancing features which encompass accounting, inventory
control, reporting and statutory processes. He then says, this helps the company access
information faster and takes quicker decisions as it also enhances communication.

McBride (2000) stated that managers cannot easily satisfy statutory and donor reporting
requirements such as profit and loss account, balance sheet and customized reporting without
using computerized accounting systems. With the system in place, this can be done quickly
and with less effort. Computerized accounting systems ease auditing and have better access to
required information such as cheque numbers, payments, and other transactions which help to
reduce the time needed to provide this type of information and documentation during auditing.

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

systems. Posting transactions to the ledger, the principle of double entry can largely be
automated when done through the use of computerized accounting system. Although
computerized accounting is highly beneficial to an entity, it is worth noting that it is dogged
with a couple of pitfalls some of which are shown as below;
Meigs (1986) stresses that there is a risk of improper human intervention with the computer
programs and computer files. Employees in the organization may temper with the computer
programs and computer based records for the purpose of deliberately falsifying accounting
information. This may result into distortion of information that would essential be for decision
making. According to Wahab (2003), another threat and limitation of computerized system is
the computer virus. Where a computer virus is a computer code (program) specially designed
to damage or cause irregular behavior in other programs on the computer. The adverse effect
is that it may lead to breakdown of the hardware thus leading to loss of valuable information
(for instance in financial institutions information such as customers’ accounts, previous
financial report, information pertaining loans advanced among others) already saved on the
computer.

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Limitations of Computerized accounting.

Despite the numerous benefits of Computerized Accounting Systems that can be listed they are
not without challenges. The impediments to implementing a CAS include: lack of
time(Proudlock et al. 1999), owner-manager’s view that the CAS is costly (Head
2000),perception that the technology is not suited to the nature of the business (ABS 2000),
and lack of IT expertise (ABS 2000; Burgess 1997).

Installation costs: S. NORA (Computerization of Society 1981) notes that the cost of installing
computers in an organization is very high as it needs huge sum of money. This is a major
hindrance as to why organizations do have computers. Accounting systems costs have
decreased substantially, but they still can be costly, not only to purchase, but to maintain them
as well. Extra costs for training new employees in the system should be considered along with
ongoing customer service. Charges for customizing reports and other processes can pose
limitations on small and medium-sized businesses that cannot afford these services. Other
program costs to consider include new version upgrades and even hardware that may be
required as technology progresses. If businesses can't afford these costs, they will be left
behind.

Power Failure: S. NORA (Computerization of Society 1981). When dealing with accounting
programs, you should consider electrical power as a major limitation of the system. Without
electricity, most small-business accounting systems are useless -- no data can be input or
reports generated. Any electrical fluctuation can have a negative impact on accounting data,
deleting information and creating confusion. Another consideration that limits the usage of
accounting systems is the network where the program may reside -- if the computer network is
not properly set up, the software cannot be accessed and cannot be utilized. Most organizations
are faced with frequent power failure that slows the rate at which operations are executed in
organizations. This leads to loss of data hence taking more time to be retrieved

Computer Virus: The major stressing challenges in the whole world are the problem of
computer viruses. S. NORA (Computerization of Society 1981), affirm that computer viruses
usually infect systems introduced via external storage devices which have already been
infected. This has led to loss of data most of which is very costly to get back as it will need
experts who are invited to install and design new packages. System security concerns can pose
limitations on accounting software. Besides worrying about viruses and worms, small-business

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owners also should be concerned with unauthorized access of computerized accounting data.
IDs and passwords are common minimum security measures businesses can use to protect the
accounting software against intrusion, but they may not be enough. According to Kiplinger
magazine, hacking is very common with small businesses; however, only one in five small
firms owns antiviral software and over half don't use encryption on wireless connections.

Computer Hacking: S. NORA (Computerization of Society 1981), goes ahead to refer this as
to when individuals make unauthorized access to computerized systems especially via dial-in-
lines or across computer networks. This leads to loss of data and inconveniences to the
individual affected by the hackers.

Converting from manual to computerized accounting system before converting from manual
to computerized accounting system, planning is of great importance. S. NORA
(Computerization of Society 1981). Hence need to consider the principle of procedure, costs
associated with new system, feasibility and reliability of the new system. S. NORA
(Computerization of Society 1981). Recommend 2 ways of changing a manual system to
computerized system. Direct or parallel method, however, the choice of the method to use will
depend on the nature, resources, objectives and purposes of the organization. Richard Back and
Rueben T. Hurns 1998 suggested that large scale; complex organizational change can be
conceptualized in movement from present to future state. All this would affect organizational
operations positively hence effectiveness.

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.

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Whereas computerized accounting has been defined by Alan & Frank (2005) as a total suit of
components that together comprises all inputs, storage, transactions, processing, collecting and
reporting of financial transaction data, manual accounting on the other hand implies that
employees perform the whole accounting cycle manually on a periodic basis: they calculate
trial balances, journalize transactions, prepare financial statement reports and other routines.

Whether manual or computerized, accounting in itself is known to have a cycle that includes
the following steps: journalizing the transactions, posting them to ledger accounts, preparing
trial balance, making adjustment entries, preparing adjusted to end-of-period trial balance,
preparing financial statements and appropriate disclosures, journalizing and posting the closing
entries, and preparing after-closing trial balance at last, Weber M. (2011). From the first look,
it is not very difficult and it is so indeed, but when there are thousands or millions of
transactions to be handled, the situation dramatically changes. Lots of transactions that must
be processed in the accounting cycle make this process routine and even a little mistake or
inaccuracy can cause all the cycle from the very beginning to fail which will therefore require
an extra effort to find and correct the mistake.

