THE IMPACT OF COMPUTERIZED ACCOUNTING

AND FINANCIAL PERFORMANCE AT PREMIER BANK

MOGADISHU SOMALIA

BY
ISMAIL AHMED YUSUF
CLASS ID: 0037 PT

THIS PROPOSAL SUBBMITED TO THE BANADIR

RESAERCH CONSULTANCY AND EVALUATION
CENTER

SUPERVISOR’S NAME: ENG.YASIN HAJI MOHAMED

JUN, 2024

MOGADISHU-SOMALIA

i
 DECLARATION

I hereby declare that this dissertation is my own work and effort and that it has not

been submitted to BRCE for any award. Where other sources of information have

been used, they have been acknowledged.

Name: Ismail Ahmed Yusuf

Signature ___________________________

Date: ___/ ___/ ________

ii
 APPROVAL

This research dissertation has been done under my guidance and Supervision as an
academic Supervisor and is due for submission to BRCE in Partial fulfillment of the
requirements for the award of a Bachelor’s Degree in Economic and Management
Science.

Supervisor: Mr. Yassin Haji Mohamed

Signature: ______________________________

Date: ……/……/…………

iii
 DEDICATION

First of all, I would like to dedicate this piece of work to the Almighty Allah who has
enabled me to carry out research successfully and my beloved parents for their
endless support both financially and morally without forgetting my dear brothers and
lovely sisters. May the Almighty Allah bless you all.

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 ACKNOWLEDGEMENT

Firstly, am greatly indebted to the Almighty Allah for enabling me complete my

academic career. I would like to extend my sincere gratitude to my supervisor for the

patience, guidance to ensure that this work is perfect. Thank you very much if it

wasn’t for you I don’t think I would have achieved this. I would like to thank my best

friends especially, Ust, Yasin, Bishaar, Asli. etc. for their endless support during my

academic career.

My sincere thanks go to my lecturers who have transformed me into a better and

knowledgeable person through the four years of academic struggle at Somali National

University.

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 TABLE OF CONTENTS

DECLARATION.....................................................................................................................ii
APPROVAL............................................................................................................................iii
DEDICATION........................................................................................................................iv
ACKNOWLEDGEMENT......................................................................................................v
TABLE OF CONTENTS.......................................................................................................vi
LIST OF TABLES................................................................................................................viii
LIST OF FIGURES...............................................................................................................ix
ABSTRACT.............................................................................................................................x
CHAPTER ONE.....................................................................................................................1
INTRODUCTION..................................................................................................................1
1.0 Overview........................................................................................................................1
1.2 Background of the study...............................................................................................1
1.3 Problem statement........................................................................................................3
1.4 Research objectives.......................................................................................................3
1.4.1 General objective...................................................................................................3
1.4.2 Specific objectives..................................................................................................4
1.5 Research questions..................................................................................................4
1.6 Scope of the study.........................................................................................................4
1.6.1 Geographical scope................................................................................................4
1.6.2 Content scope.........................................................................................................4
1.6.3 Time scope..............................................................................................................4
1.7 Significance of the study...............................................................................................5
1.8 Operational definition of the study..............................................................................5
1.9 Conceptual framework.................................................................................................6
CHAPTER TWO....................................................................................................................7
LITERATURE REVIEW.......................................................................................................7
2.0 Introduction......................................................................................................................7
2.1 Computerized accounting................................................................................................7
2.1.1 Role of computerized accounting..............................................................................8
2.1.2 Factors that influence financial performance..........................................................8
2.1.2.1 Innovation............................................................................................................8
2.1.2.2 Liquidity..............................................................................................................9

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 2.1.2.3 Company Size......................................................................................................9
2.1.3 Relationship between CAS and financial performance...........................................9
2.2 Financial performance....................................................................................................10
2.3 Chapter summary...........................................................................................................12
CHAPTER THREE..............................................................................................................13
METHODOLOGY...............................................................................................................13
3.0 Introduction.....................................................................................................................13
3.1 Research design...............................................................................................................13
3.2 Target population............................................................................................................13
3.3 Sample size......................................................................................................................13
3.4 Sampling techniques.......................................................................................................14
3.5 Data sources....................................................................................................................14
3.6 Data collection tools........................................................................................................14
3.7 Quality control................................................................................................................15
3.7.1 Validity of the instrument..........................................................................................15
3.7.2 Reliability of the instrument......................................................................................15
3.9 Data analysis...................................................................................................................15
3.9 Ethical considerations.....................................................................................................16
3.10 Limitations of the study................................................................................................16
CHAPTER FOUR................................................................................................................17
DATA PRESENTATION, ANALYSIS AND INTERPRETATION...................................17
4.0 Introduction.....................................................................................................................17
4.1 Personal information......................................................................................................17
4.2 Computerized accounting...............................................................................................19
4.3 Financial performance....................................................................................................20
4.4 Relationship between CAS and financial performance................................................22
CHAPTER FIVE..................................................................................................................23
DISCUSSION, CONCLUSION AND RECOMMENDATIONS.......................................23
5.0 Introduction.....................................................................................................................23
5.1 Discussion of findings.....................................................................................................23
5.2 Conclusion.......................................................................................................................24
5.3 Recommendations...........................................................................................................26
References.............................................................................................................................27
APPENDICES.......................................................................................................................28
APPENDIX I: QUESTIONNAIRE.....................................................................................28
APPENDIX II.......................................................................................................................30

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BUDGET...............................................................................................................................30
APPENDIX III......................................................................................................................31
TIME FRAME......................................................................................................................31

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 LIST OF TABLES

Table 4. 1Sex of respondent....................................................................................................17

