A CASE STUDY OF FIRST BANK NIGERIA SAGAMU BRANCH
This chapter contains the background, the problem statement, scope of the study, general objective, specific objectives, research questions, significance of the study and the conceptual framework to the study.
1.1 Background to the study
This study is about the role of computerized accounting system in processing financial statements. It focused on First Bank Nigeria Nigeria Ltd, Sagamu Branch as a case study.
Computerized Accounting System is defined as a computer based system which combines accounting principles and concepts as well as the concept of information system to record, process, analyze and produce financial information to its users for making economic decisions (Galina’s et al, 2005). A computerized accounting is one of the database-oriented applications wherein the transaction data is stored in well- organized database. The user operates on such database using the required interface and also takes the required reports by suitable transformations of stored data into information. Therefore, the fundamentals of computerized accounting include all the basic requirements of any database-oriented application in computers.
The processing of financial statements is the way of summarizing final accounts for publication. Final accounts are summarized and reported to the shareholders or investors in order to help them make informed economic decisions and even know their returns on capital. The four main financial statements that a company should publish are, statement of comprehensive income which basically reports sales, cost of sales, gross profit, operating expenses and the net profits; statement of financial position which consists of data related to assets, capital and liability; statement of cash flow which comprises of the inflow and outflow of cash and cash equivalents and statement of changes in equity that reports the retained earnings added to the capital employed and the dividends paid to the shareholders.
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 accounting is based on the system created by an Italian monk Fra Luca Pacioli. He developed this system over 500 years ago. This great scientific system was so well designed that even modern accounting principles are based on it (deSantis, 2010)
The study was conducted to find out the major causes of computerized accounting system failure in the financial institutions which sometimes causes a delay in processing the financial statements and it also came with recommendations that provided a basis that the bank could base on to find a solution to the above mentioned problem. As a result of system failure, the bank sometimes resorts to manual processing of financial transactions and statements which is relatively slow, prone to errors and hence causing congestion of the customers at the bank. Therefore, the research recommended solutions to the study problem. This can help in speeding up the process hence resulting into timely processing of financial statements. For this reason, the above problems always cause a break down in the communication systems of the bank; therefore, the research provided a permanent solution to the problems thus justifying its relevance.
In Nigeria, before the introduction of computerized accounting system, processing of financial statements was manually done by all financial institutions which were prone to errors and inconsistent. This is because the system was associated with errors since data was collected, analyzed, journalized and a trial balance and balance sheet were prepared (Meigs, 1986).
A computerized accounting is one of the database-oriented applications wherein the transaction data is stored in well- organized database. The user operates on such database using the required interface and also takes the required reports by suitable transformations of stored data into information. Therefore, the fundamentals of computerized accounting include all the basic requirements of any database-oriented application in computers.
Computerized Accounting has for long been an organizational function for both profit and nonprofit making organizations. Maintaining, preparation and presentation of financial accounts is crucial for success of financial institutions in making effective decisions because they all have to report to the stakeholders of the bank through financial reporting. However, there is sometimes inefficient financial reporting due to loss of records, delay in preparation of financial statements and its associated problems.
The study therefore focused on establishing the influence of computerized accounting on processing financial statements in financial institutions. The study established the role of computerized accounting systems in producing financial statements; it also looked at the various financial statements processed by the computerized accounting system at FBN.
1.2. STATEMENT OF THE PROBLEM
Despite the presence of a well established computerized accounting system at First Bank Nigeria Limited, there are still cases of system failure, delay in processing of transactions and financial statements leading to congestion of customers and inaccurate financial records and yet with the existence of a well implemented computerized accounting system and skilled employees such irregularities are least expected, this therefore, has prompted the researcher to carry out an investigation on the efficiency of the computerized accounting system being used at the bank.
1.3. OBJECTIVE OF THE STUDY
The study purposely focused on how to establish the significance of computerized accounting systems in processing financial statements in financial institutions taking a case study of First Bank Nigeria, Limited Sagamu Branch -Ogun.
Other Speciic Objectives includes:
- To establish the nature of the computerized accounting systems being used at First Bank Nigeria.
- To establish the benefits of using computerized accounting system in processing financial transactions at First Bank Nigeria.
- To assess the challenges faced in using computerized accounting system to process financial statements by First Bank Nigeria.
1.4. RESEARCH QUESTIONS
- What is the nature of the computerized accounting systems being used at First Bank Nigeria?
- What are the benefits of using computerized accounting systems in processing financial transactions at First Bank Nigeria?
- What are the challenges faced in using computerized accounting systems to process financial statements at First Bank Nigeria?
1.5. SCOPE OF THE STUDY
This section is divided into three subsections i.e. geographical, content and time scope.
1.5.1 Geographical Scope
The research was conducted at First Bank Nigeria Nigeria Ltd, Sagamu Branch in Ogun State. This was due to the availability of data about the topic of study since FBN is one of the biggest banking institutions in West Africa at the moment. Sagamu is the road to leading to the famous industrial areas like Benin Ore and Ijebu Ode.
1.5.2 Content/Variable Scope
The study focused on the nature of computerized accounting systems, benefits, and the challenges faced by FBN in processing financial statements using computerized accounting systems.
1.5.3 Time Scope
The study considered a period of two years ranging from financial year 2011/2012 to 2012/ 2013. The study was carried out from October 2014 to February 2016.
1.6. SIGNIFICANCE OF THE STUDY
The study will enable FBN management to understand the significance of preparing quality and reliable financial statements. The bank can benefit through the research findings and recommendations which can be of great significance to decision and policy making on computerized Accounting Systems (CAS). The study pointed out weaknesses in the computerized accounting system which FBN management needs to address.
Other banks policy makers can also use the research findings and recommendations to improve on their CAS by identifying its weaknesses and strengths
Researchers and Academicians
Other researchers and academicians will use the report as literature review in order to improve on their research topic in another period.
To go back to to the previous page click here: