CONVENTIONAL ACCOUNTING SYSTEM AND INFORMATION TECHNOLOGY: EXPERIENCES IN MY PLACES OF WORK.

BEING

A SEMINAR PAPER PRESENTATION

IN

ACCOUNTING AND INFORMATION TECHNOLOGY

FOR

MASTERS IN ACCOUNTING (MAC) DEPARTMENT OF ACCOUNTING FACULTY OF ADMINISTRATION SCHOOL OF POSTGRADUATE STUDIES AHMADU BELLO UNIVERSITY, ZARIA, NIGERIA

BY: KALU NNANNA NWONYUKU

JUNE, 2013

CONTENTS
1.1.1 INTRODUCTION
1.2.1 THE MEANING OF ACCOUNTING AND ACCOUNTING PROCESS
1.2.2 THE ROLES AND FUNCTION OF ACCOUNTING INFORMATION
1.2.3 BASIC ELEMENTS OF AN ACCOUNTING INFORMATION
1.2.4 BASIC ACCOUNTING POSTULATES AND PRINCIPLES
1.3.1 MEANING OF INFORMATION TECHNOLOGY
1.3.2 ADVENT OF INFORMATION TECHNOLOGY IN ACCOUNTING SYSTEM
1.3.3. THE IMPORTANCE OF INFORMATION TECHNOLOGY TO ACCOUNTING SYSTEM
1.4.1 INFORMATION TECHNOLOGY USE FOR AN ACCOUNTING SYSTEM
1.4.2 SOFTWARE FOR ACCOUNTING INFORMATION SYSTEM
1.4.3 FACTORS TO CONSIDER WHEN CHOOSING ACCOUNTING SOFTWARE
1.4.4 HOW TO CHECK ACCOUNTING SOFTWARE
1.5.1 MERITS OF COMPUTERIZED ACCOUNTING SYSTEM
1.5.2 DEMERITS/LIMITATION OF COMPUTERIZED ACCOUNTING SYSTEM
1.5.3 DIFFERENCES BETWEEN CONVENTIONAL AND COMPUTERIZED ACCOUNTING SYSTEMS
1.5.4 SIMILARITIES OF CONVENTIONAL AND COMPUTERIZED ACCOUNTING SYSTEMS
1.6.1 HOW TO SET UP MANUAL ACCOUNTING SYSTEM?
1.6.2 HOW TO REPLACE CONVENTIONAL ACCOUNT ING SYSTEM WITH ELECTRONIC SYSTEM
1.7.1 EXPERIENCES OF COMPUTERIZED ACCOUNTING SYSTEM IN MY WORK PLACES
1.8.1 CONCLUSION AND RECOMMENDATION REFERENCE 1.1.1 INTRODUCTION
Accounting is not just an integral part of a business; it is the language of business. Of course, every language should be dynamic if it is to remain relevant in the society. The same is accounting that has gone through many changes throughout the ages in order to continue meeting the increasing demand in the business world. Unlike other languages, accounting is evolving at a faster and faster pace. The most important cause among others is the rapid pace of information technology change and its high investments and development in the world today. The role of information technology has shifted in the last decades (Teng and Calhoun, 1996) to become an important part of how companies manage and control their resources (Alves, 2010). Organizations are responding in different ways and at different rates to the opportunities and pressures (Johnson, et al, 1986). Thus, information technology has taken the centre stage in today’s business world and accounting being the language of business is not let out. Effendi, et al (2006) affirm that information technology plays a crucial role in modern business, especially regarding the accounting function. Hunton (2002) notes that information technology have radically transformed the nature of business and accounting practice. “The initial interest in the relationships between accounting and information technology was gradually taken for granted; accounting was simply not possible without information technology, and the assumption appears to be that information technology is the platform for accounting data and it allows certain sophisticated queries to be performed” (Granlund and Mouritsen, 2003:78). Accounting information system has hence, taken a very unique form ever since the advent of information technology in accounting process. It provides users with timely and accurate information to aid in decision making, preparing financial statements, generating reports and improves internal control systems.
While it is widely acknowledged that IT plays an important role (and increasingly so) in the field of accounting, the relationship between IT and accounting has been studied relatively little” (Granlund, 2007:3). Most especially, many public sectors and very few other private sectors of various scales in Nigeria in particular are yet to appreciate the essence of information technology in accounting functions of their organizations. The consequence of this is their inability to meet statutory report deadlines.
Based on a literature review of earlier research, our empirical studies and experiences over time from our various places of work, “we conclude that there is a very limited knowledge about the impact of the most recent information technology development in the accounting field” (Granlund, 2007), and as such, large number of organizations in Nigeria are still operating on the platform of manual accounting system or semi-automated accounting system instead of complete computerization of the accounting system.
The purpose of this paper specifically, is to draw to focus the comparability of conventional accounting system using our various places of work as case studies and to contribute to the body of knowledge about to what extent information technology influences the ability to solve accounting tasks as well as keep accounting information useful.
In doing this, the paper explores the need and process of mutual integration of information technology and accounting. In particular, it tries to navigate with the cursory examination of information technological potentials on how IT has altered the quality of accounting information system in meeting the present day growing business complexity. If there is a single theme to this paper; it is a considered evaluation of the imperative of information technology in accounting system of organizations.
This work generally considers in a nutshell the integration of information technology in accounting system. In addition to the introduction, it considers the meaning of accounting and accounting processes, the roles and functions of accounting information and the basic elements of accounting information. It looks into the meaning of information technology and its origin in accounting. It deliberates the merits and demerits of computerized accounting systems as well as reviews the basic factors to consider when choosing accounting software and how to replace conventional accounting systems with electronic system. The climax of the paper is the x-ray of computerized accounting system experiences in our various places of work, specifically in Federal Inland Revenue Service and potential recommendations where automation of accounting system is not yet in place.
The inescapable conclusion from this paper is that, the misconception that the marriage between accounting and information technology has displaced the conceptual view of accounting is a mere fallacy without scientific jurisdiction. Instead, it has made accounting information system to remain very strong and proactive at the centre stage of business.
Index Terms: Accounting, Accounting information systems, Accounting system, information technology, conventional accounting system and computerized accounting system. 1.2.1 THE MEANING OF ACCOUNTING AND ACCOUNTING PROCESS
Accounting has been described as “… the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results there of” (AICPA, Accounting Terminology Bulletin. No.1). According to Schugart, et al (2003), “this definition emphasizes the professional judgement the accountant applies to a given problem.” Similarly, American Accounting Association, AAA (1957) provides that “the primary function of accounting is to accumulate and communicate information essential to an understanding of the activities of an enterprise, whether large or small, corporate or non-corporate, profit or non-profit, public or private.” The importance of this definition according to Schugart, et al (2003) “is the direct relevance of accounting to many enterprises, both private and public and profit and not-for-profit.” For this reason, according to them, accounting is often referred to as the “Language of business”. Also, the American Accounting Association, AAA (1966) defined accounting as “the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.” Lewis and Pendrill (1996) feel that the definition is a useful one in that it focuses not on the accounting process itself but on the reasons why information is required. Whichever way accounting may be defined, the ultimate factor is for it to meet the objective of financial statements which according to British Accounting standards Board (ASB), Exposure Draft, (1995) “is to provide information about the financial position, performance and financial adaptability of an enterprise that is useful to a wide range of users for assessing the stewardship of management and for making economic decisions.”