Table 4. 2 Marital status..........................................................................................................18
Table 4. 3 Age..........................................................................................................................18
Table 4. 4 Educational level.....................................................................................................18
Table 4. 5 Descriptive Statistics of computerized accounting system at Salaam bank............19
Table 4. 6 Descriptive Statistics of financial performance at Premier bank in Mogadishu
Somalia...................................................................................................................................20
Table 4. 7 Correlations............................................................................................................22

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 LIST OF FIGURES

Figure 1. 1 Conceptual framework............................................................................................6

Figure 4. 1 Gender..................................................................................................................17

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 ABSTRACT

Background: Using contemporary accounting technology, computerized accounting

is a form of accounting used worldwide. As a result, it lessens the issues with manual
accounting and helps to create accurate accounts, save time, and facilitate simple
account communication. Objective: the study was based on the impact of
computerized accounting and financial performance at Premier Bank Mogadishu
Somalia, and the specific objectives that include the role of computerized accounting
at Premier Bank Mogadishu Somalia, the factors that influence of financial
performance at Premier Bank Mogadishu Somalia and the relationship between
computerized accounting and financial performance at Premier Bank Mogadishu
Somalia. Methods: The study utilized a descriptive research design, targeting 120
respondents with 92 respondents using simple random sampling. Primary data was
collected through a self-administered questionnaire, and analyzed using SPSS version
27 software. Results: The study found that 69.2% of respondents were male, with
23.1% married, 46.2% single, and 30.8% divorced. The study was concluded that the
analyzes the correlation between Computerized Accounting System (CAS) and
Financial Performance (FP) at Premier Bank. The Pearson correlation coefficient is -
0.149, suggesting a weak negative relationship. The significance level is 0.628, higher
than the 0.05 threshold, indicating no strong evidence for a meaningful relationship
between the two variables in the sample of 13 observations. Conclusion: The study
explores the role of computerized accounting systems in enhancing financial
statement reliability and regulatory compliance at Premier Bank Mogadishu in
Somalia. It highlights the system's efficiency in streamlining financial processes,
minimizing human error, and ensuring accurate data, leading to improved financial
statements, regulatory compliance, and quicker decision-making. Automated systems
also eliminate manual data entry. Recommendations: The researcher suggests
Premier bank invest in robust compliance and security systems, regularly update
accounting software, and provide staff training to ensure data integrity and efficiency,
while also ensuring adherence to regulatory standards.

xi
 CHAPTER ONE

INTRODUCTION

1.0 Overview

In this chapter presents, background of the study, problem statement, research

objectives, research question of the study, scope of the study, significance of the study,
operational definitions of the study and conceptual framework of the study.

1.2 Background of the study

Using contemporary accounting technology, computerized accounting is a form of

accounting used worldwide. As a result, it lessens the issues with manual accounting
and helps to create accurate accounts, save time, and facilitate simple account
communication. One advantageous application of recent technical advancements is
computerized accounting. Therefore, an investigation will be conducted on the first
effectiveness of computerized accounting in the chosen wholesale enterprises in
Mogadishu with respect to data validation, security, storage, correctness, information,
and reporting [1].

The ability of an association to employ its resources to produce income from its main
line of business is evident in its financial performance. An organization's growth
index, share value, and total profit can all be used to gauge its financial performance.
As indicators of financial performance, other financial analysts keep an eye on return
on investment, net income as a percentage of sales, and the costs of subpar production
as a percentage of sales [2].

The Intuit personal financial computer software Quicken was first released in 1983.
The general public was then exposed to TurboTax for federal and income tax
computation and QuickBooks for small business accounting needs. Computer
technologies have made accounting easier, and manual journal entries are a thing of
the past given the present state of accounting technology development. He asserted
that the usage of accounting software improved the efficiency of companies or

1
organizations by enabling trained accountants to finish their task more quickly and
effectively. Small business owners without much accounting experience can also use
accounting software by storing their financial statements [2].
Throughout Africa, around 1950, a lot of banks began utilizing computers to assist
with the completion of accounting tasks, such as creating financial reports. DFCU
Limited, founded in 1964 by the Common Wealth Development Corporation in the
United Kingdom, is the parent company of DFCU Bank Uganda. Its primary goal was
to assist long-term development initiatives whose risks and financial requirements
were not met by the commercial lending banks who were providing the funding at the
time[3].

Uganda Leasing Company and Gold Trust Bank were bought by DFCU Bank in 1999
and 2000, expanding the group's capabilities to include general banking, leasing,
equity financing, and long-term development financing. In 2004, DFCU Limited was
incorporated as a public limited company and is currently listed on the Uganda
Securities Exchange. The bank's development plan to offer more convenient services
in an ever-changing environment is based on its ability to meet customer expectations
through new products and exceptional service levels. DFCU Bank Uganda offers
financial and banking services both domestically and outside these days.
Transactional accounts, savings and investment accounts, foreign exchange, electronic
banking for company owners, and asset management services for institutional
investors are all part of its business portfolio[4].

Even though computerized accounting information systems are said to have a

comparative advantage over manual accounting information systems due to their user-
friendliness, low cost, and the requirement to facilitate information to end users, many
SMEs in Somalia, and Mogadishu in particular, still choose to use manual accounting
information systems (MAIS) (Lief, 2000). This means that expanding SMEs in
Mogadishu have more financial obstacles to overcome, which makes careful attention
to AIS and financial reporting more important (Mohamed, 2007). Software providers
have been enhancing their financial packages with more cutting-edge capabilities
throughout time, like online interfaces and improved supply chain and other
application integration. They have also changed their products to make them easier to
use for non-accountants.