Manual accounting uses several paper ledgers and journals where accountants record financial
information. The general ledger includes miscellaneous transactions and the aggregate balance
of all subsidiary ledgers and journals. Whereas Manual accounting is very detailed, since
accountants must carefully enter information into physical books, Computerized accounting
uses software programs designed from traditional manual accounting systems and involves the
use of computers, spreadsheets and programs designed to record and report financial
information electronically, (Osmond, 2011).

Benefits of Computerized Accounting over Manual Accounting

Time: Paper works are involved in manual accounting; all the accounting activities are carried
out on paper manually and obviously, it takes much time and resources for the average business
organization and most especially, a financial institution that still uses the manual system.
Computerized accounting saves a lot of time where in, the employee has to record the
transactions and all the other calculations would be carried out by the software either
automatically or by a request. Magdalene M, (2010)

Accuracy: I also agree with Magdalene M, (2010) again, that computerized accounting is not
only speedy but also accurate. With a computer being used to collect data and change it into
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meaningful information that is used by management to make timely and effective decisions,
the computer carries out the entire data processing through classifying, sorting, calculating,
summarizing the data and production of reports, as stated by Birungi (2000). This entire process
helps to minimize the risk of miscalculations and other human errors that could have emerged
as a result of manual data processing.

Security: With the manual accounting system, every record is on paper and in case of any
uncertainties such as heavy floods, landslides and fire outbreaks, the useful data may all be
lost, and yet with the computerized accounting system and the introduction of internet and
networks in the information technology world, an easy backup and restoration system as well
as the use of passwords to avoid unauthorized parties from accessing the data, keeps the
information secure.

Cost: Some arguments may stress that manual accounting can be handled with cheap work
force and resources and that it is reliable as it is done manually with minutes of observations
Magdalene M, (2010). However, the level of competition in the business world of today is tight
and even growing tighter day by day and if a business with an aim of being successful does not
consider the aspect of time especially as far as decision making is concerned, then that business
stands to lose. Computerized accounting in this case may be more costly than manual
accounting in terms of cheap work force but its output actually overweighs its cost.

Level of output : Magdalene M, (2010) also argues that computerized accounting can actually
handle thousands of calculations simultaneously and accurately as compared to manual
accounting where by transactions are handled one at a time and even needs much time to do
that as well as being characterized by human errors and mistakes in calculations which may
eventually affect the final output of information and hinder effective decision making.

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

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

A financial statement also known as a financial report is a formal record of the financial
activities of a business, person, or other entity, Babylon dictionary (1997). A financial
statement also often referred to as an “account”; expression of one’s responsibility over a
particular activity.

Van (2005) defines financial reporting as the process of presenting financial information or
data about a company’s financial position, operating performance and its flow of funds for an
accounting period.According to Indira (2008), timeliness is also another important
characteristic of quality financial information. This arises as a result of perish ability of
accounting information. To benefit users, financial information must be presented at the right
time otherwise it loses relevance.

According to Frank Wood (1999), financial reporting is all about presenting useful information
to users so that proper decisions can be made. His implication about financial reporting is that
financial information should aid in the evaluation of amounts, timing and uncertainties of cash
flows. Also financial reporting should furnish information about the entity’s economic
resources, claims against those resources, owners’ equity and changes in the resources and
claims.

Indira (2008), emphasized that financial reports should provide information about financial
performance during a period management discharge it’s stewardship responsibility to owners.
It should likewise be useful to managers and directors themselves in making decisions on
behalf of the owners. He argues that accounting information is very necessary if decisions are
to be made accurately and rationally by the various interested parties or users of financial
information. These are broadly classified into external and internal users. Where internal users
include management and employees while the external users include donors, shareholders,
creditors, government, competitors and general public.

According to Carl’s et al (1999) the quality of financial reports depends on the intended users
of the information and should be evaluated with respect to the needs of the users. Federation
of Accounting Standards Board (FASB) defined quality as a hierarchy of accounting qualities
with relevance and reliability considered as the primary characteristics while representing
faithfulness, verifiability, neutrality, comparability, consistency and understandability
considered as secondary characteristics. Reliability, information is said to be reliable if it is

17
free from material errors and bias and represents faithfully that is purports to represent
emphasized Frank wood (1999).

Having discussed the history and essence of Computerized Accounting Systems, it is

imperative to assess the importance of financial reporting in every company. The scenario
posed by Enron and other companies like WorldCom, Tyco, Adelphia, Global Crossing, and
Xerox, endears both management and users of accounting information to pay critical attention
to the content of the financial statements (Romney et al 2008).

The Companies Code, 1963 (179) of Ghana mandates management of every company
identified under the code to prepare and present financial statements to members of the
company at least once in every calendar year.The process of periodically providing general-
purpose financial information to people outside an organization is termed financial reporting
(Greuning, 2006).

Financial Reporting can be defined as the process of presenting financial data about a
company’s financial position, the company’s operating performance, and its flow of funds
(Rose and Hudgins, 2008). Issues bothering on financial reporting are quite complex and
cumbersome. The function of financial reporting is to make publicly available information
which concerns stewardship (for example, what resources are under control of the organization,
and the consequence of their past use) and management's planning (for example, what are the
future plans for the controlled resources, and how prior mistakes will be avoided) (Beaver
1978).