“Implicit in any definition of accounting is the importance of the primary role of the accountant [in] reporting and communicating information that will aid users in the financial community in making economic decisions.” The increase in size business transactions and complexity of business events in the modern day therefore, demand that accounting information is not only readily available on time, also remains reliable over time to guide an informed user in making economic decisions. The accounting information process thus, needs to spend up while retaining its core character of accuracy, relevance and reliability in meeting the need of the users.
Although the above explanation might overstate the case just a bit, the basic point is that accountants are required to make readily available on the basis of summary-type reports prepared from accounting processes gathered from economic events, which will guide the various users of the business in making an informed economic decisions.
Accounting thus, is a function companies use to record, report and analyze their financial information. This helps business owners and managers conduct performance analyses and determine their company’s financial returns, among other things. The use of information technology has helped companies automate the accounting process. This has triggered changes in the accounting system. Glautier, et al (2011) have noted that accounting is in an age of rapid transition… with developments in information and manufacturing technology. According to them, accounting is moving away from its traditional procedural base, encompassing record-keeping and such related work as the preparation of budgets and final accounts towards a role which emphasizes its social importance.” Whatever change therefore, Schugart, et al (2003) posit that an accounting system must be designed to accumulate data concerning economic events, to process these data and to summarize the data in periodic financial reports. In spite of this, the technology innovation in accounting has not changed the model use in accounting process. This model has its formula as: Assets = Liabilities or Resources = Sources. This evidence absolutely contradicts the belief that the advent of information technology in accounting process has altered the conceptual disposition of accounting as a field of study.
“The Accounting process involves the identification of economic events affecting the entity and the recording of the relevant financial information. In effect, the recording process in accounting is used to analyze each transaction or event that takes place during the life of a business and to report the effect that each transaction or event has on the financial position, results of operations, and cash flow of the business” (Schugart, et al, 2003:8). This accounting process has not changed even in the advent of information technology, rather accuracy, timeliness and efficiency is enhanced in the accounting industry. Furthermore, Schugart, et al (2003) noted that the introduction of a computer system into the accounting function does not alter the data flow, but instead parallels the manual processing system. Computer system simply performs many functions that are performed by people in a manual system. According to them, “the objective of any accounting information system (whether manual or automated) is to produce the financial information required by internal and external users”. 1.2.2 THE ROLES AND FUNCTIONS OF ACCOUNTING INFORMATION IN AN ORGANIZATION
Accounting system is an information system designed to meet the specific needs of the accounting department. An accounting system must provide the mechanism for select employees to retrieve certain information they must work with but not information outside their scope of responsibility.
Accounting provides organizations with various pieces of information regarding business operations; this helps business owners to have insight on growing or expanding current business operations.
The system provides information useful for measuring the performance of various business operations. This is done using financial ratios. This helps business owners understand the status of their companies compared to other related businesses.
Accounting system provides information used by owners of business to create budgets for their companies. This provides financial guide for their businesses. “These budgets can also be adjusted based on current accounting information to ensure a business owner does not restrict spending on crucial economic resources.”
Accounting system provides information that guides business owner in making an informed economic decision. “Decisions may include expanding current operations, using different economic resources, purchasing new equipment or facilities, estimating future sales or reviewing new business opportunities”. This process helps business owners understand how current business operations will be affected when expanding or growing their businesses. It also guides external users to make investment decisions.

1.2.3 BASIC ELEMENTS OF AN ACCOUNTING INFORMATION The primary objective of accounting is to provide information that is useful to business decision-makers. In order to accomplish this goal, Schugart, et al (2003) noted that accounting reports should possess certain qualitative characteristics of accounting information as well as basic assumptions and principles underlying the financial reports. These characteristic increase the value of accounting information to the user and are desirable to prepare a good financial report. Nwonyuku (2012) noted that a good financial report is a product of well defined accounting information system as well as a creation of clear and appropriate accounting information procedures. Ekineh (2009) believes that financial information is key barometer of the state of health of a business entity and should be timely, accurate and reliable if it is to be useful to investors. “Further, quality of financial reporting method should be derived from the accounting information system that possesses the attributes of fairness, relevance, reliability, understandability, timeliness, objectivity, accuracy and consistency. This means, it should be a product of credible financial information process, which has evidence of high - quality and consistent accounting standards…” (Nwonyuku, 2012:23). In its Exposure Draft, the British Accounting Standards Board (ASB) (1995) identifies what makes financial information useful to include relevance, reliability, materiality, comparability, faithfully representation, predictive value, completeness, prudence, neutrality, understandability, consistency, disclosures, aggregation and classification. Traditionally, standard setters have favoured reliability over relevance in those situations in which the two are in conflict. However, Lewis and Pendrill (1996) identify relevance as the prime characteristic of financial accounting reports and ASB Exposure Draft provides that information has the quality of relevance when it has the ability to influence the decision of users by helping them evaluate past, present or future events or confirming or correcting their past evaluations. While Solomons (1989) describes reliability of information neatly in stating that, reliable information must: a. “Tell the truth and nothing but the truth - representational faithfulness; b. Tell the whole truth - comprehensiveness; and c. Be of such a nature that users can be reasonably assured of its truthfulness- verifiability.” Similarly, the British Accounting standards Board provides that: “Information has the quality of reliability where it is free material error and bias and can be depended upon by users to represent faithfully what it either purports to represent to represent or could reasonably be expected to represent.” Deloitte (2011) provides relevance, understandability and timeliness as the qualitative characteristics of useful financial reporting quality. They argue that in today’s fast-moving markets, information must be communicated quickly if it is to be useful in supporting investors’ decisions. “No matter how relevant, reliable, simple and consistent entities make their financial reports, if they are not delivered in a timely manner they will not be of much use to stakeholders” (Deloitte, 2011:7). According to them, “the perceived lack of relevant, understandable and timely information may contribute to the low use of financial reports.” As a result of this, the preparers of financial reports are required to integrate information technology into the accounting system of the organization so that, “the timing and manner in which financial information will be delivered in the future may represent the most profound change ahead.” This accounts the high level of usefulness of information technology in accounting system. Despite information technology is becoming increasingly important in producing useful accounting information for management purposes, in most cases, top management does not view computerization of accounting system as being one of the main value creating functions of the organization. As a consequence, the resources dedicated to financial report are frequently scarce. According to Nwonyuku (2012), a new research conducted between February and March 2012 by Oracle and Accenture confirmed that large number of organizations “admitted they did not know the total cost of managing and publicizing financial results,” owing to this, “they were unable to put a figure to the cost” of financial reporting. This has aggravated to