IMPACT OF INTERNET COMMUNICATION TECHNOLOGY (ICT) ON THE ACCOUNTING PROFESSION IN NIGERIA. A STUDY OF THE INSTITUTION OF CHARTERED ACCOUNTANTS OF NIGERIA (ICAN)
1.1 BACKGROUND OF STUDY
Accounting is the process of identifying, classifying and recording, and presentation of financial economic activities of an entity with the aim of facilitating decision making by the users of the information Fidelis (2013). This process is usually done manually with the use of separate ledgers to record financial transactions. It involves the use of paper, books and pen to record and prepare financial statements and manual calculations. This task is tedious and time consuming and can therefore lead to several human errors. This occurrence might be minimal in small entities such as sole proprietorship. Kwanchukwu (2004). However, in big entities such as a public limited liability company, these errors can occur more often without possibility of being detected which can affect the entity on the long run.
There is no doubt that the manual system of accounting is cheaper than the automated accounting system which is one of the reasons why small businesses still use it. But as a business grows, there is the need for a shift from manual accounting system of financial transactions to automated processes i.e. Information and Communication Technology especially in today’s generation where most transactions are performed with the use of electronic gadgets such as Computers, Computer software and the internet Onaolapo et al. (2012). The Accountant only needs to enter the transactions into the software which simply performs computations and presentation thereby relieving the accountant of such task. Any company with large size seeking to be efficient and effective in it financial operations would need to adopt an automated system of accounting. For a company to attain efficiency and effectiveness, it would require capacity to process accurate and timely information, hence, the need for Information and Communication Technology.
Information and Communication Technology (ICT) is often used as an extended synonym for information technology (IT), but is a more specific term that stresses the role of unified communications and the integration of telecommunications (telephones lines and wireless signals), computers as well as necessary enterprise software, middleware, storage, and audio-visual systems, which enables users to access, store, transmit and manipulate information. ICT is an umbrella term that includes any communication device or application, encompassing; radio, television, cellular phones, computer and network hardware and software. Jordan (1999)
Information technology has been around for a long time as long as people have been around because there were always ways of communicating through technology available at a point in time. There are four (4) main ages that divide up the history of information technology These ages include; pre-mechanical, mechanical, electro mechanical and electronic only the latest age i.e. electronic and some of the electromechanical age really affects us today. Yusuf, M.O. (2005).
In the recent past, before the inception of ICT, accountants of an organization were using a socially acceptable behavioral method of reporting accounting and economic reports, carried out during accounting year ends Kwanchukwu (2004). Accounts prepared include statement of account, statement of financial position, cash book, and statement of cash flow. The ICT, on accounting practice in Nigeria has become a subject of fundamental importance and concerns to all business enterprise and is gradually becoming a prerequisite for local and international competitiveness. It is obvious that the way accountants plan and take decision on what and how to provide their service in the accounting profession has been affected immensely by Information and Communication Technology (ICT). This has continued to change the manner in which accounting practice and their corporate relationships are organized worldwide and the variety of innovative device available to improve and facilitate the speed and quality service delivery. A major ICT has been
made on accounting is the ability of companies to develop and use computerized system to track and record financial transactions properly and accurately. The recording of business transaction manually on ledgers, papers, spread sheets etc has been translated and computerized for quick and easy presentation of individual financial transaction and give report on it. (Granlund & Mouritsen, 2003).Shanker(2008)ascertains that the use of ICT in many organization has assisted in reducing transactional cost, overcome the constraints of distance and have cut across geographic boundaries thereby assisting to improve coordination of activities within organizational boundaries. It is very clear that, the computerized accounting system have improved the functionality of accounting departments by increasing the timeliness of accounting information and report preparation of statement of cash flow, market shares report and departmental profit & loss are now more accessible with computerized system.
Computerized accounting systems have internal check and balance measure to ensure that all transactions and accounts are properly balanced before the financial statement is finally prepared. It also will not allow journal entries to be out of balance when posting, ensuring that individual transactions are properly recorded.
Since the inception of information and communication technology (ICT), accountants can now process large amount of financial information and process it quickly through computerized accounting system. Quicker processing time for individual transactions has also lessened the amount of time needed to choose out each accounting period. Transactions that would have taken an accountant months or years to prepare are done quickly and faster and thereby cutting high cost that would have resulted in preparing the reports (Pricewaterhousecoopers, June 2008).This study therefore seeks to examine the impact of Information and Communication Technology in Nigeria a study of The Institute of Chartered Accountants of Nigeria (ICAN) . This study focused on the overall performance of accounting and how the adoption of Information and Communication Technology impacts on their daily operations.
