CHAPTER ONE

1.0 Introduction

In this chapter study will critically the effect of computerized accounting system of financial

performance at some selected company in Mogadishu-Somali which were: Background of

the study, problem statement, objectives of the study, research questions, significance of the

study, scope, operational of key terms definitions, and conceptual frame of study.

1.1 Background of the Study

Conceptually: Amanamah et al. (2016) studied that computerized accounting system is a

system that uses computers to input, process, store and output accounting information for

financial reports. it adds that an accounting system records all transactions that routinely

deal with events that affect the financial position and performance of an entity. 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 that process of facilitating financial information in Ghana.

computerized accounting systems is provided major advantages such as speed and accuracy

of operation, and, perhaps most importantly, the ability to see the real-time state of the

company’s financial position. Fatihudin et al (2018) Said “In my experience I have never

seen a business that has upgraded to a computerized accounting system return to paper-

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based accounting systems.in Nigeria”. Computerized accounting system is the application of

the computer-based software used to input, process, store, and output accounting

information. This application is in support of the ever-advancing technology that enables

firms to use computer programs to perform tasks that were previously done manually;

therefore, there are many ways which in measure what Computerized accounting system

increase but, in this study, will measure Computerized accounting system at the side of

Quick books, spreadsheet and Peachtree. However, it involves the computerization of

accounting information systems which is established in order to facilitate decision making.

These are associated with a numbers of benefits like speed of carrying out routine

transactions, timeliness, quick analysis, accuracy and reporting. in Nairobi, Kenya (olive

cheekier sugut, 2012).

Financial performance is a key result of resource output Resource-based theory intuitively

explains that ESG performance as a resource can improve the company's output and bring

good financial performance to the company, as well as reduce the probability of

environmental accidents such as pollution. Third is information asymmetry theory. On the

premise of sustainable development theory and resource-based theory, asymmetric

information theory further explains the positive impact of ESG performance on financial

performance in shanghai China (Kanyanga, 2022). On the other hand, financial performance

is a controversial issue in the scientific community. Several studies have suggested that this

relationship is a positive one. Green technology innovation is defined as innovation that

includes pollution prevention, waste recycling and utilization, development of green

products, and the treatment of the environment It generally involves producing a ‗double

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dividend‘ in the form of benefit to customer in China (Qing et al., 2022). According to

(Fatihudin et al., 2018), financial performance is a measure of an organization ‘s earnings,

profits, appreciations in value as evidenced by the rise in the entity ‘s share price in

insurance, performance is normally expressed in net premium earned, profitability from

underwriting activities, annual turnover, returns on investment and return on equity. These

measures can be classified as profit performance measures and investment performance

measures. Profit performance includes the profits measured in monetary terms. Simply, it is

the difference between the revenues and expenses. These two factors, revenue and

expenditure are in turn influenced by firm-specific characteristics, industry features and

macroeconomic variables.

Globally, computerized accounting system (CAS) is software programs that improve

operational efficiency. These features are expected could increase user‘s satisfaction and job

performance. The difference in the accounting system within the agency adopted from the

public sector practices coupled with different performance measurement system in the

public sector may adjust the importance of factors previously found in the study of private

sector.in University Kembangan Malaysia (Ahmed & Ng, 2019). In addition, computerized

accounting system is tools that is used to record business transaction also prepared accurate

financial statement and financial expertise and guidance, the business owners may be unable

to make sound financial decisions, and this would impact the survivability of their business

small industry business owners in the beauty salon industry fail at a rate o within five years.

The general business problem was that some small business managers do not understand

how to use a computerize accounting system to sustain their business effectively. The

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specific business problem was that some small business owners of beauty salons lack

strategies to adopt a computerize accounting system that will help maintain their business

today is very important tools that used mostly organization because benefit come from

technology in Walden university (Bullock, 2021).

According to (Amanamah et al., 2016), Computerized accounting systems is automating the

accounting process, enhancing productivity and cutting down expenses. What's more, it has

a tendency to be more exact, quicker to utilize, and less subjected to error than the manual

system in today's automated, interconnected, worldwide business environment, CASs have

become the 'engine of growth' in small and medium scale enterprises. therefore it involves

the computerization of accounting information systems, which is established in order to

facilitate decision making. These are associated with a numbers of benefits like speed of

carrying out routine transactions, timeliness, quick analysis, accuracy and reporting. The

contribution of SMEs to the growth of national economies is significant. In the developed

economies in Germany.

Financial Performance (FP) consisting of preserving and increasing current capital,

increasing sales, reducing costs, increasing customer loyalty and improving efficiency and

business value.in south Arabia, financial performance is crucial for companies' survival;

however, it is argued that ESG is equally important for a company to survive in the long-

run. For a company to survive, it must be accepted by society. The acceptance-need,

together with the societal trends that focus on sustainability within firms, indicates that

companies with a high ESG score reduce their risk. Hence, it is argued by that sustainable

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companies have a strong financial performance in the long-run. These new demands of

reducing climate change force companies to change their strategies to succeed in the long

run (Hichri & Ltifi, 2021). Another study on financial performance in an American

university, (Bullock, 2021) found that financial performance is a positive relationship.

While in Pakistan, the objective of the current study is to investigate the influence of

financial leverage on financial and to investigate whether financial leverage has an effect on

financial performance by taking evidence from listed sugar companies of Pakistan. The

results of the study are a mixed result. The results show the positive relationship of debt

equity ratio with return on asset and sales growth, and negative relationship of debt equity

ratio with earning per share, net profit margin and return on equity (Syed et al., 2016).

On the other hand, financial performance is a measure of a company’s policies and

operations in monetary terms. It is a general measure of a firm ‘s overall financial health

over a given period and can be used to compare similar firms across the same industry or to

compare industries or sectors in aggregation. There are many ways to measure the

Company‘s financial performance in Iraq (Hanoon et al., 2020)

In Africa, According to (olive cheekier sugut, 2012), Computerized accounting system is

the application of the computer-based software used to input, process, store, and output

accounting information. This application is in support of the ever-advancing technology that

enables firms to use computer programs to perform tasks that were previously done

manually. A computerized accounting system therefore involves the computerization of

accounting information systems which is established in order to facilitate decision making.