The end product of financial reporting is a financial report. This financial report generally
consists of:
 Statement of financial position at the end of the period
 Statement of comprehensive income for the period
 Statement of cash flows for the period
 Notes to the accounts (Greuning,2006)
Financial reporting is largely an effort to assess financial performance, that is, how well or how
poorly an entity performed with money entrusted to it, (Sacco, 1998). Financial decisions
include raising and spending money as well as making promises that have financial
consequences. Financial reporting is considered a part of accountability for financial decisions.
Exactly, the quality of financial reporting depends upon how the financial data is handled right
from the point of data collection to the processing stage that leads to the production of
18
 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:

Characteristics of quality financial reports

1) 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 non professionals. As a business owner, you have to think of the different
accounting backgrounds of the different types of people who will be reading your reports and
match that accordingly Marquez Come lab. Information can only be useful to end users if they
are able to understand it.

According to Pallai (2007) Understandability as a quality of financial reporting that enables

users to perceive the significance of financial information. He argues that users are assumed to
have reasonable knowledge of business and willingness to study and understand the
information. International Accounting Standards Board adds that information should not be
excluded on grounds that it may be difficult for certain users to understand.

2) Relevant & Material: Relevance is the capacity of information to make a difference in a

decision. It is important to report and disclose information that is relevant for anyone to make
a decision. Accounting information must also deal with things that are significant enough to
impact decisions that are made by those who use the financial reports (Marquez,2011). Since
financial statements are for users to make economic decisions, the information must be relevant
to the decisions that those users have to make. . Whether the information affects the economic
decisions of users (materiality) and the nature of information affect relevance as well.
Materiality is one of the assumptions used in financial reporting that contributes to relevance
Derrell V. (2010)

3) 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.

19
4) 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)

5) Objectivity: Information which is free from bias will increase reliance the users place on it
Frank and Alan.(1999) The information should meet all the proper user needs and be neutral
in that the perception of measures should not be biased towards the interest of any one user
group. The accounts should always show a true and fair view of financial statements.

According to Turner (2000), neutrality is the demand that accounting information should not
be selected to benefit one class and neglect to other. Reliable information is verifiable, neutral
and has representative faithfulness. Relevance is also a very important characteristic of quality.
Frankwood indicates that financial information is relevant if it is capable of making a difference
in decisions made by helping users to form predictions about the outcomes of the past, present
and future events either to confirm or correct prior expectations. Comparability is another
characteristic of quality information. Frankwood (1999) also stresses that users must be able to
compare the financial statements of the enterprise over time in order to identify trends in its
financial position and performance.

Relationship Between Computerized Accounting and Financial Reporting

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

while generating financial reports. Computerized accounting systems have been credited for
their quick processing speed and large storage capacity. Using computerized accounting system

20
ensures up-to-date account balances are available any time for management to make quick
decisions (Lancouch, 2003).

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

manual systems. The method of inputting and processing data is sophisticated thus accuracy of
data is improved. This means that financial reports will bear minimum errors. Computerized
system will foster accessibility and faster transformation of information stored in computers,
hence financial reports can easily be accessed through online system without delay and timely
decision making (Kwarijuka, 1998).

The use of computer based systems in manufacturing firms will enable employees from various
function areas and branches to generate timely financial reports which enable managers to
monitor business operations and important finance decisions (Wailes, 1999). A computerized
accounting system is a delivery system of accounting information as providing reliable
accounting information to users. So records of expenditure and incomes and assets, liabilities,
revenue expenses must be documented and transferred to general ledger of firm’s financial
details to be analyzed for future financial decisions.

Conclusion

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

information continue to change, the accounting system should become flexible enough to meet
the need of users. Automated generation of accounting document like invoices, cheques and
statement of accounting with the larger reduction in the cost of hardware and software and
availability of user-friendly accounting software package with relative cheap maintenance. In
order to promote quality of financial reporting, there is need of feedback regarding the way in
which user determines quality (Mangiameli et al, 1999).Financial reports need provide feedback
in order to prepare good reports enable constantly updating the system.

21
 COMPANY PROFILE

About

Superior Spirits is a young, customer oriented dynamic company dealing primarily in Alcohol
and Alcoholic products. It focus on delivering results by maximising the strength of its
portfolio, the presence in key markets. It is pioneers in the supply of alcohol and alcoholic
products in various international markets and the objective is to supply our Customer’s at very
competitive price and the best possible services.

Superior Spirits Private Limited is a Private incorporated on 07 July 2011. It is classified as

Non-govt company and is registered at Registrar of Companies, Delhi. Its authorized share
capital is Rs. 10,000,000 and its paid up capital is Rs. 3,700,000. It is inolved in Manufacture
of refined petroleum products

Superior Spirits Private Limited's Annual General Meeting (AGM) was last held on 12
September 2018 and as per records from Ministry of Corporate Affairs (MCA), its balance
sheet was last filed on 31 March 2018.

Directors of Superior Spirits Private Limited are Prem Chandra Lal Srivastav and Debasish
Sengupta.

