CHAPTER TWO Literature review 2.1 Introduction In trying to assess the impact of ICT on accounting practice in Nigeria, one does not only need to concentrates on trying to gather fresh knowledge or facts but also need to concentrates on how to get himself familiarized with existing studies on the same subject and how to develop solution to solving the problem under review. In trying to do so, the researcher need to take into cognizance the findings made in the previous studies and also be able to know the answers to come out with; that could be useful for further research work. Information and Communication Technology needs not be over emphasis as people needs and relies on information systems to communicate effectively using physical devices (Hardware) e.g. telephone, computer, information processing and procedures (softwares) e.g. the use of DMS,SPSS, Yahoo messenger, 2go, Facebook, communication channels (Network) e.g. intranet, extranet, internet, intercom and data store (data resource) has been so impacting from the onset of civilization. 2.2 conceptual framework The advance in ICT and other business technology are making accounting practice easier, faster and cleaner; however, the rate at which technology has been introduced makes it more difficult for accountants to cope up with accounting practice. It is important to consider where the impact of ICT lies, being in a broader information society conceptual model. These model used by OECD 2009 to illustrate the information society, identifies the following inter-related segments: ICT supply (ICT sector), ICT demand (use and users), ICT infrastructure, ICT products, information and electronic content and in a wider social and political context. These research work will examine the impact of ICT on Auditing, individuals, work group, employment and production etc. and the application software that are needed in executing each task at the various sector of the economy. 2.3 Literature review of prior study The effectiveness of accounting practice and increase in productivity and high turnover as well as the profit of any organization is as a result of the impact of ICT. Electronic data processing (EDP) is the process of changing raw data, facts into information that are meaningful to the mangers and accountant for decision making. EDP is the function of planning, recording, managing and reporting business transactions by the use of computer and related peripherals. EDP in accounting practice; the accountant gets the data from the source documents which includes the receipt, invoice, payment vouchers, written cheques etc before there are been inputed into the computer and process into information meaningful to the users as output. (MIS by James O’Brien). According to Apulu and Lathan (2010), claim that ICT enables customers to receive immediate feedback that allow companies to react fast to customers’ demands and recognize new market niches. This entails that organizations that are able to exploit the potentials offered by ICT can handle various types of innovative processes in their businesses since ICT influences the performances of an organization in multifaceted ways. Thus ICT can bring about change in organizations and make them more competitive, innovative and assist to increase organizational growth. Alam and Noor (2009) argue that ICT offers enterprise avenues to compete on a global scale with improved efficiency and closer customer and supplier relationships. Therefore, ICT should be regarded by businesses as an important strategy to stay competitive. Currently, the manner in which accountants can potentially add value to economic entities and society is undergoing a metamorphosis. Many traditional accounting task dealing with the recording and processing of accounting transactions can be reliably automated. In this regard, accountants add little incremental value to organization, but now accountants worth is reflected in higher- order critical-thinking skills, such as designing business processes, developing financial strategies, designing e-commerce models, providing independent assurance to companies and individuals. 2.3.1 Accounting and application software; This is a set of computer programs that help accountants of the 21st century to carry out their task effectively. Prior to the 1960s, the accountants were perceived as a book-keeper whose primary responsibility was ensuring that records were kept. The accountants fought a constant battle against the failure and lost of records. Computer provides more efficient means of keeping the books, and they afforded the accountant quick access to financial information for reporting purposes. Accounting software and applications such as peachtree, SAP, sharepoint, DMS, Turbo tax, Microsoft dynamics, Quick book, Oracle, spreadsheets, Global enterprise resource planning system (ERPS)loctus (e-mail) etc has help accountants like auditors perform their task effectively and efficiently. These software and applications have helped tremendously in impacting on work group level and business process level. 2.3.2 Impact of ICT at business level. Information technology has made it possible to stay plugged in and connected on a 24/7 basis. Documents containing information regarding business operation and performance can be access effortlessly. 2.3.3 Impact of ICT at work group level. Information can be easily shared among colleague in an organization. ICT has made it possible to stay connected 24/7 with the help of: Blackberries Laptop Facebook E-mails 2go Twitter etc. The problem of one staff is not on seat so work should be delay or stop is eliminated as you can literally be flying over the Atlantic and still be able to talk and e-mail colleagues and clients. 2.3.4 Benefits of the impacts of ICT on work group: Increase productivity Increased customers service relationships Increased freedom to work from any were 2.3.5 Audit An audit is an official inspection of an organization books, accounts and financial statement. Audit can be carried out internally by the internal auditors in the entity internal control department or externally by an independent professional accountants (Auditor). It is aimed at; providing information as to true and fairness of the financial statement. It provide assurance of accountability, identifies the weakness of the internal control system and make recommendations. The report of the auditor form an opinion as to the true and fairness of the financial statement. The report provide users such as individuals, tax authority, investors, creditors, Government etc as an assurance to rely upon for their decision making based on the audit report. 2.3.6 Impact of ICT system on auditing (a) Computerized accounting system. One of the greatest impact of ICT on accounting is the ability of companies (audit firms) to develop and use computerized system to track, extract and report on financial transactions. It allow the auditor to report quickly and easily for decision making. (b) Increase functionality. Computerized accounting system have improved upon the functionality of accounting departments by increasing the timeliness of accounting information. Accountants can now prepare reports and operations and analysis that give management an accurate picture of the client firm under review. (c ) Improved accuracy Errors and fraud are easily detected as it limit the number of accountants that have access to financial information. Less access by accountants ensure that financial information is audited by only qualified accountants or supervisors. (d) Reporting deadline/testing processing. Since the advent of ICT, accountants now process large volume of financial information quickly through the use of some audit software such as CAAT. Reporting that might have taken an accountant months or years to prepare can be done within a relatively short period of time, thereby aiding companies in cost control, which increase the companies overall efficiency. (e) Better external reporting Investors can be inform on time on the liquidity of the company, and make informed decision as to whether to invest in the company or not. The existing shareholders will know the performance of the directors and how efficient they are.
Posted on: Thu, 25 Jul 2013 17:27:46 +0000
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