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These are associated with a numbers of benefits like speed of carrying out routine

transactions, timeliness, quick analysis, accuracy and reporting.in university of Nairobi

Kenya. On the other hands, (Ahmed & Ng, 2019) Computerized accounting system is the

companies outside accounting firm Some of the reasons presented include information that

is more accurate, better efficiency, easier compliance to government regulations, the ability

to share information, tighter internal control, and better financial management. Showed that

the adoption of CAS helps prevent internal fraud through better reporting and internal

controls. Additionally, the accounting firm ‘s desire to maximize billings while

simultaneously minimizing client contact hours allows for greater efficiency and accuracy

within the accounting find. Accountants advise that better internal control often enhance the

ability to detect fraud as a primary benefit to Computerized accounting system Ohio State

University.

A study on financial performance in South Africa, (Rogers, 2016) Found that Financial

performance is directly influenced by its market position. He also identified risk and growth

as important factors influencing a firm‘s financial performance. The size of the company

can also have a positive effect on financial performance because the larger firms can use this

advantage to get some financial benefits in business relations.in South Africa. The financial

performance is a term used in relation to the capacity of financial institution to generate

sustainable profitability. For any financial institution to be successful in its operations,

managers must weigh complex trade-offs between growths, return and risk, favoring the

adoption of risk-adjusted metrics According to is a key proxy measure frequently used in the

literature of bank financial performance and reflects the management ‘s ability and

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efficiency to utilize banks ‘financial and real investment resources to generate profits.

School of Business, University, Kenya (Abayomi & Adegoke, 2016).

In Somalia, computerized accounting systems is explained by the variation of the

management commitment, efficiency of the human capital, business user's competence, and

cost capability. As a conclusion, the findings support the hypothesis that Human Capital

Efficiency, Cost Capability, and CAS Implementation in SMEs are and., respectively,

indicating a significant relationship between the variables (Mohamed & Ramli2, 2021).

Thus, financial performance analysis of commercial banks has been of great interest to

academic research since the Great Depression Intern the 1940‘s. In the last two decades

studies have shown that commercial banks in Sub-Saharan Africa (SSA) are more profitable

than the rest of the world with an average Return on Assets (ROA) of 2 percent Flaming

(Njoki, 2023).

Financial performance is one of the major reasons behind high return in the region was

investment in risky ventures. The other possible reason for the high profitability in

commercial banking business in SSA is the existence of huge gap between the demand for

bank service and the supply thereof. That means, in SSA the number of banks is few

compared to the demand for the services; as a result, there is less competition and banks

charge high interest rates. This is especially true in East Africa where the few governments

owned banks take the lion's share of the market. The performance of commercial banks can

be affected by internal and external factors these factors can be classified into bank specific

(internal) and macroeconomic variables. The internal factors are individual bank

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characteristics which affect the bank's performance. These factors are basically influenced

by the internal decisions of management and board. The external factors are sector wide or

country wide factors which are beyond the control of the company and affect the

profitability of banks in garowe. However, (Farah, 2021) studied effect of financial

management practices on financial performance of manufacturing firms in Bossaso city

Puntland.

(SHEIKHDON, 2016) studied effect of liquidity management on financial performance of

commercial banks in Mogadishu, Somalia It can be seen that this above study did not

investigate the financial performance is the side of computerized accounting system there

for the problem that this study dairies is envisage the elements in which draft computerized

accounting system it is work the financial performance.

1.2 Problem of the Statement

Business managers need accounting information system (AIS) to plan, control and make

both short- and long-term decisions. Computerized accounting has been a useful tool in

performance appraisal of business organizations (banks), so as to increase stakeholder’s

confidence in the organization and encourage them in investing more in the organization. In

order for an organization to appraise its performance, it needs some important information

that must be timely, accurate and useful to the users. The information must allow for quick

comparison between current and previous years data, offer financial statement for use by

both managers and stakeholders etc. Hence, the needs for any computerized accounting

system are accuracy, speed and low cost of running the organization. The problem here is

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whether the computerized accounting system in these bank(s) is(are) useful in appraising the

performance of its operation and also whether computerized accounting system enhances

higher turnover and profitability in banks. Also, a problem to be reviewed in this research is

to determine whether the use of computerized accounting system to keep accounting records

in organizations has been of great use (Akesinro & Abayomi, 2016).

Since the 1950s, when technology started to be applied in business (Otieno and Oima,2013),

most developing countries have moved away from the use of a pen and a paper and started

to adapt to the use of accounting software’s to facilitate generation of quality, quick and

accurate financial reports. However, due to other poverty related issues, there is lack of

consistency coupled with irregularities registered in the field of technology which handicap

the regular use of computerized accounting system. Studies to evaluate the impact of using

this technology to generate financial reports are limited (Murungi & Kayigamba, 2015).

Therefore, this research aims to investigate the effect of computerized accounting systems

on the financial performance of organizations. It seeks to explore whether the adoption of

computerized accounting systems leads to improved financial performance or if there are

any potential drawbacks associated with their implementation. By gaining a deeper

understanding of this relationship, organizations can make informed decisions regarding the

adoption and utilization of computerized accounting systems to enhance their

financial performance.

1.3 Purpose of the study

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The purpose of this study is to investigate the impact of computerized accounting systems,

specifically QuickBooks, spreadsheet software, and Peachtree, on the financial performance

of selected companies in Mogadishu, Somalia. The study aims to address the existing

problem of inadequate evaluation of the effectiveness of these computerized accounting

systems in appraising organizational performance and their potential to enhance turnover

and profitability in banks and other organizations in Mogadishu, somalia.

1.3 Research Questions

1. What is the effect QuickBooks on financial performance at some selected of companies in

Mogadishu Somali?

2. What is the effect spreadsheet on financial performance at some selected of companies in

Mogadishu Somalia?

3. What is effect of peach three on financial performance at some selected of companies in

Mogadishu Somalia?

