FINANCIAL CONTROL IN A COMPUTERIZED ACCOUNTING SYSTEM

ABSTRACT

The primary aim of this study is to check the effectiveness and efficiency of financial control in Computerized Environment. i.e. First Bank of  Nigeria Plc and to ascertain whether the computer has enhanced profitability and control in the bank and other financial sectors or industries.

CHAPTER ONE

1.0    INTRODUCTION

In ancient days, human activities were relatively easy. The difficulties posted by nature than were considerably simply and demanded solutions of man and his way to solve them necessitated the inventors of machines. Since the invention of the first machines, the world has experienced a tremendous degree of advancement in technology and ones for the machine invented for solving complicated problems on the computer. With increasing frequency, it is recognized that an understanding of the computer how it influences accounting operations and it’s benefits to every accounting student and intends to work this world of advancing technology cannot be overemphasized. Due to the recent intends in accounting operations and the complexity of these operations with the number of task to be performed constantly on the increase, today’s accountants are left with no option other than to always device ways by which these increasing tasks could be processed more speedily and accurately so that there will be no loss of information. With the advent of computer, many organizations have computerized their accounting systems, an example of such an organization with a computerized accounting system is FIRST BANK OF NIGERIA PLC.

1.1    BACKGROUND OF THE STUDY

In the last few decades, business activities have not only grown bigger and very much complex, but things happen even faster than expected, the combination of complexity, size, and faster action and reaction generated a view for new management tools, especially tools for converting the large and complex volume of business data into useful and meaningful terms to assist management in decision making. The processing of business data and the delivery of information using their machines are known as “AUTOMATIC DATA PROCESSING” OR “COMPUTERISED OPERATIONS”. The effectiveness of a computer depends on the ability of the user. Inherently the computer has no creative ability than the screw-driver or any simple machine. The fundamental power is its ability to absorb mountain data, manipulate the data, and bring out the results in a summarized meaningful form, quickly accurately for management use. The entire accounting and management function started in a manual form where the process of accounting data and information was provided in the manual form by human beings. This system of providing information manually had it’s shortcomings later, the use of punched cards was introduced, which involves the use of the electromechanical devices for the processing of data. This method of processing was later replaced by a computer that is made up of processing.

1.2    STATEMENT OF THE PROBLEMS

The computer is known for its speed and accuracy in processing information such speed and accuracy has not been achieved manually or by any other device. It is expected that a computerized banking system will facilitate the speed and accuracy of processing transactions of financial nature and also reduces the customer’s waiting time.

This has been achieved by virtue of technology, other countries where customer services and general financial control have been computerized whether it can be established is yet to be confirmed.

The fact of the matter which the researcher intends to study    are: –

-Of what relevance is the computerization accounting system.

-Has there been a tremendous change in financial control and the entire system since the establishment of computerized system?

-Though benefits are bound could there be a limitation of computerizing an organization’s accounting system?

-What could be done to change the present situation data using electronic devices

Undoubtedly, the computer, therefore, can be regarded as the most powerful management tool ever developed. In fact, it has become a tool for most managers who have learned to use it. This can be seen from the fact that most of our banks, mainly profit-oriented organization are operating the computerized system now. Therefore, an understanding of the computer of the amount of time and of the step it takes to accomplish a task from the time the idea was taken up until the final output has been received by the uses or accountant has made an interface between accounting and the system and programming funding more meaningful to the accountant.

1.3    OBJECTIVES OF THE STUDY

The need to minimized fraud and improve service to customers is very important today, due to the increasing numbers of new generation banks therefore, the objective of this study is to assess: –

(a)  The effectiveness of financial control in a computerized environment.

(b)  Whether computerization has minimized the level of fraud.

(c)  Whether computerization has improved the profitability performance of the organization, and

(d)  Whether it has increased speed in attending to customers needs

And finally, the effort will be made to recommend feasible banking organizations.

1.4   HYPOTHESIS

The hypothesis can be defined as an assumption or statement which may or may not be true concerning one or more population or organization e.g. FIRST BANK OF NIGERIA PLC.

STATEMENT OF HYPOTHESIS

Null hypothesis denoted by

Ho:  Computerization has improved financial control.

Hi:   Computerization has not made any impact on financial control.

Reference will be made in chapter four when analysis and presentation of data to this statement.

1.5  SIGNIFICANCE OF THE STUDY

There is a number of reasons why this research could be useful.

The reason is: –

(1)   A study of a number of computer applications in accounting might have as a lesson for accountants about the reasons for success or failure in the development and implementation of the computer system.

(2)   It will help financial institutions to anticipate some of the likely problems they might encounter with their computer system.

(3)    Knowledge of the improvement of the accounting system in financial institutions.

