AN EVOLUTION OF THE IMPACT OF COMPUTERIZATION ON THE ACCOUNTING SYSTEM OF SMALL SCALE BUSINESS ORGANISATION (A CASE STUDY OF MODEL COMPUTERS COMPANY WARRI DELTA STATE)
The development and implementation of systems in any organisation is a natural consequences of the need to establish an integrated information system that will assist an enterprise to achieve maximum performance in meeting total organizational objectives.
Webster defines a system as “an organized set of interrelated principles intended to explain the …. Working of a systematic whole. An organized or established procedures (of operation) a manner of classifying, symbolizing, or schematizing; harmonious arrangement or pattern, bringing order out of confusion cost in a business environment. We may conclude that system is an orderly approach to accomplishing organizational goals.
In a practical sense systems can also be viewed as ‘the combination of components that include all or same of the following. Objectives, relationships, and a boundary with the rest of the univers. Inherent in this definition is the fact that a description of a system must begin with a description of its elements and components, which make up the system.
An element is the smallest component of a system that can be can be used in a system’s description or design. The cord, which binds the subsystems, or elements of a system, together, is the systems objectives. The system concept simplifies and integrates phenomena that appear to be complex and unrelated. This is one factor, which makes the development of systems imperative for organisations.
There are different types of systems and systems can be variously classified of interest to us are organizational cum-business systems, which are open systems. According to Anderson, a business system may be defined as:
“a combination of related sub-systems consisting of a series of operations arranged in a logical sequence to achieve a particular purpose as efficiently as possible.
It is important to note that the systems approach to business organisations stresses the importance of information and information systems in processing and communicating the required information to the user. If this information is not accurate or readily available, management cannot effectively control the organisation and will find it difficult to make sound decisions.
Since the typical business environment is dynamic, the information system must be able to respond to the new demands placed upon it. For this purpose such systems, according to Dauis et al, must have the basic objectives of simplicity, flexibility, reliability, timeliness and feasibility. Systems should be able to meet the needs of users.
The modification and development of an information system generally follow a cycle. This cycle is repeated with each major systems change. The process involves system analysis, systems design, system selection and implementation and systems operation.
It is evident that all organisations have limitations. The success of a system, therefore, will depend on its ability to operate within given constraints while still meeting its objectives. Dauis et al have identified these constraints as management policy, personnel, resistance to change, financial resources, technology and environmental constraints.
The soundness of the conceptual approach to systems development will be in direct proportion to the degree in which it embraces some fundamental principles. Willain Gill gives the principles as follow:
- That systems and procedures consideration should be recognized as an essential part of the processes of management,
- That the application of systems and procedures considerations to the process of management must be dynamic and
- The improvement of systems and procedures, through simplification and standardization must not be seen as a start-and-stop drive, it is a continuous, repetitive function that can pay off in a host of beneficial results.
2.2 ACCOUNTING INFORMATION SYSTEM
Accounting information system encompasses the processes and procedures by which an organisations financial information is received, registered, recorded, handled, processed stored, reported, and ultimately disposed of viewed as one part of a management information system, accounting can be seen as possessing all the elements of a system viz objectives, inputs, processes, outputs, controls and a boundary.
The objective of an accounting information system has been given by summers as”
“to monitor an organisations monetary dimension of economic activity by processing data according to know rules and delivery precise information that is useful to those who plan and manage the organization’s activities as well as interested outsiders.
It is obvious from the above expression that the information. Which these systems supply, constitutes a consistent and reliable framework for managing operations. It could be rationalized, therefore, that an effective accounting information system is crucial for the success of any organisation. Summers again captures it in this way that;
“by accurately keeping trade of the economic life of an organisation, these systems enable business activity to be undertaken and sustained”.
However, Davies et al have noted that despite the fact that accounting information systems enhances organisations operation, they cannot be left to chance but must operate under the gis of some pre-designed regulating features (controls).
It is imperative, therefore, for a properly designed accounting system to have some basic principles. An accounting system must be tailored to meet the specific needs of each business. since cost most be incurred in meeting these needs, one of the major considerations in developing an accounting system is cost effectiveness. No matter how informative a report may be, it should not be produced if it costs more than the benefits received by those who use it.
A characteristic of the modern business environment is change. Each business must adapt to the constantly changing environment in which it operates. So the accounting system must be flexible enough to meet the changing demands made on it.
Accounting systems should also have adequate internal controls. The detailed polices and procedures used by management to direct operations so that enterprise goals can be achieved are called internal controls. It is evident that users of the information provided by the accounting system rely on various reports for relevant information presented in an understandable manner. Thus an accounting system should be capable of effective reporting.
Fundamental to the success of an accounting system, is its adaptation to organizational structure. The accounting system mus be tailored to the organizational structure of each business. the lines of authority and responsibility will affect he information requirements of each business.
CHARACTERISTICS OF AN ACCOUNTING INFORMATION SYSTEM
The first characteristic is INPUT. Accounting information systems are federal by business activity. Input items are thus the representatives of documents and contracts that constitute the objective, verifiable evidence of consummated business transactions. On the significant of input, Davies et al state that “a reduction in the flow of the input diminishes systems efficiency and effectiveness.
The second characteristic is OUTPUT. Given that information is the product of the refinement of raw data, the operation of a dynamic process should create certain visual evidences of successful processing. These evidences are the outputs, which, essentially, are reports, base on the data and tailored to the needs of internal and external users.
The third characteristic is the PROCESS. This, according to Davies et al, encompasses all the systemic elements and operations that contribute to the data transformation sequence.
The fourth characteristic is the CONTROL. The function of control quality. Summers in his exposition on control, writes that the controls applied within an accounting information systems have objective, preventive, feedback and follow-up element. Control, therefore, should literally mean inviolable operating rule to the accountant.
The fifth characteristic, which is the last for our purpose, is FEEDBACK. According to Davies et al the term feedback is commonly used to denote the modification of the processing activity based on measurements of the output stream as compared to some predetermined standard. In practical business terms, this means a constant stream of uncompleted business transactions and adjustments to other input records affecting future processing.
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