CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY     

Business today is being done or conducted in an age of economic crisis and highly complex technology imposed on business management, there is need to implement sophisticated business systems which accords with present day needs. Looking at these, it is therefore necessary that effective and useful information should be provided to an organization for effective decision making. We are living at the age of information and technology environment which requires today’s accountant and auditor or manager to be versed in the use of computer if he or she does not want to be left behind. Computer can be seen as machines which magnify information as well as data about workers abilities since it can receive and process back information, therefore person skills in using computer system will increase his or her output. 

Today computers are used in different  forms in both  small and  large business, education, science and engineering, health  care, sports in our homes, entertainments and leisure e.t.c   Technological development through the years enable us to do more with less effort. Today we are now witnessing one of the most dramatic technologies ever developed. A computer can just be seen as a device that works faster than an ordinary human brain. Although a machine or computer has no brain of its own to reason like a human being but has the in build memories and other accessories that enable it to solve complex of mathematical problem as fast as possible.

There are two types of computer namely, the Digital computer and the Analogue computer and their computer language such as (FORTRAN, COBOL, BASIC, ALGOL etc) the computer can  translates sources programmed from a high level language (FORTRAN, COBOL, BASIC, ALGOL) into a machine  language. The computer language that concerns the accountant is the common business oriented language (COBOL), which is English ion Nature. Before the introduction of computer into the business world, accounting computation were usually done manually, but with the introduction of computers accounting jobs has became more easier and fasters to perform the rate of errors has drastically reduced to the barest minimum. Since the computer cannot err as it is in human being, unless there is a human error with regards to the feeding in of the input where the logic of Garbage in and Garbage out (GIGO) will emanate.

The computer also cannot operate itself, but it can only work where an individual feed in information into the computer, the computer has its memories that can store in data for a long time use. Computers are very sensitive and highly complicated in nature. Accounting system, in a public sector means the services of task and records of an entity by which transactions are processed as a means of maintaining financial records. Such systems identify, assemble analyze, calculate, classify, record, summaries and report transactions and other events. The accounting system also comprise the internal control system which also comprise of environment and control procedure. It includes all the policies and procedures (internal controls) adopted by the directors and management of an entity to assist in achieving their objective of ensuring, as far as practicable, the orderly and  sufficient conduct of its business, including adherence to internal  policies, the safeguarding of  assets, the prevention and detection of fraud and error, the accuracy and completeness of the accounting records and timely, preparation of  reliable  financial information internal controls  may be incorporated within computerized accounting systems.

However, the internal control system of public sector accounting go beyond those matters which relate directly to the accounting system. Control environment means overall attitude awareness and action of directors and management regarding internal control and their importance in the entity or public sectors, the control encompasses the management style and corporate culture and value shared by all employees.

Nwohode N.G.(2011),Auditors are only concerned with the policies and procedure within the accounting system or internal control systems that are relevant to the financial statement assertions the understanding of relevant aspects of accounting and internal control systems, together with the inherent and control risk assessment enable auditor to assess the adequacy of the accounting system as a basis for Preparing the financial statements. Accounting system and control environment which is (internal system) state that in planning the audit, auditors should obtain and document and understanding of the accounting system and control environment sufficient to determine their audit approach in the process of understanding of the accounting and internal control system, some test of control on one assertion may provide audit evidence about effectiveness of the operation of internal control relevant to another assertion, in obtaining the understanding of accounting system pertaining to cash, auditors may obtain audit evidence about the effectiveness of the bank reconciliation process through enquiry and observation. In a computer environment auditor may find it necessary or may prefer to use computer assisted audit techniques. The use of such techniques, for e.g. file interrogation tools or audit test data, may be appropriate when the accounting and internal control system provide No visible evidence documenting the performance of internal controls which are programmed into a computerized accounting system.  Accounting and auditing system were formally evaluated by the use of manual operation irrespective of the manner in which business organization have evolved. One factor has remained constant and that is the need for Book-keeping (that is, the recording of business transaction in an orderly manner). In order to, among other measure the value of resource employed and profitability (or otherwise) of the business venture. Various forms of recording existed in the accounting and auditing department ranging from situation in which virtually No record were kept to single entry system, double entry and computerized system. Manuel accounting system operated by human afford clerical personal or book keepers prepare business from making journals, entries posted to ledger account and prepared financial reporting, many small business able to satisfy within their information requirement with the manual system, although this has decrease significantly because of the increasing popularity and decreasing cost of computer.

John  (2002),Refinement of accounting and auditing system equipment it has being  mentioned that  business often referred to general accounting records of a manual  system,  to provide more efficient data processing and satisfying his own information requirement to process data accurately, most business used some types of equipment are calculators, type writers, cash register and copying machine are use to reduce the work a lot, and reduce errors wide range of additional  equipment is available  and can be adopted satisfy the information requirement and operating condition of a firm. 

YemiAjijason (1999)The most modern and sophisticated types automated accounting and auditing system  involve and electronic computer, Electronic data processing the term of electronic data process  and computer data processing are often use interchanging, refers to the sure of electronic consistence of a computer and its preference equipment to process, the primary advantage of computer in accounting and auditing accurately in speed, storage capacity, versatility for performing analytical operations as a firm  grow in size and the value of paper  work  from transaction to the process, increasingly significantly  at some point that cause  inaccurately in the daily of manual  system  force, today electronic equipment are at advance  stage.   

