Abstract

Accounting plays a critical role in the success or failure of entrepreneurs and the advent of Technologies across the globe have altered the norm of the game and expectations of the new mode of economics activities. Improvements in this

technology have replaced manual bookkeeping systems with computerized ones. This research assessed whether implementation of Computerized Accounting System has positive influence on the performance of in small and medium size enterprises in Buea municipality.

The population of the study comprises of list of 50 registered small and medium size businesses in Buea Molyko municipality.  Primary data was used for the research and also Random sampling technique will be adopted for the study. The sample size of 35 were mathematically derived using the Taro Yamene’s formula, 33 questionnaires were received and useful for the study representing 79% of the total sample size.

Data collected were coded and analyzed using frequency table and percentage while inferential statistic such as chi-square and regression analysis was used to test the formulated hypotheses. Finding from the study indicate that advancement in technology has become a driver to business success.

Evidence from this finding revealed that Computerized accounting systems are used by entrepreneurs in order to generate timely and accurate reports through a fast and efficient processing of accounting data.

It was observed that adoption of computerized accounting systems by entrepreneurs is based on the efficient and effectiveness of the system toward entrepreneur operations. It was also observed that, there are numerous benefits both financial and non-financial which are derived from the use of a Computerized Accounting System.

The result of tested hypotheses show that computerized accounting system significantly related to entrepreneur performance and positively influences Entrepreneur performance. The study is expected to be extremely significance to Entrepreneur development with the arouse of e-com.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Accounting in these recent times has become an instrument in the day to day dealings of any business operations. This Accounting is the art of recording, classifying and summarizing in to financial statements a company’s transactions that create assets, liabilities, equities, revenues and expenses. It is a means of satisfying users’ demand of the financial information that arises from the forces of complexity, remoteness and consequences which far originate from Bookkeeping.

In these present days modern accounting is still founded on the system of keeping transactions developed by an Italian monk Luca Pacioli over 500 years ago and the creation of software by Bill Gate. This great scientific system was so well executed that even current accounting principles are based on it (de Santis, 2010).

Manual accounting system requires a greater understanding of how to book keep; it can only be easier to manage once the concept of double entry of bookkeeping has been understood. Tavakolian (1995) emphasized that the manual accounting system consisted of books ledgers and calculators. Consequently, with this system of accounting recording there was high amount of errors and detection could not be done on time.

The record in a paper based accounting system is susceptible to several harms such as by water, fire and different hazards. Also, this system takes in consideration a lot of time consuming due to the fact various accounts need to matched where the necessity comes in irrespective of the numerous transaction being carry out during and more over a period of a month which is as a result of the different steps carried for the recording of the different transactions.

For example, if a business pay their rent, a check has to be written, an entry must be recorded into the check register, and the transaction has to be posted to respective ledgers: in this case, a debit to the rent company’s ledger account and a credit to bank.

What’s more, where there exist numerous transactions to record in a business the sheer volume of transactions are run, not talking of the stress and boredom of extracting trial balance and financial statements which are state of comprehensive income (profit and lost), cash flow statement and statement of financial position (balance sheet). This has led to the introduction and development of computerize accounting system (CAS).

As time is passing the world is improving at any state point so do technologies likewise with accounting actually. So, moviric (2010) contented that computerized utilization offers assistance to limit  human  mistakes,  loss  of monetary exchange in computer, using computerized accounting system was the safest rather than keeping financial activity manually by using ledger transactions.

The presentation of automated bookkeeping framework creates great and exact budgetary report  for  both  administration  and  outcast  for  decision  making.

Computerized accounting system spread all over the world globally in business environment in which the computerized accounting became the engine of growth in business organizations.

This provides a number of benefits such as speed of carrying out routine of transactions, timelines, quick analysis, accuracy and reporting.The process of keeping enterprises financial transaction have become primary importance for Small and Medium scale Enterprises ,since it has led to the improvement of checking out financial performance.

These enterprises are very useful to the economy since they act as a great working force and the higher their number and size determined highly their employment capacity. It promotes youth starts up, there welcome new business of different sizes and thus reduce employer to employee ratio.

Small Business enterprises play an important role in the economic development of Cameroon by providing employment and production of goods and services. However, the extent of contribution that these business units make to move toward the economic growth and development of Cameroon is dependent on the level of success attained through their operations.

The facts is that the major factor that influence the success of a business enterprise is the establishment and application of controls by the owners and management in addition to the systematic record keeping of business transaction, which keeps the owner well informed about the performance of the business (Mbroh et al.,2011).

Computerized Accounting System (CAS) records accounting transactions with the utilization of computers and accounting software.

This result of quick technologies changes needs to attract these Small and Medium Scale Enterprises (SMEs) to improvements. CAS will help keep several client’s information and transaction in the business and for several years which is quite important for taxes control and personal business need.

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

This improvement in data innovation has eventually prompted the introduction of computerized accounting system to help produce a relevant financial statements for both management and outside clients for decision making (Mtetwa, 2010).

Computerized 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).

The impact of computerize accounting on the performance of enterprise cannot be measured this has eventually led to the incidence of accounting malpractices, delay preparation of financial Statements,

The world economy has witnessed modern development which can be traceable to the fact that computerized accounting has emergence so greatly to solve our business difficulties gotten from inadequate financial information and the length of time this information could be gotten therefore making it easy to interpret which were not like before that the down fall of the world great companies like ERON and the others during the 1990,s.