2
The computerized accounting systems at Premier Bank in Mogadishu, Somalia,
present serious difficulties that have an adverse effect on the bank's financial
performance. Frequent system outages, challenges integrating different software
platforms, and cybersecurity risks are major concerns that result in inconsistent data
and inefficient operations. Furthermore, insufficient staff training, high
implementation and maintenance expenses, and challenges in guaranteeing regulatory
compliance put further strain on the bank's financial resources and jeopardize the
accuracy of financial reporting. As a result, these difficulties make it more difficult for
the bank to reach sustainable growth and make wise financial decisions.

1.3 Problem statement

Computerized accounting system plays important role to all companies in the world
such as business organizations, commercial banks in the world, and central bank in
Somalia, to improve their financial performance.

Premier bank in Mogadishu Somalia has poor financial performance since the
liquidity of the bank has declined, so that the management of Premier bank
recommends to use modern software accounting to increase their profitability of the
bank. This problem caused by computerized accounting of the bank led to this
situation.

As the results, there is huge gap between computerized system and financial
performance of commercial banks in Somalia, in this reason the researcher was
investigated the impact of computerized accounting and financial performance at
Premier Bank Mogadishu Somalia.

1.4 Research objectives

1.4.1 General objective

The general objective of the study is to analyze the impact of computerized

accounting and financial performance at Premier Bank Mogadishu Somalia.

3
1.4.2 Specific objectives

i. To determine the role of computerized accounting at Premier Bank Mogadishu

Somalia.
ii. To examine the factors that influence of financial performance at Premier
Bank Mogadishu Somalia.
iii. To identify the relationship between computerized accounting and financial
performance at Premier Bank Mogadishu Somalia.

1.5 Research questions

1. What is the role of computerized accounting at Premier Bank Mogadishu

Somalia?
2. What are the factors that influence of financial performance at Premier Bank
Mogadishu Somalia?
3. What is the relationship between computerized accounting and financial
performance at Premier Bank Mogadishu Somalia?

1.6 Scope of the study

1.6.1 Geographical scope

The study was conducted Premier Bank, it situated on Makka Al-Mukarama Road
km4, opposite to My Bank. The researcher was used this bank because it experienced
poor financial performance.

1.6.2 Content scope

The study was focused on the role of computerized accounting at Premier Bank
Mogadishu Somalia the factors that influence of financial performance at Premier
Bank Mogadishu Somalia and the relationship between computerized accounting and
financial performance at Premier Bank Mogadishu Somalia.

1.6.3 Time scope

The study was completed the information in six months that is May – Nov 2024,
because the study was included data gathering, editing and processing.

4
1.7 Significance of the study

The study will help all the management of commercial banks, business organization
and ministry of finance and development of Somalia by the role played by
computerized accounting towards financial performance.

The study will act as a source of references to the future researchers about
computerized accounting towards financial performance.

The study will support the researcher to complete his bachelor’s degree in accounting
and finance.

1.8 Operational definition of the study

Computerized accounting

Computer

Accounting

financial performance

Finance

Performance

5
1.9 Conceptual framework

Independent variable (IV) Dependent variable (DV)

Computerized accounting financial performance

Role of
computerized
accounting

Factors that influence of

financial performance
Financial performance

Relationship between
computerized accounting
and financial
performance

Figure 1. 1 Conceptual framework

6
 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter presents that literature review that related to this research study and
includes the basic objectives of the study that is the role of computerized accounting,
the factors that influence financial performance and relationship between CAS and
financial performance at Premier Bank Mogadishu Somalia.

2.1 Computerized accounting

A computerized accounting system is a plan or technique that uses computers and

computer-based systems, including accounting software, to record, organize,
summarize, analyze, interpret, and transmit financial data on business transactions to
stakeholders. He underlined that it's an automated procedure that facilitates the intake
of financial data and automates accounting functions like database maintenance and
report creation.

The history of accounting is as old as humanity. The accounting procedure has existed
since the beginning of time. Numerous academics have defined accounting from
various angles. Accounting is the act of locating, gathering, categorizing, organizing,
documenting, evaluating, interpreting, and disseminating financial data so that
decision-makers may use it. This emphasizes that the process of managing financial
data for decision-making is what accounting entails. In order to make better decisions
and adopt other policies, every company needs to run a specific accounting system
that allows it to communicate its financial status to the relevant parties. Ali, Umar, and
Bakar (2016) define an accounting system as a systematic collection of manual and
computerized accounting standards, procedures, controls, and methods designed to
gather, record, group, analyze, summarize, communicate, and present sufficient
financial data in a timely manner to enable prompt and informed management
decisions. It seemed that information technology (IT) globalization had gained center
stage in accounting procedures. Computerized accounting systems are adopted by
organizations in order to enhance their operational processes. A computerized
accounting system is a financial system that gathers, organizes, analyzes, interprets,

7
and presents data to the user for decision-making. It does this by using computer
systems and specialized automated devices known as calculators. This accounting
system makes it easier to quickly analyze financial data that has been stored.

Data gathering is typically at the core of any accounting system, whether it is

electronic or manual. According to Akamanwam (2020), this type of CAS is in charge
of keeping and storing data. Onaolapo and Odetayo (2012) provided evidence in
support of this by revealing that Relational Database Management Systems (RDBMS)
concentrated on the management, storage, and application of dependable data sets in a
computerized environment. This clarified how a relational database management
component, which maintains the equilibrium between the many sets of data, files, and
records stored in the system, holds together an automated accounting system.
Consequently, data independence, scalability, security, and integrity are guaranteed.
The optimal operation of the overall computerized accounting system may be
impeded by the RDBMS's inefficiency, which could also lead to the inefficiency of
the system's data processing and reporting features. In accounting professionals, the
relational database component of CAS becomes crucial.

