Abstract

The study focused on the influence of computerised accounting systems on small and medium enterprises in the Limbe Municipality. The purposive sampling technique was used to select 27 SMEs in the Limbe Municipality for the study. Descriptive analysis was used to analyse the data. The results of the study revealed that a majority of SMEs are using computerised accounting system.

Those using the CAS indicated that the system plays a vital role in the realisation of their business objectives including large data storage capacity, timely information management, reduction of clerical works and enhanced customer satisfaction. The low level of usage of the computerised accounting system by some SMEs is attributed to cost, personnel and lack of education on the benefits of using CAS.

In conclusion, the usage of the CAS by SMEs has the potential to improve their performance; however, cost, lack of education on the benefits of the usage and knowledgeable personnel are negatively affecting the usage of the software. It is therefore recommended that SMEs be educated on the benefits of using the CAS and accounting training institutions should do well to incorporate a segment on computerised accounting systems into their training modules, so that those moving into the job market from these institutions can adequately carryout these computerised services in their various establishments.

CHAPTER ONE

INTRODUCTION

1.1 Background of Study

The background of this study will be done by looking at the historical background and the conceptual background.

1.1.1 Historical Background

Researchers have discovered in their studies that the world is a global village so much so that businesses in one way or the other are becoming interrelated in their everyday functioning and the activities they carry out in their daily existence. As such, in carrying out some decisions, mostly at the level of the methods, the businesses have to do that in consideration the current changes in the world at the time and how it will affect it.

A drawback to the traditional quantitative cost-benefit analysis is the difficulties associated with measuring employee satisfaction in terms of job performance and job satisfaction (Edison et al., 2012). Ilias and Razak (2011) noted difficulties with direct measurement of system quality and effectiveness but found indirect measurement through end user satisfaction is the best measure of the relationship between the management of an organisation and the information or accounting system.

Given that there are various departments in every business, this research will be done with specifications of the accounting department and looking at it as a vital part of every business which it is, most relevant when it involves financial activities.

Accounting assumes an important role in the success or failure of contemporary business organisations. Every business must keep track of the financial data that identifies with its business exercises.

It likewise has various procedures; some basic, others cumbersome and confusing. Modern accounting is founded on the system developed by an Italian monk Luca Pacioli over 500 years ago. This great scientific system was so well executed that even current accounting principles are based on it (De Santis, 2010).

In keeping track of financial information businesses are concerned primarily with methods for recording transactions, keeping records, performing audits, reporting and analysing financial to the management, and receiving advice on tax matters. As a result, organisations put in place a systematic process that identifies, records, measures, classifies, verifies, summarises, interprets and communicates financial information. This reveals the profit or loss for a given period, and the value and nature of the organisation’s assets, liabilities and equity. Accounting provides information on the resources available to a firm, the means employed to finance those resources, and the results achieved through their use.

Accounting is a relevant financial activity which is carried out by different businesses all over the world in their day to day financial activities. Researchers over time have concluded accounting is a continuous process of carrying out analysis of a business’s financial activities. Different researchers tried to define accounting in ways which they best understood.

According A.W Johnson (1943), Himalaya Publishing House, Accounting is “the collection, compilation, and systematic recording of business transactions in terms of money, the preparation of financial reports, the analysis and interpretation of these reports and the use of these reports for the information and guidance of management”.

The American Institute of Certified Public Accountants –AICPA, (1953),  “accounting is the act of recording, classifying and summarising in a significant manner and terms of money, transactions, and events, which are in part at least, of a financial character and interpreting the results thereof”.

Also, the American Accounting Association –AAA, (1966), “accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information”. Apart from the above cited definitions, there are a lot more definitions of the concept of accounting by different researchers, which cannot all fall under the scope of this study, who all aimed at making this concept more comprehensive by its users and those who practice it.

Even though this concept has these different definitions, they are more or less centred on the same idea which looks at accounting as a continuous process that deals with one step to another and it is carried out to provide financial information for its intended users and permit informed decision making.

