IMPACT OF AUTOMATED ACCOUNTING SYSTEM ON PAYROLL PREPARATION IN SOME SELECTED LARGE ORGANISATIONS

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Globally, automation of accounting system plays an increasing important role in economy and society at large, of which computer applications knowledge is a pre-requisite in every profession, opportunities are enhanced, whatever be the nature of the profession chosen. The presence of this small box in day-to- day function is overpowering and it has become the backbone of all banking accounting systems. Business depends on computers to handle all kinds of accounting and bookkeeping jobs. Banks use computers to record money deposited and withdrawn. You can also book and plan your entire travel agenda, including your ticket booking through e-mail facility, Boyett et al., (2005). It is globally belief that the computers are able to provide useful information if properly fed with a reasonable input or it will result in “Garbage in Garbage out”. The use of computer to carry out a very wide range of activities for work, study and leisure has become part of our everyday life. It is no longer something that you may want to use if you are interested; rather like motor car it is an essential part of our lives, Loudon et al., (2001).

The primary objective of an accounting function in an organization is to process financial information about the activities of the organization and prepare financial statements at the end of the accounting period. 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 it (deSantis, 2010).

Organizations seem to have realized that it is in their interest to run business processes while they are monitored by computerized accounting systems as opposed to manual given the great merits the former possess over the later. Accounting is a financial method used by businesses to collect, organize, process and summarize data for reports and statements. Accounting is used to keep track of business trends and to report on the relevant facts within the business. Computer and business Software allows more efficient processing and organization of data. Computerized accounting system refers to the integration of different component systems to produce computerized books of accounts and computer-generated accounting records and documents.

Computerized Accounting means that the “books” of a business are managed on a computer. Quick Books, for instance, would be an example of computerized accounting (there are many different software’s) Using Microsoft Excel to organize a business’ financial information is also a manner of computerized accounting. Accountants measure a business entity’s income, expenses and changes in resources. Back in the day, prior to the widespread use of spread sheet and computer applications, Accountants used journals and ledgers in which they recorded business transactions, hence, the term keeping the books. As computer applications became main stream, this keeping of the books accounts has gradually migrated into computerized spreadsheets. Gradually, accounting systems dedicated to this function were developed and the term Computerized Accounting was born.

Computer in commercial and industrial settings have been around for several decades. The banking industry computer has been used in various areas carrying out their day-to day activities through automated Teller Machine, electronic funds transfer, electronic data exchange, smart cards, MICR cheques, local area network, wide area work, point of sales system, electronic home and office banking, telephone banking, make cheque available program, computerized credit rating, daily calculation of accounts program, local accounting systems, CD accounting system, saving accounting system and safe deposit box accounting system. Computer has immensely aided in banking industry or baking sector in the areas of managerial position, sales department and other various department in the bank. The use of programmed decision making offers several important advantages to the firm, since the computer is potentially capable of making better programmed decision than the human user. One of the most existing things about the information and retrieving is that they are used oriented, Laura (2003).