IMPACT OF AUTOMATED ACCOUNTING SYSTEM ON PAYROLL PREPARATION IN SOME SELECTED LARGE ORGANISATIONS

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IMPACT OF AUTOMATED ACCOUNTING SYSTEM ON PAYROLL PREPARATION IN SOME SELECTED LARGE ORGANISATIONS

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Globally, automation of accounting system plays an increasing important role in economy and society at large, of which computer applications knowledge is a pre-requisite in every profession, opportunities are enhanced, whatever be the nature of the profession chosen. The presence of this small box in day-to- day function is overpowering and it has become the backbone of all banking accounting systems. Business depends on computers to handle all kinds of accounting and bookkeeping jobs. Banks use computers to record money deposited and withdrawn. You can also book and plan your entire travel agenda, including your ticket booking through e-mail facility, Boyett et al., (2005). It is globally belief that the computers are able to provide useful information if properly fed with a reasonable input or it will result in “Garbage in Garbage out”. The use of computer to carry out a very wide range of activities for work, study and leisure has become part of our everyday life. It is no longer something that you may want to use if you are interested; rather like motor car it is an essential part of our lives, Loudon et al., (2001).

The primary objective of an accounting function in an organization is to process financial information about the activities of the organization and prepare financial statements at the end of the accounting period. The modern method of accounting is based on the system created by an Italian monk Fra Luca Pacioli. He developed this system over 500 years ago. This great and scientific system was so well designed that even modern accounting principles are based on it (deSantis, 2010).

Organizations seem to have realized that it is in their interest to run business processes while they are monitored by computerized accounting systems as opposed to manual given the great merits the former possess over the later. Accounting is a financial method used by businesses to collect, organize, process and summarize data for reports and statements. Accounting is used to keep track of business trends and to report on the relevant facts within the business. Computer and business Software allows more efficient processing and organization of data. Computerized accounting system refers to the integration of different component systems to produce computerized books of accounts and computer-generated accounting records and documents.

Computerized Accounting means that the “books” of a business are managed on a computer. Quick Books, for instance, would be an example of computerized accounting (there are many different software’s) Using Microsoft Excel to organize a business’ financial information is also a manner of computerized accounting. Accountants measure a business entity’s income, expenses and changes in resources. Back in the day, prior to the widespread use of spread sheet and computer applications, Accountants used journals and ledgers in which they recorded business transactions, hence, the term keeping the books. As computer applications became main stream, this keeping of the books accounts has gradually migrated into computerized spreadsheets. Gradually, accounting systems dedicated to this function were developed and the term Computerized Accounting was born.

Computer in commercial and industrial settings have been around for several decades. The banking industry computer has been used in various areas carrying out their day-to day activities through automated Teller Machine, electronic funds transfer, electronic data exchange, smart cards, MICR cheques, local area network, wide area work, point of sales system, electronic home and office banking, telephone banking, make cheque available program, computerized credit rating, daily calculation of accounts program, local accounting systems, CD accounting system, saving accounting system and safe deposit box accounting system. Computer has immensely aided in banking industry or baking sector in the areas of managerial position, sales department and other various department in the bank. The use of programmed decision making offers several important advantages to the firm, since the computer is potentially capable of making better programmed decision than the human user. One of the most existing things about the information and retrieving is that they are used oriented, Laura (2003).

Computerized accounting tends to involve dedicated accounting software and digital spreadsheets to keep track of a business or client’s financial transactions. It is a beneficial use of current technological advances. Not only has it revolutionized the traditional paper methods of accounting, but it has also created new types of accounting applications for business. Companies now create entire accounting information systems that integrate all business operations, including external suppliers and vendors. Computerized accounting systems have replaced manual-based accounting in virtually all businesses and organizations, providing accountants, managers, employees and stockholder’s access to vital accounting information at the touch of a button.

Computerized accounting systems automate the accounting process–improving efficiency and cutting down costs. And it tends to be more accurate, faster to use, and less subject to error than its manual counterpart. In today’s computerized, interconnected, global business environment, Computerized Accounting Systems became the ‘engine of growth’ in business organizations. It therefore involves the computerization of accounting information systems which is established in order to facilitate decision making. These are associated with a numbers of benefits like speed of carrying out routine transactions, timeliness, quick analysis, accuracy and reporting.

1.2 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 computerized 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.

Modern technology has brought about the use of computer system in all areas of our human endeavor’s in some organization and other African countries workers sees this as an attempt to replace them and to result them into mass retrenchment or lose their jobs, Iyabi (2007). They always believe that where computers are installed will require less human effort to perform the desired operation. In the advert of computers, the work of accountants and auditors has changed rapidly with the aid of special software packages; accountants summarize transactions in standard formats by financial records and organize data in special formants employed in financial analysis. Despite most high profile companies having 100% computerized accounting systems; there are still difficulties in tracking down errors and at the same time, time consuming, Adetayo et al., (2009). Given that business enterprise performance in various departments of some organizations has been persistently poor, the study intended to establish the factors behind this persistent negative situation. On the basis of this background the researcher was convinced that there was need for automated accounting system on payroll preparation in some selected large organizations.

1.3 OBJECTIVES OF THE STUDY

This study sought to know the impact of automated accounting system on payroll preparation in some selected large Organizations. Specifically, the study sought to;

i. examine the relationship between automated accounting system and the payroll preparation in some selected large organizations.

ii. establish the benefits of automated accounting system on payroll preparation in organizations.

1.4 Research Questions

i. What is the relationship between automated accounting system and the payroll preparation in some selected large organizations?

ii. What are the benefits of automated accounting system on payroll preparation in organizations.

1.5 Research Hypothesis

Ho: There is no relationship between automated accounting system and the payroll preparation in some selected large organizations

1.6 Significance of the Study

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

1.7 Scope/Limitations of the Study

This study is on the impact of automated accounting system on payroll preparation in some selected large Organization.

Limitations of study

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 Definition of Terms

Automated Accounting System: Automated or computerized accounting systems are important to businesses in various ways. The use of computers is time-saving for businesses and keeps financial information well-organized.

Payroll: A payroll is a company’s list of its employees, but the term is commonly used to refer to: the total amount of money that a company pays to its employees a company’s records of its employees’ salaries and wages, bonuses, and withheld taxes the company’s department that calculates funds and pays these.

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