Basic Information

Nature of Business Exporter

Additional Business  Manufacturer
 Trader

Total Number of Employees 51 to 100 People

22
Year of Establishment 2011
Legal Status of Firm Private Limited Company
Annual Turnover Rs. 100 - 500 Crore

Company Detail

CIN U23209DL2011PTC222050
Company Name SUPERIOR SPIRITS PRIVATE LIMITED
Company Status Active

RoC RoC-Delhi
Registration 222050
Number
Company Category Company limited by Shares
Company Sub Non-govt company
Category
Class of Company Private
Date of 07 July 2011
Incorporation
Age of Company 8 years, 1 month, 30 days
Activity Manufacture of refined petroleum product

Mission, Vision & Our Values

Our Values:
23
 Customer First Performance focus Valuing People Nurturing Relationship
Deliver quality Ensure an Provide a Culture that Cultivate mutually
products & services environment that attracts and nurtures beneficial and ethical
by adopting best fosters teamwork and the best talent relationships
practices rewards performance

Our Vision:
To attain leadership position in the markets we serve. We contemplate ourselves to be the front
runner in the march towards achieving undisputed leadership in our field by our proven ability
in high quality and efficiency and the undoubted trust by our clients.
We believe in healthy competition as it offers us an opportunity to demonstrate our superiority
and encourages us to take on the challenge to gallop ahead to mould the future in the right
direction.
"Vision without action is a dream. Action without vision is simply passing the time. Action
with Vision is making a positive difference".

Our Mission:
To become an efficient and reliable business partner by providing exceptional customer
services and quality products at fair price.

PRODUCTS
Extra Neutral Alcohol or ENA (Ethyl Alcohol)

24
Derived From Sugar Cane Molasses

General Application: Alcoholic beverages incl. whisky, rum, vodka, gin, cane, liqueurs and
alcoholic fruit beverages

The Extra Neutral alcohol or ENA is a high distillated alcohol without any impurities and others
destinated to be used in the high cosmetic industry, perfumeries as well as for the production
of alcoholic beverages such as whisky, vodka, gin, cane, liqueurs and alcoholic fruit beverages
and aperitifs.

It should be noted that for alcoholic beverage only alcohol produced from fermentation origin
are allowed to be used in such applications.

1. Packaging
o Available in HDPE Drums (250, 235, 210, 35, 30, 25 & 20 Ltrs), ISO Tank
Container & IBC's (1000 Ltrs)

2. Specification
o Extra Neutral Alcohol or ENA @ min. 96% v/v
o Rectified Spirits @ min. 94% v/v
o Absolute Alcohol @ min. 99.8% v/v

Extra Neutral Alcohol or ENA (Ethyl Alcohol)

25
Derived From Grains

General Application: Alcoholic beverages incl. whisky, vodka, gin, cane, liqueurs and
alcoholic fruit beverages

The Extra Neutral alcohol or ENA is a high distillated alcohol without any impurities and others
destinated to be used in the high cosmetic industry, perfumeries as well as for the production
of alcoholic beverages such as whisky, vodka, gin, cane, liqueurs and alcoholic fruit beverages
and aperitifs.

It should be noted that for alcoholic beverage only alcohol produced from fermentation origin
are allowed to be used in such applications.

1) Packaging

Available in HDPE Drums (250, 235, 210, 35, 30, 25 & 20 Ltrs), ISO Tank Container & IBC's
(1000 Ltrs)

2) Specification

Extra Neutral Alcohol or ENA @ min. 96% v/v

Ethyl Acetate (Etac)

Ethyl acetate is the ester of ethanol and acetic acid.

Ester - Formed by reaction between an acid and an alcohol with elimination of water.

General Application: A colourless volatile flammable liquid, CH3COOC2H5, used in

perfumes, flavourings, lacquers, pharmaceuticals, ink , paint , plastic and rayon etc as a general
solvent.

1. Packaging
o Available in HDPE Drums of 210Kg & 225Kg, MS Drums of 185 Kg , ISO
Tank Container & IBC's
2. Specification
o Ethyl Acetate or Etac Purity min @ 99.60% v/v

26
Liquid Glucose

Liquid glucose molecular formula C 6 H12 O6 also known as corn syrup is a fundamental ingredient
in many food and industrial products it is a purified concentrated aqueous solution of nutritive
saccharides obtained from starch.

General Application: Liquid Glucose used in backing industry, in confectionery and also as
adjuncts in brewing industry.

1. Packaging

o Available in HDPE Drums , MS Drums & ISO Tank Container.

2. Specification

o Liquid Glucose

Corn Starch

Corn starch, is the starch derived from the corn (maize) grain. Corn starch is a popular food
ingredient used in thickening sauces or soups, and is used in making corn syrup and other
sugars.

27
General Application: Corn starch is used as a thickening agent in liquid-based foods, as an anti-
caking agent in powdered sugar.

1. Packaging

o Available in 25 kg, 50 kg Bags.

2. Specification

o Corn Starch

Methanol

Methanol, also known as methyl alcohol, wood alcohol, wood naphtha or wood spirits, is a chemical
with the formula CH 3OH. Methanol acquired the name "wood alcohol" because it was once produced
chiefly as a byproduct of the destructive distillation of wood. Modern methanol is produced in a
catalytic industrial process directly from carbon monoxide, carbon dioxide, and hydrogen.
Methanol is the simplest alcohol, and is a light, volatile, colorless, flammable liquid with a
distinctive odor very similar to, but slightly sweeter than, that of ethanol (drinking alcohol) . At room
temperature, it is a polar liquid, and is used as an antifreeze, solvent, fuel, and as a denaturant for
ethanol. It is also used for producing biodiesel via trans esterification reaction.

General Application: Methanol is a toxic, colourless and flammable liquid used in manufacture
variety of chemicals, including formaldehyde and acetic acid.

1. Packaging

o Available in HDPE Drums , MS Drums , ISO Tank Container & IBC's

2. Specification

28
 o Methanol Purity min @a 99.90% v/v

Rice Gluten

Rice Gluten is the dried residue from rice after removal of the starch, germ and bran. An excellent
source of highly digestible protein.

