1.0  CHAPTER 1 1.1     BACKGROUND OF THE STUDY

Accounting is the process of identifying, record, classifying and summarizing financial transactions to produce the financial reports for their ultimate analysis (European commission, 2008). Accounting systems has two aspect. First, it works under a set of well-defined concepts called accounting principles. The second is a user defined framework for maintenance of records and generation of reports. Account reporting serves as the custodian of the ledger, related accounting transaction and reporting applications and data warehouse tables; provides timely, compressive, and accurate financial reports and analysis, and maintains a system of internal accounting and system controls to safeguard peoples’ assets and ensure financial data integrity (UI, 2006).

In a manual accounting system, transactions recorded in the books of original entry are further classified by posting into ledger accounts. This results in transaction data duplicity. In computerized accounting, no such data duplication is made to cause classification of transactions. In order to produce ledger accounts, the stored transaction data is processed to appear as classified so that the same is presented in the form of a report. Different forms of the same transaction data are made available for being presented in various reports.

The transactions are summarized to produce trial balance in manual accounting system by ascertaining the balance of various accounts. As a result, preparation of ledger accounts becomes a prerequisite for preparing the trial balance. However, in computerized accounting, the originally stored transactions data are  processed to churn out the list of balances of various accounts is not a necessary condition for producing trial balance in a computerized accounting system.

In manual accounting system, these entries are made to adhere to the principles of cost matching revenue. These entries are recorded to match the expenses of the accounting period with the revenues generated by them. Some other adjusting entries may be made as part of errors and rectification. However, in computerized accounting, journal voucher are prepared and stored to follow the principle of cost matching revenue, but there is nothing like passing adjusting entries for errors and rectification, except for rectifying an error of principle by having recorded a wrong voucher such as using payment voucher for a receipt transaction.

After the preparation of financial reports, the accountants make preparations for the next accounting period. This is achieved by posting of closing and reversing journal entries. In computerized accounting, there is year-end processing to create and store opening balance of accounts in database.

Manual account reporting system has been discredited for its inability to give real-time report, slow retrieval of data and information, inaccuracy among other things. On the other hand, computerized accounting system has the setback of possibility of loss of data following system failures; high cost and exposure to computers (Amongin, 2007).

In spite of these setbacks, computerized accounting reporting system is still the preferred system. It is against this background that this project was carried out to design and implement a computer accounting system that will be tested in financial institutions with a view to access the quality of accounting report produced by the system.

Accounting report can be done manually or electronically through the use of computer. The identification of transactions, based on application of accounting principles is, common to both manual and computerized accounting system. .the recording of financial transaction, in manual accounting system is through books of original entries while the data content of such transaction is stored in a well-designed accounting database in computerized accounting system.

The implication of inaccurate accounting report can be devastating and result in employees tragically making career and retirement investment decision based on a false picture of their employer’s financial prospects (FRC, 2010)

1.2     PURPOSE OF THE STUDY

Accounting is a necessary function for any of their income expenses and the records should be as detailed as possible.  For some the idea of spreadsheets, general journal books and ledger sheets is frightening. This project was prompted by the fact that financial transaction and accounting reports are often delayed because of errors, omissions and inability to cope with calculations and entry of data. Also, cases of fraud / errors cannot easily be detected either due to the volume of files / works and or lack of time. Moreover, much energy is expended in manual sorting and entry of accounting records leadings to fatigue and reductions in productivity. Furthermore, rectification of errors often implies that the accounting process be repeated, which is often not palatable to the accounting system that will enhance both efficiency in the accounting process and reduce, detect and also rectify errors, while saving time and energy of the accountant.

1.3     SIGNIFICANCE OF THE STUDY

The overall goal of this project is to design and implement an account reporting system. Specifically, the project sought to:

1. Identify the types of account reporting system in use in the financial institutions.
2. Design a computer based account reporting system that will be used for accessing the records of students and other transactions.
3. Implement and test the computer accounting system in financial institutions.
4. Establish the qualities of accounting reports generated by computerized accounting system.

1.4     SCOPE OF THE STUDY

This study is concerned with the application of an accounting system that will be used in the Bursary Department of Ken Saro-Wiwa Polytechnic, Bori. Both primary and secondary data will be collected from the unit.

1.5     OBJECTIVE OF THE STUDY

1. The success of this application will boost the efficiency of the accounting systems in the Bursary Unit of the school as well as other organization where large volume of data and financial transactions are carried out.
2. It will help in eliminating sources of complaints by both workers and customers.
3. The study will enable management to understand the significance of preparing quality and reliable financial reports.
4. The study will point out weakness in the accounting system which management needs to address
5. Other researcher will use the report as literature review in order to improve on their research topic in another period

1.6     DEFINITIONS OF TERMS

Some terminologies used in this project are hereby defined:

Computer sections: this is the computer application that contains series of programmes which will be used to process the data available in order to solve problem at hand.

Data: This is a representation of facts, figures, symbols etc.

File: is a set related records treated as a unit

Flow chart: is a diagrammatic and symbolic representation of the logic flow in a programme system.

Ledger: this is location of all accounts an entity maintains in its accounting system.

Reporting system: it is an integrated set of objects that constitute the report.

Software: is a unit of programme written by Ht computer expert to perform a specific task.

Data processing: it is a sequence of actions that are taken to transform the data into decision useful information.