EXECUTIVE SUMMARY

This study was based on computerized accounting and financial reporting at SUPERIOR
SPIRITS PVT. LTD. The objectives of the study were; to determine the uses of a
computerized accounting information system, to find out the pros and cons of computerized
accounting to financial institutions, and to establish the qualities of financial reports
generated by computerized accounting system. The researcher used qualitative and
quantitative research designs with a sample of size 15 respondents. Both primary and
secondary data were used and the data collection methods were questionnaires, observation
interviews and investigative procedures. The study established that computerized accounting
had a great impact on quality of financial reports and that many financial statements were
generated through the computerized accounting system. The findings shows a strong
significant positive relationship between the variables (r=0.861**, p>0.01) which implies that
computerized accounting and financial reporting at SUPERIOR SPIRITS PVT. LTD are
strongly related. The computerized accounting system is of a great importance to the running
of the company but is also associated with its own weaknesses that hinder efficiency in the
company’s business environment. A continuous culture of utilizing a computerized
accounting system is recommended.

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 INTRODUCTION TO TOPIC

This study pursues the concept of computerized accounting and financial reporting. First and
foremost, where as accounting itself refers to the process of identifying, measuring and
communicating economic information to permit informed and rational decisions, Omonuk
(2009), computerized accounting is defined by Alan & Frankwood (2005) as a total suit of
components that together comprises all inputs, storage, transactions, processing, collecting
and reporting of financial transaction data. Computerized accounting system involves the use
of computers in processing accounting data into information to facilitate quick decision
making through timely preparation of financial reports and financial reporting in this case
refers to the way in which financial information is recorded, processed and conveyed to the
end users of this information in particular. In pursuit of the topic mentioned above, this
chapter brings forth the introduction to the research paper as it tackles the background of the
study, the statement of the problem, purpose of the study, study objectives, research
questions, the scope of the study in terms of geography, content/variables and time, and
eventually the significance of the study.

Background
Individuals and companies day by day hire accountants to help them carry out the
mathematical requirements of accounting and balancing of books. Before the introduction of
information technology into accounting, these accounting protocols were being performed
manually. However, today many accountants and non-accountants like to use computer
software to perform these duties, (Osmond, 2011).
Business owners use accounting to record, report and analyze their company’s financial
information and in doing this, companies often generate several pieces of financial
information from business transactions, and compile this information into general ledgers and
journals, (Osmond, 2011). Historically, accounting was a manual process using paper books
and documents for financial information. Business technology has created significant
advances in the area of financial management and accounting software.
Accounting information system being an asset of methods, people, procedures and devices
regularly used to process business transactions, Hermanson et al, (1987), information is
therefore much more useful when it is conveyed through a proper reporting system which
gives it good qualities such as accuracy and reliability among others and this can be achieved
by use of computerized accounting system.

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

Purpose of the Study

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

Scope of the study

1. Content scope

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

2. Geographical scope

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

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

3. Time scope

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

Significance of the study

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

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

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

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

OBJECTIVES

The objectives of the study were:-

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

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 LITERATURE REVIEW

Introduction
This chapter discusses and reviews similar or related researches and literature published by
other authors’ articles, books, journals, reports and previous dissertations related to the topic
in question and its variables in order to give an insight into the study as well as expressing the
need for this study.
Accounting
As many professional accountants and auditors state - accounting is a language of business
which is accepted in all developed and developing countries, but what exactly is accounting?
Well, accounting has been defined by many authors in various ways. According to Osmond,
(2011), accounting is the way business owners manage their company’s financial information
in orders to make better decision regarding their companies.
Meigs & Meigs (1986) also defines accounting as the art of measuring, communicating and
interpreting financial activities. I do agree with both authors since the meaning derived out of
their ideas are similar and state the actual art behind accounting.

History of Accounting

Osmond, (2011), states that; Accounting is several centuries old and that Luca Pacioli, an
Italian friar from San Sepulcro, is the father of accounting. Pacioli is credited with developing
the double entry bookkeeping system in 1494 using debits and credits to manage a company’s
financial information. His system included ledgers and journals where financial information
was kept relating to business transactions. Pacioli’s accounting system is still in use today,
even by the various computerized accounting programs in the industry.

Computerized Accounting
Before we can explore studies about computerized accounting, there is need to know what
exactly a computer means. Waburoko, (2001) define computer as a general purpose machine,
which can receive, store, manipulate and output information. It is therefore agreeable that a
computer is an electronic device that operates and runs under the control of instructions or
commands stored in its own memory unit, accepts data through input, stores it, processes the
data and produces output.