In addition, majority of respondents accepts that computerized accounting system has improved on producing accurate and compressive results as well as being quick in handling financial transaction. This means that computerised accounting system has a positive contribution in the generation of financial report. (Merungi, 2015)

In Africa the effect of computerised accounting has been felt in many ways such as the easy accessibility to information without time consuming and also letting to the increase in financial performance as information are made easy for financial decisions.

In Tanzania, computerized accounting information was initially introduced at the Tanzania Public sector in 1992 where by the government assessed several computerized aspect of professional deals on financial management function which assisted them to move from manual accounting system toward an automated (Anaeli, 2017).

The introduction of this system was the beginning of improving financial operations in Tanzania. Tanzania has been updating the accounting computerized system over the years. The system has been improving financial efficiencies in public and private sector.

Before the installation of computerized all processes of accounting where performed manually including receiving financial data, recording, processing and reporting.

The manually system of paper and pen made the accounting work become relatively difficult to perform. It was easy for accounting document to be misplaced and eventually lost. Sometime documents were stolen because there was not back-up system to safeguard accounting data.

Furthermore, accounting information was deliberately changes or altered to conceal accounting information for fraudulent financial activities.

Due to the shortcoming in the manual system, the report of the controller and auditor general of the government has been querying the weakness in the accounting system (Controller and Auditor General Report, 2017)

In Cameroon the microfinance institution has given a bravo to the coming of computerise accounting. this is because it has develop their bookkeeping and has help remove them for paper work to an electronic system method which is more effective and efficient.

Therefore, making financial information can been gotten on time and without errors therefore making management to present good and reliable decisions. Due to this benefits most medium seize financial institutions has gotten computers and employ competent employees to make use of this computer.

However, some small enterprise has not been able to meet up to the standard of getting a computer due to their small nature, so financial transactions are still recorded manually.

1.2 Statement of the Problem

The instalment of sound Computerised accounting system in an enterprise irrespective of the relative important why not crucial and adapt each enterprise to it appropriate software. Audit of such enterprises are being unable to give appropriate report of such enterprises and a consequent lack of good internal establishment and management transaction leads to the fall of several of these enterprises.

Most small and medium scale enterprises are being own by families and the rate at which computerise accounting systems are being used by such like depends on the managers’ knowledge in information and communication technology and their familiarity with technology.

According to Murungi (2006), finding educational attainment of company directors who are related to the used of information and communication technology (ICT) and further stresses that one possible clarification for the low adoption of computerized accounting system (CAS) is that smallest and medium scale enterprises’ (SMES) owners are anxious of it and also because of their unfamiliarity with the technology.

Small and medium scale enterprises are one of the influencing factor of the economies presently due to some factors as numerous and high employment ability but also suffer from continuity.

The market force is very volatile and almost unpredictable, the used of sound computerized accounting systems really impact not only in the sustainability of these enterprises but mostly on their survival and their performance in this present competitive market.

But this means of acquiring such sound accounting system makes a barrier for these small and medium scale enterprises (SMEs).

More to that, there is a need specialise accountant with a mastery of the system software being used so that appropriate decision can be taken by management and directors from the useful financial information gotten from the system. In fact, they are the basis to any business success.

Maintenance of sound accounting records is a major factor that contributes proper decision making process since it’s the roots through which relevant informational requirement is derived (Alphonce, 2014).

For an Entrepreneur to survive in business he/she need to be conversant with accurate and timely accounting information.

Accounting information is used to measure and communicate financial information of business in order to make proper decision, planning, controlling, and coordinating activities of the business and also for the end users of the accounting information.

Accounting information has an important influence to the business success of entrepreneurs. However, majority of entrepreneurs do not maintain sufficient accounting records that are necessary in their decision making.

Entrepreneurs lack of access to capital and burden of high rate charges are partially the result of incomplete (or on) accounting records, and the inefficient use of accounting information. Poor record keeping and accounting information make it difficult for financial institutions to evaluate potential risks and returns (Akande, 2005).

Amidu, Effah and Abor (2011) also opined that inaccuracy of reports, Frequent breakdown of the system, Inability of the system to support large volume of data, Lack of constant supply of electricity, and Inability to fully comprehend and interpret the result are major challenges of implementing computerized Accounting by SMEs in Buea is a critical application in corporations of all sizes, computer managers are hence caught in a no-win situation.

1.3 Research Questions

The study is structured to answer the following main research question; what is the effect of computerized accounting system on the financial performance of small and medium scale enterprises in Cameroon?

The specific research questions will include:

1. To what extent do small and medium scale enterprises in Buea adopt computerised accounting system?
2. What is the relationship between the used of computerized accounting system and financial performance of small and medium scale enterprises in Buea?
3. What are they difficulties face by small and medium scale enterprises in Buea in adopting well developed computerized accounting system?

1.4 Objectives of the Study

1.4.1 Main Objective

The main objective of this study is to assess the effect of computerized accounting systems on the financial performance of small and medium scale enterprises in Cameroon.

1.4.2 Specific Objectives

The specific objectives include,

1. To assess the impact of cost on computerized accounting systems and the performance in the Buea municipality.
2. To assess the impact of business size on computerized accounting systems and the performance in the Buea municipality.
3. To assess the impact of government support on computerized accounting systems and the performance in the Buea municipality
4. To assess the impact of the external environment on computerized accounting systems and the performance in the Buea municipality.

1.5 Hypothesis for study

The following hypothesis is proposed for the study:

Null hypothesis (H0): Computerized accounting system has no significant relationship with the financial performance of small and medium scale enterprises in Buea.

Alternative hypothesis (H1): Computerized accounting system has a significant relationship with the financial performance of small and medium scale enterprises in Buea.

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