2.1.1 Role of computerized accounting

2.1.2 Factors that influence financial performance

2.1.2.1 Innovation
Financial performance is an important aspect of a business as it reflects the result of
management's efforts in utilizing the company's resources to maximize shareholder
value. A report on financial performance can indicate whether a company's strategy
contributes to improving profitability. Kaplan (2009) suggests that a company's
financial operations can be enhanced through two approaches: growth strategy and
product strategy.

Businesses can generate profits by improving productivity through innovation -

including product innovation and process innovation. Productivity improvement can
be achieved by (1) reducing direct and indirect costs or by using financial and
physical assets more efficiently and (2) reducing working capital and the required

8
investment to support a certain level of business. A linked strategy from a financial
perspective emerges when companies balance growth and productivity. The three key
indicators used to measure financial performance effectiveness are (1) revenue
growth, (2) cost reduction or cost savings and increased asset utilization efficiency,
and (3) increased customer value.

2.1.2.2 Liquidity
Liquidity measures the ability of the business to meet financial obligations as they fall
due, without disrupting the normal, ongoing operations of the business. Liquidity can
be analyzed both structurally and operationally. Structural liquidity refers to balance
sheet measures of the relationships between assets and liabilities and operational
liquidity refers to cash flow measures. Solvency measures the amount of borrowed
capital used by the business relative to the amount of owner’s equity capital invested
in the business. In other words, solvency measures provide an indication of the
business’ ability to repay all indebtedness if all its assets were sold. Solvency
measures also provide an indication of the business’ ability to withstand risks by
providing information about the operation’s ability to continue operating after a major
financial adversity.

2.1.2.3 Company Size

Previous studies in finance have shown that company size can predict the future stock
price (Simerly and Li, 2000). For instance, Hvide and These (2007) in their study
concluded that larger firms have better financial performance. Flamini et al (2009)
suggested that bigger firms are more competitive than smaller firms in harnessing
economies of scale in transactions and enjoy a higher level of profits. Athanasoglou et
al (2005) assert that increase in company size increases the performance of the bank.
Almajali et al (2012) argued that the size of the firm can affect its financial
performance. However, for firms that become exceptionally large, the effect of size
could be negative due to bureaucratic and other reasons.

2.1.3 Relationship between CAS and financial performance

There is a positive relationship between computerized accounting systems and

financial performance. He consented that computerized accounting systems improve
9
management activities such as decision making and controlling. The system enables
production of timely and reliable information on which specific action or plans may
be based. This improves financial performance. Computerized accounting
departments in business create audit trail by which every transaction can be traced
very fast. Proper recording of transactions provides sufficient information as regards
to performance and financial position of the business. Conducting business.

Therefore, proper accounting systems should be kept so at any required moment a

reference could be made on it and the combined efforts to all transactions. In order to
compete favorably, banks have resorted to computerization as a major tool for
improving service quality, hence improving their performances. The emergency of
electronic banking has incredibly reduced the need for direct link between the bank
and its customers. This is basically because internet, telephone and ATM banking
networks do complement each other to give customers a wider range of financial
services that can substitute those provided by traditional banking tools. Automation of
banking services enables customer satisfaction through its ability of speed, accuracy,
accessibility and flexibility in service provision.

2.2 Financial performance

Financial performance is an important aspect to any organization, firm or institution.

It affects directly the life and survival of any profit-making organization. When there's
better performance, that's an indication of how effective the management works and
makes good use of the organization's resources. In this research, financial
performance of an organization is defined as the measurement of how effectively an
organization can use its assets to generate revenue from its primary mode of business.
Financial performance of an organization can be measured by monitoring its profit
accumulated, the value of shares and its growth index. Other financial analysts
monitor return on investment, net income as a percentage of sales, and costs of poor-
quality production as a percentage of sales, as measures of financial performance.

Financial performance as the act, process, or manner of doing things or execution of

the financial duties. The efficiency of any accounting system is measured by its ability
to provide basic services and meet information needs of its customers. Financial
performance can be measured in terms of effectiveness of output and costs incurred,
also if they can enable business system to prepare monthly and annual reports,

10
projections and management schedules. The fact that the financial management is a
process of helping organizations to achieve their final objectives. Financial
performance management, functions by first establishing shared understanding
between financial managers and staff on what is going to be achieved and then
creating people in a way which increase profitability that will be achieved in a short
period hence improved financial performance which helps in decision making. The
following indicators of financial performance.

Organizational performance is a measure of the change in the state of an organization

or the outcomes that result from management decisions and the execution of those
decisions by members of the organization (Carton & Hofer, 2006). According to
Carton (2004), organizational performance is based on the premise of using human,
physical, and capital resources to achieve a shared purpose. The organizational
performance comprises the actual output or results of an organization as measured
against its intended outputs (or goals and objectives). According to Richard,
Devinney, Yip, and Johnson (2009) organizational performance encompasses three
specific areas of firm outcomes: financial performance (profits, return on assets,
return on investment, etc.), product market performance (sales, market share, etc.);
and shareholder return (total shareholder return, economic value added).