Notwithstanding, every business makes use of accounting no matter the way this is being carried out or the criteria through which they are carried out. Some establishments even hire external auditors who are to ensure that these accounting activities are properly carried out.

They are responsible for critically analysing the financial statements to be able to report if they were carried out or prepared properly according to the GAAPs (General Accepted Accounting Principles) like IFRS (International Financial Reporting Standards), ISA (International standards of Accounting), or any other standards that could be designed to suit the reporting needs of that establishment, to be able to present a true and fair view. Some establishments even go as far as hiring internal auditors that have the duty of regularly carrying out check and balances as compared to the external auditors who may only do so once a year or only when they are called up to do so by the establishment. So no matter the way it may be carried out, every business, no matter the size of the business carries out accounting, in a bit to have accountability of the financial activities which it carries out.

In the recent day, accountants no longer record every transaction of a company or any corporate body with the help of pens and pencils using a ledger book. The adding machine in 1890 helped early accountants calculate receipts and quickly reconcile their books. When IBM released the first computer in 1952, Accountants were among the first to use them, which was used as one of the first computer systems utilized by business people as IBM 9Pac.

This system has grown over time to different areas of the world, from the western world to Africa and Cameroon. After the birth of computers and the emergence of digitalisation in most professional in India, Accounting was also computerised. For the past few decades, computerised data was used mainly in the field of science and technology.

However, as the years go by, computerised accounting systems are also becoming quite common. Several accounting firms still perform bookkeeping manually, while most firms comprise financial transactions that can be a lot for a manual accounting process.

Moreover, the complicated financial transactions of a firm are quite difficult to be recorded manually. That led to the introduction of the concept of computerised accounting. Some of the advantages of the computerised accounting system are; speed, accuracy and reliability of accounting executions, high efficiency along with top security, and real-time user interference along with quality report preparation, which is mostly automated.

A CAS records accounting transactions utilising a computer and accounting software. It is one of the database-situated applications where the transaction information is stored in a well-composed database. The user works on such a database using the required interface and furthermore obtains reports by suitable transformation of the data. Computerised accounting is the beneficial use of current technological advances. The system has not only revolutionised the practice of accounting, but has also created new types of accounting applications for businesses (Burdick, 2010).

As a result of the quick change in technology, numerous small and medium scale enterprises like to track financial transactions with computerised software rather than to rely on a manual system of bookkeeping recording entries in large books.

The advancement in data innovation has eventually prompted the introduction of computerised accounting systems to help produce relevant financial reports for both management and outside clients for decision making (Mtetwa, 2010). Computerised accounting tends to involve dedicated accounting software and digital spreadsheets to keep track of a business or client’s financial transactions. It is a beneficial use of current technological advances. Organisations now employ full accounting software that can coordinate all business operations, including outside suppliers and sellers.

Computerised accounting systems have replaced manual-based accounting in virtually all businesses and organisations, providing accountants, managers, employees and shareholder’s access to vital accounting information at the touch of a button. Computerised accounting systems automate the accounting process, enhancing productivity and cutting down expenses.

What’s more, it has a tendency to be more exact, quicker to utilize, and less subjected to error than the manual system (Alexis, 2010). In today’s automated, interconnected, worldwide business environment, CASs has become the ‘engine of growth’ in small and medium-scale enterprises. It therefore involves the computerisation of accounting information systems, which is established in order to facilitate decision making. These are associated with numbers of benefits like speed of carrying out routine transactions, timeliness, quick analysis, accuracy and reporting.

In the developed world, computerised accounting system is very much used, practiced and has a great influence on companies. It also serves as a focal point for competition among establishment as each is trying to be better than the other through how adequate its services are computerised.

Most often, when a system is computerised, it makes customer service a lot better both in terms of accuracy and speed, cause for example, in the present 21st Century, it is easier to log into your computer and trace the data that corresponds to the customer in question and serve the customer rather than a situation where you have to take down the information of the customer manually and maybe go through the books to the able to get the information details of that particular customers.