1.4.1 General Objective

The purpose of this study is to determine and describe effect of computerized accounting

system financial performance at some selected of companies in Mogadishu.

1.4.2 Specific Objective

1. To assess the effect of QuickBooks on financial performance at some selected of

companies in Mogadishu Somalia.

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2. To find out the effect of spreadsheet on financial performance at some selected of

companies in Mogadishu Somalia.

3. To determine the effect of peach three on financial performance at some selected of

companies Mogadishu Somalia.

1.6 Scope of the study

The scope of the study is explained in three dimensions namely content scope, Geographical

scope and time scope

1.6.1 Content Scope

The study focuses on assessing the effect of the use of Computerized accounting systems in

financial reporting. This will determine the possible effect of computerized accounting

system in financial reporting and how it can affect in the decision making of the company.

1.6.2 Geographical scope

This study focuses on some areas where the most companies use Accounting Softwares in

Mogadishu, including Bakaro Market in Howlwadag District, the most common reason we

chose these areas is the availability of most companies in Mogadishu.

1.6.3 Time Scope

This research will be focused on the effect of computerized accounting software on financial

performance. The data to be used in this study will cover a period of 6 months in this season

from March to July 2024.

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1.7 Significance of the Study

The findings of this research will help hasten the efforts of SMEs in improving the financial

reporting that will help management in monitoring, planning and decision making and thus

ensuring their survival in the business environment. The research will provide immense

knowledge in the way SMEs are managed and thus improve on performance for the benefit

of owners and stakeholders. In addition, the research study will facilitate better SMEs

management by enhancing the knowledge of financial analysis and forecasting that will spur

expansion of business and growth of SMEs. The study will equally be useful in formulating

policies of SMEs especially in strengthening policy consideration for the sector, and also its

important for policy makers and new researchers as they provide opportunities for policy

development, economic analysis, comparative studies, exploration of emerging

technologies, and investigation of long-term effects. Understanding the relationship between

technology adoption and financial performance contributes to evidence-based policy

making, fosters economic growth, and drives innovation in the accounting field.

1.7 Operational Definition of Key Terms

Computerized Accounting System.: Is an accounting information system that process the

financial transactions and events as GAAP to produce reports in accordance with user ‘s

Requirements.

Quick books: Is accounting software whose products provide desktop and online

accounting applications as well as cloud-based ones which can process bills and business

payment. Quick books are mostly targeted at medium and small business.

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 Spreadsheet: Is a software program you use to easily perform mathematical calculation on

statistical date and totaling long columns of numbers or determining percentages and

Averages.

Peachtree: is an accounting tool which has been developed by sage software

Financial performance: Is a subjective measure of how well a firm can use assets from its

primary mode of business and generate revenue.

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter introduces concepts and theories about is the role of cost management on financial

performance, while the study concentrates on concept about how the two variables affect one

another, as well as deep concepts about the research objectives, and lastly empirical study

2.1 COMPUTERIZED ACCOUNTING SYSTEM

Computerized Accounting System is defining this system as a system that uses specialized

machines called calculators and computer in gathering information. It is technically known as

Electronic Data Processing (EDP) Accounting System. A computerized accounting system also

allows analysis of the stored information. This is particularly crucial in the crafting of business

and strategic plans especially as competition in the specific business or industry heats up. A

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computerized accounting system will work with whatever type of business. This is because any

business in general, whether it produces products or delivers services, has a basic structure:

input, process and output. There are uniform reporting requirements and accounting principles to

comply with and use. A computer–based accounting system processes data in basically the same

manner as does a manual system. Transactions are initially recorded manually on sources

documents, the data from these source documents are then key – punched into punched cards,

which can be read by the computer. The computer processes the information and performs such

routine tasks as printing journals, posting to ledger accounts, determining account balances and

printing financial statements and other reports. (Abayomi & Adegoke, 2016).

Computerized accounting systems is process integration, which is the ability of the system to

coordinate its various parts to perform several processes simultaneously. The common ground

identified in the diverse views discussed above is that accounting information systems possess

integrated components with interrelated functionalities. However, in line with the principles of

garbage-in-garbage-out, the quality of outputs would depend on the inputs to the system. The

system with the worst input cannot generate any good quality output. Hence, in this study, inputs

and outputs were not considered as components of computerized accounting systems, while

computer hardware and other related technologies were classified as enhancing technologies.

The researcher, therefore, conceptualizes the structural characteristics of computerized

accounting systems in terms of internal control component, automated data-processing

component, relational database component, automated reporting component, and enhancing

technologies. computerized accounting systems (CAS) quality and effectiveness based on

systems theory, in terms of their structural characteristics or functional components. The

researcher identified five structural characteristics (components or subsystems) of CAS, namely

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internal controls, automated data-processing, relational database, automated reporting, and

enhancing technologies components. The operationalization of these structural characteristics

resulted in an item index that forms the measurement tool developed. The 25-item index was

constructed based on the review of prior literature to ensure content validity. The CAS

measurement tool was administered to active members of the Institute of Chartered Accountants

of Nigeria (ICAN) through an online survey, and useful responses were collected and analyzed

to test the validity and reliability of the measurement tool. The researcher assessed the construct

validity of the CAS measurement developed using the exploratory factor analysis, and the

internal and external reliability using the Cronbach ‘s alpha test of consistency and test-retest

statistics, respectively. (Akamanwam, 2020)

Computerized Accounting System (CAS) According to All financial transaction data inputs,

storage, transfers, processing, collecting, and reporting are all part of the CAS. So, for the

contemporary or digital era, computerized accounting is the most important and gets many

incentives, such as accurate records, less expense, and timely reporting. A computerized

accounting process is one in which computers and computer-based programs are used.