inefficient financial reporting and inability to meet statutory report deadlines. This problem in particular, is affecting most organizations in Nigeria and often results in loss of confidence, high cost of running financial management activities and hinders decision making. Nwonyuku (2012) attributes this limitation to financial reporting quality to lack of investment in proper software and on over-reliance on spreadsheets. More so, Schugart, et al (2003) outline the summary qualitative characteristics of accounting information as follow: a. Benefits and costs: In order to justify providing accounting information, the benefits that may be derived from the use of this information must exceed the costs of providing the data. This entails the cost to prepare, communicate, and interpret the information should not exceed the benefits to the users from having the information on which to base such decisions as investing or providing credit to particular companies. b. Understandability: Understandability is the quality that enables users to perceive the significance of information. The information provided by financial reporting should be understandable to those who have reasonable understanding of business and economic activities and who are willing to study the information with reasonable diligence. c. Decision Usefulness: Usefulness for decision-making is the most important quality of accounting information. Usefulness provides the benefits from information to offset the costs of providing the information, without usefulness, there are no benefits. Decision usefulness may be divided into two qualities of relevance and reliability. d. Relevance: In order to be relevant, accounting information must be capable of making a difference in a particular decision by helping users to form predictive value and feedback value. Users need to receive information which it can still be of use in the decision-making process. In other words, it must be received on a timely basis. Timeliness means having information available to decision-making before the information losses its capacity to influence decisions. Timeliness by itself does not make information relevant. However, information may lose its relevance if it is not communicated on a timely basis. Relevant information does not necessarily mean that a new decision should be made; the information may support a decision which was made previously. e. Reliability: Information is reliable if it is reasonably free from both error and bias and if it represents faithfully what it is intended to represent or convey. To be reliable, accounting information must be verifiable, neutral, and possess representational faithfulness. f. Comparability: The significance of information is enhanced greatly when it can be contrasted with similar information concerning other enterprises and with similar information about the same enterprise for some other period or point in time. Comparable information allows users to identify and examine similarities and differences between multiple enterprises, or between multiple periods for one enterprise. Quantitative information is most useful when it can be compared with such benchmarks. The purpose of comparison is to detect and explain similarities and differences. g. Consistency: Consistency is conformity from one period to another in the use of accounting methods and procedures. Information should be consistently prepared from period-to- period so that it is comparable. This means the accounting principles used should remain the same from period-to-period. The consistency concept requires that once an entity adopts a particular accounting method for its use in recording a certain type of transaction, the enterprise should continue to use that method for all future transactions of the same category for the period. Consistency does not mean that a company can never change its accounting methods. A change may occur if a firm can justify that the change makes the financial statements more meaningful or if a firm is required to make a change due to the issuance of a new accounting rule. Such a change must be disclosed in the notes to the financial statements. Thus, the concept of consistency is essential to comparability. 1.2.4 BASIC ACCOUNTING POSTULATES AND PRINCIPLES
In the word of Hendriksen (1984), Accounting postulates are basic assumptions or fundamental propositions concerning the economic, political and sociological environment in which accounting must operate. Balkoaull (1985) explains that accounting postulates are generally accepted axioms or self-evident truths that conform to the objectives of financial statements and portray the economic, political, sociological and legal environment in which accounting must operate. American Institute of Certified Public Accountants, AICPA (1962) provides that they necessarily are derived from the economic and political environment and from the modes of thought and customs of all segments of the business community. They provide a meaningful foundation for the formulation of principles and the development of rules or other guides for the application of principles in specific situations. They are few in numbers and include: a. Entity Postulate or Assumption: This assumes that the financial statement and other accounting information are for the specific business enterprise which are separate and district from its owners. b. Going Concern postulate or Assumption: This assumes that an entity will continue operating indefinitely in the absence of evidence to the contrary. c. Money Measurement postulate or Assumption: This is of the view that a unit of exchange and measurement is necessary to account for the transactions and events of business enterprises in a uniform manner. The common denominator chosen in accounting is the monetary unit. Further, it also assumed that all monetary units are of equal worth; in other words, inflation and deflation are ignored. d. Time - Period postulate or Assumption: This is of the view that accounting information about the economic activities of an enterprise is prepared for specific time period that is shorter than the life of the enterprise for users. Even though an indefinite life is assumed for the enterprise, information is presented for shorter time periods, commonly monthly, quarterly, or yearly.
Accounting concepts are also self-evident statements or truths, which provide guidelines for application in the financial accounting process. They are much more close to accounting postulates than accounting principles. “They provide help in resolving future accounting issues on a permanent or longer basis rather than trying to deal with each issue on an ad-hoc basis” (ROHTAK, 2004: 92). They may be the point of origin of accounting principles. While according to ROHTAK (2004), accounting principles are general decision rules derived from accounting concepts. They are general rules adopted as a guide to action or basis of conduct or practice in accounting. They “are general approaches used in the recognition and measurement of accounting events” (ROHTAK, 2004: 92). They provide the rules or bases on how to apply or use accounting concepts. According to Anthony and Reece (1991), “accounting principles are man-made. Unlike the principles of physics, chemistry and other natural sciences, accounting principles were not deducted from basic axioms, nor can they be verified by observation and experiment. Instead, they have evolved. This evolutionary process is going on constantly; accounting principles are not eternal truths.” A-two way relation exists between concepts and principles. However, in this paper, both accounting concepts and principles are going to be interchangeable and assumed as same.
Accounting principles are listed as follows:
Cost concept, Dual- Aspect Concept, Accrual or realization concept, Conservation or prudence concept, Matching concept, Materiality concept, Objectivity or verifiability principle, Uniformity or Comparability principle, Full-disclosure principle and Consistency principle.
It is of great importance to address the allayed fears to most organizations relating to the accounting postulates and principles at the advent of information technology. Most organizations are of the view that integration of information technology in generating accounting information will affect negatively the quality of accounting information as such prefer to remain in their traditional way rather than convert to computerized platform. The subsequent sections of this paper will articulate and evaluate the truthfulness in this statement.
1.3.1 THE MEANING OF INFORMATION TECHNOLOGY
According to Wikipedia, in a business context, the Information Technology Association of America has defined information technology as “the study, design, development, application, implementation, support or management of computer-based information systems.” As provided by Wikipedia, the responsibilities of those working in the field include network administration, software development and installation, and the planning and management of an organization’s technology life cycle, by which hardware and software is maintained, upgraded, and replaced.
Information Technology (IT) has created significant benefits for accounting departments. IT networks and computer systems have shortened the lead time needed by accountants to prepare and present financial information to management and stakeholders. Not only has IT shortened the lead time required to prevent financial information, but is also has improved the overall efficiency and accuracy of the information.