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Computerized accounting is defined by Alan & Frankwood (2005) as a total suit of components
that together comprises all inputs, storage, transactions, processing, collecting and reporting of
financial transaction data.
Computerized accounting. Jennifer VanBaren (Computer based Accounting: 1997) defines
computerized accounting as the accounting done with the aid of a computer. It tends to
involve dedicated accounting software by digital spreadsheets to keep track of a business’ or
clients financial transactions. Computerized accounting involves the use of computers to
handle large volume of data with speed, efficiency and accuracy aimed at overcoming the
fundamental however, does not mean change in principle, the principle of accounting remains
the limitations of manual accounting and hence producing quality and reliable work same
with day books ledgers double entry only that the accounting processing is done by computer
packages (ACCA, 2007).

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

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

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

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

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

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

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

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

Components of Computerized Accounting Software

Accounting softwares are used to implement computerized accounting system. The

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

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

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

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

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

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

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Benefits of Computerized accounting systems:

Different scholars have expressed views on computerized accounting packages as below: A

computerized package can quickly generate all types of records needed by management. Data
processing and analysis are faster and more accurate which meets the manager’s needs for
accurate and timely information for decision making (Mc Bride, 2000).

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

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

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

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

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

Organization and Accuracy: A Computerized Accounting System enables businesses to

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

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

Distribution: Computerized Accounting Systems allow companies to distribute financial

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

Speed and accuracy. : With computerized accounting, you reduce the amount of time you
have to spend monitoring and organizing your accounts. The information will be available at

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your fingertips, and systemized, so that there are no anomalies, there will be no information
missing. This will help you improve your business efficiency in areas such as customer
relations, production, and employee management. You will have the potential to increase
your profits and improve general business efficiency.

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

Improvement in operational efficiency: A computerized accounting system eliminates

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

Compatibility: The implementation of a computerized accounting system also allows

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

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Storage and Retrieval of information. Sangster (Computerized accounting 2002), a
computerized accounting system can store many years of information. If the audit requires it,
the employer can access information dating from many years back. If, during the audit, the
auditor spontaneously requests an accounting document, the employer can quickly retrieve it
from the system instead of rummaging through storage boxes to locate hard copies. The
majority of computerized accounting systems have features such as order-entry and
generation of associated invoices. The employer can create accounts for their clients, storing
their names, addresses, orders and invoices for as long as necessary. A computerized system
also allows the employer to make and print account statements. Further, many accounting
systems have a payroll feature, which enables complete payroll processing, including the
generation and printing of checks and reports.

Reduces fraud and Embezzlements: Computerized accounting software makes it difficult

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

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

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

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

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

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

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

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

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

accounting systems. Posting transactions to the ledger, the principle of double entry can
largely be automated when done through the use of computerized accounting system.
Although computerized accounting is highly beneficial to an entity, it is worth noting that it is
dogged with a couple of pitfalls some of which are shown as below;
Meigs (1986) stresses that there is a risk of improper human intervention with the computer
programs and computer files. Employees in the organization may temper with the computer
programs and computer based records for the purpose of deliberately falsifying accounting
information. This may result into distortion of information that would essential be for
decision making. According to Wahab (2003), another threat and limitation of computerized

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system is the computer virus. Where a computer virus is a computer code (program) specially
designed to damage or cause irregular behavior in other programs on the computer. The
adverse effect is that it may lead to breakdown of the hardware thus leading to loss of
valuable information (for instance in financial institutions information such as customers’
accounts, previous financial report, information pertaining loans advanced among others)
already saved on the computer.

Limitations of Computerized accounting.

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

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

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

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Computer Virus: The major stressing challenges in the whole world are the problem of
computer viruses. S. NORA (Computerization of Society 1981), affirm that computer viruses
usually infect systems introduced via external storage devices which have already been
infected. This has led to loss of data most of which is very costly to get back as it will need
experts who are invited to install and design new packages. System security concerns can
pose limitations on accounting software. Besides worrying about viruses and worms, small-
business owners also should be concerned with unauthorized access of computerized
accounting data. IDs and passwords are common minimum security measures businesses can
use to protect the accounting software against intrusion, but they may not be enough.
According to Kiplinger magazine, hacking is very common with small businesses; however,
only one in five small firms owns antiviral software and over half don't use encryption on
wireless connections.

