A Comparative Analysis of Software Accounting Package System and Manual Accounting System
Chapter One
OBJECTIVE OF THE STUDY
The main objective of this study is a comparative analysis of software accounting system and manual accounting system. The study aims at ascertaining the following objectives:
- To evaluate whether frauds and forgeries are encourage in computerized accounting system i.e. software accounting system than the manual accounting system.
- To examine whether software accounting system can handle large volume of data than the manual accounting system.
- To study whether the use of software accounting system increases effectiveness and efficiency in organizations or companies than manual accounting system in reducing the amount of funds lost through frauds and forgeries.
- To examine whether software accounting system is capable of storing, retrieving, analyzing, processing, summarizing and reporting rapidly than manual accounting system.
- To show the operational and reporting system in both the manual accounting system and software accounting system.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
EVOLUTION OF MANUAL ACCOUNTING AND COMPUTERIZED ACCOUNTING
The historical aspect of accounting started with God when he says that every living soul must give account of his/her life at the last day. Going with concept, it means that the world we are in is a market place where we do buying and selling after which we give account of the business we have transacted. So you can understand that God ever approves the word “Accounting”. Accounting is the first and important law made by God which everybody must obey. The buying and selling business in this world is our service to God laws. From the above explanation, accounting can be referred to as the recording of transactions in books of accounts (i.e. book-keeping) in line with double entry principle which dated back to the 14th century when Italian merchants began to use the double entry system to record their transactions. The earliest known double entry records are the accounts of stewards of the commune of Genoa for the year 1340. An Italian monk, Luca pacioli published the first known text on double entry accounting. In his book summa di Arithmetica geometria proportioni et proportionalita (meaning everything about Arithmetic, Geometry and proportion 13 published in 1494,he included a section on double entry accounting entitled De computis et scripture. This section was later separately published in 1504 under the title in scuola perfetta dei mercanti, which in English means the perfect school of merchants. The double entry system quickly spread across Europe, particularly after the publication of Luca Pacioli’s summa. Due to its Italian origin, the system, in those days was known as the Italian method. The European writer subsequently started to improve on his work by stating the emergence of money as a medium of exchange has provided impulsion for the development of accounting and book-keeping. Thus, it became necessary to record business events on monetary aspect rather than on physical values. Furthermore, the industrial revolution of 18th century which bought about ample growth in the world trade and industry provided an important incitement to accounting and bookkeeping. The business has been continuous growth and expansion resulting in increased need for information through proper records. Before this era, business that the need for information was less required. The industrial revolution was in effect and the basis of the modern business enterprises ranging from partnership to joint companies. Therefore, business enterprises are thus described as a means or mobilization of funds and human resources. This implies the principle of accountability which marks a step further in the development of accounting and book-keeping. It is a 14 common practice nowadays that business enterprises, especially large ones who do collect millions of naira obtained from thousands of people (i.e. investors and lenders) and deploy them in operations extending throughout the country or even beyond, for the ultimate purpose of profitability. Thus, the result of successive innovations has its adaptations and modifications to the changing of business environment. In fact accounting has gone through many phases of changes due to changing socio-economic environment. Like any other discipline, it has been adjusting itself to changing requirements and will continue to do so in future as well as to promote social welfare hence, enabling its users to form rational as sound judgment and take appropriate decisions. Computerized accounting system is a well-known hi-tech modern device used in every walk of life in today’s world. It is a vital tool in the field of information system whatsoever it relates to management or accounting, engineering or technology, medicine or surgery, arts or drawings, music or movies, finance or investment, manufacturing or marketing, transportation or travelling, insurance or banking. It has, hence become essential in every sphere of life. With the advent of industrial revolution, a wide spectrum of change has been brought about and the business grew in size and complexity from the sole trading firms to the global corporations and MNCS (multi-national corporations) firm 15 single commodity to hundreds or thousands of products and varieties in them from localized operations to the globalized operation in the fields of production, finance, human resources and marketing. Hence it is impossible to manage and account for these activities without the help of any device, as large volumes of inter-related data emerge. It is, thus through this computerized system that a full-fledged information system can be designed which collects the required data, processes it with accurate, speed and precision and finally gives the results for that reasons. The growth of management theory and techniques, management accounting and its application theory in the production and distribution, changes in the organizational structure etc. has made it mandatory to switch over to the computerized information system to win over the business competitors and rivals. Computer system helps to analyze financial data from the past and forecast for the future for arriving at appropriate and correct decisions. It not only calculates but also projects trends in costs, prices, profitability analysis and product mix to meet the financial information needs for the users of account information. In 1968, Gary Dickson proposed a model of information system development, based on the organization structure and its information needs.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine a comparative analysis of software accounting package system and manual accounting system. Breweries Plc in Enugu state form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain a comparative analysis of software accounting package system and manual accounting system. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of software accounting package system and manual accounting system
Summary
This study was on a comparative analysis of software accounting package system and manual accounting system. Four objectives were raised which included: To evaluate whether frauds and forgeries are encourage in computerized accounting system i.e. software accounting system than the manual accounting system, to examine whether software accounting system can handle large volume of data than the manual accounting system, to study whether the use of software accounting system increases effectiveness and efficiency in organizations or companies than manual accounting system in reducing the amount of funds lost through frauds and forgeries, to examine whether software accounting system is capable of storing, retrieving, analyzing, processing, summarizing and reporting rapidly than manual accounting system and to show the operational and reporting system in both the manual accounting system and software accounting system.. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from staffs of breweries Plc in Enugu state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
From the study, software accounting system proves to be a better choice in handling data but the issue of fraud and forgery continues to be a major challenge to accountants and managers. Fraud and forgery is a security issue that is common to most software implementation which can be measured and reduced.
Recommendation
1) Migrating to software accounting system: recent experience has shown that manual accounting systems are no longer attainable in processing large volume of data or little volume of data during transactions. Therefore showing the necessity for companies to move over to software accounting system.
2) Software accounting system encourages speed in caring out various business objectives therefore organizations are recommended to switch over to software accounting system for their daily business activities in order to increase efficiency and effectiveness.
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