1.2 STATEMENT OF PROBLEM
Accountant’s worth is now reflected in higher order critical-thinking skills, such as designing business processes, developing e-business, model in providing independent assurance and integrating strategic knowledge James, Hunton et al (2002). Hence, most companies have derived a way of recording and reporting transactions. ICAN are expected to take advantage of ICT to automate existing processes for conducting business in new and innovative ways. Growth within management accounting and information system is becoming prominent with the advent of ICT. Enterprise Resource Planning(ERP)system, Software and ancillary equipment such as Automated Teller Machine(ATM), Debitcards, Electronic commerce, Computer hardware, Database, Internet, Intranet, Telecommunication, Oracle, Peachtress, Accounting software and Statistical Package of Social Sciences etc. are related products emanating from ICT. Ogbu (2011)
This study seeks to evaluate the degree of ICT adoption by ICAN members in the preparation and presentation of financial reported accounts. To what extent are ICAN members literate with the use of ICT? How relevant is ICT to ICAN?
1.3 OBJECTIVES OF STUDY
The main objective of the study is to examine the impact of internet communication technology (ICT) on the accounting profession in Nigeria. Using members of the institution of chartered accountants of Nigeria (ICAN) as a study.
The specific objectives of the study are to:
- Assess the impact of ICT on financial transaction report of ICAN members
- Examine the effect of ICT implementation on the financial performance of ICAN members
- Evaluate the challenges associated with integration of ICT in accounting profession.
- Analyze the importance of ICT in training requirement of an accountant.
1.4 RESEARCH QUESTIONS
For the purpose of this study, the following questions have been put forth in line with the of research objectives;
- To what extent has ICT impacted on the transaction report of ICAN members?
- What are the challenges associated with adoption of ICT by ICAN members?
- How has ICT improve the financial performance of ICAN members
- What are the importance of ICT in training requirement of accountants?
1.5 RESEARCH HYPOTHESES
The following null hypotheses are formulated to guide the study:
H0; ICT has no significant impact on transaction report of ICAN members
H0; ICT has no significant impact on improved financial performance of ICAN members
H0; There are no challenges associated with integration of ICT into the accounting profession by ICAN members
H0; ICT has no relevance in the training requirement of accountant
1.6 SIGNIFICANCE OF THE STUDY
It is expected that the findings of this study when completed will be useful to practicing chartered accountants including members of ICAN by exposing them to be more proficient in the use of ICT in order to perform optimally in the profession and develop their competencies in such area of ICT’s
This study also serves as a guide for further research work in the impact of ICT on business and finance. Findings from the study will also prove useful to students in the field of accounting.
1.7 SCOPE OF THE STUDY
The scope of this study is to evaluate the impact of ICT on accounting profession in Nigeria. The research work adopts ICAN as a study area.
There are a lots of factors which limits the researcher ability in carrying out this research, they are:
- External Factors: One of the external factors that affect the research is legal factors. The legal policy prevailing within the organization restricting members of ICAN from disclosing some secretes in the organization would have still be an additional data for the researcher.
Secondly, Some members of ICAN visited were afraid to give out information despite the assurance by the researcher that information given would be treated in strict confidence and will be purely for academic work.
- Internal Factors; – the internal factor that affect the researcher include;
Finance;- Inadequate transportation fare to visit ICAN offices to interview their members limit the researchers ability to conduct the research to some extent.
Time; – The researcher were faced with conflicting programs such as the project work and academic work and this also limited the scope of the study.
However, despite these shortfalls, the researcher were able to complete the study as they do not in anyway hinders the accuracy of data in the study.
1.9 ORGANIZATION OF THE STUDY.
- CHAPTER ONE; This chapter comprises of the background of the study, statement of the problem, objectives of the study, research questions, research hypothesis, significance of the study, scope of the study, organization of the study and definition of terms.
- CHAPTER TWO; critically review related literature, conceptual clarification and theoretical framework relevant to the research study.
- CHAPTER THREE; Examined the research methodology. It presents the research design, the population, the sample size, the nature and source of data, the method of data collection, the techniques of data analysis, the decision rule and the summary.
- CHAPTER FOUR; Discussed data analysis which includes; data presentation, test of hypothesis and the results of findings.
- CHAPTER FIVE; this chapter gives the summary of findings and conclusion from the research work. Recommendations, limitations of the study and suggestion for further research are also presented.
1.10 DEFINITION OF TERMS
a.Information and Communication Technology(ICT):This to the automated means of originating, processing, storing and communicating information and includes recording device, communication system, computer system( including hardware and software component and data)and other electronic devices(AIC PA 2006a, AU319.02).
b.Accounting information system (AIS): Is a system of collection, storage and processing of financial and accounting data that is used by decision makers.
c.Enterprise Resource Planning (ERP): Is an integrated information system that serves all
departments within an enterprise
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