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

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

Manual versus Computerized Accounting

Accounting is an important part of every company. Businesses are required to keep books on
their credits and debits. So which is best for your business idea - people or software? Well,
Weber, M. (2011) emphasizes that every company applies accounting because it is generally
accepted that companies have to reveal certain financial and management information to the

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government and public users and of course because accounting is an indispensable tool in
business decision-making process, it has led to the development of information technologies
and many computer products (software in terms of accounting packages) that make
accounting as easy as ABC for those who use them. From this point accounting can be
divided into two basic categories: those which apply manual accounting and those which
prefer computerized accounting systems. This topic therefore targets the main features of
manual and computerized accounting, their benefits and shortcomings, and their comparison.

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

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

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

Benefits of Computerized Accounting over Manual Accounting

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

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

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

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

Level of output : Magdalene M, (2010) also argues that computerized accounting can
actually handle thousands of calculations simultaneously and accurately as compared to
manual accounting where by transactions are handled one at a time and even needs much
time to do that as well as being characterized by human errors and mistakes in calculations

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which may eventually affect the final output of information and hinder effective decision
making.

Financial Reporting and its Qualities

According to the Babylon dictionary (1997), financial reporting is the process of preparing
and distributing financial information to users of such information in various forms.
Emphasis is made that the most common format of formal financial reporting are financial
statements, which are actually prepared in accordance with rigorously applied standards
defined by professional accounting bodies developed according to the legal and professional
framework of a specific locale.

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

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

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

Indira (2008), emphasized that financial reports should provide information about financial
performance during a period management discharge it’s stewardship responsibility to owners.
It should likewise be useful to managers and directors themselves in making decisions on
behalf of the owners. He argues that accounting information is very necessary if decisions are
to be made accurately and rationally by the various interested parties or users of financial
information. These are broadly classified into external and internal users. Where internal
17
users include management and employees while the external users include donors,
shareholders, creditors, government, competitors and general public.

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

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

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

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

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

The end product of financial reporting is a financial report. This financial report generally
consists of:
 Statement of financial position at the end of the period

18
  Statement of comprehensive income for the period
 Statement of cash flows for the period
 Notes to the accounts (Greuning,2006)
Financial reporting is largely an effort to assess financial performance, that is, how well or
how poorly an entity performed with money entrusted to it, (Sacco, 1998). Financial
decisions include raising and spending money as well as making promises that have financial
consequences. Financial reporting is considered a part of accountability for financial
decisions. Exactly, the quality of financial reporting depends upon how the financial data is
handled right from the point of data collection to the processing stage that leads to the
production of meaningful financial information in terms of reports. As noted by Sacco,
(1998) two major models are considered in this context, manual or computerized accounting.
With either system, many types of financial reports can be generated but a considerable
amount of attention is given to the system that generates financial reports with the stated
qualities below:

Characteristics of quality financial reports

1) Understandable: Naturally the information produced must be understandable. A guideline is

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

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

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

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

decision. It is important to report and disclose information that is relevant for anyone to make
a decision. Accounting information must also deal with things that are significant enough to
impact decisions that are made by those who use the financial reports (Marquez,2011). Since
financial statements are for users to make economic decisions, the information must be
relevant to the decisions that those users have to make. . Whether the information affects the
19
 economic decisions of users (materiality) and the nature of information affect relevance as
well. Materiality is one of the assumptions used in financial reporting that contributes to
relevance Derrell V. (2010)

3) Reliable: also agree with Frank and Alan (1999) that reliability is regarded as one of the main
qualities. People must be able to depend on the figures and the facts printed on your financial
statements and to make sure that they are true. It must be verifiable. Free from error. E.g. you
can always look at a receipt to verify the amount of an expense. As you already know, when
you get audited, you must verify all transactions that occurred in your business.

4) Comparable & Consistent: Furthermore, comparability relates to the ability of information

to be compared with those of other similar companies, without comparability the accounts
would be of little use Frank and Alan (1999). General Accepted Accounting Principles
(GAAP) allow for certain choices of different accounting methods for depreciation and
inventory management. If a financial statement from one company that was prepared
differently from other companies in the industry, or even prepared differently from previous
statements, it is likely that the users will not be able to compare the statements among
companies and over time.
Comparability adds a degree of transparency to financial statements by allowing comparisons
over time and among entities. Comparability is affected by consistency of presentation and
disclosure of accounting policies—particularly when comparing items among entities that
might use different (but equally valid) methods like straight-line/ reducing balance
depreciation or FIFO/ average cost method. This indicates that comparable financial
statements are not necessarily uniform, but merely allow suitable comparisons. Derrell V.
(2010)

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

According to Turner (2000), neutrality is the demand that accounting information should not
be selected to benefit one class and neglect to other. Reliable information is verifiable, neutral
and has representative faithfulness. Relevance is also a very important characteristic of
quality. Frankwood indicates that financial information is relevant if it is capable of making a
20
difference in decisions made by helping users to form predictions about the outcomes of the
past, present and future events either to confirm or correct prior expectations. Comparability
is another characteristic of quality information. Frankwood (1999) also stresses that users
must be able to compare the financial statements of the enterprise over time in order to
identify trends in its financial position and performance.

Relationship Between Computerized Accounting and Financial Reporting

Computerized accounting on financial reporting is linked to benefits applying computer

system while generating financial reports. Computerized accounting systems have been
credited for their quick processing speed and large storage capacity. Using computerized
accounting system ensures up-to-date account balances are available any time for
management to make quick decisions (Lancouch, 2003).

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

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

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

Conclusion

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

of information continue to change, the accounting system should become flexible enough to
meet the need of users. Automated generation of accounting document like invoices, cheques
and statement of accounting with the larger reduction in the cost of hardware and software
and availability of user-friendly accounting software package with relative cheap

21
maintenance. In order to promote quality of financial reporting, there is need of feedback
regarding the way in which user determines quality (Mangiameli et al, 1999). Financial reports
need provide feedback in order to prepare good reports enable constantly updating the system.

COMPANY PROFILE

About

Superior Spirits is a young, customer oriented dynamic company dealing primarily in

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

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

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

Superior Spirits Private Limited's Annual General Meeting (AGM) was last held on 12

22
September 2018 and as per records from Ministry of Corporate Affairs (MCA), its balance
sheet was last filed on 31 March 2018.

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

Basic Information

Nature of Business Exporter

Additional Business Manufacturer
Trader

Total Number of Employees 51 to 100 People

Year of Establishment 2011

Legal Status of Firm Private Limited Company
Annual Turnover Rs. 100 - 500 Crore

Company Detail

CIN U23209DL2011PTC222050
Company Name SUPERIOR SPIRITS PRIVATE LIMITED
Company Status Active
RoC RoC-Delhi
Registration 222050
Number
Company Category Company limited by Shares
Company Sub Non-govt company
Category
Class of Company Private
Date of 07 July 2011
Incorporation
Age of Company 8 years, 1 month, 30 days
Activity Manufacture of refined petroleum product

Mission, Vision & Our Values

23
Our Values:

Customer First Performance focus Valuing People Nurturing Relationship

Deliver quality Ensure an Provide a Culture Cultivate mutually
products & services environment that that attracts and beneficial and ethical
by adopting best fosters teamwork and nurtures the best relationships
practices rewards performance talent

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

Our Mission:
To become an efficient and reliable business partner by providing exceptional customer
services and quality products at fair price.
24
PRODUCTS
Extra Neutral Alcohol or ENA (Ethyl Alcohol)

Derived From Sugar Cane Molasses

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

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

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

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

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

Extra Neutral Alcohol or ENA (Ethyl Alcohol)

25
Derived From Grains

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

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

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

1) Packaging

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

2) Specification

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

Ethyl Acetate (Etac)

26
Ethyl acetate is the ester of ethanol and acetic acid.
Ester - Formed by reaction between an acid and an alcohol with elimination of water.

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

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

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

Liquid Glucose

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

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

adjuncts in brewing industry.

1. Packaging

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

2. Specification

o Liquid Glucose

Corn Starch

27
Corn starch, is the starch derived from the corn (maize) grain. Corn starch is a popular
food ingredient used in thickening sauces or soups, and is used in making corn syrup and
other sugars.
General Application: Corn starch is used as a thickening agent in liquid-based foods, as an anti-
caking agent in powdered sugar.

1. Packaging

o Available in 25 kg, 50 kg Bags.

2. Specification

o Corn Starch

Methanol

Methanol, also known as methyl alcohol, wood alcohol, wood naphtha or wood spirits, is a
chemical with the formula CH 3OH. Methanol acquired the name "wood alcohol" because it was
once produced chiefly as a byproduct of the destructive distillation of wood. Modern methanol is
produced in a catalytic industrial process directly from carbon monoxide, carbon dioxide, and

28
hydrogen.
Methanol is the simplest alcohol, and is a light, volatile, colorless, flammable liquid with a
distinctive odor very similar to, but slightly sweeter than, that of ethanol (drinking alcohol). At
room temperature, it is a polar liquid, and is used as an antifreeze, solvent, fuel, and as a
denaturant for ethanol. It is also used for producing biodiesel via trans esterification reaction.

General Application: Methanol is a toxic, colourless and flammable liquid used in manufacture

variety of chemicals, including formaldehyde and acetic acid.

1. Packaging

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

2. Specification

o Methanol Purity min @a 99.90% v/v

Rice Gluten

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

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

1. Packaging

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

2. Specification

o Rice Gluten

Denatured Spirits
29
Good Solvent
General Application: Various aerosols (Personal care products, perfumes, air fresheners),
plasticizers.

As a good solvent, ethanol is used in the production of some lacquers, paints and ink for
the printing industry. It is an intermediate for the production of ethyl esters (like ethyl
acetate), which in turn are used in plastics, fumigants, resins, and even for the production
of synthetic rubber.

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

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

1. Packaging

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

2. Specification

o As per customer requirement

Indian Made Foreign Liquor

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

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

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

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

31
  State House Vodka: Exotic Vodka of your choice which has been crafted retaining
the natural character and with fusion of perky flavours.

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

Quality Policy of Superior Spirits

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

 Stability, dynamism and growth to all its business associates

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

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

ISO 9001: 2008 Certified Company

32
 Research Methodology

Introduction
This chapter brings forward the methodology of the study and in doing this, the discussion here
under majorly involves the study design, area of study, the population studied, sample size and
the selection method, the data collection tools or methods, way of data management, data
processing and data analysis. The researcher also points out some of the challenges or limitations
that may come up during the study process.

Study Design
The researcher used qualitative and quantitative research tools based on the findings of the
questionnaires and interview guides that were used to gather the necessary data.

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

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

Sample Size and Selection Method

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

33
 Size

20% 13%

Management Staff
Accounting Staff/Tellers
Support staff

67%

The purposive technique above was used in selection of respondents not only for its’ time and
money saving but also helps in selecting of typical and relevant cases necessary to equip the
study with the required information. Besides, the simple random sampling methods were used
to select a sample of respondents without any bias from the accessible population. Each party
of the target population in this case has an equal opportunity of independence as far as
expression of their opinions is concerned.

Sampling and Sampling technique

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

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

Source of Data

1) Primary Data

34
Primary data was obtained through the use of self-administered questionnaire to respondents
following systematic and established academic procedures, as suggested by Nunnally and
Bernstein (1994). Primary data was collected from the respondents that were chosen from
Superior Spirit Pvt. Ltd..

2) Secondary Data

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

Data collection method

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

1. Questionnaire.

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

2. Interview.

35
Here, questions were determined beforehand while others arise during the course of the
conversation. The interviews were done on individual-oriented basis to allow expression of
personal view points. The researcher used face to face interviews because of the following
reasons; provision of firsthand information, rich data collection, cost effective, speedy and
ability to clarify the questions, clear doubts and could add new questions where it was
necessary

3 Key Informant Interviews

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

4 Documentary Analysis

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

Data Processing
Collection of data researched was followed by sorting, data arrangement and scrutiny for any
arising inconsistencies, so as to obtain an objective and reasonable judgment.

Data Analysis
Data analysis in this case was done quantitatively with statistical techniques such as the statistical
package for social scientists. The use of table, frequencies and percentages was employed in the
analysis so as to ensure accuracy, adequacy and completeness of the study.

Analysis & Interpretation

Introduction
36
 The following chapter reports on the findings of the study that was carried out to evaluate
the strength of the computerized accounting system effectiveness used by Superior Spirit
Pvt. Ltd. , to find the pros and cons of computerized accounting system effectiveness to
financial institutions, to establish the qualities of financial reports generated by
computerized accounting systems effectiveness and to establish the relationship of
computerized accounting system effectiveness and financial reporting in financial
institutions.

 Findings on the uses of a computerized accounting system.

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

its operations.

Response Frequency Percent Valid Percent Cumulative

Percent
YES 15 100 100 100
NO 0 0 00 100
Total 15 100 100
Source: Primary Data 2019
120

100

80

YES
60
NO
Total
40

20

0
Frequency Percent Valid Percent Cumulative Percent

Table 1 above indicates that all the respondents (100%) are in agreement that the company
actually runs and maintains a computerized accounting system for its operations. This
positive response is of great significance to the study since it enabled deeper research into the
topic in question.

37
Table 2: Responses showing what major tasks are performed by the computerized
accounting system.
Major Response (Tasks) Frequency (out of 15) Percent

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

Data security(password protection)

Reporting (financial statements)

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

Data summary

0 20 40 60 80 100 120

Table 2 above is showing the major tasks stated by the majority of the respondents .It is also
evident by the percentage differences above that the respondents mostly appreciate the ability
of the system to carry out data entry (80%), security (86%) and production of financial
statements or reports also standing at a percentage of 86%.

