CHAPTER ONE

INTRODUCTION

1.1        Introduction

The statement of problems, objectives of the research, also the significant of the research, organization of the study, those information related to the background of the study presented by introductory chapter.

1.2        Background of the Study

Condition which a role to another renders account to another its judgments made with adequacy of performance called accountability, said that performance is linked to accountability. Kogan (1986) . Lerner and Tetlock (1999), equate accountability not only to reporting but also to the justification of performance, and they continue to explain accountability as the understood and unambiguous prospect called upon to give good reason for one’s faithful, feelings and actions to others.

Computerized accounting system (CAS) was introduced in Tanzania Public Institutions in 1992, when the government evaluated several computerized aspects of professional deals on financial management functions and that help them to move from using manual accounting software towards an automated system. Always improvement in performance in the financial department hassled to increases significantly (World Bank, 2002). Before the introduction of computerized accounting system the accounting practice was performed manually. These accounting records were prepared manually, however, nowadays many accountants desire to use the application of software to enter transactions in the books of accounts, statements and make their analysis of their organization financial information. The information were collected from transaction records and made their compilation into financial position (Weber, 2011). Frankwood (2009) elaborates more about the impact of computerized accounting system on accounting records in local government be measured by the degree to which the local government has been in execution to use of CAS.

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The CAS deals with recording accounting transactions using computer through various accounting packages and stored in a database. The users of that database prepare reports accurately. The fundamental of computerized accounting system includes all the basic requirements of any database learning. The application of computer system helps the simplification, integration of all business processes, cost efficiency and helps to present exactly all the business undertakings to stakeholders of financial reports.

Due to rapid changes in technology, many organizations prefer to track monetary transactions with computerized software. So, Morivic (2009) contended that computerized utilization offers assistance to limit human mistakes ,loss of monetary exchange in computer, using computerized accounting system was the safest rather than keeping financial activity manually by using ledger transactions. The presentation of automated bookkeeping framework creates great and exact budgetary report for both administration and outcasts for decision making. Computerized accounting system spread all over the world globally in business environment in which the computerized accounting became the engine of growth in business organizations. This provides a number of benefits such as speed of carrying out routine of transactions, timelines, quick analysis, accuracy and reporting.

Main computerized accounting system used in local government authorities in Tanzania is EPICOR 9, MS exel, TISS, Pastel, Tally, and Quick book. Accounting is an essential part of any business, large or small owners, profit making or not for profit organizations. Many LGA`s did their accounting manually and they were satisfied. Others may be considering using a computerized system, since accounting software was most affordable.

Local Government Authorities (LGAs) are not for profit civil society organizations created with the mission of addressing the underserved aspects of national life and development. Over the last decade there was remarkable growth of LGAs in the developing world. Cook (2003) emphasized that many donors view the LGAs as a better alternative to governmental agencies in getting services and assistance to 2

those computerized accounting system, purposely in countries that are in weak position in terms of political favoritism and corruption.

Several studies on computerized accounting system and organization performance was conducted in the organization to investigate the impact of computerized accounting system on preparation and publishing of financial reports (Imeokparia and Olajire, 2013). In Tanzania, Oladipupo and Ajabe (2013) provide empirical evidence on the existence of computer based accounting system in Local government; Otieno and Oima (2013) examine the effect of computerized accounting system on audit risk management in public enterprises; Yaser (2013) investigated the effect of computerized accounting system in income tax departments to check the effectiveness of tax audit and collection; and El-Dalabeeh (2012) looked into medical services to understand how computerized accounting information system is used to reduce costs of medical services.

Little has been done on Computerized Accounting in Organization performance at a Local Government level whereas, this study intended to assess the impact of computerize accounting system usage on organization performance in Tanzania with a special focus on local government authorities (LGA`s) in Arusha Region.

1.3 Statement of Problem

Currently, local government authorities took different measures to develop efficiency in accounting practices including switching to computerized Software in accounting as a result has increase the efficiency and improved compared to those years when accounting was manual (URT, 2003). There are also several challenges in information communication technology with regard to computerized accounting system including information communication technology which drives computerized accounting system CAS being concentrated mainly in Dar es Salaam as noted by URT (2003). There were many difficulties in adoption of information communication technology on computerized accounting system in Tanzania. According to Nfuka (2012) noted that the bureaucracy and lower managerial autonomy in local government limit the freedom for organization performance, due

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to complexity legal regulatory lead to difficulties in embedding the application of computerized the accounting system in local government. The Problem was some local government used manual accounting system which associated with large number of books which create transaction errors in recording large number of transactions. The use of manual accounting system is attributed by lack of expertise knowledge about computerized accounting system in LGA`s. Information communication technology on computerized accounting system was intended also to be effectively utilized in local governments to bring impact in the accounting and organization performance in LGA`s. Moreover, few studies have been done on the effects of computerized accounting systems in local government and the quality of financial reports like a study by Mwaura (2013). Otieno and Oima (2013) study the implementation of the computerized accounting system in Kisumu, Kenya. No studies done about assess of the impact of computerized accounting systems usage on organization performance of LGAs especially in Tanzania. Thus, this study intended to fill this research gap by assessing the impact of computerized accounting system usage on organization performance in Tanzania with special focus in local government authorities (LGA`s) in Arusha Region.

1.4        Research Objectives

1.4.1  General Objective

To assess the impact of computerized accounting system usage on organization performance in Tanzania with special focus in local government authorities (LGA`s) in Arusha Region.

1.4.2  Specific Objectives

i.           To assess the level of usage of computerized accounting system in the organization.

ii.           To assess the performance of the organization with respect to adoption of computerized accounting system.

iii.           To assess the challenges encountered with the use of computerized accounting systems in the organization.

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iv.