Abstract

The computerization of MFIs in Cameroon has now become widely spread. However, the fact that computerization has gained acceptance in the financial sector in Cameroon does not mean that an improvement in MFIs performances has occurred over the years of adoption of computerized system.

Apparently, the study aims to examined the impact of computerized accounting systems on the performance of Limbe Urban Council Cooperative Credit Union Ltd. Convenience sampling method was adopted to arrive at sample size of 10 covering staffs and employees of Lucccul.

The study variables consist of both dependent variable and independent variable, with Computerized Accounting System being the dependent variable and MFI performance as independent variable.

Data collected were analyzed using SPSS (21.0). Results show CAS has increase speed in the preparation of financial statements, ease of recording procedures and provides reports that serve as relevant information for decision making and planning of MFIs.

It was concluded that computerized accounting system has a positive effect on MFIs performance and as well customer patronage. The study therefore recommends that computerized accounting systems should be adopted by all by MFIs in Cameroon because it has a lot of advantages and also that MFIs should train their employees through seminars in using properly computerized accounting systems.

CHAPTER ONE

INTRODUCTION

1.0 Background of the Study

The innovation of information and communication technology (ICT) has drastically revolutionized the application of financial management and accounting practices. ICT has become instrumental for providing a competitive edge for corporations, financial institutions, manufacturing industries and specifically in the accounting profession. In particular, ICT has been a major factor of the efficient and reliable accounting system and hence improved organizational performance (Taiwo and Edwin, 2016).

Yinus and Oladejo, (2014) observed that the basic indicator of modern-day development in any society is the level of technological advancement and how it has contributed to economy growth of a country. Hence, from the aforementioned statement, one can identify how significant the computerized accounting system is to the growth of microfinance institutions.

The many advantages from the use of these systems have led many to conclude that computerized accounting systems in corporate reporting is the engine of growth in microfinance institutions. This was evident with numerous advantages of computerized accounting over manual accounting system. Porter and Millar, (1985) mentioned in this competitive advantage, over the years, information technology had played a major role, changing the nature of business who knows its effects.

With the introduction of new technology and more user-friendly software, computerized accounting system (CAS) appears to reduce the problems in book record-keeping practice. Furthermore, with the new and rapid financial information, news updates and changes will be available for others in making decisions; these reliable decisions will in effect increase the performance of Microfinance Institutions and thus leading to their growth.

Regarding the subject of accounting, it is an integral part of any business whether large or a small entity. It has a major role in measuring the financial performance of company activities during a stipulated time. For this reason, accounting plays a very important role in the management and success or failure of contemporary business-institutions.

Therefore, it is convenient to set a computerized accounting system to record, analyze and interpret financial or accounting information to management. This is due to fact that the computerized accounting system ensures speed, accuracy and reliability of financial information compared to other traditional manual systems of accounting (Ware, 2015).

Before the introduction of ICT into accounting practice, all the accounting activities were performed manually. However, due to the introduction of the computer accounting system, it has been easier for every accountant or accounting practitioner to use this system. As a study by Amahalu, Abiahu, and Chinyere (2017) conducted a comparative analysis of the computerized accounting system and manual accounting system in Microfinance banks in Nigeria from 2006 to 2015. The results of the findings indicated that the computerized accounting system had a significant contribution to the profitability of banks compared to the manual system.

Smith and Wiggins, (1991) argued that the use of Accounting Information could be linked to the success or failure of Microfinance Institutions. To survive, Microfinance Institutions need to be updated, accurate and timely accounting information (Amidu and Abor, 2005). Accounting systems are responsible for analyzing and monitoring the financial condition of firms, preparation of documents necessary for tax purposes, providing information to support business purposes. Without such a system it will be very difficult for Microfinance Institutions to determine performance, identify customer/member and supplier account balances and forecast the future performance of the organization/institution. The primary purpose of an Accounting Information System (AIS) is the collection and recording of data and information regarding events that have an economic impact upon organizations and the maintenance, processing and communication of such information to internal and external stakeholders (Stefanou, 2006).

Harold and Jeff (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 widespread 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 advises banks to reexamine their service and delivery systems to properly position them within the framework of the dictates of the dynamism of information and communication technology.

Due to the weakness of the manual accounting system, many private and public organizations have been shifting to the computerized accounting system. There are a lot of studies which have examined the effects of a computerized accounting system in the government or public sector (Anaeli, 2013; Munisi, 2013; Mbelwa, 2015). In modern theories of growth and operational performance, technology innovation has taken the Centre stage through the introduction of PC-based Accounting Systems, both the computer hardware and the accounting software creating an opportunity for Microfinance Institutions to adopt computerized accounting system. These Computerized Accounting Systems include “Quick Books” and “le Sage” for big organizations and “Alpha” for MFIs mostly Credit Unions which is the focus of this study.