General Application: Rice Gluten used in Cattle Feed & Poultry feed.

1. Packaging

o Available in HDPE Drums , MS Drums & ISO Tank Container

2. Specification

o Rice Gluten

Denatured Spirits

Good Solvent
General Application: Various aerosols (Personal care products, perfumes, air fresheners),
plasticizers.
29
As a good solvent, ethanol is used in the production of some lacquers, paints and ink for the
printing industry. It is an intermediate for the production of ethyl esters (like ethyl acetate),
which in turn are used in plastics, fumigants, resins, and even for the production of synthetic
rubber.

Ethanol is used in cosmetics (perfume, toiletries, cologne, hair spray, aerosol.) and
household products (air fresheners, detergents). Some grades are use for pharmaceutical
products (antiseptics, drug, syrups, medicated sprays.).

It is an excellent co-product for anti-frost and screen wash applications. Ethanol is a raw
material for vinegar, which tradition curiously places in industrial use.

1. Packaging

o Available in HDPE Drums (250, 235, 210, 35, 30, 25 & 20 Ltrs), ISO Tank
Container & IBC's (1000 Ltrs)

2. Specification

o As per customer requirement

Indian Made Foreign Liquor

30
  State House Premium Whisky: A whisky of your choice. The fine blend of matured
malt and premium grain spirit which involves superior process of ageing to get the
silky taste.

 8 TO 8 Premium Whisky: Blessed with incredible and ultimate velvetiness, 8 TO 8

is full-bodied with Indian grains spirit - making it silky and warm.

 State House Dry Gin: Superior Spirits’ innovative blend of flavours has shaped into
one of the finest extra dry gin. Just try to fall in love.

 State House Vodka: Exotic Vodka of your choice which has been crafted retaining the
natural character and with fusion of perky flavours.

 State House XXX Rum: Superior Spirits’ XXX Rum is known for its robust taste and its
ever lasting pleasure. Taste to, feel it.

Quality Policy of Superior Spirits

31
The Quality Policy of Superior Spirits is to provide quality product & services through effective
sourcing of products while striving to ensure-

 Stability, dynamism and growth to all its business associates

 Enhanced level of customer satisfaction and
 Continual improvement in business processes and procedures to attain global standards,
through full employee participation.

And continually reviewing and updating the Quality Management System to align it with the
dynamic business environment.

ISO 9001: 2008 Certified Company

Research Methodology

Introduction
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, the data collection tools or methods, way of data management, data processing
and data analysis. The researcher also points out some of the challenges or limitations that may
come up during the study process.

Study Design
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.

32
Area of Study
The area of study is SUPERIOR SPIRITS PVT. LTD., Noida, U.P.

Population
This encompassed the accounting staff/tellers, support staff and management of the case study who
actually record and even use the same information generated as a result of computerized
accounting.

Sample Size and Selection Method

The researcher used convenient sampling to come up with 15 respondents of the financial
institution as broken down below.
Table 3.1 Showing the category and size of respondents used for the study
Category Size
Management Staff 2
Accounting Staff/Tellers 10
Support staff 3
Total 15
Source: Primary 2019

Size

20% 13%

Management Staff
Accounting Staff/Tellers
67% Support staff

The purposive technique above was used in selection of respondents not only for its’ time and
money saving but also helps in selecting of typical and relevant cases necessary to equip the
study with the required information. Besides, the simple random sampling methods were used
to select a sample of respondents without any bias from the accessible population. Each party

33
of the target population in this case has an equal opportunity of independence as far as
expression of their opinions is concerned.

Sampling and Sampling technique

The samples used in the study were selected using purposive sampling which is a function of
non- probability sampling. Under purposive sampling technique, the researchers purposely
choose who, in their opinion are thought to be relevant to the research topic. In this case, the
judgment of the researcher was more important than obtaining a probability sample. The
process of sampling in this case involved was purposive identification of the respondents.

The sample size was therefore selected from all the different department and the subjects of
the study include more particularly on the management staff, accounting staff / bank tellers and
support staff who were directly dealing with the day to day management of the bank since they
were the ones conversant with the relationship between computerized accounting and financial
reporting in the commercial bank.

Source of Data

1) Primary Data

Primary data was obtained through the use of self-administered questionnaire to respondents
following systematic and established academic procedures, as suggested by Nunnally and
Bernstein (1994). Primary data was collected from the respondents that were chosen from
Superior Spirit Pvt. Ltd..

2) Secondary Data

Secondary data was used to support the empirical findings of the study. These other sources of
data (Literature review) major used to back up the arguments and findings in chapter four and
five. The secondary data were obtained from Superior Spirit Pvt. Ltd. journals, text books,
brochures, library and internet information relating to computerized accounting and financial
reporting.

Data collection method

34
This study was based on data collected from two major categories of sources: primary and
secondary. Whereas the primary source of data were used in the questionnaire, to collect more
information and clarify on some information, it majorly constituted structured and open-ended
questions focusing on the research objectives and control questions to check correctness and
consistency.
The secondary data source involves were mainly the organization financial and management
reports. This record inspection was carried out in relevance to the study objectives. Besides,
the study employ the use of interviews, which involve talking or interacting face to face with
the respondents sampled for the study and finding out issues concerning the research objectives

1. Questionnaire.

This was one of the major instruments that were used to collect data. The researcher used both
open and closed questions which was required specific answers. Questions were printed in clear
and simple language possible for the respondents to understand. The respondents were selected
the correct options by ticking the correct answers.

