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ASSESSMENT OF EFFECTIVE FINANCIAL MANAGEMENT IN A COMPUTERIZED ACCOUNTING SYSTEM

ACCOUNTING PROJECT TOPICS AND MATERIALS

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study \

Today’s business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers.

Business organizations, especially the banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve.

Laudon and Laudon, (1991) contend that managers cannot ignore Information Systems because they play a critical role in contemporary organization. They point out that the entire cash flow of most fortune 500 companies is linked to Information System.

The application of information and communication technology concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and concerns to all banks and indeed a prerequisite for local and global competitiveness.

ICT directly affects how managers decide, how they plan and what products and services are offered in the banking industry. It has continued to change the way banks and their corporate relationships are organized worldwide and the variety of innovative devices available to enhance the speed and quality of service delivery.

Harold and Je (1995) contend that financial service providers should modify their traditional operating practices to remain viable in the 1990s and the decades that follow. They claim that the most significant shortcoming in the banking industry today is a wide spread failure on the part of senior management in banks to grasp the importance of technology and incorporate it into their strategic plans accordingly.

Woherem (2000) claimed that only banks that overhaul the whole of their payment and delivery systems and apply ICT to their operations are likely to survive and prosper in the new millennium. He advices banks to reexamine their service and delivery systems in order to properly position them within the framework of the dictates of the dynamism of information and communication technology. The banking industry in Nigeria has witnessed tremendous changes linked with the developments in ICT over the years.

The quest for survival, global relevance, maintenance of existing market share and sustainable development has made exploitation of the many advantages of ICT through the use of automated devices imperative in the industry. This study evaluates the response of Nigerian banks to this new trend and examines the extent to which they have adopted innovative technologies in their operations and the resultant effects.

Globally, in United States of America, computerization of banking departments 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). 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 Microso Excel to organize a business’ financial information is also a manner of computerized accounting. http://wiki.answers.com.

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 http://wiki.answers.com Computerization has provided self-service facilities (automated customer service machines) from where prospective customers can complete their account opening documents direct online.

It assists customers to validate their account numbers and receive instruction on when and how to receive their cheque books, credit and debit cards.

Computerization deals with the physical devices and software that link various computer hardware components and transfer data from one physical location to another, Laudon and Laudon (2001).

ICT products in use in the banking industry include Automated Teller Machine, Smart Cards, Telephone Banking, MICR, Electronic Funds Transfer, Electronic Data Interchange, Electronic Home and Office Banking.

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