Research has proven that companies in the developed and developing world compete to get better software designed that will better carry out their business needs than those of competing businesses. They pay millions of dollars to get very advanced software that will have better features than that of other businesses all in a bit to be more defensive than their competitors in business.

All of these resources can only be spent by a company if they know and realise the importance of it. In Africa, this concept has not been intensively inculcated since Africa is mostly made up of developing and underdeveloped countries. This doesn’t mean that African countries are not practicing computerised accounting but that it is at a smaller rate than countries in other continents of the world like Asia, Europe, and America.

There are big companies in Africa like DANGOTE CEMENT, SONARA, who have adequately inculcated the computerised system and are making adequate use of it at each stage of their processing is computerised and is only supervised by personnel’s. Notwithstanding, a whole lot of enterprises have not accepted and making use of the system even though they might have received the computerised system, they are still manually inclined in more than half of the daily processes they carry out. In some extreme parts of Africa, for example wum, mbiligi, it has no influence on the financial activities of the business, they still carry out their financial activities manually on a daily basis.

Research has proven that it is mostly for reasons considering that this system is expensive to purchase or even design the software, the people in that area are illiterates that might be unable to use a system as advanced as this, some cases may just be the phobia to learn new things, as such they prefer to remain with a system that they are familiar with and it is easy for them to understand as opposed to what is new that they will need to learn to use.

Research has proven that as compared to how the concept was understood and used, it has changed over time tremendously as it is used by a lot more businesses as compared to its time of origin.

This wide spread over the years has come with a lot of advancements and improvements which have brought about a number of accounting software which are made to suit the need of various financial organisations. Some of these software include Sage Sari, QuickBooks, Alpha, and Peachtree. These developments over time have made computerised accounting faster, more reliable, and less expensive.

According to an article by Machera. P and Machera. C (2017), on Computerised Accounting Software, researchers in 2016 discussed the benefits of computerised accounting to be; easy to reconcile stock on hand, easy maintenance of assets registers, gives provision for graph and financial ratios, provides the business with financial intelligence, cloud accounting online accounting (connecting on smart phones, I-phones, and use internet), enhance speed for entry processing( for example add on module for bank managers), enhance the rate for employability traits and self-reliance (consultancy), enhance completeness and accurateness. The history of computerised accounting has grown and developed over time considering different historic advancements that have been made.

1.2 Problem Statement

In an ideal economy with the emergence and fast growth of technology, all activities have to be done with the aid of machines with specifications to the financial world as per the context of this study. The carrying out of financial activities and analysis has been computerised in all sorts that make it very assessable to as many establishments and businesses as possible.

The continuous development has made it that systems can be designed to suit the various needs of the establishment. Overtime, research has proven that, the ideal situation of how computerised accounting is used and its influence over the SMEs in different economies is not a sure and certain practice (it is not an ideal situation). This difference between the expected and the actual is the aim behind this research, given that those who do not make use of the computerised system will have some differences in terms of accuracy and efficiency as compared to those who make use of it.

Amidul and Abor (2011), the study proved that 75% of SMEs make use of the computerised system. Richelle Baba (2016), study on computerised accounting usage in SMEs in Ghana concluded that 78% of SMEs made use of this system.

It is based on these findings that this study set out to investigate how this system of computerised accounting has influenced SMEs in Cameroon with SMEs in the Limbe Municipality as a case study.

1.3 Research Question.

1.3.1 Main Question

The main research question of this study: What is the influence of computerised accounting systems on small and medium enterprises in the Limbe municipality?

1.3.2 Specific Research Questions

The specific research questions are:

1. To what extent have computerised accounting systems been accepted by small and medium-sized enterprises in the Limbe municipality?
2. What is the role played by the computerised accounting software packages on small and medium size enterprises?
3. How does computerised accounting contribute to financial performance?

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