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

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

38
 Frequencies out of 15

Income statement

Statement of cash flows Frequencies out of 15

Statement of financial position

Statement of comprehensive income

12 13 14 15

The research also aimed at finding out what type of financial statements are produced by the
computerized accounting system and as we can see in table 3 above, are the various reports of
the financial kind that the respondents pointed out during the study. All the financial
statements named above rank highly in percentages of interviewee responses. This reveals
that the stated financial statement (Statement of comprehensive income, Statement of
financial position, Statement of cash flows and the Income statement), are the most
commonly generated financial reports produced.
As seen above, the study findings on the use of a computerized accounting system and data
entry, processing and reporting are paramount. In the first case, we can reveal that the case
study actually employs the use of a computerized accounting system for its operations as per
the findings of the research and the tasks performed by the system among other found out
include those summarized in table 3 above. While the system performs several tasks in the
bank, the end results zeroed to financial reports generated by the system as shown in table 3
above.

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

Table 4: Responses, on the pros of a computerized accounting system.
Response (pros) Frequencies (out of 15) Percentage (%)
Risk management 12 80
User friendly 14 93
Easy communication (funds 14 93
transfer)
Easy balancing of daily transactions 14 93
Effective auditing 14 93
Speed 15 100

39
 Time saving 15 100
Source: Primary Data 2019

Frequencies (out of 15)

Percentage (%)

Time saving

Speed

Effective auditing

Easy balancing of daily transactions

Easy communication (funds transfer)

User friendly

Risk management

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

Table 4 above shows the advantages of a computerized accountings system as per the study
carried out. However, among the several advantages pointed out, those shown above are the
most prominent as reflected by their high percentage responses. It is therefore clear that the
system actually performs its operations very well as far as auditing, balancing,
communication, user friendliness, speed and the time saving factor as per the high percentage
of response on these factors shown in the table thus guaranteeing effectiveness and efficiency
of business operations.

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

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

40
 Frequencies
12
8
4
0
ed s d s re
pe os io in ilu
s tal per stra fa
er da g e m
ind nd in
in Ey ste
h a a y
rs ts tr fs
ute r ea o ng eso
p th L c
co
m us an
d ir Ch
Ol rv
ute
p
o m
C

Earlier on, the study was able to find out a number of appreciations of the system; however,
the respondents were also keen on stating some disadvantages of the system as shown in table
5. It is also important to note that there were not really many disadvantages revealed by the
research as shown on the table above. This does not only show that the system is of higher
advantage to the bank but it is also notable that most of the system cons regardless of their
response-percentage variances, are not of a financial nature and actually contribute less to
disrupt the effectiveness and efficiency of the financial operations of the business.

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

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

Manual Accounting Computerised Accounting

100
90
80
70
60
50
40
30
20
10
0
Frequencies Percentage (%)

41
From the findings, it is clear that all the respondents interviewed, prefer computerized
accounting to manual accounting. This is seen in the percentage differences shown in table 6
above, with computerized accounting standing at 100% and manual accounting at 0% of
preference by the respondents. This shows that the use of a computerized accounting system
is much more effective and efficient as compare to the manual accounting option, as far as
business operation, running, management and reporting is concerned. Much as the
respondents stated their independent preferences in table 6 above, the researcher went
forward to find out the reasons for the preference chosen above. Eventually, computerized
accounting became the most outstanding option and the reasons for its preference as per
response, are shown in table 7 below.

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

Frequencies Percentage (%)

93
Time saving and speed
14

73
Easy tracking of transactions
11

60
Simplifies work
9

Responses on table 7 above show that computerized accounting is much preferred instead of
manual accounting because of the latter’s aspects of less paper work, the ability to easily
track transactions, simplifying of work and the time saving factor, which are all key to
today’s business operations

 Finding on the qualities of Financial Reports generated by a Computerized

Accounting System

42
In this section, the researcher aimed at finding out from the respondents, the qualities of
financial reports, how often the respondents access the financial reports and whether
transactions that lead to the production of these reports pass through authorization, as shown
in the findings below.
Table 8: Showing findings on what the qualities of financial reports generated by a
computerized accounting system are.
Response (qualities) Frequencies Percentage (%)
Comparable 11 73
Understandable 12 80
Consistent 14 93
Reliable 14 93
Material 14 93
Source: Primary Data 2019 (N=15)

14
12
10
8
6
4 Frequencies
2
0
le
ab le t
pa
r
dab en e
n is st bl l
Com
r sta n le ia eria
de Co R at
n M
U

Table 8 above, shows the qualities or characteristics of a computerized accounting system

that the researcher was able to find out from the respondents. The findings above are majorly
solid to the aspects of these financial reports being consistent, reliable and material as
indicated by their high response percentages of 93% above. This shows that the system is not
only accurate as far as calculations of figure that appear in the reports are concerned but is
also produces trustworthy results and cannot be manipulated when it comes to reporting. It is
also important to note that the aspects of materiality, consistency and reliability as pointed
out above, among other qualities of reports generated through computerized accounting is
concerned, are the major weaknesses of a manual accounting system and it is the reason as to
why financial reports generated in a computerized manner are much more preferred as
compared to those generated the manual way, which is actually an outdated system of
operation.

