CHAPTER ONE

INTRODUCTION

1.1) Background of the Study

Computerised accounting systems basically mean software tools that we can employ for accounting purposes. In other words, they help in maintaining accounting records digitally. They even generate financial statements automatically using the data users feed into them according to Frankwood(2005). Tally is a great example of a computerised accounting system. It is a popular software that accepts accounting information, generates financial statements, maintains records, etc. Similarly, billing machines like the ones found in malls are also good examples of digital accounting systems. They help in calculating billing amounts, reducing discounts, adding information of customers, etc. Manual accounting was the most popular method of accounting until recent times. Businesses had to hire a full-time or part-time accountant or book-keeper for this purpose. They would manually record transactions, generate books and ledgers, and prepare financial statements. They had to do all accounting work manually on paper.

Yinus & Oladejo, (2014) Observed that the basic indicator of modern day development in any society is the level of technological advancement and how it has contributed to Economy growth of a country. Hence, from the aforementioned statement, one is able to identify how significant computerized accounting system is to the performance of commercial banks. The many advantages from the use of these systems have led many to conclude that Computerized Accounting Systems in corporate reporting is the engine of commercial banks performance. This was evidence with numerous advantages of computerized accounting over manual accounting system.

Accounting process later moved to computerised systems like billing machines. As we read above, these machines resembled typewriters and calculators and people used them in stores. They performed tasks like calculating net totals, deducting discounts, recording billing information, etc.

With the advent of newer technology according to McBride (2000), modern computerised systems made accounting easier. They enabled users to enter accounting data real-time. Apart from basic outcomes, these technological innovations helped record sophisticated transactions as well.

Accounting systems are responsible for analyzing and monitoring the financial condition of firms, preparation of documents necessary for tax purposes, providing information to support business purposes. Without such a system it will be very difficult for  commercial banks to determine performance, identify customer/member and supplier account balances and forecast future performance of the organization/institution. The primary purpose of an Accounting System (AS) is the collection and recording of data and information regarding events that have an economic impact upon organizations and the maintenance, processing and communication of such information to internal and external stakeholders (Stefanou, 2006). In modern theories of growth and operational performance, technology innovation has taken the Centre stage through the introduction of PC-based Accounting Systems, both the computer hardware and the accounting software creating an opportunity for commercial banks to adopt computerized accounting system. These Computerized Accounting System include “Quick Books” and “le Sage” for big organizations and “Alpha”.

In the early 1990’s, reseachers such as Smith and Jones (1992) highlighted the need for banks to modernize their accounting practices to stay competitive in the rapidly changing financial landscape. They argued that the Integration of CAS would enable banks to streamline operations, enhance data accuracy and improve decision-making capabilities. As the 21st century progressed, the drivers for CAS adoption among commercial banks became increasingly compelling. Patel and Sharma (2005) identified several key factors including; regulatory pressures to improve financial reporting and compliance, increasing cuatimer expectations for real-time, personalized banking services, the need to enhance operational efficiency and reduce costs, the emergence of new technologiessuch as cloud computing and data analytics, that could further amplify the benefits of Computerized Accounting System.

The adoption of computerized accounting system has been a transformative development in the banking industry over the past few decades. According to a study by Smith and Jones (2018), the implimentation of CAS has enabled banks to streamline their financial reporting, improve data accuracy, and enhance overall operational efficiency. The authors note that prior to the widespread adoption of CAS, banks often relied on manual, paper -based accounting processes which were prone to human error and lacked the real-time data access that modern systems provide.

Patel and Sharma(2020) highlight that the Integration of of CAS hassle allowed Commercial Banks to better manage their assets, liabilities and cash flows leading to improved financial decision making and risk management capabilities. The author’s argue that the increased transparency and data-deiven insights enabled by CAS have been instrumental in enhancing the overall performance and competitive of banks in the global market.

According to a study by Mbatha, and Odhiambo(20215) the implimentation of CAS was initially concernttrated in the more developed economies of the continent, such as South Africa and Kenya, as these countries sought to modernize their financial Systems and improve operational efficiency.

Reseachers Adebayo and Bello(2017) identified several key factors that have driven the uptake of CAS among commercial banks in Africa, including the need to enhance financial reporting and compliance with regulatory requirements, increasing customer demands fro digital banking services and real-time access to financial info, the desire to improve operational efficiency, reduce cost and streamline accounting processes and the availability of more affordable and scalable CAS solutions tailored to the African market

Commercial Banks have been acknowledged as one of the powerful tool for the provision of banking services to both high and low income earners of the economy. Reason being that, she has the potential to improve users income and savings accordingly as well as improve assets accumulation and reinforce growth.

With the rapid growth of commercial Banks, it has become complicated working out things manually and it therefore led to the initiation of computers in performing accounting transactions. Todays modern technology brought into use computers, this technology is the application of science to gathering, recording, processing and communicating business with means of electronic media. Most common tool for application is the computer and it involves all transaction processing system, management information system, various support systems etc. The computer is a central force in the advancement of various organizations. The historical development of computer started with Hollerith punched card 1880, George Allen calculator and Charles Babbage’s creation of the difference engine.

Measuring and communicating economic information to permit informed judgement and decision by users of the information.

1.2) Statement of the Problem

For an organization to appraise it’s performance, it needs   important information that must be timely, accurate and useful to the users. This information must allow for quick comparison between current and previous years data, offer financial statement for use by both managers and stakeholders.

Prior to the introduction of computerized accounting systems, manual accounting was the popular method of accounting where the business had to hire a private or public accountant who would manually record transactions books and ledgers then prepare financial statements on paper. This brought about many problems as accounting practices were time consuming., monotonous, had no backup record in case of loss and prone to human error. With the awareness of information technology, manual accounting is gradually becoming outdated. Although most commercial banks have 100% computerized accounting systems, some still find it difficult to trace down errors and fraud, Adetayo et al (2009). This could be due to the fact that, those in charge of the computerized systems are not computer literates and so, face difficulties in using the computerized system.

Despite the fact that computerized accounting is advantageous ( some of these advantages include the fact that it is time saving , accurate and it is good in fraud detection) there are still private companies which have not implemented this system and this has eventually led to inferences of accounting malpractices( such as fraud), delay in preparing financial reports and misreporting of financial statements. There has been an increase in accounting problems associated with financial reporting, hence killing most businesses that fall victim of these circumstances. Financial reports produced by banks should be secured so that in the future it can be compared with past work so as to see if the organization is making progress or not.

So this research work has been carried out to evaluate the effects computerized accounting has had on the performance of commercial Banks in the Northwest and also suggest ways in which it can be improved.

1.3) Research Questions

1.3.1 The Main Research Question

 What is the EFFECT OF COMPUTERIZED ACCOUNTING SYSTEMS (CAS) ON THE PERFORMANCE OF COMMERCIAL BANKS IN THE NORTHWEST REGION OF CAMEROON?

1.3.2 Specific Research Questions

1. What is the effect of accounting software on the performance of commercial banks in the NWR of Cameroon?
2. What is the effect of IT literacy on the performance of commercial banks in the NWR of Cameroon?
3. What is the effect of quality financial reports on the performance of commercial banks in Cameroon?

1.4 Objectives of the Study

1.4.1 The Main Objective

To assess the effects of computerized accounting systems on the performance of commercial banks in the NWR of Cameroon

1.4.2 The Specific Objectives

1. To assess the effects of accounting software on the performance of commercial banks in the NWR of Cameroon
2. To evaluate the effect of IT literacy on the performance of commercial banks in the NWR of Cameroon
3. To examine the effect of quality financial reports on the performance of commercial banks in the NWR of Cameroon.