Historically, the concept of microfinance dates back before the 19th century where money lenders were unofficially carrying out the role of now formal financial institutions. The unofficial financial institutions comprised of: village banks, rotating saving groups and social venture capital funds to help the poor. These institutions were those that provided savings and credit services for Small and Medium-Sized Enterprises and most especially to the poor.

They mobilized rural savings and had simple and straight forward procedures that originated from local cultures and were easily understood by the population says (Germidis, 1991). The creation of the Grameen Bank in Bangladesh by Muhammad Yunus because of the high capacity of the innovation of the informal sector contributed to the growth of microfinance in the world.

The CEMAC regulation defines Microfinance as an activity carried out by an institution that does not have the status of banks or financial institutions as defined in the appendix in the convention of 1992 (17th January) to harmonize and regulate the banking activities in the Central African State, and which carry out regularly, loan operations and/or savings collections and offers specific financial services to a population who mainly operate outside the traditional banking channel.

Robinson, (2001) in his work titled; “The Microfinance Revolution” defines microfinance as small-scale financial services offered to people into a small business in both rural and urban societies. He went further to point that the goal of microfinance institutions is to improve living standards or get rid of poverty through the provision of small business financing and consumer credit or bring financial services to poor and vulnerable people in the society.

In Cameroon, the first microfinance institution was created in 1963 at Njinikom in the Northwest Region of Cameroon by a Roman Catholic priest; Anthony Jansen, a priest from Holland. The relative success of noticed in this industry lead to the creation of CamCCUL in 1968 by 34 credit unions that were already in existence (Zengue, 2006). As times went by, many MFIs in Cameroon have adopted the use of computers in many sections of their activities such as recording of daily collections, recording of customer’s savings (account details), preparation and presentation of their yearend financial reports etc.

1.1 Statement of the Problem

As information technologies grow more progressively, manual accounting systems have become gradually inadequate for decision needs (Brecht and Martin, 1996). Consequently, public and private sector firms in both developing and developed economies view Computerized accounting systems as a vehicle to ensure effective and efficient information flow in the recording, processing, and analysis of financial data. Effective and efficient, information flow enhances managerial decision-making, thereby increasing the firm’s ability to achieve corporate and business strategy objectives (Manson, McCartney, and Sherer, 2001).

In most MFIs, funds from customers are poorly managed and their accounting systems are in poor order. Many MFIs do not have qualified accountants and have problems preparing accurate and timely financial reports, which is one of the major customer and stakeholders requirements. Furthermore, it has prompted fraudulent activities perpetrated by accountants or accounting practitioners in private companies. All these challenges pose negative repercussions to the overall financial performance of microfinance. Thus this study calls for the investigation of the impact of Computerized on performance of MFIs in Cameroon.

With the fall of CONFINEST a major microfinance institution in Cameroon, many MFIs in Cameroon have changed their systems of operations from the manual to computer-based systems. With the advent of ICT packages and computerized accounting software, MFIs in Cameroon have adopted and are applying ICT in almost all areas of their actions, due to its inter-sectional link. It appears to be reaping most of the benefits of revolution in technology, as can be seen by its application to almost all areas of its activities such as: using of debit and credit cards, inter-regional money transfer, using computerized accounting systems in the recording, preparation and presentation of their financial reports.

A few studies have been done on the effects of computerized accounting systems on the performance of financial institutions. Mwaura (2013), the study assessed financial accountability on the performance of non-governmental organizations in Kenya, (Otieno and Oima 2013) studied the implementation of the computerized system in Kisumu County, Kenya. Another study by Byenkya Denis Mark (2011), the study was conducted to assess the impact of computerized accounting on financial reporting in Uganda Breweries Limited. However, not many such studies have been conducted to investigate the impact of accounting system on the performance of MFIs in Cameroon. It’s against this background that the researcher sought to examine the effect of the impact of computerized accounting systems on the performance of Limbe Urban Council Cooperative Credit Union Ltd.

1.2 Research Questions

1.2.1 Main Research Question

What is the impact of computerized accounting systems on the performance of Limbe Urban Council Cooperative Credit Union Ltd (Lucccul)?

1.2.2 Specific Research Questions

The study sought to answer the following specific research questions:

1. Is there any significant difference in customer patronage after the adoption of a computerized accounting system at Lucccul?
2. What is the impact of Computerized Accounting System having on the performance of Lucccul?

Read: Accounting Project Topics with Materials