11
2.3 Chapter summary

Financial performance is crucial for an organization's survival and success, assessing

how effectively assets are used to generate revenue. It includes profit, share value,
growth index, return on investment, net income, and production costs. Financial
management helps achieve objectives by establishing shared understanding between
managers and staff. Computerized accounting systems use computers to record,
organize, analyze, interpret, and communicate financial information on business
transactions. The globalization of Informational Technology has shifted focus to
computerized systems, with Relational Database Management Systems (RDBMS)
essential for data integrity, independence, scalability, and security. Inefficiency can
hinder system performance, making it crucial for accounting professionalism.

Computerized accounting systems positively impact financial performance by

improving decision-making and controlling, enabling timely and reliable information
for specific actions. They also create audit trails for fast transaction traceability,
providing sufficient information about a business's performance and financial
position. Banks have resorted to computerization to improve service quality and
performance. Electronic banking networks complement traditional tools, providing a
wider range of financial services and enhancing customer satisfaction through speed,
accuracy, accessibility, and flexibility.

12
 CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents; Research design, Target population, Sample size, Sampling
techniques, Data Source, Data collection tools, Quality control, Data analysis, Ethical
considerations and Limitation of the study.

3.1 Research design

The study was used descriptive research design. Descriptive research design is a
methodological approach primarily concerned with describing the characteristics of a
population or phenomenon being studied. The study was used quantitative research
data approach. The researcher was used only this research design because it is easier
than others.

3.2 Target population

The researcher was used target population of 120 respondents. The target population
refers to the specific group of individuals or elements that a researcher intends to
study and make inferences about based on their findings. The target population was
included 5 top managers, 30 employees of the bank, 8 Auditors of the bank and 77
customers of Salaam bank. The researcher was used these respondents because they
have better and more information about computerized accounting and the finance of
the bank.

3.3 Sample size

The study was used Sloven’s formula, to determine the actual number of respondents
that participant this research study. The Sloven’s formula states that:
N
n= .
1+ N ( e 2 )
While:
N= Target population
n= Sample size

13
e= level of significance (0.05)
N 120
therefore, n= = = 92
1+ N ( e )
2
1+ 120 ( 0.052 )
So that the researcher was applied this research study 92 respondents.

Table 3. 1 Category of target population and sample size

Category Target population Sample size

Top managers 5 4
Employees 30 23
Auditors 8 6
Customers 77 59
Total 120 92

Source: Primary data 2024

3.4 Sampling techniques

The researcher was used simple random sampling. Simple random sampling is a
method of selecting a sample from a population in which each member of the
population has an equal chance of being chosen and each combination of elements is
equally likely to be selected. Top managers, employees, auditors and customers of the
bank selected as a random method. The researcher was used this method because all
of the respondents have same characters and they have equal chance.

3.5 Data sources

The study was used primary data. Primary data is the data which is collected from
some primary sources i.e., a source of origin where the data generate. Primary data
was obtained from questionnaires. The researcher was used primary data because it is
more accurate because it is directly collected from the population.

3.6 Data collection tools

The researcher was used a self-administered questionnaire. A self-administered
questionnaire (SAQ) refers to a questionnaire that has been designed specifically to be
completed by a respondent without intervention of the researchers (e.g. an
interviewer) collecting the data. The researcher was distributed questionnaires to

14
managers of the bank, employees of the bank, auditors and customers. The researcher
was used self-administered questionnaire because respondents answer at their
suitability.

3.7 Quality control

3.7.1 Validity of the instrument

The researcher was also used Validity of the instrument. Validity refers to the degree
to which results obtained from analysis of the data actually represents the
phenomenon under study. In calculating validity, the researcher was ensured that
questions are relevant in order to ensure that data collected gives meaningful and
reliable results represented by variables in the study. The researcher was used the
following formula to establish validity of the research instrument as seen below.

Number of question declared valid

Content Validity Index (CVI) =
Total no . of questions ∈the questionnaire

If the overall Content Validity Index (CVI) of the instrument is equal to the average
acceptable Index of 0.7/70% or above, then the instrument will be accepted as valid
(Amin, 2005).

3.7.2 Reliability of the instrument

To ensure the reliability of the instrument, the researcher will use the test-retest
method. The questionnaire was given to 50 people and after two weeks, the same
questionnaire will be given to the same people and the Cronbatch Alpha was
computed using SPSS. The minimum Cronbatch Alpha coefficient of 0.6 will be used
to declare an instrument reliable.

3.9 Data analysis

The quantitative data was involved information from the questionnaires only. Data
from the field will be too raw for proper interpretation. It will therefore be vital to put
it into order and structure it, so as to drive meaning and information from it. The raw
data obtained from questionnaires will be cleaned, sorted and coded. The coded data

15
was entered into the computer, checked and statistically analyzed using the statistical
package for social scientists (SPSS version 27) software package to generate
descriptive and inferential statistics.

3.9 Ethical considerations

To ensure ethical considerations in undertaking the study and the safety, social and
psychological well-being of the respondents involved in the study, the researcher will
get an introductory letter from the BRCE. On the other hand, to ensure the safety of
the person and/or community involved in the stud, the researcher will get their
consent of the respondent before they fill in the questionnaires. The study will also
ensure the privacy and confidentiality of the information provided by the respondent
which was be solely used for academic purposes.

3.10 Limitations of the study

Some respondents were busy with their daily schedules and might fail to spare time to
fill the questionnaires in time. In such circumstances, the researcher was given ample
time to those respondents. As a result of other academic work coupled with shortness
of time given for completion researcher was had to battle with the limited time
available of this research work, the two him in combining traveling to the place of
case study and attending lectures.

16
 CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.0 Introduction

This chapter presents that data presentation, interpretation and analysis that related the
specific objectives that include the role of computerized accounting towards financial
performance, factors effecting financial performance at premier bank and the
relationship between computerized accounting and financial performance.