Accounting software, for example, can be used to track, coordinate, summarize, review, view,

and communicate financial information about business transactions to stakeholders. It's a

computerized system for simplifying financial data inputs and automating accounting tasks

including database documentation and report generation. according to him. computerized

accounting systems improved the quality of the financial statement, increased the speed of

financial statement preparation. Respondents also acknowledged the need to constantly improve

the skills and qualifications of the employees through training. (Mohamed & Ramli2, 2022)

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Many organizations have used computerized accounting systems widely to compose the

operations of their businesses. Service industries have experienced a tremendous growth as a

result of using computerized accounting systems in the recent past; an example is the banking

industry. The usage and availability of the internet has been an added advantage to the users of

computerized accounting systems since a virtual environment is created where accounting

operations can be conducted remotely or even globally (Osmond, 2017). This aspect aids in the

improvement of data management function which in the long run can influence the performance

of an institution or any other firm. Most Computerized Accounting Systems (CAS) are multi-

user systems. These systems use databases that which keeps consolidated sets of data from the

institution's systems. After setting up databases, performance monitoring must always be done

and also security provided, so as to make it not available to anyone, but intended users. Retrieval

of information from databases is always done by user friendly programmers, as well as addition

of new information. This forms an integral part which enhances efficiency in management of

accounting data in the institutions.

Therefore, it is necessary to take time to invest and monitor relevant technological advancements

in the journey of a digital accountant. CAS is the flexibility, adaptability or willingness of the

accounting staff to the changes in technology. This means keeping pace with evolving

technologies in the accounting field. This is because the accounting model applied today is likely

to be different from the business models that will be used in the next decade or five years to

come. It is therefore necessary to take time to invest and monitor relevant technological

advancements in the journey of a digital accountant. The modern technology we use today has

brought in the use of computers in conducting various tasks. Technology involves applying

science in collecting, recording and processing of information in business, and then

16
communicates to the intended users by use of electronic media. For this purpose, the tool mostly

used is the computer for processing transactions and managing of business data. The computer

plays a major role in advancement of various organizations. (Kanyanga, 2022)

The researcher in this study assessed the effects of Computerized Accounting Systems on the

auditing process within Sanko Bank. Moreover, in order to reach this main objective, the

researcher outlined specific objectives and these included; to investigate the type of CAS used, to

identify the risks and challenges faced in using and applying computerized systems to the

auditing process, to investigate the positive contribution of CAS to effective auditing using a

comparative approach with the manual system and also to find out the capability of the auditors

in auditing using computer-based accounting system. From the results obtained, it was revealed

that the contribution of Computerized Accounting Systems to the effectiveness and efficiency of

the auditing process is moderate. The results highlighted that the respondents were not sure

whether risk competence is a factor affecting the effectiveness of auditing. Computerized

Accounting Information Systems. (Gardi, 2021)

Computerized accounting system is expensive; organizations are reluctant to accept it.

Computerized accounting includes equipment expenditures, assembly, installation, and startup

testing costs. The system requires specially trained personnel to operate. suggested that it has

been discovered that the lack of infrastructure restricts the implementation of CAS. The obstacles

to technology implementation are the lack of financial resources for hardware, applications,

equipment, and time. In addition to the initial investment, the barriers to CAS implementation

are maintenance costs and technical support. suggested that financial resources affect CAS

adoption. stated that financial resources had an impact on the implementation of the usage of

computers has brought many benefits to society. When users have quick access to data from all

17
around the world, both business and household users may make well-informed decisions.

Another type of customer provides extra opportunities to assist pupils in their study. It is vital to

profit from the use of computers because of their advantages of speed, dependability, precision,

storage, and networking. According to Shelly and Vermont, Computers provide advantages in

terms of speed, reliability, consistency, storage, and communication, so they can be helpful. In a

computer, data, instructions, and information flow at breakneck speed via electronic circuits.

Speed. In a single second, many computers can carry out millions or trillions of operations.

Addition, subtraction, alphabetical sorting, gaining, showing photographs, recording sounds,

playing music, and presenting a movie or video are all examples of processing. (Mohamed &

Ramli2, 2022)

2.1.1 QUICKBOOKS ON FINANCIAL PERFORMANCE

QuickBooks is Simple Start, available in over 160 countries. The innovation fulcrum of

QuickBooks variations for the focus markets seems to be 4 versions including Simple Start. This

is implemented by Intuit in four of QuickBooks ‘five focus markets except for the US, where an

additional Advanced version is also offered to a different customer segment. For the focus

markets, Intuit strikes the right balance of product innovation and operational complexity. In the

growing markets, Intuit has short operation history, with higher operational complexity due to

limited product-market fit. There were not enough data for us to analyze the QuickBooks

innovation fulcrum in these markets. We concluded that Intuit‘s operating system with its

Customer-Driven Innovation focuses exactly on what customers want‖, as suggested by the

framework, which helps the company stay at its innovation fulcrum. (Reyna et al., 2020)

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QuickBooks Online is a brand and a product owned by Intuit Inc. You are capable of using the

well-known cloud-based online accounting tool QuickBooks. You may manage your accounting

online. It is a simple online accounting programed that enables business owners to make

informed choices. QuickBooks allows you to access real-time information and manage your

business from anywhere at any time. A bank's connectedness defines the quality of QuickBooks

that distinguishes it from rival accounting software Companies can connect their bank account to

import and classify transactions automatically. In the QuickBooks platform, there are other APIs.

Application for integrating external applications into your company. It can import bank

transactions as a consequence. profit books One of the top accounting programs for small

enterprises in India is Profit Books since it is incredibly quick and easy. It is among the most

influential small business online accounting programs. On the other hand, Profit Books gives you

total control over your inventory and is perfect for inventory management. Without any prior

accounting training, you can use it to create stunning invoices, keep tabs on expenses, and

manage inventory. Profit Books creates thorough tax reports for goods bought and sold.

(Chandra & Gupta, 2022)

This study offers empirical evidence on small businesses ‘use of QuickBooks software for

management accounting reporting. Specifically, the research examines the extent to which

business owners monitor a broad range of management accounting reports available in the

QuickBooks report menu. The study also seeks to understand predictors of report use by testing

hypotheses that examine the effects of owners ‘personal attributes, locus of control and goals, on

their frequency of report use. A majority of small businesses employ the QuickBooks accounting

software program. In fact, its market share is reported to be 93% of the retail market in unit sales

(Shields, 2011) The software program has many useful features for small businesses that, if

19
employed, can aid small business owners in performing important management accounting

responsibilities. Convenient and relatively low cost, it facilitates recording transactions for

record keeping. Transactions include items such as purchases, sales, payments, collections, and

the like. These items provide data to generate management accounting information to manage the

business.