It was mentioned earlier that accounting and auditing system in the public sector are those financial activities of a government ministry or parastalas are made into several separate entities called funds for purposes of recording information, reporting financial position and the result of operations, therefore, some ministries and prastatals are given certain  money for a specific purpose of which the ministry or parastatals are expected to give account of the fund to ensure that the purpose of the fund are met. 

For example certain amount as released to all the higher institutions to enable them give refurbishing loans to the teaching and non-teaching staff of the institutions. It is mandatory that a separate report on the fund will be given which will also be included in the main account of the ministry or parastalas. Furthermore, when accounting and Auditing were able to create fund in that organization to meet government policy on certain issue, a separate fund account will be prepared as such, receipt and payments accounts revenue/income and expenditure accounting should be prepared to account for the fund, the receipts and payment account consist of actual money received and payment made during the accounting and auditing period of the public sector account.

1.2       STATEMENT OF THE PROBLEM

Computer has the ability to get you tentative information and answer fast enough, so  one has time to take action on them, it also has the memory unit to store large amount or huge quantity of information which can be retrieved when required. It has a high level of accuracy and consistency which can be relied upon. Computers are capable of performing almost any task provided that the task can be reduced to a series of logical step; it performs its specific task automatically. Computer does not got tired completely when operating it or loss concentration, despite these recorded success.

This study therefore is directed toward determining whether the cause of this nonchalant inadequate attention or recognition of computerized accounting and auditing originate as a result of inadequate qualified workers to handle computer, its inability to eradicate fraud  completely, its installations cost and maintenance or as a result of epileptic power supply in the country at large which  affects the out put of the system or whether computerized and auditing system  makes accounting and auditors redundant leading to consequential unemployment among the labour force of that discipline in the country entirely. its seems from the researcher observation that computerized accounting system  on auditing has not been given its attention in the public and private services right from federal, state and local government especially in the Peugeot Automobile Nigeria Limited Kaduna.

1.3       OBJECTIVE OF THE STUDY 

The main objective of this research is to evaluate the impact of computerized accounting system on audit of Peugeot Automobile Nigeria Limited Kaduna as a case study. Other specific objective includes to;

i.                 See whether organizations has qualified personnel’s to handle computer in the Account and auditing department of the organization.

ii.               Minimize fraud in the organization through the use of effective computerized accounting and auditing system.

iii.             Minimize the effect of Virus which affects the computer which resulted to damage of files and some component of the computer.

iv.             See how the persistent network problem can be solve which at times render the computer activities sluggish in the accounting and auditing department     

1.4       RESEARCH QUESTIONS  

In view of the proceeding identification of problems the following questions were raised 

i.                 Do computerized accounting has an impact on auditing system of the Peugeot Automobile Nigeria Limited Kaduna?

ii.               Do organizations has qualified personnel’s to handle computer in the Account and auditing department?

iii.             How can fraud be minimize in the organization through the use of effective computerized accounting and auditing system?

iv.             How can the effect of Virus which affect the computer which resulted to damage of files and some component of the computer be minimize.

v.               How can the persistent network problem be solve?

1.5       HYPOTHESES OF THE STUDY

In line with the objective of the study, the following hypothesis are been formulated;

H0       Computerized accounting system has no impact on Auditing of Peugeot Automobile Nigeria Limited Kaduna

H1             Computerized accounting system has a significant impact on Auditing of Peugeot Automobile Nigeria Limited Kaduna.

1.6       SIGNIFICANCE OF THE STUDY 

This study is limited to staff of  Peugeot Automobile Nigeria Limited Kaduna, and its significant in the sense that it will assist government train and retrained accounting officers and auditing officers to be able to become knowledgeable and competent in handling computers in their various filed of Endeavour for adequate professional and financial decision making as well as improving the quality of service delivery in the public service the study will further  serve as a ringing  bell to accountant and  accounting students to be computer literate as a matter of fact to avoid redundancy.

1.7       SCOPE AND LIMITATION OF THE STUDY

The research aimed at studying the impact of computerized accounting system on audit in public service with the Peugeot Automobile Kaduna as the study area. The study focus on the retreat of computerized accounting system on audit system in the sector, it also tend to outline the significance of computers usage with reference to the Peugeot Automobile Nigeria Limited Kaduna, from 2011 till date.

This study is limited to Peugeot Automobile Nigeria Limited Kaduna, due to lack of adequate finance, time to conduct the research and in adequate materials constituted major difficulties during the research finding.

1.8  DEFINITION OF TERMS

-               Computer:-A general purpose machine with application limited only by creativity of the human who use it.

-               Hardware:- System in the computer itself and all of its mechanical electrical magnetic and electro parts which consist of central processing unit (CPU) made-up arithmetic I logic unit central memory I storage and control it also consist input and out devices.

-               Software:-System programmer that tells the computer what to do soft ware may be written by use or supplied by the manufacturer of the computer, it is a supervisor programme or langrage  translator.

-               Data:-A presentation of facts concept on instruction in a formularized manner suitable for communication, interpretation or processing by humans on automatic means. 

-               Auxiliary Storage:- A storage that supplements the primary internal storage of a computer.

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