4.1 Personal information

Table 4. 1Sex of respondent

Frequency Percent
Valid Male 9 69.2
Female 4 30.8
Total 13 100.0

Source: Primary data 2024

The table 4.1 above and the figure below indicate that 9(69.2%) of the respondents
were male and 4(30.8%) of the respondents were female. This implies that the
majority of the respondents were male. This is because that Premier bank requite/
employed male gender and also believes that men had worker than the female.

17

Figure 4. 1 Gender
 Gnder of respondent

80

69.2

Percent
60
40
20
30.8
0
Male Female
Sex

Table 4. 2 Marital status

Frequency Percent
Valid Married 3 23.1
Single 6 46.2
Divorced 4 30.8
Total 13 100.0

Source: Primary data 2024

According to the table 4.2 above illustrates that 3(23.1%) of the respondents were
married, 6(46.2%) of the respondents were single and 4(30.8%) of them were
divorced. This implies that the majority of the respondents were single.

Table 4. 3 Age

Frequency Percent
Valid 20-29 11 84.6

40-49 2 15.4
Total 13 100.0

Source: Primary data 2024

Table 4.3 shows the age distribution of a sample of 13 individuals. The majority of the
sample, 84.6% (11 individuals), are aged between 20 and 29 years. The remaining
15.4% (2 individuals) fall within the 40 to 49 age range. This indicates a
predominantly younger demographic in the sample.

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Table 4. 4 Educational level

Frequency Percent
Valid Degree 7 53.8

Master's degree 3 23.1

P. HD 3 23.1
Total 13 100.0

Source: Primary data 2024

Table 4.4 presents the educational level distribution of a sample of 13 individuals.

Over half of the sample, 53.8% (7 individuals), hold a degree. Additionally, 23.1% (3
individuals) have a master's degree, and another 23.1% (3 individuals) have a Ph.D.
This indicates that the sample is relatively well-educated, with all individuals holding
at least a degree.

4.2 Computerized accounting

Table 4. 5 Descriptive Statistics of computerized accounting system at Salaam bank

Std.
Statement N Min Max Mean Deviation
Computerized accounting significantly increases 13 1.00 5.00 3.615 1.19293
the efficiency of financial processes, allowing 4
Premier Bank to handle transactions more
quickly and accurately
Automated systems reduce human error, 13 3.00 5.00 4.076 .86232
ensuring that financial records are precise and 9
reliable
Computerized accounting provides detailed 13 2.00 5.00 3.923 1.11516
financial reports and analytics, facilitating better 1
strategic planning and performance evaluation
Total average 13 3.872 1.056

Source: Primary data 2024

Table 4.5 provides descriptive statistics for the perceptions of the computerized
accounting system at Premier Bank based on responses from 13 participants. The

19
table includes three statements related to the effectiveness and benefits of the
computerized accounting system, along with the number of responses (N), minimum
and maximum ratings, mean scores, and standard deviations for each statement.

The first statement, "Computerized accounting significantly increases the efficiency

of financial processes, allowing Premier Bank to handle transactions more quickly
and accurately," received ratings ranging from 1.00 to 5.00. The mean score for this
statement is 3.6154, with a standard deviation of 1.19293. This suggests a moderate
agreement among respondents, with some variability in their perceptions.

The second statement, "Automated systems reduce human error, ensuring that
financial records are precise and reliable," had ratings between 3.00 and 5.00. The
mean score is higher at 4.0769, and the standard deviation is lower at 0.86232. This
indicates stronger and more consistent agreement among respondents regarding the
role of automated systems in reducing human error and enhancing the reliability of
financial records.

For the third statement, "Computerized accounting provides detailed financial reports
and analytics, facilitating better strategic planning and performance evaluation," the
ratings varied from 2.00 to 5.00. The mean score here is 3.9231, with a standard
deviation of 1.11516. This reflects a generally positive perception of the system's
ability to provide detailed financial reports and support strategic planning, though
there is some variability in the responses.

Overall, the total average mean score across all three statements is 3.872 with a
standard deviation of 1.056. This indicates that, on average, respondents have a
favorable view of the computerized accounting system at Salaam Bank, recognizing
its benefits in enhancing efficiency, reducing errors, and supporting strategic financial
management, though opinions vary to some extent.

4.3 Financial performance

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Table 4. 6 Descriptive Statistics of financial performance at Premier bank in
Mogadishu Somalia
Std.
Statement N Min Max Mean Deviation
Competitive pressure from other banks and 13 2.00 5.00 4.076 .95407
financial institutions can impact market share and 9
profitability
Economic stability in Somalia influences the 13 3.00 5.00 4.461 .66023
bank's performance by impacting customer 5
deposits and loan demand
Political conditions in Somalia can affect investor 13 3.00 5.00 4.384 .65044
confidence and the overall business environment 6
Total average 13 4.307 0.7575

Source: primary data 2024

Table 4.6 presents descriptive statistics for the financial performance of Premier Bank
in Mogadishu, Somalia, based on responses from 13 participants. The table
summarizes the participants' views on various factors affecting the bank's
performance, with each statement evaluated by the number of responses (N),
minimum and maximum ratings, mean scores, and standard deviations.

The first statement, "Competitive pressure from other banks and financial institutions
can impact market share and profitability," received ratings ranging from 2.00 to 5.00.
The mean score for this statement is 4.0769, with a standard deviation of 0.95407.
This suggests a strong agreement among respondents that competitive pressure
significantly affects the bank's market share and profitability, though there is some
variability in their perceptions.