QuickBooks has a report menu which lists categories of reports. The report menu enables a small

business to conveniently create and access management accounting reports which present the

effects of transactions on company financials, customers and receivables, purchases, and vendors

and payables. QuickBooks facilitates planning and control decisions through the use of reports

(e. profitability year-to-date, actual to budget comparisons, list of accounts and their respective

balances). QuickBooks can be used by small businesses to both plan and control their business.

A menu of reports allows managers to readily view reports on financial statements, customers

and receivables, budgets, lists of accounts and items, purchases, and vendors and payables.

Frequent consultation of these reports is important to small business management because it

allows a small business owner to plan, monitor, and get timely feedback and thus to make more

timely interventions. (Shields, 2011)

2.1.2 SPREADSHEET ON FINANCIAL PERFORMANCE

The most complete set of data on error rates comes from programming, which is at least a cousin

of spreadsheet development. In programming, many firms practice code inspection on program

modules. In code inspection, teams of inspectors first inspect the module individually and then

meet as a group to go over the module again (Fagan, 1976). Significantly, there is a requirement

to report the number of errors found during code inspection. This has resulted in the publication

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of data from literally thousands of code inspections. The data from these studies shows strong

convergence. Code inspection usually finds errors in about 5% of all program statements after

the developer has finished building and checking the module. While there is some variation from

study to study, much of this variation appears to be due to differences in programming language,

module difficulty, and, sadly, in hastiness in development. (Ahmed & Ng, 2019)

Excel spreadsheets; usually, school students know spreadsheets, so it is easy for everyone to

understand the theme behind the GUI. Moreover, the students can practice as many examples of

each module as possible. These spreadsheets are also helpful for teachers who want to make

different papers with answer keys. This work can further be extended towards analytical

geometry, where we see a lot of use of applications of vectors. Spreadsheets are useful tools for

teaching physics and related experiments online through simulation. It got more importance,

particularly in this pandemic situation. Microsoft Excel is a popular spreadsheet that is very

simple to use. Most people from different areas of life are familiar with Microsoft Office and

Excel spreadsheets. These sheets are also common to students, and most are familiar with how to

use them for data analysis. The impacts of various factors in a physical system may be seen using

MS Excel. It can be used in situations. A graphical user interface makes it easier to utilize

computers by displaying information to allow quick acquisition and modification. (Razzak &

Uddin, 2023)

2.1.3 PEACHTREE ON FINANCIAL PERFORMANCE

Peachtree is very flexible, but in this case, students ‘attention is directed to the fact that the

flexibility can lead to thievery if user‘s access is not limited. For example, after a check has been

issued, an individual with access can change the name of the payee to hide an embezzlement.

21
The importance of proper segregation of duties and limited user access is stressed in the case.

Students set up making profile with limited access, and the case provides opportunity for

students to see for themselves just how the access limitation can be applied to provide for a

measure of segregation of duties. Peachtree, can provide small business owners. Although not

every student will graduate and join a small business firm, there is a good chance that they may

leave the large business environment and join a smaller firm or become entrepreneurs.

In this case study, financial information is provided for a movie theater, as most accounting

students understand the business processes behind selling tickets and concessions. It requires

students to set up a company, maintain vendors, inventory, etc., and record a set of monthly

transactions. Upon completion of this project, students will have obtained a better understanding

of how financial transactions flow through an accounting system and how the transactions affect

different accounting cycles and reports. Peachtree Accounting Software. Students will learn how

to set up a new company and track a month of financial information. Additionally, the project

identifies potential weaknesses in the software ‘s design and demonstrates how to set some user

security levels to help mitigate the chances for misuse. Peachtree Accounting, for the reasons

already cited in the Introduction of this article. While the student team had already gained

experience with accounting software packages, they developed this case as a delivery mechanism

and basis for teaching their peers (and undergraduate AIS students) the fundamentals of using

Peachtree. (Hayes et al., 2011)

Peachtree Software: This is a devise that comes with different features which gives the buyer an

opportunity to make choices of the flavor the prefer. These flavors include peach tree pro, peach

tree complete, peach tree premium and peach tree quantum. Peach tree premium and peach tree

quantum have accountant edition which can be of great use to the professional accountant, added

22
also is the accounting and business management tools, payroll management solutions. Peachtree:

is a popular accounting software for small businesses, independent accounting firms, personal

and professionals account management. Among its features are automated tax calculations,

expense tracking, invoice management and balance sheet reporting. Uses Accounting software:

is a good example of intuitive set up which is straightforward to use. It incorporates security

features to negate any online threat such as hacking. (Dore, 2017)

Peachtree software to the new accounting software. The process began with the general study of

the company collate and the management of its accounting, followed by consultations about

accounting in Jamaica and at the same time a comparison was made with accounting in

Colombia, due to the fact that, despite being under standards international financial information,

the contexts within each country vary and therefore there are regulatory, tax and labor aspects

that differ. End use small and medium business practices professionals to prepare financial

statement organized transaction information obtained software Peachtree al Software general

control and correct digitation information que facility visualization de increment o decrement.