2. Interview.

Here, questions were determined beforehand while others arise during the course of the
conversation. The interviews were done on individual-oriented basis to allow expression of
personal view points. The researcher used face to face interviews because of the following
reasons; provision of firsthand information, rich data collection, cost effective, speedy and
ability to clarify the questions, clear doubts and could add new questions where it was necessary

3 Key Informant Interviews

Face to face interviews were carried out with the top management and clients to cross check
the response from the questionnaire. These were designed in a way that more specific and
truthful answers were got. These help to capture information, not provided by the
questionnaires. The method used Interview guide to capture the respondents‟ views. This
method was preferred because of its flexibility and ability to provide new ideas on the subject
(Kothri, 1990).

4 Documentary Analysis

Secondarily data from materials such as textbooks, newspapers, journals and internet were used
to back up primary information and relate the findings to other approaches already in existence.
35
The method used document checklists and guides to get views from other writers which were
instrumental especially in comparison analysis and literature review.

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.

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.

Analysis & Interpretation

Introduction

The following chapter reports on the findings of the study that was carried out to evaluate
the strength of the computerized accounting system effectiveness used by Superior Spirit
Pvt. Ltd. , to find the pros and cons of computerized accounting system effectiveness to
financial institutions, to establish the qualities of financial reports generated by
computerized accounting systems effectiveness and to establish the relationship of
computerized accounting system effectiveness and financial reporting in financial
institutions.

 Findings on the uses of a computerized accounting system.

Table1: Responses on whether, the company uses a computerized accounting system for

its operations.

Response Frequency Percent Valid Percent Cumulative

Percent
YES 15 100 100 100
NO 0 0 00 100

36
 Total 15 100 100
Source: Primary Data 2019
120

100

80

YES
60
NO
40 Total

20

0
Frequency Percent Valid Percent Cumulative
Percent

Table 1 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 2: Responses showing what major tasks are performed by the computerized
accounting system.
Major Response (Tasks) Frequency (out of 15) Percent

Data summary 9 60
Data analysis 11 73
Entering/Recording of data 12 80
Reporting (financial statements) 13 86
Data security(password protection) 13 86
Source: Primary Data 2019(N=15) 14

37
 Data security(password
protection)

Reporting (financial statements)

Entering/Recording of data
Frequency (out of 15)
Data analysis Percent

Data summary

0 20 40 60 80 100 120

Table 2 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 3: Responses, showing the financial statements (reports) generated by the

computerized accounting system.
Response (reports) Frequencies out of 15 Percentage (%)
Statement of comprehensive income 13 86
Statement of financial position 14 93
Statement of cash flows 14 93
Income statement 15 100
Source: Primary Data 2019 (N=15)

38
 Frequencies out of 15

Income statement

Statement of cash flows

Frequencies out of 15
Statement of financial
position

Statement of
comprehensive income

12 13 14 15

The research also aimed at finding out what type of financial statements are produced by the
computerized accounting system and as we can see in table 3 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.
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 3 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 3
above.

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

Table 4: Responses, on the pros of a computerized accounting system.
Response (pros) Frequencies (out of 15) Percentage (%)
Risk management 12 80
User friendly 14 93
Easy communication (funds 14 93
transfer)
Easy balancing of daily transactions 14 93

39
 Effective auditing 14 93
Speed 15 100
Time saving 15 100
Source: Primary Data 2019

Frequencies (out of 15)

Percentage (%)

Time saving

Speed

Effective auditing
Easy balancing of daily
transactions
Easy communication
(funds transfer)
User friendly

Risk management

0% 20% 40% 60% 80% 100%

Table 4 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 5: Responses, on what the cons of a computerized accounting system are.

Response (cons) Frequencies Percentage (%)
Old computers hinder speed 8 53
Computer virus threats and data loss 9 60
Long training period 10 66
Eye strains 12 80
Chances of system failure 12 80
Source: Primary Data 2019 (N=15)
40
 Frequencies

12
10
8
6
4
2
0
Old computers Computer Long training Eye strains Chances of
hinder speed virus threats period system failure
and data loss

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
5. It is also important to note that there were not really many disadvantages revealed by the
research as shown on the table above. This does not only show that the system is of higher
advantage to the bank but it is also notable that most of the system cons regardless of their
response-percentage variances, are not of a financial nature and actually contribute less to
disrupt the effectiveness and efficiency of the financial operations of the business.

Table 6: Responses on preferences between manual computerized accounting systems.

Preferences Frequencies Percentage (%)
Manual Accounting 0 0
Computerised Accounting 15 100
Total 15 100
Source: Primary Data 2019 (N=15)

41
 Manual Accounting Computerised Accounting

100

80

60

40

20

0
Frequencies Percentage (%)

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 6
above, with computerized accounting standing at 100% and manual accounting at 0% of
preference by the respondents. This shows that the use of a computerized accounting system is
much more effective and efficient as compare to the manual accounting option, as far as
business operation, running, management and reporting is concerned. Much as the respondents
stated their independent preferences in table 6 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
7 below.

Table 7: Responses on reasons for preference of the option chosen in table 20 above.
Preferences Frequencies Percentage (%)
Simplifies work 9 60
Easy tracking of transactions 11 73
Time saving and speed 14 93
Source: Primary Data 2019 (N=15)

42
 Percentage (%) Frequencies

93
Time saving and speed 14

73
Easy tracking of transactions 11

60
Simplifies work 9

Responses on table 7 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

 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 8: Showing findings on what the qualities of financial reports generated by a
computerized accounting system are.
Response (qualities) Frequencies Percentage (%)
Comparable 11 73
Understandable 12 80
Consistent 14 93
Reliable 14 93
Material 14 93
Source: Primary Data 2019 (N=15)

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 15

10

0
Frequencies

Table 8 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.