The second statement, "Economic stability in Somalia influences the bank's

performance by impacting customer deposits and loan demand," had ratings between
3.00 and 5.00. The mean score is higher at 4.4615, with a lower standard deviation of
0.66023. This indicates a very strong and consistent agreement among respondents
that economic stability plays a crucial role in the bank's performance, affecting both
deposits and loan demand. For the third statement, "Political conditions in Somalia

21
can affect investor confidence and the overall business environment," the ratings also
varied from 3.00 to 5.00. The mean score here is 4.3846, with a standard deviation of
0.65044. This reflects a strong agreement among respondents that political conditions
significantly impact investor confidence and the business environment, with relatively
little variation in responses.

Overall, the total average mean score across all three statements is 4.307 with a
standard deviation of 0.7575. This indicates that, on average, respondents have a very
favorable view of the impact of competitive pressure, economic stability, and political
conditions on the financial performance of Premier Bank, recognizing the significant
influence of these factors on the bank's operations and profitability.

4.4 Relationship between CAS and financial performance

Table 4. 7 Correlations

Variable CAS FP
CAS Pearson Correlation 1 -.149
Sig. (2-tailed) .628
N 13 13
FP Pearson Correlation -.149 1
Sig. (2-tailed) .628
N 13 13
Source: Primary data 2024

Table 4.7 presents the correlation analysis between two variables: Computerized
Accounting System (CAS) and Financial Performance (FP) at Premier Bank. The
table shows the Pearson correlation coefficients, significance levels (Sig. 2-tailed),
and the number of observations (N) for each pair of variables. The Pearson correlation
coefficient between CAS and FP is -0.149, indicating a very weak negative
relationship. This suggests that as the effectiveness of the computerized accounting
system increases, financial performance slightly decreases, though this relationship is
not statistically significant.

The significance level (Sig. 2-tailed) for the correlation between CAS and FP is 0.628,
which is much higher than the commonly used threshold of 0.05 for statistical

22
significance. This indicates that the observed correlation is not statistically significant,
meaning there is no strong evidence to suggest a meaningful relationship between the
computerized accounting system and financial performance in this sample of 13
observations

CHAPTER FIVE

DISCUSSION, CONCLUSION AND RECOMMENDATIONS

5.0 Introduction

This chapter presents that discussion of findings, conclusion and recommendations

about the basic objectives of the study that include the role of computerized
accounting, factors that affect financial performance and relationship between them.

5.1 Discussion of findings

The result of the first objective of the study which was the role of computerized
accounting system at Premier bank Mogadishu in Somalia was excellent because most
of the respondents were support too much so that, it improves reliability in its
financial statements and better compliance with regulatory requirements. This is in
line with (Daru, 2015) who noted that the role of computerized accounting system,
The implementation of a computerized accounting system at Premier Bank in
Mogadishu, Somalia, represents a significant advancement in the bank’s operational
efficiency and financial management. A computerized accounting system streamlines
financial processes by automating tasks such as transaction recording, ledger
maintenance, and financial reporting. This automation reduces the likelihood of
human error, enhances accuracy, and ensures that financial data is up-to-date and

23
easily accessible. For Premier Bank, this means improved reliability in its financial
statements and better compliance with regulatory requirements. Additionally, the
system enables quicker decision-making by providing management with real-time
financial insights and analytics, thus facilitating more informed strategic planning and
resource allocation.

The study result revealed that automated systems reduce human error, ensuring that
financial records are precise and reliable, the result of this statement was good,
because most of the respondents support too much because These systems eliminate
the manual entry of data, which is often prone to mistakes such as typographical
errors, miscalculations, and inconsistencies. According to (Septarini & Ismanto, 2023)
they present that the automated systems reduce human error, ensuring that financial
records are precise and reliable, therefore, Automated processes use algorithms and
predefined rules to accurately record transactions, generate financial statements, and
conduct real-time audits, thereby enhancing data integrity. Additionally, automated
systems provide consistent documentation and audit trails, facilitating easier tracking
and verification of financial activities. This precision and reliability not only improve
the accuracy of financial records but also enhance compliance with regulatory
standards and bolster stakeholder confidence in the organization's financial
management practices.

The study result discovered that the computerized accounting provides detailed
financial reports and analytics, facilitating better strategic planning and performance
evaluation, the management of the bank and the employees supports this statement
because These systems can generate various types of reports, such as income
statements, balance sheets, cash flow statements, and customized financial analyses,
with a high degree of accuracy and consistency. This is in line with (KHARE, 2021)
who suggested that the computerized accounting provides detailed financial reports
and analytics, facilitating better strategic planning and performance evaluation,
therefore Computerized accounting systems enhance strategic planning and
performance evaluation by offering detailed financial reports and robust analytics
capabilities. These systems automate the collection and processing of financial data,
ensuring accuracy and real-time availability of information. They can generate
comprehensive reports such as income statements, balance sheets, and cash flow

24
statements, which provide a clear and precise overview of the organization’s financial
status. Additionally, advanced analytics tools within these systems help identify
trends, pinpoint variances, and highlight key performance indicators, offering deep
insights into financial operations. This detailed and timely financial data supports
informed decision-making, enables efficient resource allocation, and improves
financial forecasting. Consequently, organizations can better align their strategies
with financial realities and accurately assess their performance against set objectives,
enhancing overall strategic planning and performance evaluation.

