Abstract

Financial management is one of the management functional areas which is core to the success of business enterprises. Inefficient financial management, combined with the uncertainty of the business environment often led Business Enterprises to serious problems. This study seeks to carried out an evaluation of financial management in performance of computerized accounting system, Purposive sampling technique was used for study with a sample size of 15. Primary data was employed for data collection with the help of questionnaire. Also, data was analyze using SPSS version 21, data was equally presented in tables and chart.

The result of the finding revealed that increase in withdrawers decrease the level of liquidity in an organization, operating cost is one of the problems faced by credit union which is associated to liquidity management, furthermore, it was TTCCUL ensures there is sufficient cash flow to meet daily needs. The study conclude that it was concluded that TTCCUL has a working capital management, optimal cash balances are maintained by your organisation at all times. The study also recommended that working capital management should be given higher emphasis since it has a higher significant relationship with computerized accounting system.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Performance of computerized accounting system involves the use of computers in processing quality accounting data into information to facilitate quick decision making through timely preparation of financial reports and financial reporting. In this case refers to the way in which financial information is recorded, processed and conveyed to the end users of this information in particular. Financial reports are precisely generated by performance of computerized accounting system and it helps to make business decisions through timely preparation of financial reports and analytical financial reporting. Before the advent of ICT in accounting practice, these accounting protocols were being performed manually. However, today many accountants and non-accountants prefer to use computer software to record, report and analyze their company’s financial information. This information is collected from transactions and is compiled into financial reports (Bahati,2014).

The modern method of accounting is based on the system created by an Italian monk Fra Luca Pacioli. He developed this system over 500 years ago. This great and scientific system was so well designed that even modern accounting principles are based on its DeSantis (2010). Individuals and companies’ day by day hire accountants to help them carry out the mathematical requirements of accounting and balancing of books. Before the introduction of information technology into accounting, these accounting protocols were being performed manually. However, today many accountants and non-accountants like to use computer software to perform these duties, (Osmond, 2011)

A number of Software packages have been developed to assist in the accounting field and some of such packages are QuickBooks, Mind Your Own Business (MYOB), EPICOR (formerly Platinum), Tally ERP, PASTEL and SUN. Even though some of these software mentioned here are developed for small businesses, they are also designed specifically for accounting purposes in the banks (2014).

According to Muchiri (2017) financial management is one of management functional areas which is core to success of business enterprises. Inefficient financial management, combined with the uncertainty of the business environment often led Business Enterprises to serious problems. Paramasivan and Subramanian (2009) argued that financial management helps to improve the profitability position of business organizations with the help of strong financial control devices such as budgetary control and ratio analysis. The decision function of financial management can be broken down into three major areas: the investment, financing, and asset management decisions. Financial management practices revolve around these three key decisions. Efficient financial management requires the existence of some objective or goal, because judgment as to whether or not a financial decision is efficient must be made in light of some standard.

Different authors and researchers approach the particular areas of financial management in various ways given their area of focus. For instance, a study carried out in Malaysia by Mohd et al., (2010) identified the components of financial management as financial planning and control, financial accounting, financial analysis, management accounting, capital budgeting and working capital management. Chung and Chuang (2010) studied five particular areas of financial management practices: capital structure management, working capital management, financial reporting and analysis, capital budgeting and accounting information system. From the study variables, Financing, Investing and asset management decisions play out.

According to Erken (2012) most MFIs in Cameroon are noted for not fully utilizing the CAIS. This is attributed to; the poor educational systems of most of the Cameroonian schools that neglect practical/technical education to general which deals mostly with theory, this probably because of the high cost involved in investing in technical education. The few that exist are too expensive that eliminate most young people who could be determined to learn more on CAIS. Also, the already existing workers in most MFIs find it as a difficult task to switch from the manual system to computerized system because of the time and cost involved in learning how to use the updated systems. In some cases, some MFIs do not have enough capital to possess the software and hardware needed to management of FMIS.

In the context of Cameroon, most MFIs are noted for not fully utilizing the CAS. This is attributed to; the poor educational systems of most of the Cameroonian schools that neglect practical/technical education to general which deals mostly with theory, this probably because of the high cost involved in investing in technical education. The few that exist are too expensive that eliminate youngest people who could be determined to learn more on CAS (Kwatinyuy,2018). There has been improvement area of financial management championed by the various schools and universities in Cameroon both private and public to meet up the ever-changing business environment. This study seeks to evaluate effective financial management in performance of computerized accounting system.

1.2 Statement of Problem

Day in day out universities and vocational training centers graduate thousands of students ready for the job market who cannot prepare a simply financial statement talk less of switching on a computer. The result of this has been ineffective financial management practices since these graduates can meet up with the new financial management practices.

Despite the obvious benefits that accrue as a result of the use of Performance of computerized accounting system s, some organizations have not achieved the benefits that result such as timely reports for quality accounting information to users which is reliable, accurate and timely due the fear by management to go for training, fear for loss of jobs, etc. However, despite of the many benefits of using performance of computerized accounting system s, in many public institutions, incidences of accounting malpractice, delays in preparation of financial reports, financial misreporting and fraud have been reported (CAG, 2012)

Nowadays, competition is everywhere in the business environment. Because of that, companies are trying hard to create better interaction with customers and suppliers. Therefore, wise decision making is very crucial to the success of the companies.

Sian Roberts (2009) suggested that managers need to have effective financial management as well as information technology (IT) as a tool to help them make effective decisions. Moreover, during the economic downturn, companies have to change their attitudes to be more competitive in the environment. Further, recent empirical evidence suggests that effective financial management may contribute to the success of companies in future (Barker 2003). Generally, the success of companies in managing its business financial should be evaluated by the owner of the companies in terms of their usefulness in decision making (Shahwan and Al-Ain 2008).

Although the importance of performance of computerized accounting system, there are many private companies which have not implemented this system. This eventually has led to incidences of accounting malpractices, delays in preparation of financial reports, misreporting of financial statements, misrepresentation of financial information which results into distorted information. Furthermore, it has prompted fraudulent activities perpetuated by accountants or accounting practitioners in the private companies. All these challenges pose negative repercussions to the overall financial performance of private companies (Ndalahwa,2019).

In advanced countries, the management of Financial Management Information System (FMIS) requires considerable management skills which of course they possess. This is not the case with developing countries Cameroon not being and exception. Most often than not, top managers in most organization are not computer literate and the staff as well. Many organizations do not have qualified accountants and have problems preparing accurate and timely financial reports, which is one of their major requirements.

Most of the recent researchers (Muchiri, 2017; Bahati, 2014; Naibei, 2014) have majorly concentrated on one financial management aspect of companies rather than a wider spectrum of financial management aspects that not only impact on profitability but performance of computerized accounting system.  It is against this background that this study was carried out.

1.3 Research Questions

1. What is the effect of liquidity management on the performance of a computerized accounting system?
2. What influence does capital budgeting have on the management of the performance of a computerized accounting system?
3. How does working capital management affect the performance of a computerized accounting system?

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