(Temnani et al., 2021)

2.2 FINANCIAL PERFORMANCE

The financial performance is a term used in relation to the capacity of financial institution to

generate sustainable profitability. For any financial institution to be successful in its operations,

managers must weigh complex trade-offs between growths, return and risk, favoring the

adoption of risk-adjusted metrics According to the Return on Assets (ROA) is a key proxy

measure frequently used in the literature of bank financial performance and reflects the

management ‘s ability and efficiency to utilize banks ‘financial and real investment resources to

23
generate profits. The author further indicates that the ROA depends on the bank ‘s policy

decisions as well as on uncontrollable factors relating to the economy and government

regulations. objectives of an organization are accomplished. Financial performance will measure

the results of a firm in monetary terms. (Alhammadi et al., 2022)

financial performance is introduced into the analysis framework of the impact of ESG

performance on the market value of listed companies as an intermediary variable. By

constructing linear regression model and mediating effect model, this paper examines the impact

of ESG performance on the market value of a company and its transmission mechanism from

several different aspects such as profitability, operating capacity, and growth capacity. In this

paper, the ESG rating newly developed by SynTao Green Finance in the Wind database is

converted to assign values, and a complete data index that can reflect the ESG performance of

listed companies is constructed. On the basis of exploring the relationship among ESG

performance, financial performance, and market value of the company, the research objects are

further divided into polluting enterprises and non-polluting enterprises, which makes the research

results more detailed, more targeted, and more instructive to the reality. (Zhou et al., 1984) Is

more consistent with a mediating perspective or a moderating perspective. In addition, this is the

first known study to use SEM to investigate the direct effects of lean production methods and

NFMP measurements on externally-audited, objective measures of financial performance have

attracted limited academic research. Most of the research in this area has focused on the

performance of socially-screened portfolios relative to broader market Indices. A firm's social

performance has typically been quantified using reputational indices. These indices have been of

two types: those which combine a firm's social performance reputation on a variety of issues into

a single rating of social performance, or those which focus on a single aspect of social

24
performance, such as involvement in South Africa or environmental performance. (Fatihudin et

al., 2018)

Evident that financial performance is crucial for companies' survival however, it is argued that

ESG is equally important for a company to survive in the long-run. For a company to survive, it

must be accepted by society. The acceptance-need, together with the societal trends that focus on

sustainability within firms, indicates that companies with a high ESG score reduce their risk.

Hence, it is argued by Syed (2017) that sustainable companies have a strong financial

performance in the long-run. These new demands of reducing climate change force companies to

change their strategies to succeed in the long run. However, it is challenging to build a strategy

that balances environmental, social, and economic needs for both the company and society.

(Ahmed & Ng, 2019) evident that financial performance is crucial for companies' survival;

however, it is argued that ESG is equally important for a company to survive in the long-run. For

a company to survive, it must be accepted by society. The acceptance-need, together with the

societal trends that focus on sustainability within firms, indicates that companies with a high

ESG score reduce their risk. Hence, it is argued by Syed (2017) that sustainable companies have

a strong financial performance in the long-run. These new demands of reducing climate change

force companies to change their strategies to succeed in the long run. However, it is challenging

to build a strategy that balances environmental, social, and economic needs for both the company

and society. (Ahmed & Ng, 2019)

Financial performance is a measure of a company’s policies and operations in monetary terms. It

is a general measure of a firm ‘s overall financial health over a given period and can be used to

compare similar firms across the same industry or to compare industries or sectors in

aggregation. There are many ways to measure the Company’s financial performance. (Hanoon et

25
al., 2020) This construct entails the measurement of a company’s policies and operations from a

monetary standpoint. It indicates the company’s general financial soundness over a certain

period, and is utilized as a comparison point between companies of the same industry or between

industries as a whole. There a several ways to measure a company’s financial performance,

among which is through its return on investment (ROI) and return on assets (ROA), which

subjectively measure how the company can use its primary business assets to produce profits.

Financial performance is significantly moderated by audit committee having the P-value 0.005

which is less than 0.5. Therefore, we conclude that there is a moderating effect of audit

committee in the relationship between internal control environment and financial performance of

Iraqi banking sector. This is consistent with previous studies edit committee moderates the

relationship between Risk assessment and financial performance in Iraqi Banking Sector. The

relationship of risk assessment control and financial performance is significantly moderated by

audit committee having the P-value 0.011 which is less than 0.5. Therefore, we conclude that

there is a moderating effect of audit committee in the relationship between risk assessment

control and financial performance of Iraqi banking sector. (Hanoon et al., 2020)

financial performance is a controversial issue in the scientific community. Several studies have

suggested that this relationship is a positive one. Green technology innovation is defined as

innovation that includes pollution prevention, waste recycling and utilization, development of

green products, and the treatment of the environment. It generally involves producing a ‗double

dividend‘in the form of benefits to consumers or businesses and a significant reduction in

environmental damage; in other words, benefiting the environment while helping to improve

corporate financial performance other studies, however, have suggested that this relationship is

26
neutral or even negative the inconsistency of these findings leaves room for further research.

(Qing et al., 2022)

2.3 EMPIRICAL STUDY

(MASANJA, 2020) studied The Impact of Computerized Accounting System on the Financial

Performance for Selected Private Companies in Arusha, Tanzania this study examines the impact

of accounting information system in financial performance in selected private companies in

Arusha, Tanzania. Specifically, the study adopted a descriptor-exploratory research design. The

population was generated from the number of employees working in the accounting and financial

department in 10 private companies located in Arusha region. The 10 private companies were

randomly selected in Arusha region. The population was 71 personnel working in the accounting

and finance department. The overall sample was 61 participants. However, the questionnaire

retrieved were 56 in total. The findings indicated that cost and management support are

significant contributors toward the implementation of computerized accounting system for

selected private companies in Arusha Tanzania. The researcher recommended that management

should support the efforts to adopt computerized accounting systems to improve the overall

performance of selected private companies in Tanzania.

This study aims to provide a comprehensive review on financial performance measurement of

supply chains, particularly in developing countries. Previous studies have advised transferring

from financial to nonfinancial measures but neglected to provide a comprehensive overview of

applicable financial measures. The study also aims to specify differences in cost and specific

measures of financial performance assessment. Despite numerous financial performance

measures available in literature, they are not applicable concurrently due to extra costs and

27
similar functions. This review aims to fill the gap in previous studies by reviewing supply chain

performance measurement from a financial perspective, enhancing the general knowledge of

researchers, managers, and practitioners on financial performance measures of supply chains.