The application of IT - Electronic business (e-business) allows the accounting firm to coordinate activities for internal management and combines the clients’ relationships with the use of digital networks. Enterprise applications can be used on a small internal network called the intranet. The intranet can distribute information to employees such as corporate policies, and programs. It is a good means of communication within an organization and increases efficiency.
1.3.2 THE ADVENT OF INFORMATION TECHNOLOGY IN ACCOUNTING SYSTEM
Ever since business accounting existed, there have not been many changes to the way accounts are prepared and maintained. The inventions of abacus coupled with several attempts to build adding machines to help accountants with mathematical solutions as well as the invention of the calculator for information accuracy were among the earliest progress made to advance the speed and proficiency in the accounting profession. “But even with adding machines and calculators the accountant still had to keep track of the businesses’ functions with paper entry” (Pepe, 2011). History vindicates that accounting was performed in the form of paper records, columned ledger books and hand written statements, as such, required hours to capture relevant accounting information. “Storing accounting data took lots of space and there was always risk of fire, flood or other disasters. Along with the large amounts of manual labour and repetitive, almost mindless work, there existed a risk potential for error in the data, both in recording the data accurately and in calculating the results. These errors carried forward, polluting the data and making it more difficult to understand the reality of business results for managers, owners and investors.”
Towards the end of the twentieth century the accounting profession began to take on a whole new look. Computers and accounting software has changed the industry completely. With programs such as Microsoft Excel, an accountant now had an electronic spreadsheet. The need for adding machines, calculators, ledgers and pencils was eliminated. The job became less tedious with less of the margin for error” (Kruglinski, 2009).
As provided by Wikipedia, the term ‘information technology’ in its modern sense first appeared in a 1958 article published in the Harvard Business Review. There are several phases of information technology development. This paper shall focus on the most recent period - electronic, which began in about 1940. Quite unlike accounting, “information technology is changing fast and changing every day.” In all these phases, however, one thing that is common to them is the ability of information technology to make accounting information not just being accurate and readily available also useful in meeting the needs of the users in today’s business world.
It is usually argued that the first use of an information system was in relation to accounting (Rom and Rhode, 2007), because often IT was about the firm’s financial ledgers and reporting systems (Granlund and Mouritsen, 2003). Information technology has allowed for many advances in the practice of accounting in recent years. Many forms of automation in recording, storing, managing and analyzing data are allowing accountants and the companies they work for achieve higher quality accounting system by receiving more accurate, timely and beneficial information than ever before. Provision of relevance, reliable and useful information system is the hallmark of accounting. And this is what the advent of IT in accounting has achieved in an outstanding manner.
“Prior to the 1960s, the accountant was perceived as a bookkeeper whose primary responsibility was ensuring that records were kept. The accountant fought a constant battle against the failure of record” (Alves, 2010). The introduction of computer technology into accounting systems changed the way data was stored, retrieved and controlled. According to Wikipedia, it is believed that the first use of a computerized accounting system was at General Electric in 1954. During the time period of 1954 to the mid-1960s, only mainframe computers were used and few people had the skills and abilities to program computers. This began to change in the mid-1960s with the introduction of new, smaller and less expensive machines. This increased the use of computers in businesses. Along with the increase in computer use, came the rise of different types of accounting systems. “During the 1960s, the accountant was able to respond to manager’s requests for reports on the business activities. Computers provided a more efficient means of keeping the books, and they afforded the accountant quick access to financial information for reporting purposes. Next, the 1970s brought both IT developments and manager’s increase demand for more information about the business” (Alves, 2010).
Currently, the manner in which accountants can potentially add value to economic entities and society is undergoing metamorphosis. Many traditional accounting tasks dealing with recording and processing of accounting transactions can be reliably automated (Alves, 2010). Rather, an accountant’s worth is now reflected in higher-order critical-thinking skills, such as designing business processes, developing e-business models, providing independent assurance, and integrating strategic knowledge (Hunton, 2002). “The impact of modern information technologies in companies is broad and manifested in the most varied ways.” (Alves, 2010). Some of these technologies, with their widespread use, especially the internet, have altered the way companies work and their accounting organization (Granlund, 2007). Today, research within accounting “is coming alive with the advent of integrated information systems such as enterprise resource Plan (ERP) systems” (Chien and Tsaur, 2007). In this context, information technology has emerged as the most common brief name in making the quality of accounting information useful.
Since the advent of computer, information has become available to an accountant with the click of a mouse. “More doors were opening with the use of information technology. This diversified opportunities in the field of accounting.” The advent of information technology represents a vector of development and an important component in catalyzing the possibilities for sharing and exchanging accounting information among the internal users, which at end is extended to the external users. This development “represents a precious assistance in the search for and treatment of information needed in the decision making process” (Connor and Martinsons, 2006). “Information technology has impacted accounting processes in a very good way.” It is difficult to find any organization doing completely manual accounting with paper and pencil these days. Since accounting is about dealing with information - business information, any advances made in information technology will have a positive effect on accounting processes from the old days of Abacus adding device to the fast computers of today.
1.3.3 THE IMPORTANCE OF INFORMATION TECHNOLOGY TO ACCOUNTING SYSTEMS
Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) require a company to prepare full and accurate financial statements. This is achievable where there is a well established computerized accounting system to prepare on time, accurate and reliable operating reports. Computerized accounting information system involves the use of tools, methods, computers, printers, software, hardware and other equipment. Information technology plays a crucial role in accounting processes because it improves financial reporting procedures and prevents errors in financial statements.
“Speed is the hallmark of information technology. The utilization of multiple technologies results in faster and more accurate results.” Computerized accounting systems allow companies to create individual reports quickly and easily for management decision making. Computerized accounting systems have improved the functionality of accounting departments by increasing the timelines of accounting information. By this, financial information can be prepared and communicated on time to give management an accurate picture of current operations. Therefore, accounting system needs to work seamlessly with proper hardware and backup systems in order to give a good account of the synergy. A computerized accounting system therefore ensures efficiency and speed of operations. “Accounting work is very detailed and accuracy in recording and reporting is greatly valued. Technology has had a positive effect in accounting applications because calculations done by a computer program experience very few errors.” Accuracy is also improved by limiting the number of accountants that have access to financial information. Less access by accountants ensures that financial information is adjusted only by qualified supervisors.
“An accounting department also needs flexible technology that can adapt as business practices change. To be effective, information technology associated with accounting must be flexible to accommodate the changes.” With information technology in place, changes can be made relatively easy to reflect any economic changes in business operations. IT makes recording, classifying, and identification of accounting data flexible; as a result encourages quick changes with no damage to the recording process.
The latest trend in information technology with accounting applications is Web hosting off-site. “Instead of installing a program onto your computer and saving data there, the program resides on a server in a different location; the saved information is accessed via the internet.” That is also referred to as ‘Working in the Cloud.’ “Businesses can save money in software and hardware purchases by signing up with a cloud provider and using its programs and space for saving data, meaning there is no need to get a bigger hard-drive or worry about program versions. The other advantage of the Cloud is that you have access to your information anywhere you may be.”
Information technology in accounting often enables companies to set up automated accounting information systems. These systems gather and process data electronically through the use of computers, servers, workstations, intranets and internets. Most companies also use an accounting software applications or packages to run their reports, create queries, track projects and monitor financials. By this way, IT improves companies’ efficiency. Therefore, implementing information technology in accounting can increase the individual output of accounting employees. Rather than trudging through countless paper ledgers and journals, the accounting software contains the information for easy review and manipulation by employees.
Information technology applications facilitate work remotely. It gives remote access to company’s electronic network, so that you can work from home or on the road. This accessibility allows increase in company’s productivity because an individual can still get work done at all time, even when one is not physically in the office.
Accounting has earlier been described as the language of business. And communication is essential to the business world; as such information technology provides the resources to communicate the accounting information quickly and effectively to the various users. This can be done through e-mail, intranet, internet, video conferencing, and internet chat rooms, so that they always have an efficient way to conduct business and communicate the results of business operations.
“Information Technology (IT) benefits the business world by allowing organization to work more efficiently and to maximize productivity.” Crescenzi and Kocher (1984) express that by avoiding the potential risk, the accountants can use the new IT to enhance his role within the organization. “The possibilities for sharing and exchanging information among those involved may lead to informal cognitive networks, like electronic discussion boards, and can reinforce relationships with electronic partners” (Alves, 2010).
1.4.1 THE INFORMATION TECHNOLOGY USE FOR AN ACCOUNTING SYSTEM
Information Technology is a set of tools, processes, and methodologies (such as coding/programming, data communications, data conversion, storage and retrieval, system analysis and design, systems control) and associated equipment employed to collect, process, and present information. Information Technology system is a combination of hardware, software, infrastructure and trained personnel organized to facilitate planning, control, coordination, and decision making in an organization.
A computerized Accounting Information System is a subset of Management Information System that is responsible for providing timely and accurate financial and statistical reports for internet management decision, and for external parties such as creditors, etc. Information technology has impacted accounting processes in a very positive way, from the old days of the abacus adding device to the present fast computer era.
The set of tools, infrastructure, process and methodologies in use are: 1. Equipment: The equipments are computers, printers, scanners and faxes. They are available at affordable prices for both large corporations and small businesses. The machines are sophisticated, fast and user friendly. They are the hardware of information technology. 2. Software: They assist the hardware in providing highly efficient services to the accountants. For example, basic spreadsheet systems, off-the-shelf accounting software, customized accounting database platforms and enterprise software. They are accounting programs in the market that are easy to use and affordable, making the accountants very efficient with calculations and reporting in their daily tasks, such as paying bills, recording transactions, etc. They help to organize data in a centralized location. 3. Internet: The internet devices assist the accounting processes in many ways. It opens doors for documents sharing and exchanging, to conduct accounting researches, to help facilitate tax filling online and share accounting information. Connection to internet can be wireless and simple. 4. Security: Information technology is used widely in accounting security. Identifications and passwords limit access to confidential information. Instead of pile of paper ledgers and journals lying around, occupying space, and inconveniencing the accountants with subject to the risk of flood, fire outbreak, theft, among others. The use of information technology can provide security of the documents through proper computer programs. “Using a program, accounting information can be encrypted in a way to prevent unauthorized use, making it safe. A lost, stolen or misplaced laptop or desktop computer can be tracked using security software that can be activated remotely. 5. Education: For efficient and effective utilization of resources, Information Technology in accounting involves training and retraining of account personnel to facilitate planning, control, coordination, and decision making in an organization. Because of the close synergy between accounting and information technology, many universities have started offering four-years degree in accounting and information systems. This is to enable the accountants of the present and future to be technologically inclined and to remain relevant in the dynamic business world.

1.4.2 SOFTWARES FOR ACCOUNTING INFORMATION SYSTEMS
“A trend in programming practices is to target certain industries and make entire programs customized for those industries”. This is what accounting industry has enjoyed. “That makes computerized accounting fast to set up and use”. “Accounting software has continued to improve. Every business function that generates numerical data can be and usually is connected with financial reporting.” Fully integrated software packages such as Systems Application and Products (SAP), Peachtree, QuickBooks and Oracle, along with many others available in the market place, allow organizations to set up how data will be input into the systems and how that data links into the accounting function for immediate and later use. There is a price tag for this level of performance, both in acquiring and implementing the software system. In today’s business environment, all large and small companies even individual businesses need systems of this nature, and need them up and running to assist them monitor the resources and sources of their business and to ensure they can remain competitive.
Examples of the software include: Business Intelligence (BI), System Applications and Products (SAP), Audit Command Language (ACL), Peachtree, QuickBooks, Tally, Excel and Enterprise Resource Plan (ERP).
The Software can be made available in the form of: A. SpreadSheets Programs- Example is Microsoft Excel. They are used in almost any basic accounting need to list expenses, sales or other relevant financial data, and even to handle more advanced accounting functions. They also compliment other accounting processes. B. Commercial Accounting Software: - This is also known as Off-the-shelf accounting software. Examples include QuickBooks, Peachtree, Tally, etc. They can handle most, if not all, of a small – to - medium size business accounting needs. This type of accounting software works with almost any business and allows business to create customized functions to fit its specific needs. They include graphs that summarize data, as well as reports that provide a picture of a business health. “Each type of commercial accounting software has strengths and weaknesses”. C. Enterprise Accounting software: This type of accounting software helps larger organizations with complex operations in running their accounting processes together with other business operations. Enterprise accounting software integrates accounting with other services provided by the software, such as workflow management, business intelligence and project planning. It comes in modules or packages. The price of the software depends on the need and modules in use by the companies. “Often, when a large business selects this type of accounting software, it follows a multistage protocol that includes a request for information from accounting software Vendors, a product demonstration and communication with other companies that use the software.” D. Customized Accounting Software: This is accounting software created by a business for its specific need. It could be created by knowledgeable staff who may be asked to write software to handle various accounting processes as the business grows. In other situations, a business may assign the responsibility to a vendor to create accounting software unique to the business operation; because there are commercial accounting programs that basically meets its needs or fits into its business operations.
1.4.3. FACTORS TO CONSIDER WHEN CHOOSING ACCOUNTING SOFTWARE
A good accounting software package eliminates or collapses many manual components in accounting processes. It helps track business expenses, provide you with many efficient ways of managing daily financial tasks, as well as provide management and ownership with useful reports to help analyze business performance. Once a business gets its up and running, it can help to organize and manage the entire accounting process and even make tax time easier and faster to manage. With no proper consideration, “business owners sometimes make costly mistakes by investing in the wrong accounting software, and then they struggle to make the software work or incur even more cost by converting to different software.” “If you are in the market for accounting software, evaluate several products before making your purchase. Remember, even inexpensive accounting software can turn out to be expensive if it does not adequately perform for you and your business. Once you install an accounting software package, you will be locked into using it for a long time unless you select a new system. This is an expensive proposition in terms of time and efforts. Do your research on the front end to find the right product for you and your business.”