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Table 9. Chart 1: Showing findings on how often the respondents’ access financial
reports.

How to get access to the financial

reports
percentages of the respondents

Once a year Frequently Never

Series1 5% 93% 2%

Source: Primary Data 2019

In order to find out whether the respondents have access to financial reports, it necessary to
find out how often they get access to these reports. As a result, the findings shown on table 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 15 100
NO 0 0
Total 15 100
Source: Primary Data 2019 (N=15)

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 16
14
12
10
8
6
4
2
0
YES SOME NO Total

Frequencies

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
financial statements. In this case, every company treats their chain of transaction differently
and with this factor in question, the study 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 money the transaction requires.

Table 11: Shows correlations between computerized accounting effectiveness and

financial reporting in Superior Spirit Pvt. Ltd.
Correlations
Computerized Financial reporting
accounting
Computerized Pearson 1.00 .861**
accounting correlation
Sig (2-tailed) . .000
N 15 15
Financial Reporting Pearson .861 1.00
correlation
Sig (2-tailed) .000 .
N 15 15

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 N

Reporting
Financial
Sig (2-tailed)

Pearson correlation

N
Computerized
accounting

Sig (2-tailed)

Pearson correlation

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Computerized accounting Financial reporting

**.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 Superior Spirits Pvt.
Ltd 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 Superior Spirits Pvt.
Ltd and this is majorly due to short falls of the computerized accounting system.

FINDINGS & INFERENCES

Introduction

This chapter presents a summary of major findings on computerized accounting and corporate
fraud and the relationship between them, gives conclusion, recommendations based on the
findings and areas for further research.

Discussion of major findings from the Study

 To determine the use of a computerized accounting system: The results from the
study confirm that computerized accounting performs several unique tasks in a
company which are satisfactory. This is indicated by the tasks noted down by
respondents in the questionnaire on this variable.

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 Quick Financial Reports: The researcher found out that through computerized
accounting system, financial reports can be generated quickly. This side with McBride
(2000) view that computerized accounting system can generate different types of
reports needed by management for instance profit and loss reports, and VAT reports
among others. It was observed that the quickness in generation of the reports is due to
the fact that through computerized accounting, data processing and analysis are faster
and more accurate hence managers can instantly access different information which
leads to easy and quick decision making.

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

computerized system is a highly integrated application that transforms the business
processes with its performance enhancing features. Thus accounting functions,
inventory control and statutory reporting can be easily done resulting into faster access
to business information.

 Accuracy and Efficiency: Due to expansions, business transactions increase and such
transactions can only be recorded and maintained accurately. The study revealed that
the firm can handle large volumes of accounting data with ease which was the same
view pointed by McBride (2000). Computerized accounting can handle data many
times greater than humans hence cost effective.

 Simplified Posting of Transactions: There is no need to have huge paper

documentations as in manual systems. The accountant emphasized the advantage that
accounting functions such as record keeping, double entry principle are simplified with
computerized systems. Cook (2002) also echoed that accounting functions such as
posting transactions are simplified. However there should be accuracy in entering data
otherwise human errors in inputting data results into inaccurate financial reports.

 Minimized errors: The researcher observed that with computerized accounting

systems, arithmetic errors are remarkably reduced this is because computerized
accounting performs the computations automatically. However the researcher also
established that computerized accounting does not have intelligence to eliminate or
correct errors made by humans during data entry but can only detect errors.

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  Easy Auditing: The researcher was informed that when external auditors come, there
work is simplified because all sets of transactions are easily availed to them hence
saving time and costs.

SUMMARY OF FINDINGS

 To determine the use of a computerized accounting system. The results from the
study confirm that computerized accounting performs several unique tasks in a
company which are satisfactory. This is indicated by the tasks noted down by
respondents in the questionnaire on this variable.
 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 of the reports generated through manual accounting, thus
making the latter system much preferable

LIMITATIONS

In attempt to make this project authentic and reliable, every possible aspect of the topic was
kept in mind. Nevertheless, despite of fact constraints were at play during the formulation of
this project. The main limitations are as follows:

 Cost of the research/study: just like any other study, costs are normally unavoidable and these
may include, transport costs, airtime costs, typing, printing and binding costs among others that
may come up unpredicted. However, as far as costs are concerned, the researcher will have to
acquire soft loans from friends and relatives so as to meet the costs of the research.

49
  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 will only hinder the acquisition of the necessary
information, so the researcher will not get tired as far as wooing the respondents to cooperate
is concerned.

RECOMMENDATIONS AND CONCLUSION

RECOMMENDATION

1) 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.

2) 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.

3) 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
50
for a company that is in need of smooth operations and reliable reporting, the computerized
accounting system is recommended.

CONCLUSION

1 To determine the use of a computerized accounting system.

From the findings, response is high that the company 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 Superior
Spirit Pvt. Limited actually make use of a computerized accounting system.

2 To find out the pros and cons of computerized accounting to financial institutions

The results revealed that much as a computerized accounting system has got satisfactory
advantages, it also comes with its disadvantages. However, the study findings show that the
advantages of computerized accounting are more paramount as compared to its disadvantages
even as far as financial reporting is concerned. This therefore zeroes to the computerized
accounting as more of an asset than a liability to business operations and reporting.

