1.1 Background of the study
Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof. Accounting can also be referred to as an information system that measures, processes and communicates financial information about an economic entity. Advancements in information technology have dramatically improved accounting systems and transformed economic life. Computers and other digital technologies have increased office productivity facilitating the rapid exchange of documents, research, collaboration with far-flung partners and the collection and analysis of data. Information technology gave all sorts of individual economic actors the new valuable tools for identifying and pursuing economic and business opportunities. Information Technology (IT) deals with the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data. This may also be described as anything that renders data, information, or perceived knowledge in any visual format through any multimedia distribution mechanism. Applying in the context of business, it is designed to help management in their stewardship function, support management in their day-today operations and decision making.
In 1880, machines where invented to help in the accounting system. As year years passed by, advancements on information technology also transformed accounting systems and its processes. There were many developments in the Accounting Information System (AIS). This is designed to help in the management and control of activities related to the firms’ economic and financial area. Accounting system is essential for majority of the business entities. The advancements of technology have lead in the creation a computerized accounting system which is commonly adopted by business entities at present. This has created a competitive market. Thus, entities need to improve their systems in order to match their information needs for better decision making. An information system is a set of interrelated subsystems that work together to collect, process, and store, transform, and distribute information for planning, decisions making and control. The use of computer in information systems can improve the efficiency of information collection, processing, storing, transformation and distribution. Accounting information system (AIS) is a tool which was incorporated in the field of Information and Technology systems. It is very important for business entities. This is the one responsible in generating reliable financial information needed for decision making. There are many varying designs of the system for they must consider factors that influence the way in which information is gathered and reported. It will still depend on the anticipated users of the information and the types of decisions they are expected to make. The design of the system may also depend on the size of the firm, volume of transaction data, nature of operations, organizational structure and business form.
Accounting evolved from everyday activities of an organization to produce relevant information for decision making. Information on financial activities is thus vital to organization’s existence, survival and growth. Proper and accurate record of these activities is therefore an effective means of generating the required accounting information. Every corporate organization, private or public, require records of its financial activities be kept for performance evaluation. However, the method of transmitting financial information has been greatly influenced by rapid changes in Information Technology and introduction of computers. The first computing machine created was used for accounting which marked the new beginning in the history of the profession as it is being increasingly embraced by organizations to simplify accounting records. The introduction of computers and innovations in Information and Communication Technology (ICT) has changed the manner accounting and Accounting functions are performed. Computerization of financial accounting system has posed challenges to the accounting profession as accountants now face a number of problems especially when doing accounting and Accounting of companies in the electronic environment. It has however increased the fraternity (scientific exposure) of accountants to improve the service levels and variety of services rendered to clients. Traditionally, auditors’ schedule included discrete phases of planning but in today’s continuously evolving technology-driven world of financial statement, auditors might have to revise the traditional audit schedule due to changes in technology and perform tests on a continuous basis.
1.2 Statement of the Problem
Accounting in e-environment is highly challenging due to the fact majority of documents are kept electronically. Some of the challenges include lack of source documents which evidenced a transaction, lack of audit trail, inadequate knowledge of computerized process of accounting data and electronic initiation and approval of transactions.