5.2 Conclusion

The study found that 69.2% of respondents were male, with 23.1% married, 46.2%
single, and 30.8% divorced. The majority of the sample was aged 20-29, with 84.6%
being younger. The majority of respondents held a degree, with 53.8% holding a
master's degree and 23.1% having a Ph.D., indicating a relatively well-educated
population. The majority of respondents were married. The study found that 69.2% of
respondents were male, with 23.1% married, 46.2% single, and 30.8% divorced. The
majority of the sample was aged 20-29, with 84.6% being younger. The majority of
respondents held a degree, with 53.8% holding a master's degree and 23.1% having a
Ph.D., indicating a relatively well-educated population. The majority of respondents
were married.
The study focuses on the role of computerized accounting systems in improving the
reliability of financial statements and compliance with regulatory requirements at
Premier Bank Mogadishu in Somalia. The implementation of these systems
streamlines financial processes, reduces human error, and ensures accurate financial
data. This results in improved financial statements, better compliance with regulatory
requirements, and quicker decision-making. Automated systems also reduce human
error by eliminating manual data entry, ensuring precise and reliable financial records.

They provide consistent documentation and audit trails, enhancing compliance with
regulatory standards and stakeholder confidence in financial management practices.
Computerized accounting systems also provide detailed financial reports and
analytics, facilitating better strategic planning and performance evaluation. These
systems automate the collection and processing of financial data, ensuring accuracy

25
and real-time availability of information. Advanced analytics tools help identify
trends, pinpoint variances, and highlight key performance indicators, providing deep
insights into financial operations. This data supports informed decision-making,
efficient resource allocation, and improved financial forecasting, enhancing overall
strategic planning and performance evaluation.
The study was concluded that the analyzes the correlation between Computerized
Accounting System (CAS) and Financial Performance (FP) at Premier Bank. The
Pearson correlation coefficient is -0.149, suggesting a weak negative relationship. The
significance level is 0.628, higher than the 0.05 threshold, indicating no strong
evidence for a meaningful relationship between the two variables in the sample of 13
observations.

5.3 Recommendations

1. The researcher recommends that Premier bank should Invest in systems with
strong compliance and security features to safeguard financial data, ensuring
adherence to regulatory standards and protecting against data breaches.
2. It recommends that the Premier bank should regularly update accounting
software to incorporate the latest features, security patches, and compliance
requirements, maintaining system efficiency and data integrity and provide
ongoing training for staff to effectively use computerized accounting systems,
ensuring they can maximize the tools' capabilities and maintain high levels of
accuracy and efficiency.

3. The study deeply recommends that the Primer bank and all commercial banks
in Mogadishu should monitor and analyze market conditions, including
economic trends, competition, and customer demand, to anticipate and
respond to changes that could impact financial performance and focus on
improving operational efficiency through cost control, process optimization,
and resource management to enhance profitability and financial stability.

26
References

[1] S. U. N. Yan and L. I. Dong, “O verview of Botnet,” Security, vol. 9081, pp.
1628–1631, 2006.

[2] S. A. Akesinro and J. A. Adetoso, “The effects of computerized accounting

system on the performance of banks in Nigeria,” J. Econ. Sustain. Dev., vol. 7,
no. 14, pp. 76–82, 2016.

[3] N. MASANJA, “The Impact of Accounting Information System on the

Financial Performance in Selected Private Companies in Arusha, Tanzania,”
SSRN Electron. J., no. January, 2020, doi: 10.2139/ssrn.3642377.

[4] H. M. S. Farhat, “Impact of Using Computerized Accounting Programs on

Enhancing the Financial Performance of The Entrepreneurship Projects in
Palestine,” vol. 1, no. 3, pp. 24–38, 2021.

27
 APPENDICES

APPENDIX I: QUESTIONNAIRE

Dear respondent

My name is Ismail Ahmed Yusuf, I am from BRCE, I am currently carrying out ‘The
effect of computerized accounting and financial performance at Premier Bank
IN Mogadishu Somalia’ I request to fill out my questionnaire.

SECTION 1 Personal information

1. Sex
Male
Female

2. Marital status
Married
Single
Divorced

3. Age of the respondent

Between 20-29

28
 Between 30-39
Between 40-49
50 and above

4. Educational level
Degree
Master’s degree
P. HD

Dear respondent please follow the instruction table below:

Score Response mode Interpretation

1 Strongly disagree Poor
2 Disagree Fair
3 Neutral None
4 Agree Satisfaction
5 Strongly agree Very satisfactory

SECTION 2: Computerized accounting at Premier Bank Mogadishu Somalia

No Statement 1 2 3 4 5
1 Computerized accounting significantly increases the
efficiency of financial processes, allowing Premier Bank to
handle transactions more quickly and accurately.

2 Automated systems reduce human error, ensuring that

financial records are precise and reliable.
3 Computerized accounting provides detailed financial
reports and analytics, facilitating better strategic planning
and performance evaluation

29
SECTION 3: Financial performance at Premier Bank Mogadishu Somalia.

No Statement 1 2 3 4 5
1 Competitive pressure from other banks and financial
institutions can impact market share and profitability
2 Economic stability in Somalia influences the bank's
performance by impacting customer deposits and loan
demand.
3 Political conditions in Somalia can affect investor
confidence and the overall business environment.

APPENDIX II

BUDGET

Category ITEM’S NAME Amount

Communication Airtime and MBs 48
Transport Go and back 18
Papers A4 and pens 9
Copy 3 books 12
Food Lunch and drink 22
Research assistance 2 people 30
Total budget 139

30
 APPENDIX III

TIME FRAME

Activity Jan Feb March Apr Ma Jun

Topic formulation

Introduction

Literature review

Methodology

Developing questionnaire

Data distribution and collecting

Data analysis and findings

Discussion, conclusion and recommendations

Reviewing

Recorrecting

31