The following factors are to be considered when choosing accounting software for your organization. a. Determine the objective and scope of the business organization:
The first and most thing business organization managers and owners should determine before choosing accounting software for their business is the objective and scope of the business and what accounting tasks the software should ideally perform. “In addition to basic accounting requirements, make a list of other items you want the accounting software to handle, such as inventory management, payroll and cost accounting. Consider the future of the business in your decision as well as current operations. Software that fits perfectly today may not be enough a year from now. Keep business growth and expansion in mind when creating your scope list.” b. Modules Included:
“Once you have defined the scope of the business and the purpose of the accounting package, screening software possibilities become an easier task, because you can easily eliminate those that do not cover item on your scope list. For each accounting package that covers your scope, determine which modules are included in the base price and which modules have an additional cost. For example, some software manufacturers charge an additional price for a payroll module.” c. Access and Portability:
In this case, you put into consideration the various areas the business is located. “If you have a simple business location and do not expect that to change, any accounting package that installs on a network server is suitable for your business. But if you have, or intend to have, multiple locations, you need to consider how field employees will access the accounting software if needed.” d. Knowledge Required:
“When choosing accounting software, you must take into account the education level of your employees and the difficulty of the software selections. Some accounting software requires high-level accounting knowledge for setup and use, while other software packages are geared towards business owners and employees who do not have accounting education or experience.” The usefulness of accounting software to procure relies heavily on the knowledge base of the user. Bearing in mind that, “powerful, do-it-all accounting software is still useless if your employees cannot learn to use it.”
e. Cost:
“Once you have eliminated software packages by scope, portability, module and knowledge requirements, the last factor to consider is the cost of the remaining software packages. When considering cost, take into account fees for upgrades, annual licensing and support. Compare technical support packages and factor additional fee support packages into the overall cost of the accounting software.” If your organization cannot perform the installation and setup of the accounting software, also includes estimate for installation and setup and factor those figures into the overall cost.
1.4.4 HOW TO CHECK ACCOUNTING SOFTWARE
The following steps will be of great guides in checking efficient accounting software in an organization.
Step 1
Perform online research to get plenty of internet information about various accounting software packages. Read about the packages, read reviews from people who have used the product and even ask question in online forums. Contact customer service personnel as well and read through the vendor’s material.
Step 2
Use product demos to run product tests. Most accounting software packages have a demo package that you can obtain; this enables you to try the product. Ask other people in your organization to evaluate the software as well.

Step 3
Identify the pros and cons of each accounting software package. Ask your coworkers to do the same. Go over the pros and cons of each package together. Eliminate any packages that clearly do not measure up to your needs.
Step 4
“Investigate customer service, online help and other support features. Check the customer support offered by each company on your short list. These features are important when you run into problems”.
Step 5
“Finalize your accounting software choice. Select a software package only after you are satisfied you have thoroughly checked all packages under consideration. This may need to be a group decision if other people will use the accounting software package”.
1.5.1 MERITS OF COMPUTERIZED ACCOUNTING INFORMATION SYSTEM.
A computerized accounting system offers many advantages over manual accounting systems. A computerized accounting system change forever the way accounting task are processed. It makes business to have a centralized location where all accounting transactions are entered and saved.
In a computerized accounting system, all the multiple steps of a manual system are collapsed into one entry. By this, financial statements can be created at any time with error free and as often as needed.
The number of financial reports has also been improved by computerized systems; cash flow statements, departmental profit and loss, and market share reports are now more accessible with computerized accounting system.
Most computerized accounting systems have internal check and balance measures to ensure that all transactions and account are properly balanced before financial statements are prepared. Computerized accounting systems will not allow journal entries to be out of balance when posting, ensuring that individual transactions are properly recorded.
Quicker processing times for individual transactions has also lessened the amount of time needed to close out each accounting period. Shortening this time period aids companies in cost control, which increases overall company efficiency.
Report issued to outside investors and stakeholders have been improved by computerized accounting systems. Improved reporting allows investor to determine if a company is a good investment for growth opportunity and has the potential to be a high-value company. Companies can utilize these investors for equity financing, which they use for expanding business operations.
It can save and organize accounting information. Computerized accounting systems facilitate the speed of processing accounting information. Data is entered once and can then be used and reused in compiling reports. If a transaction needs correction, it is easily done, with reports generation afterward at speeds never possible with manual accounting systems.
Besides the speed of processing accounting data, computerized accounting system makes it easier for organization of financial information. It can save as well as organize accounting data. Computerized accounting systems make it easier for classification of accounting information.
Computerized accounting systems improve the safety of accounting information. Once data, is entered into a computer, it is safe. The chances of losing data are remote, especially when you perform regular system backups.
1.5.2. DEMERITS/LIMITATIONS OF COMPUTERIZED ACCOUNTING SYSTEM
Computerized accounting systems have many benefits with accompanied disadvantages. A computerized accounting system is not perfect. Many times, problems with connections, compatibility and other technical issues affect how accounting processes are performed or if they are performed at all.
Computerized accounting systems create room for impersonal communication as such might lead to abstract and artificial character and suffer from the greater trust.
Computerized accounting system does not guarantee a perfect information system. There is still a room for error. Simon (1997) affirms that “it is unrealistic to think that an information system, whatever it may be, can always supply the decision maker with relevant and timely information. The decision maker would have to know in advance which information would be needed…”
It has also been argued that ever since the advents of accounting system, accountants “add little incremental value to organizations...” “Rather, an accountant’s worth is now reflected in higher-order critical thinking skills, such as designing business processes, developing e-business models, providing independent assurance, and integrating strategic knowledge” (Hunton, 2002). According to Crescenzi and Kocher (1984), the rapid evolution of IT represents both an opportunity and a potential risk for the accountant. Further, they argued that “Management Information Systems were developed to support the new accountant’s role. However, the new Management Information Systems generated all the information without regard to its relevance and the accountant was forced to become the interpreter of information”, and to deal with problem of information overload (Alves, 2010). So, we have a “paradoxical situation that, although there is an abundance of information available, it is often difficult to obtain useful, relevant information when it is needed” (Edmunds and Morris, 2000:17). Companies often face rising operating costs when using information technology. These costs come from maintenance, software licenses, upgrades to equipment and other fees relating to the technology. These extra costs can be difficult to offset, because accounting is an ancillary service rather than a process directly related to making money.
Computerized accounting information systems have the potential risk of losing information through power outages or system crashes. When this happens, there is a chance that all the information in the system could be lost if a system crash occurs.