(4)  The researcher is also convinced that the research would serve as an important material to provide a useful framework for further research on this topic.

(5)    A more academic significance of this study is that it provides evidence to test some of the predictions that have been made about the impact of computers in accounting.

1.6    SCOPE OF THE STUDY

Though the entire banks in Nigeria are almost computerized, the study will especially look at the case as relevant to the FIRST BANK OF NIGERIA PLC Kaduna’s main branch.

The researcher will also like to critically observe the impact of computerization on the customers waiting time during paying and withdrawal of cash or undergoing any transactions with FIRST BANK OF NIGERIA PLC.

1.7    HISTORICAL BACKGROUND OF THE CASE STUDY

The history of First Bank of Nigeria Plc dates back to 1984 when the bank of British West African (First Bank of Nigeria Plc) opened its branch office in Lagos. First Bank of Nigeria Plc, leading financial institution in Nigeria with over a hundred years of banking operation experienced in the industry. It was founded by a shipping magnate from Liverpool, Sir Alfred Jones. It commenced operation as a small bank in the office of Elder Dumpster Company in London on the 31st March 1894 with head office in Liverpool. The bank was originally incorporated as Bank of British West African in 1894 with an Authorized Share Capital of £100,000 divided into 10,000 ordinary shares of £10 each. First Bank was listed on the exchange in March 1971. In December 1896, a branch was opened in Accra Gold Coast (Ghana) while it was established in Sierra-Leone in 1898. The second branch in Nigeria was opened in the old Calabar in 1900 and two years later. It services had extended to Northern Nigeria with it Northern Regional Branch at Kaduna, the branch has experienced phenomenal growth over the years with a share capital of 55.6 million nairas in 1980, which rose to 269 million nairas (including a bonus reserve of 53.8 million nairas) in 1995 of 500 million nairas in 1998. The bank’s total assets currently stand at 59.82 billion nairas. At the commencement of operation in 1984, it had a staff of six (6) comprising of three (3) Europeans and three (3) Africans. But today, the bank is virtually Nigerians. In its determination to identify with aspirations of the country, in its march towards national development, the bank has had to continually adjust its organizational structure and corporate entity. It started with West Africa countries, the bank was incorporated locally in 1969 to became Standard Bank of Nigeria Limited. This was in response to the dictate of companies decree of 1968 and thereafter, the participation of Nigerians in the management of the bank becomes corporate policy. Further changes in the name of the bank were made in 1979 and 1992 to First Bank of Nigeria Limited and also to First Bank of Nigeria Plc respectively. FBN has diversified into a wide range of banking activities and services including merchant and international banking.

In December 2005, First Bank acquired it’s merchant banking subsidiary, FBN (Merchant Bankers) Limited and MBC International Bank Plc, following Central Bank of Nigeria’s inspired consolidation in the banking industry. Today, the bank boast of magnificent Head Office in Lagos with a branch network of 300 with a large number of staff and a diversified loan portfolio to various sector of the economy.

1.8   DEFINITION OF TERMS

(i)   Financial Control: This is the regulation of the flow of money through the enterprises and in particular with ensuring that cash is always available to pay debts when falling due.

(ii)   Fraud: – This is an act of deliberate omission or commission for personal benefits. It is also a deceitful behavior perpetrated for the purpose of enriching oneself, party, family or friends it is often carried in various ways such as:-

(a)   Inflation of price

(b)   Embezzlement

(c)   Mismanagement

(d)   Subversion of facts

(e)   Pilfering and stealing

(iii)  Computer: – This is defined as an electronic machine that accepts data (in raw form) and instruction through special input devices and after processing its an internal memory, it produces meaningful output. Another definition of computer according to the oxford dictionary, the computer is an electronic machine that can be supplied with a program and can store and recall information and perform various processes on it. It can also be defined as an electro-machine device which is capable of accepting data, processing data and bring out result meaningfully and useful as information.

(iv)  Accounting: – This is the act of recording, classification, analyzing and summarizing in a significant manner and in terms of monetary, transaction and events which are in part at least of financial characters and interpretation of result thereof. It is also an information system that processes and communicates the data of managerial transactions about an economic entity.

(v)  System: – IT means the methods of unifying personal activities, machines, and materials to accomplish the objectives of the enterprises.

(vi)  Data: – These are the raw facts and figures that are not correctly being used in a decision process and they usually take the form of historical records that are recorded and filled without immediate intent to reference for decision making.

(vii)  Bank: – According to the encyclopedia of banking and finance, the term “Bank” in it’s broadest senses may be applied to any organization engaged in any or all of the various function of Bank i.e. receiving, collecting, transferring, paying, lending, investing, dealing, exchange and servicing. (Safekeeping of deposits, custodianship, agency, trusteeship) of money and claims both domestically and internationally.

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