(Rahiminezhad Galankashi & Mokhatab Rafiei, 2022)

2.4 THEORETICAL FRAMEWORK

This section presents the theoretical frameworks that underpin the relationship between

computerized accounting systems and financial performance. It discusses theories from various

disciplines, such as information systems, organizational behavior, and strategic management that

provide insights into the mechanisms through which computerized accounting systems influence

financial performance. Technology Acceptance Model (TAM) explores the factors influencing

the adoption and usage of technology. It can be applied to understand the acceptance and

utilization of computerized accounting systems within organizations. (Le & Cao, 1989) Resource-

Based View (RBV) emphasizes the role of resources and capabilities in achieving competitive

advantage. It can provide insights into how computerized accounting systems can contribute to

the development of unique resources and enhance financial performance. (Zhou et al., 1984)

Contingency Theory suggests that the effectiveness of management practices depends on the fit

between the characteristics of the organization and its environment. It can be applied to examine

how the implementation of computerized accounting systems aligns with organizational

characteristics and external factors, influencing financial performance. (Birger Wernerfelt, 1982)

2.5 CONCEPTUAL FRAMEWORK

IV DV

28
 COMPUTERIZED ACCOUNTING SYSTEM FINANCIAL PERFORMANCE

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter will focus on the methodology of the study. The chapter consists of research design,

target population including sample size and sample selection procedure, research instruments

with the validity and reliability test of the data and the data gathering procedure, to analyze the

data, data analysis followed by the ethical consideration of study and limitation of the study.

3.1 Research design

29
Research design is the plan or strategy that outlines the steps, procedures, and methods that will

be used to conduct a research study, with the aim of answering a research question or testing a

hypothesis. It includes the selection of research participants, the methods of data collection, the

choice of data analysis techniques, and the interpretation and reporting of findings (Alam et al.,

2022).

The study will be conducted through descriptive design. The study will use this approach in

order to describe and to investigate the effect of computerized accounting system on financial

performance at some selected of companies in Mogadishu. Using information gained from the

questionnaire. This design is selected for this study because it is effective, less cost and easily

accessible for collecting information from the target population.

The survey would be designed to collect data on the effect of computerized accounting system at

some selected companies in Mogadishu, Somalia, as well as their financial performance. The

survey will include questions related to computerized Accounting system to our sub variables,

QuickBooks, Peachtree and Spreadsheet. This design involves collecting data at a single point in

time from a representative sample of participants to examine the relationship between variables.

A random sample of companies in Mogadishu could be selected for inclusion in the survey. The

sample size should be large enough to provide a representative sample of firms in the city. The

survey could be administered in person, by phone, or online, depending on the preferences of the

participants.

3.2 Research population

The population of the study is the group of individuals, events, or objects that share one or more

characteristics of interest and that a researcher wants to generalize the findings of a study to. It is

the entire group that the researcher is interested in studying and making conclusions about, and

30
from which a sample is typically selected to participate in the study. The population of the study

can be defined based on various characteristics such as age, gender, geographic location,

educational level, or any other relevant factor that is of interest to the researcher. The size of the

population can range from a few individuals to a large number, depending on the scope and

nature of the research study. It is important for researchers to carefully define the population of

the study, as this will influence the selection of a sample and the generalizability of the findings.

A representative and 36 unbiased sample is required to ensure that the findings can be

generalized to the population of the study (Habib, 2011)

The target population for this study would be individuals working in various companies in

Mogadishu, Somalia, specifically those selected for the study, including Iftin Express, Kaamil

Computers, Beder Electronics, Discount Co., and Dauus Company. These individuals will be 67

respondents of employees, managers, or executives involved in the financial activities of their

respective companies. This category was chosen because the study intends to the effect of

Computerized accounting system, QuickBooks, Spreadsheet, Peachtree on financial performance

in Mogadishu, Somalia.

Table 3.2.1 Distribution of the Population

Category Frequency Percentage

Iftin expresses 17 25.37%

Kaamil Computer 9 13.43%

Beder Electronics 10 14.93%

Discount Co. 8 11.94%

Dauus Company 23 34.33%

Total 67 100%

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3.3 Sample Size

Sample size is a critical component of research design, representing the number of individuals,

cases, or units of analysis included in a study or experiment. It is typically determined based on

statistical considerations such as the level of precision, confidence, and power required to test

hypotheses or estimate population parameters. A larger sample size generally leads to more

precise and reliable results, but may also increase the costs and complexity of data collection and

analysis (Habib, 2011)

Slovene formula was being used to this study to determine the sample size. Slovene ‘s formula as

using to obtaining the sample size. Denoting by n the sample size, Slovene formula is given by,

the sample of the study is 57

Where:

n = the sample size

N = Total population

e = Margin of error

Thus, the sample size was determined as shown below:

N = 67

e = 5% = 0.05
67 67
n= = = 57
1+67(0.05)² 1.1675

Table 3.3.1 sample of 57 was chosen

Category Sample Size Percentage

Iftin Express 15 26.32%

Kaamil Computers 7 12.28%

Beder Electronics 11 19.29%

32
 Discount Co. 5 8.78%

Dauus Company 19 33.33%

Total 57 100%

3.4 procedure of sample selection

The procedure of sample selection refers to the process of identifying and selecting participants

or observations to include in a research study. This involves defining the target population,

determining the sampling frame, and applying a sampling method to select a representative

sample. The goal of sample selection is to ensure that the sample is unbiased and reflects the

characteristics of the larger population, allowing for generalization of study findings (Killmeyer

et al., 2020)

This study used probability sampling; the technique was taken for random sampling to select the

sample size in the Random sampling, the researchers decided who can participant the sample; the

main objective of this sample was to collect focused information. We chose this method because

it reduces Bias.

3.5 Research quality

3.5.1 Validity

Validity refers to the extent to which data collection method accurately measures what it will

intend to measure or to the extent to which research findings are about what They are claimed to

be about (Oso & onen, 2008). Validity of the data collection instruments will do whit the help of

an expert (the research supervisor) to edit the questionnaire and the interview guide. The

researcher forwarded the structured questionnaire to supervisor who is an expert in the area

33
covered by the research for editing and reviewing. The validity is generally gained from the type

of instrument being used.