43
Table 9. Chart 1: Showing findings on how often the respondents’ access financial
reports.

How to get access to the financial reports

percentages of the respondents

Source: Primary Data 2019

In order to find out whether the respondents have access to financial reports, it necessary to
find out how often they get access to these reports. As a result, the findings shown on table 9
above indicate that actually 93% of the respondents have frequent access to the reports. This
also indicates that the respondents’ opinions as far as financial reports are concerned are
articulate.

Table 10: Showing findings on whether transactions pass unauthorized and why.
Response Frequencies Percentage (%)
YES 0 0
SOME 15 100
NO 0 0
Total 15 100
Source: Primary Data 2019 (N=15)

44
 16
14
12
10
8
6
4
2
0
YES SOME NO Total

Frequencies

All companies have got different and various modes of operation as far as supervision and
chain of command are concerned. It is right from the beginning point of a single transaction
that a company will either make a gain or a loss that eventually has to appear in the periodic
financial statements. In this case, every company treats their chain of transaction differently
and with this factor in question, the study deemed it necessary to find out the authority of
transactions in the case study where respondents were meant give their independent opinions.
However, from the findings, it is clear that some transactions may pass by authorization and
others pass unauthorized. The reasons given for this option all zeroed to one conclusion that
transaction differ in nature especially in terms of the amount of money the transaction
requires.

Table 11: Shows correlations between computerized accounting effectiveness and

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

45
 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Computerized accounting Financial reporting

**.Correlation is significant at the 0.01 level (2-detailed)

From the table above, findings shows a strong significant positive relationship between the
variables (r=0.861**, p>0.01) which presupposes that if management of Superior Spirits Pvt.
Ltd ensures proper computerized accounting, the quality of financial reporting will surely be
increased by 86.1%.Therefore 13.9% is the gap that needs to be closed by Superior Spirits
Pvt. Ltd and this is majorly due to short falls of the computerized accounting system.

FINDINGS & INFERENCES

Introduction

This chapter presents a summary of major findings on computerized accounting and

corporate fraud and the relationship between them, gives conclusion, recommendations based
on the findings and areas for further research.

Discussion of major findings from the Study

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

46
 Quick Financial Reports: The researcher found out that through computerized
accounting system, financial reports can be generated quickly. This side with
McBride (2000) view that computerized accounting system can generate different
types of reports needed by management for instance profit and loss reports, and VAT
reports among others. It was observed that the quickness in generation of the reports
is due to the fact that through computerized accounting, data processing and analysis
are faster and more accurate hence managers can instantly access different
information which leads to easy and quick decision making.

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

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

 Accuracy and Efficiency: Due to expansions, business transactions increase and

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

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

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

 Minimized errors: The researcher observed that with computerized accounting

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

47
  Easy Auditing: The researcher was informed that when external auditors come, there
work is simplified because all sets of transactions are easily availed to them hence
saving time and costs.

SUMMARY OF FINDINGS

 To determine the use of a computerized accounting system. The results from the
study confirm that computerized accounting performs several unique tasks in a
company which are satisfactory. This is indicated by the tasks noted down by
respondents in the questionnaire on this variable.
 To find out the pros and cons of computerized accounting to financial
institutions: The findings revealed that computerized accounting is not only
advantageous but is also associated with some weaknesses. However, the study results
indicate that advantages of a computerized accounting are much more paramount than
its disadvantages. This reflects a positive response in the adoption of the use of
computerized accounting.
 To establish the qualities of financial reports generated through computerized
accounting. The study findings also identified a number of qualities or characteristics
of reports generated through computerized accounting. It is evident that most of these
qualities are unique to those of the reports generated through manual accounting, thus
making the latter system much preferable

LIMITATIONS

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

 Cost of the research/study: just like any other study, costs are normally unavoidable and
these may include, transport costs, airtime costs, typing, printing and binding costs among
others that may come up unpredicted. However, as far as costs are concerned, the researcher
will have to acquire soft loans from friends and relatives so as to meet the costs of the
research.
48
  Time required to carry out the research: the time required to carry out the research is not
adequate, given unpredicted and uncertain happenings that may hinder timeliness such as
delays and bad weather which the researcher definitely has to bare with and try as much as
possible to work longer hour in order to compensate for the lost time.