Learning an accounting information system can often be difficult and time-consuming. Individuals must be trained on a system, and this can cause a disadvantage to companies in terms of time and manpower. Because of the complexity of computerized accounting systems, some people may find them difficult to use. It can take weeks or months for a person to understand the system, and usually individual still does not understand completely what the system is capable of doing. If the employee quits working with the organization, it can take weeks or months, once again, to train another employee.
Companies often change their way of doing business to keep up with the latest trends. To keep up in a demanding business world, these changes may impact an accounting system. An accounting information system is difficult to set up because every company is unique in its own way. In order to keep up with changes and process information in efficient manner, accounting information systems must be re-evaluated often. And it takes time and money for the re-evaluation.
It has been argued that the attempt for software developers to set up default charts of accounts and financial statement formats create all manner of problems that could be avoided simply by demanding the user to learn enough about accounting and their own business. This simplifying design increases the reliance on expensive experts.
More so, it has been observed that software developers make money not by selling excellent and reliable software that works for years, but by selling frequent ‘new and improved’ upgrades. Whereas, an accounting package that was any good to begin with should not require frequent upgrades, or for that matter any upgrades at all. This is because “basic bookkeeping and financial statement compilation procedures have not changed for centuries. Yet any popular software package user will be inundated with new versions of the package which will require yet more expensive consultations. Most of these upgrades are simply unnecessary bells and whistles or fixes for bugs that should have never been in earlier versions.”
There is also the risk of having ill conceived software design in a computerized accounting system. The problem of poor design stems from an over ambitious attempt on the part of developers to allow users with no bookkeeping training to make entries without reference to the debit and credit structure. The software developer hides the debit and credit structure on the assumption that the user does not understand it. All manner of problems ensue from this design flaw. This necessitates expensive training and consultation with experts in the software.
1.5.3 Differences between Conventional and Computerized Accounting Systems
Following the advent of information technology in accounting industry, three types of accounting systems exist. They are manual or conventional accounting system, computerized or automated accounting system and semi-automated accounting system. An organization may choose to run manual or computerized accounting system and/or the combination of the two systems, which is semi-automated accounting system.
The differences between the computerized and manual accounting systems are as harnessed. * Computerized accounting system can save time because it allows faster data entry than manual accounting system. As a result, it has increased efficiency and time management compared with manual system. * Computerized accounting has the advantage of higher accuracy when compared with manual accounting. Manual accounting is more of labour intensive and the potential for human errors is greater when manually processing accounting data. * Manual accounting system allows for creativity and initiative in analysis of accounting information. This is unlike computerized system. This is because the outcome of analyzing data depends on the person operating the system. Without the nuance and experience of the actual person, computerized accounting system lose their potential for sophisticated analysis. More so, analysis may be hampered or obstructed by software design. * Computerized accounting system produces accounting information report quicker than manual system. With computerized system, many reports are automatically updated and instantly available. * Computerized accounting system is more expensive to setup than manual system. * Manual accounting uses paper ledgers and journals where accountants record financial information. Computerized accounting uses software programs designed from traditional accounting systems. It involves the use of computers, spreadsheets and programs designed to record and report financial information electronically. * Conventional accounting system involves a tedious and copious amount of time in processing accounting data. Simple mistakes such as transposing numbers or entering information into the incorrect column could occur and create significant errors. Computerized accounting systems allow accountants to process more information than before by easier review processes. Accountants can potentially spend less time looking for error and more time analyzing information for decision purposes. * The security of the accounting information in a computerized programme is limited to the quality of the program itself and the company’s security system. A poorly protected program and database leaves an opening for hackers or unauthorized personnel to access the company’s financial information. This is not the same with manual system. * Loss of accounting data in computerized system through power failure or viruses and the danger of hackers stealing data, computer fraud, faced by computerized system. Also, if there is a security breach and data is stolen, management can be held personally liable for the loss of data. Bugs in the software can cause incorrect data. These cases are not traced to manual accounting. * Computerized system can allow accounting data transfer to multiple reports and systems. This is not applicable to manual system. * Because of technology is rapidly changing every day, computerized accounting systems may become outdated over time. The functionality of outdated system is limited compared to updated software. If you switch to a completely different accounting system, it involves transferring the whole lot of old data from the previous system and this can be tedious and boring. This situation is not encountered in manual system. * A software program still requires knowledgeable staff members to use it in order for it to be effective. No matter how easy the accounting software is to use, limitations will exist based on how well-trained the staff is and how confident they are using the software. User error is a potential problem that could create incorrect accounting data for the company. This is not applicable in manual system. * Manual accounting system is cheaper to setup than the computerized accounting system, which requires a machine and software coupled with training and program maintenance costs. Also expenses can add up fast with costs for printers, paper, ink and other supplies. * With computerized accounting system, all transactions can be saved and backed up, in case of fine or other mishap. This is not applicable with paper records in the case of manual system. * When recording accounting transactions manually, several entries are typically required for every transaction. While in a computerized accounting system when transaction is recorded, the computer posts all entries transaction correlating with the transaction. It does not allow the end-user to post them one after the other. This saves an accounting clerk time and helps them to avoid mistakes. * A computerized accounting systems offer a faster way of recording financial information than the manual system. It allows users to find records more quickly. If users need to locate an invoice total, price or date of a transaction, a computerized system offers a faster method for information location. * A computerized accounting system provides more efficient and accurate result than the manual system. This is because an accounting clerk enters only one set of numbers, which is then transferred automatically to several different areas in the system. * A computerized accounting system can automatically generate accounting documents. This is unlike manual system. It can be set to automatically pay bills and print checks. They can also create purchase orders, invoices and credit memos .With computerized accounting system, payroll tasks can be done automatically. * Computerized accounting system offers end-of-month advantages for businesses. Adjusting and closing entries are recorded easily on the system. The creation of financial statements is made easy with a computerized accounting system. This is unlike a manual accounting system. * Computerized accounting systems have great storage devices. With computerized accounting system, information stored are always backup to avoid the loss of the information. It provides a convenient place to store information because it does not take up a lot of space and the information is all conveniently located in one place.
1.5.4 SIMILARITIES OF CONVENTIONAL AND COMPUTERIZED ACCOUNTING SYSTEMS
Despite the differences that exist between the manual and computerized accounting systems, there are still the areas of connection between the two systems. * Both accounting systems are aimed at producing relevant and reliable accounting information that would be useful to decision makers. * The two systems are not error free. The quality of persons operating both computerized and manual goes along way to determine the information output. * Both manual accounting system and computerized accounting use double entry concepts of book keeping system. * Computerized accounting system uses software designed from traditional manual accounting system. * Computerized accounting system still requires individual to manually input financial information into the program. * Manual and computerized accounting systems are equal when it comes to reliability. This is because manual accounting system can function independently of machines so that work continues when the system is not working. * Both manual and computerized accounting systems required high cost of maintaining staff. It can be costly to staff qualified accountants to complete manual accounting processes, but it can also be costly to staff accountants familiar with specific computer accounting software and programming.