3.5.2 Reliability

The reliability of the research instruments concerns with the degree to which the research,

instrument will give the same result under similar conditions. To ensure that the data is reliable a

standard of test re-test exercise will do before actually using it. (Joppa, 2000) Defines reliability

as the extent to which results are consistent over time and an accurate representation of the total

population under study is referred to as reliability and if the results of a study can be reproduced

under a similar methodology, then the research instrument is considered reliable. Needless to

say, validity and reliability are very indispensable for this research to be accurate.

3.6 Date collection procedures

This study was used for primary data, as well as should be collected from respondents in the area

of study. Data was collected using a pre-code structured questionnaire for the survey. The closed

questions are questions in which all possible so as to pre-specify answers and the respondents

make the choice from the answers provide.

Data collection was done by direct InTouch in the field of study. This is important because it is

helping the respondent to understand the questions by interpreting them to fit the respondents

understanding. This was done to ensure that the respondent answers the questions in the

appropriate sequence.

3.7 Data Analysis

34
After the research team collect the questionnaire from the respondents, the researchers use the

quantitative method for analyzing and interpreting data, the data have been analyzed through

correlation analyze to describe the effect of computerized accounting system on financial

performance by using statistical package for Social Science technique (SPSS 20.0) and other

applications necessary during the study. The statistical package analyzed variables by computing

relative frequencies, means, and standard deviations to produce valid and reliable data.

In the questionnaire each selected one to five scale for where, 1= Good 2= Absolutely 3= Neutral

bad; 4=Bad 5=Absolutely bad the following table presents the mean range and its interpretation

Mean Range Descriptions Interpretation 4.24-5.0 Good Excellent 3.43-4.23 Absolutely Good

2.62-3.42 Neutral bad Average 1.81-2.61 Bad Poor 1.00-1.80 Absolutely bad Very poor

3.8 Ethical Consideration

Ethical considerations of confidentiality and privacy address. A concerted and conscious effort

make at all times to support this promise. A guarantee was given to the respondents that their

names will not be revealed in the research report. In order to ensure the success of the research,

directors will link to subordinates in such a manner that each subordinate ‘response remained

anonymous apart from being linked to a particular director.

3.9 Limitation of the study

One limitation of this study is the potential for response bias, as the data collection relied on self-

reporting through questionnaires. Respondents may provide socially desirable answers or

inaccurately represent their experiences with computerized accounting systems and financial

performance. Additionally, the studies focus on companies in Mogadishu, Somalia, may limit the

generalizability of the findings to other contexts or regions with different economic, cultural, or

regulatory environments. Furthermore, the reliance on a single point in time for data collection

35
may not capture changes or fluctuations in financial performance over time. Future research

could address these limitations by employing diverse data collection methods, expanding the

study's scope to include a broader range of companies and regions, and conducting longitudinal

analyses to assess trends in financial performance more comprehensively.

APPEND 1
QUESTIONNAIRE
Section A: Demographic Characteristics
Please provide the following information about yourself by placing a tick (√) on one of the
choices to assist in analyzing the responses:
1. Gender
A) Male ( ) B) Female ( )
2. Age
A) 20-25 ( ) B) 25-30 ( ) C) 30-35 ( ) D) 35 Above ( )
3. Highest Level of education

36
 A) Diploma ( ) B) Bachelor ( ) C) Master ( ) D) PhD ( )
4. Job title
A) Director B) Manager C) Staff D) Supervisor

Section B: Computerized Accounting System

1. Which financial software do you currently use for managing your company's finances?
a) QuickBooks
b) Peachtree (Sage)
c) Spreadsheet (Excel/Google Sheets)
d) Other (Please specify: ________)
2. How long have you been using the financial software mentioned above?
a) Less than 1 year
b) 1-3 years
c) 3-5 years
d) More than 5 years
3. How would you rate your proficiency in using the selected financial software?
a) Beginner
b) Intermediate
c) Advanced
d) Expert

4. On average, how many hours per week do you spend using the financial software for
your company's financial management tasks?

_________________________________________________________________________________

5. Have you received any formal training or attended any courses to enhance your skills in
using the selected financial software?
A) Yes B) No
Section C: Financial Performance
1. How do you measure your company's financial performance? Please select the relevant
metrics or indicators from the list below: (Select all that apply)
a) Revenue/Sales growth
b) Profit margin
c) Return on investment (ROI)
d) Operating expenses
e) Cash flow
f) Accounts receivable turnover
g) Accounts payable turnover
h) Inventory turnover
i) Other (Please specify: ________)
2. How frequently do you review and assess your company's financial performance?

37
 a) Monthly
b) Quarterly
c) Annually
d) As needed
e) Rarely or never
3. What are the primary goals or objectives you aim to achieve by improving your
company's financial performance?

___________________________________________________________________________

4. How satisfied are you with your company's current financial performance?

___________________________________________________________________________
5. How confident are you in the accuracy and reliability of the financial data used to assess
your company's financial performance?

___________________________________________________________________________

Section D: Relationship between CAS and Financial Performance

1. In your opinion, how does the use of financial software (e.g., QuickBooks, Peachtree, Spreadsheet)
impact your company's financial performance?
a) Positively
b) Negatively
c) No impact
d) Not sure
2. Please rate the extent to which you agree or disagree with the following statements regarding
the impact of the chosen Computerized Accounting Softwares on your company's financial
performance:
1 2 3 4 5
Agree Strong Agree Neutral Disagree Strong Disagree

Computerized Accounting System 1 2 3 4 5

1 The CAS has improved the accuracy and timeliness of

financial data.
2 The CAS has enhanced financial analysis and reporting
capabilities.
3 The CAS has increased efficiency in financial processes
and tasks.

38
4 The CAS has improved decision-making and financial
planning.
5 The CAS has reduced costs associated with financial
management.

Section E: Additional Comments

1. Please provide any additional comments or insights regarding the relationship between the
chosen financial software and your company's financial performance.

39