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

system.

The study also established a number of qualities of financial reports generated through
computerized accounting. From these findings however, it is evident that reports produced
through manual accounting have also got their own strengths characteristically but all the same,
financial reports generated through computerized accounting have much more paramount and
unique qualities that still leave computerized accounting as a better option to financial
reporting.

APPENDIX 1 (QUESTIONNAIRE)

QUESTIONNAIRE ON COMPUTERISED ACCOUNTING AND FINANCIAL REPORTING

51
Dear respondent,

I am a final year student conducting a purely academic study as a partial requirement that leads to the
award of the degree of Bachelor of Commerce.

The research is on computerized accounting and financial reporting. The answers provided will be
treated with utmost confidentiality and only for academic purposes. I therefore kindly request you to
respond appropriately to the following questions.

Thank you.

SECTIONA: Background of the respondent

1. Sex

a. Male

b. Female

2. Age of respondent

a 15-30

b 31-40

c 41 and above

3. Time spent working with SUPERIOR SPIRITS PRIVATE LIMITED

a) 1 year1 Month – 1 Year

b) 1 - 2
c) 2– 3
d) 4 and above

4. Position held / responsibility…………………………………………………………

5. Department

a). Procurement b. b) Information and stores

c) Administration d) Sales

SECTION ONE: THE USE OF A COMPUTERIZED ACCOUNTING SYSTEM

52
1. Does your organization/company employ the use of a computerized accounting system?
(a)Yes
(b) No

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

………………………………………………………………………………………………

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

through computerized accounting:
......................................................................................................................................................
......................................................................................................................................................

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

AS FINANCIAL REPORTING IS CONCERNED.

1. What are the advantages of computerized accounting systems?

a) ................................................................................................................................................
b) ................................................................................................................................................
c) ................................................................................................................................................
d)...................................................................................................................................................

2. What are the disadvantages of computerized accounting systems?

a) ..........................................................................................................................................
b) ..........................................................................................................................................
c) ..........................................................................................................................................
d) ..........................................................................................................................................
e) ..........................................................................................................................................

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

1) Computerized accounting
2) Manual accounting
3.1 Please give reasons for your preference ticked above:
…………………………………………………………………………………………………
……

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SECTION THREE: THE QUALITY OF FINANCIAL REPORTS GENERATED BY 30
COMPUTERIZED ACCOUNTING SYSTEMS.
1. What are the qualities or characteristics of financial reports generated by the computerized
accounting systems in your organization?
......................................................................................................................................................
......................................................................................................................................................
2. How often do you get access to the financial reports?
Once a year Frequently Never

3. Do all transactions pass unauthorized? (Please tick in one box of your preference below)
Yes Some No
Please give reasons for your choice of answer in Qn.
3above.
......................................................................................................................................................

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

…………………………………………………………………………………………………
…………………………………………………………………………………………………
…. Thanks for your cooperation.
God bless you.

REFERENCES

1. B. J. Lexus. (2002). Qualitative characteristics of financial statements: An overview. Helium,

Inc. 200 Brickstone Square Andover, USA

2. Birungi, A (2000). The Effectiveness of Information Technology in Organisations, A case study

of Post Bank

3. Darrell Victor 2010: Qualitative characteristics of financial statements: An overview. Helium,

Inc. 200 Brickstone Square Andover, USA

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4. Differences between Manual and Computerized Accounting: Retrieved 17, March, 2011 from
http://www.ehow.com/facts_5756244_differences-between-manual-computerized-
accounting_.html

5. Frankwood & Alan Sangster (1999). Business Accounting 2 (Eighth edition), Prentice Hall,
Britain.

6. Frankwood & Alan Sangster (2005). Business Accounting (19th edition), Pitman Publishers,
London

7. Herman Son (1987). Accounting Principles. (special edition) Business Publication Inc, Plano,
Texas

8. John Sacco, (1998). Financial Reporting in Government. (Revised ed), George Mason
University.

9. Marquez Comelab: Qualities of useful financial reports. Retrieved 17, March, 2011 from
http://www.marquezcomelab.com

10. Mary Magdalene, (2010). Comparison Between Manual and Computerized Accounting,
Retrieved April, 19, 2011, from EzineArticles.com. http://www.accountingproviders.com

11. Max Weber (2011) Manual Accounting Versus Computerized Accounting -

Experience_com.mht

12. Meigs & Meigs, (1986). Financial Accounting, Grawhill Book Company, London

13. Omonuk J.B. (2009), Fundamental Accounting for Business. (Practical emphasis). Department
of Accounting, Makerere University Business School.

14. Osmond V, (2011): Manual versus Computerized Accounting Systems. Retrieved April, 24,
2011, from http://www.ehow.com/about_5410997_manual-vs_-computerized-accounting-
systems.html
15. Singil, C. (2002): Risk Management in Banks

16. VAN-Briefing (2005) Computerized Accounting, Issue No 92. The Voluntary Arts Network,
Scotland.

17. Wuburoko E.S, (2001): Introduction to information technology (second edition), I.A.C.E,
Makerere University, Edsoft computer institute.

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56
.

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15. Singil, C. (2002): Risk Management in Banks

16. VAN-Briefing (2005) Computerized Accounting, Issue No 92. The Voluntary Arts Network,
Scotland.

17. Wuburoko E.S, (2001): Introduction to information technology (second edition), I.A.C.E,
Makerere University, Edsoft computer institute.

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