 Uncooperative respondents: as usual, not every respondent during research is completely

willing to cooperate positively towards the demands of the researcher, some are even hostile.
However, giving up on the respondent will only hinder the acquisition of the necessary
information, so the researcher will not get tired as far as wooing the respondents to cooperate
is concerned.

RECOMMENDATIONS AND CONCLUSION

RECOMMENDATION

1) To determine the uses of a computerized accounting system: I strongly recommend that

financial institutions should continuously adopt a culture of utilizing computerized
accounting systems that provide easy preparation of financial reports. As seen from the earlier
chapter, computerized accounting systems perform enormous tasks which if performed
correctly provide the company with accurate, efficient and timely reports.

2) To find out the pros and cons of computerized accounting to financial institutions:
The computerized accounting system has got its own strengths and weaknesses while in
operation. However, the study findings show that the system is actually more of an asset than
a liability to the company’s business operations and it would therefore be necessary to
recommend that other financial institutions that have not yet implemented this system, get to
adopt the idea of establishing it so as to improve on operations in terms of effectiveness and
efficiency.

3) To establish the qualities of financial reports generated by a computerized

accounting system: In the business world of a financial nature, daily financial operations
have reported several weaknesses such as errors and intentional figure manipulations being
common to financial reports generated through the manual accounting system. However, the
introduction of a computerized accounting system as far as the study was concerned, brought
49
with it qualities of financial reports that are very unique to those reproduced manually. This
gives a strong stand for a company that is in need of smooth operations and reliable reporting,
the computerized accounting system is recommended.

CONCLUSION

1 To determine the use of a computerized accounting system.

From the findings, response is high that the company runs its financial operations, right from
the beginning point of data entry, data processing and security to the end point of data
reporting of a financial nature in a computerized manner. It is therefore fair to conclude that
Superior Spirit Pvt. Limited actually make use of a computerized accounting system.

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

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

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

system.

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

APPENDIX 1 (QUESTIONNAIRE)

50
QUESTIONNAIRE ON COMPUTERISED ACCOUNTING AND FINANCIAL REPORTING

Dear respondent,

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

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

Thank you.

SECTIONA: Background of the respondent

1. Sex

a. Male

b. Female

2. Age of respondent

a 15-30

b 31-40

c 41 and above

3. Time spent working with SUPERIOR SPIRITS PRIVATE LIMITED

a) 1 year1 Month – 1 Year

b) 1 - 2
c) 2– 3
d) 4 and above

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

5. Department

a). Procurement b. b) Information and stores

c) Administration d) Sales

SECTION ONE: THE USE OF A COMPUTERIZED ACCOUNTING SYSTEM

51
1. Does your organization/company employ the use of a computerized accounting system?
(a)Yes
(b) No

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

………………………………………………………………………………………………

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

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

SECTION TWO: THE PROS AND CONS OF COMPUTERIZED ACCOUNTING AS

FAR AS FINANCIAL REPORTING IS CONCERNED.

1. What are the advantages of computerized accounting systems?

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

2. What are the disadvantages of computerized accounting systems?

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

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

1) Computerized accounting
2) Manual accounting

52
3.1 Please give reasons for your preference ticked above:
…………………………………………………………………………………………………
……

SECTION THREE: THE QUALITY OF FINANCIAL REPORTS GENERATED BY 30

COMPUTERIZED ACCOUNTING SYSTEMS.
1. What are the qualities or characteristics of financial reports generated by the computerized
accounting systems in your organization?
......................................................................................................................................................
......................................................................................................................................................
2. How often do you get access to the financial reports?
Once a year Frequently Never

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

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

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

REFERENCES

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

Inc. 200 Brickstone Square Andover, USA

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

study of Post Bank

53
3. Darrell Victor 2010: Qualitative characteristics of financial statements: An overview. Helium,
Inc. 200 Brickstone Square Andover, USA

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

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

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University.

9. Marquez Comelab: Qualities of useful financial reports. Retrieved 17, March, 2011 from
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10. Mary Magdalene, (2010). Comparison Between Manual and Computerized Accounting,
Retrieved April, 19, 2011, from EzineArticles.com. http://www.accountingproviders.com

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

Experience_com.mht

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

13. Omonuk J.B. (2009), Fundamental Accounting for Business. (Practical emphasis).
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14. Osmond V, (2011): Manual versus Computerized Accounting Systems. Retrieved April, 24,
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systems.html
15. Singil, C. (2002): Risk Management in Banks

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

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

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55
.

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

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

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

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