1.61. HOW TO SET-UP MANUAL ACCOUNTING SYSTEM
A primary function of accounting is to accumulate the information required by decision-makers and to communicate these data to them. The accounting system used for communicating information consists of business documents (such as invoices or cheques) and records the procedures used in recording transactions and preparing reports (Schugart, et al, 2003: 38). Therefore, the accounting system of an organization should be designed to handle all the many facets of accounting, and the system must operate in a manner that is efficient, effective, accurate, and timely (Schugart, et al, 2003:38).
“A model of a basic financial accounting system should show the procedures followed during the accounting cycle and provides a comprehensive picture or overview of the information flows that are required in a typical organization”.
The basic components of the system according to Schugart et al (2003) are as follows: 1. A chart of Account (2) A coding system
(3) A general journal (4) A general ledger
(5) Subsidiary ledgers (6) Special journals
(7) Internal control (8) An audit trail
1.6.2. HOW TO REPLACE CONVENTIONAL ACCOUNTING SYSTEM WITH ELECTRONIC SYSTEM?
“An electronic accounting system has significant advantages over a manual system”. It is obvious that the business world today is driven by the innovations of information technology. Several business literatures have shown higher possibilities available for information technology to explore more in the business industry. There is therefore great need for accounting industry to follow suite if the accounting information from any business enterprise is to remain relevance and reliable in making competitive decisions.
“Setting up an electronic accounting system to match a current manual system will improve the quality of accounting information provided to the decision makers. It involves undertaking certain procedures.
1. Obtain software: This involves the following steps:
a. Set up a committee of the personnel responsible for implementing the current accounting system including the people who use the reports produced.
b. Review the current system and identify problem areas that can be corrected in the new system.
c. Obtain software that will meet the needs of the business, considering reports in different formats from those in your manual system.
2. Test the Software:
Testing the software before switching to the electronic system is crucial because it is easier to make changes in the new system before it contains all your data. A test period with some personnel of the organization is important because it will help to identify areas of challenge where training requirements may be intensified. For an agreed time, it may be worthwhile to have both systems operating simultaneously so that you can identify needed changes.

3. Provide Training
Establish a plan for training the accounting staff and managers who use the data. Training should provide information about any new or changed procedures and furnish experience in using the new system.
4. Comparing the report formats of the new system with the manual system.
The users of the data need to compare the report formats from the manual system with those of the new system.
5. Install New System:
This may require entering and testing for accuracy some old data before starting the electronic system and entering more after the change is implemented.
6. Backup Data
An electronic accounting system without a regular backup is not complete or secure. Backup your data every day to cloud storage site or to your own drives that you keep in a secure, off-site location.
1.7.1 EXPERIENCES OF COMPUTERIZED ACCOUNTING SYSTEM IN MY PLACES OF WORK.
The presenter of the paper has worked in several places. Presently, he is a staff of Federal Inland Revenue Service Abuja, Nigeria, where he has selected as the case study. The Federal Inland Revenue Service (FIRS) was established as a body corporate with perpetual succession and a common seal by 2007 Act No. 13 of the National Assembly with powers of assessment, collection of, and accounting for revenues accruable to the government of the Federal Republic of Nigeria; and for other related matters. In pursuance of its statutory and administrative responsibility, the establishment has over the years and in recent time integrated information technology applications in its major functional areas of finance and accounts, tax administration and standard compliance, human capital management and research and planning. In addition to their existing automation level, they have in place several ongoing automation projects such as Integrated Tax Administration System (ITAS), which “is a suit of programmes specifically developed to support the automation of the tax administration function”. This is designed to enable taxpayers be able to calculate and pay their tax liability from the comfort of their homes. “The ITAS solution procurement and installation involves the deployment of the Standard Integrated Tax Administration Solution (SIGTAS) and hardware infrastructure including support services for FIRS. This will ultimately simplify taxpayer compliance and increase revenue generation” (FIRS, 2013:8).
There are also other automation projects some of which have been completed while some are still ongoing. They include: VAT automation, CAC Integration, SAP/HR, SAP Finance, Accounts and Procurements (TRUSTFAP), I- SHARE, Microsoft SharePoint, Microsoft –Exchange and third party government institutions such as the Central Bank of Nigeria (CBN), Corporate Affairs Commission, Nigeria Customs Service, among others.
The Finance and Accounts/Procurement Automation project is using SAP-ERP software. It is nicknamed TRUSTFAP. It is designed “to enhance the efficiency and effectiveness of finance/procurement processes without compromising internal controls”. It focuses to automate the reviewed existing FIRS structure and procedures for payment processing and eliminate identified bottlenecks in finance and accounts process and procedures… the project would result in a reduction in procurement time and payment processing, easy and timely rendition of required management of financial statutory reports as well as an automated inventory management system for inbound/outbound logistics” (FIRS, 2013:19).
1.8.1 CONCLUSION
Not to be overlooked is the impact of accounting on our society. The transfer and distribution of the economic resources of society are often related to the quality of accounting information available. The ability of accounting systems to report information on an accurate and timely basis is crucial. Thus, the need for the search of information technology that would be integrated into accounting system to improve accounting processes.
Overtime, many information technology innovations that could serve the above purpose began to emerge. Today, computerized accounting systems are the electronic ancestor of accounting books and ledgers used for centuries by businesses before the invention of the computer and software programs.
The trend of financial reporting in recent time is gradually shifting away from providing reports and schedules that were produced by the conventional accounting platforms and toward a demand driven model where users will receive and retrieve the information they deem most relevant, and on a more real time basis.
The graduate shift from conventional accounting information process to a computerized accounting information system is taking one sided shape. “The accounting industry is now speaking a brand new language of business”. It is the language that delivers the objective of accounting to future generations. The evolution of information technology has helped to make this possible. “The advancements have taken the industry to many new levels of opportunities…” Unfortunately, it is not all organizations have been able to benefit from the integration of IT in accounting system. In comparing and contrasting the changes that have occurred with the use of information technology in accounting throughout the ages, enterprise productivity has significantly improved to meet challenges in today’s business world.
The comparative analysis of the manual and computerized accounting systems gives the new system strong edge over the older system. Even the experience from the various places of work adjudged that the automated accounting information system accrues benefits far more unequal than conventional accounting system.
The experiences gathered show that many of the accounting information were produced using conventional or semi-automated accounting systems. Analyzing the role of accounting information in the present day, we found that, the accounting information gathered through traditional accounting system are more frequently used to “understand the current state of the” organization and to “identify problems” than to “solve problems”. As a matter of fact, the drive to integrate IT into accounting system demands an urgent attention if accounting as a business language is to continue to make any meaningful impact to organizations.

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