CHAPTER ONE
INTRODUCTION
1.1 Background of study
Today,
business world is changing rapidly. Frequent investments and rapid pace of
changes in IT along with increased costs of research and development (R&D)
all are reasons for globalization (Fishamar, 2002). During past decades, role
of IT has changed in relation to how corporations manage and control their
resources (Teng and Calhoun, 1996). Organizations are reacting to a wide range
of ITs through different practices and with varied proportions based on
opportunities and bottlenecks faced (Johnson et al., 1986). Decisions on
foundation of IT structure need to be linked to making decisions on designing
organization of IT within organizations. As a result, IT plays a vital role in
new trade, especially with respect to accounting performance (Efendi et al.,
2006). IT alters the nature of practices of business and accounting basically
(Hunton, 2002). The first advantage of relationships between accounting and IT
is that they will be accepted gradually; without IT, accounting is not
accomplished easily, and it is assumed that IT is a base for accounting data,
allowing certain distortions on performance to be inquired (Granlund, 2007).
Therefore, IT and accounting systems will constitute main acknowledged part of
accounting research. Although it has been that IT plays an important role in
accounting field, few studies have been performed on relationships between
them.
In
the recent past centuries, before the inception of Information and
Communications Technology (ICT), the accountants of an organization were using
a socially acceptable behavioural method of reporting accounting and economic
reports, carried out during accounting year ends, the preparation of accounting
records, book such as the profit and loss account, the balance sheet, cash
book, cash flow statement, income and expenditure accounts.
The application of Information and
Communication Technology (ICT), on accounting practice in Nigeria has become a
subject of fundamental importance and concerns to all business enterprise and
indeed a prerequisite for local and international competitiveness. It is
obvious that the way accountants plan and take decision on what and how to
provide their service in the accounting profession has been affected immensely
by Information and Communication Technology (ICT). This has continued to change
the manner in which accounting practice and their corporate relationships are
organized worldwide and the variety of innovative device available to improve
and facilitate the speed and quality service delivery.
1.2 Statement of the problem
The growth within management of accounting and Information
system is presumed to be coming alive with the advent of Information Technology
(IT). The use of various forms of information and communication technology such
as software and ancillary equipment like computer hardware, database, internet,
intranets, Extranet, Telecommunication, Oracle, Statistical Package for Social
Sciences (SPSS), Structural Adjusted
Program (SAP), Automated Teller Machine (ATM), debit cards, electronic
commerce, Peachtree and Tax Software (Turbo Tax) to mention but a few, seem to have posed a problem to accounting
practice.
These have translated into some forms
of problem as the manner in which accountants can potentially add value to
economic entities and societies is undergoing a metamorphosis. Another problem
is that the accounting practice now requires higher level of critical-thinking
skills, such as designing business processes, developing e-business model,
providing independent assurance and integrating strategic knowledge.
It is observed that, when Information
Technology (IT) first arrived on accounting profession, accountants initially
automated existing processes rather than envisioning how information Technology
could be used to conduct business in new and innovative ways. The system has been
set; it is the duty of accounting profession to device a means of improving on
the Information Technology (IT).
Therefore;
the adoption of Information Technology in accounting practice in Nigeria have
resulted into greater speed, accuracy, timeliness and cost, which will obviously
reduce the task required on professional accounting.
1.3 Objectives
of the study
The extent to which accounting
practice have changed as a result of introduction of information and
communication Technology (ICT) is immense. IT has impacted the accounting
practice positively in diverse ways, as various
study in this area have largely shown that ICT and its perceived importance due
to its usage across several groups of business firms, especially in the field
of Auditing. This study is however aimed at the following objectives:
1.
To
assess the impact of ICT on firms’ financial transaction reporting.
2.
To
evaluate the challenges associated with information and communication
technology in accounting profession today.
3.
To
assess and explore the impact of ICT usage since it can directly impact audit
judgment, effectiveness and efficiency which form the basis for accepting the
financial statement as to it true and fairness.
4.
To
evaluate the impact of ICT on accounting practice since its introduction
5.
To
determine how the use of ICT have impacted and improved the performance of
audit exercise
6.
To assess the possible challenges faced by
accounting practices as a result of the adoption of ICT
1.4
Research questions
The research question formulated for
this study is below:
1.
Has
the introduction of information and communication technology improve accounting
practice?
2.
Does
information and communication technology affect profitability in financial
reporting?
3.
Does
the organization embark on training the accountant in other to accommodate the
change?
4.
Does the use of ICT have a resulting impact
on the on the performance of audit exercise?
1.5 Hypotheses
The followings null and alternative hypothesis
is guide to this work
Ho:
There is no relationship between the introduction of information and
communication technology and efficiency in accounting practice
H1:
There is relationship between the introduction of information and communication
technology and efficiency in accounting practice
1.6 Scope
of the study
Due to the ambiguity of accounting practice in both big and
small affirms across the country Nigeria, this research which looks into the
impact of ICT on accounting practice will be streamlined to the accountants and
audit departments of First Bank of
Nigeria PLC, Isolo Branch and Lagos State Ministry of Finance, Lagos State. It
will consist of accountants in the accounting and audit department of the bank.
This work will be restricted to cover the impact within
accounting practice and profession. The level of ICT investment by the firm
will help in the result and data presentation and generalized accounting
practice. Furthermore, this study can also help in analyzing ICT environment
that govern the preparation, presentation of financial statement and audit
evidence.
1.7 Definition
of operational terms
Information and Communication Technology ICT refers to “the
automated means of originating, processing, storing, and communicating
information, and includes recording device, communication system, computer system
(including hardware and software components and data), and other electronic
devices” (AICPA 2006a, AU 319.02). Audit ICT usage refers to the manner in
which auditors uses ICT throughout the process of their audit.
Auditing is the examination and verification of a company’s
financial and accounting records and supporting documents by a professional so
as to give his profound opinion as to the true and fairness of the financial
statement of that company.
Accounting information system (AIS) is a system of collection,
storage and processing of financial and accounting data that is used by
decision makers.
Enterprise Resource Planning (ERP): is an integrated information system
that serves all departments within an enterprise.
Automated teller machine (ATM): is an electronic banking
outlet, which allows customers to complete basic transactions without the aid
of a branch representative or teller.
1.8 Proposed
Organization of work
Chapter one: These comprises of the Introduction of the
research work which includes the Background of the study, Statement of the
problem, Objective of the study, Research question, Hypothesis, Scope of the
study, Organization of the work.
Chapter two: The chapter will review the related
literatures with critical review of the conceptual framework, the review of
prior study as related to the software, the impacts of ICT at various level,
the benefits of ICT.
Chapter three: This chapter examines the
methodology used in this study, thereby analyzing the research design,
population of study, sample size, source and method of data collection, method
of data analysis and decision rule.
Chapter four: This chapter seek to present the
result and analyse the data. The analysis will focus on Data presentation and
test of Hypothesis.
Chapter
five: This
chapter will seek to summarize the findings in this research, with a view of
concluding the research, making necessary recommendations and stating the
limitations of the study.