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COMPUTERIZED ACCOUNTING SYSTEMS AND FINANCIAL PERFORMANCE OF
CORPORATIVE UNIONS IN MBALE DISTRICT:A CASE STUDY OF BUGISU
COOPERATIVE UNION
BY
BUTEME CARO
1161-05014-04251
A RESEARCH REPORT SUBMITTED TO COLLEGE BUSINESS
AND MANAGEMENT IN PARTIAL FULLFILMENT OF THE
REQUIREMENTS FOR THE AWARD OF BACHELORS
DEGREE IN BUSINESS ADMNISTRATION
OF KAMPALA INTERNATIONAL
UN1VERSITY UGANDA
FEBRUARY, 2019
DECLARATION
This rcsenrch has never been submitted to any University or institutions of higher learning for
any academic c~ualilications. This research isa result ol my o~ ii independent research eflbri and
investigations. Where it is indebted to the work of others, the ackno~~ lecigment has been made.
Signed: H 1O~ (20 ~
APPROVAL
This is to certify that thts work has been carried out under lily super~ ision and is flO\~
submitted to Ka a International University for examination ~vith m~ approx al.
Date r.Signed
Mis. IraLl Florence
ready to be
DEDICATION
I dedicate my report to my parents Masaba David and mother Nankwanza Agatha and brother
Maruti Barnabas for their utmost effort towards my academic life.
III
ACKNOWLEDGEMENT
I extend my special thanks to the almighty God for his wonderfiji blessing and guidance. Without
Go(s intervention I ~voukl not have reached this far.
My grateful thanks to my supervisor Mrs. Irau Florence for her professional advice and support
he rendered to me throughout this research project.
Special thanks go to my respondents from BCU who spared their time to give me the data
required to accomplish this study.
I thank my lovely parents. It’s your financial support, care, advice and prayers that made me
reach great heights.
Special thanks go to all my lecturers at the University and teachers in all schools I attended.
Without all of you, finishing this course would not be easy. I will live to remember you. God
bless you.
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ABSTRACT
The study was intended to establish the relationship between computerized accounting systems
and financial performance. The objectives were to determine the efThct of accounts receivables
software on financial performance of Bugisu cooperative Union. to establish the effect of
accounts payable software on financial performance of Bugisu cooperative Union and to
examine the effect of general Ledger software on financial performance of Bugisu cooperative
Union. The study was based on a descriptive research design and case study. The data was
collected from 40 respondents who were the employees of BCU using closed ended
questionnaires. The study findings indicate that computerized accounting system influence or
affect the financial performance of 13(1.!. The study findings indicate that accounting software of
receivables has an effect on financial performance of the organizations; the findings conclude
that enhancing computerized accountings facilitates financial perlbrmance. On the second
objective, the study conclude that payables software to enhance the performance there is need for
consolidating the management of the payables software and finally on the third objective of the
study conclude that effective use of the accounting ledger software enhances the performance of
the organization BCU, hence the need to manage the organization software. The study
recommend that there is need to improve it management need to enhance operations and search
for a more reliahlc customer base since the prevailing is not sufficient enough to guide work in
the organizations. There is need for strong cost reduction by management so as to save on the
finances lost through operations that are not effectively guided in work. On the second objective,
there is need for consideration and employment of the payables accounting system as means to
improving the performance of the software in managing the organization for financial
performance. On the third objective the Ledger systems need to be developed enhanced both in
the manual and automated system in order to develop the form of accounting software
assessment necescary for enabling the organization accounting systemc for the nrganizations.
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TABLE OF CONTENT
DECLARATION
APPRO\’AL
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENT
CHAPTER ONE
I .Olntroduetion
1.1 Background of the study 1
.1.1 Historical Perspective
1.1.2 Theoretical Perspective 2
1.1.3 Conceptual perspective 2
1.1.4 Contextual Perspective 3
1.2 Statement of the Problem 4
1.3 Pui~ose of the Study 5
1.4 Objectives of the Study 5
1.5 Research Questions 5
1.6 Scope of the study 5
1.6.1 Geographical Scope
1.6.2 Time Scope
1.6.3 Subject Scope 6
1.7 Significance of the study 6
1.8 Dcfiniiioii uf Kcy [citti’, 6
CHAPTER TWO 7
LITERATURE REVIEW 7
2.0 Introduction 7
2.1 Theoretical Review 7
2.2 Conceptual review
vi
2.3.1 Effect of accounts receivables software on financial performance .9
2.3.2 Effect of accounts payable software on financial performance 12
2.3.3 ElThct of general Ledger software on financial pcrlhrmance 14
2.4 Relationship between computerized accounting systems and financial perlormance 5
CHAPTER THREE 19
METHODOLOGY 19
3.0 Introduction 19
3.1 Research design 19
3.2 Study Population 19
3.3 Sample Size 19
3.4 Sampling techniques 2 I
3.5 Sources of data 21
3.5.1 Primary Data 21
3.5.2 Secondary Data 21
3.6 Data Collection methods 21
3.6.1 Questionnaire 21
3.8 Validity and Reliability 22
3.9 Ethical Considerations 22
3.10 Limitations 22
CHAPTER FOUR 24
DATA PRESENTATION, INTERPRETATION AND ANALYSIS OF FINDINGS 24
4.0 Introduction 24
4.1 B iu—daw of tile rcspoiidciits 24
4.1.1 Gender of respondents 24
4.1.2 Age of respondents 25
4.1.3 Academic qualification of respondents 26
4.1.4 Findings on working experiende 28
4.2 Effect of accounts receivables software on financial performance of Bugisu cooperativeUnion 29
vU
4.3 Effect of accounts payable software on financial perlormance of Bugisu cooperative
Union 31
4.4 Effect of general Leclger software on financial performance of Bugisu cooperative Union.
34
CHAPTER FIVE 36
SUMMARY, DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS 36
5.0 Introduction 36
5.1 Summary of’ linclings 36
5.2 Discussion of findings 37
Conclusions 39
5.4 Recommendations 40
5.5 Areas of future study 40
REFERENCES 41
Appendix i. Research Questionnaire 45
Appendix ii: Research Budget 4$
Appendix iii: Time frame and Ac~ivities 49
vfli
recorded, processed and conveyed to the end users of this information in particular
(Sathyamoorthi, 2011)
Pandey (2010) contend that computerized accounting is defined by Pendley and Rai (2009) as a
total suit of components that together comprises all inputs. storage. transactions, processing.
collecting and reporting of financial transaction data. Computerized accounting system involves
the use of computers in proccssing accounting data into information to facilitate quick decision
making through timely preparation of financial reports and financial reporting in this case refers
to the way in which financial information is recorded, processed and conveyed to the end users
of Lhis information in particular.
Sollenberg & Anderson (2009) asserts that financial performance is measured by how efficient
the enterprise is in use of resources in achieving its objectives, It is the measure of attainment
achieved by an individual, team, organization or process.
Financial perlbrmance of Institutions can be gauged via the degree of attainment of their
organizational objectives like meeting both short-term and long-term objectives as and whenever
they fall due. The scarce resources of the organization are not supposed to be pumped into white
elephants. Optimal resource utilization should ensure maximum output in the projects named in
the organizational objectives.
1.1.4 Contextual Perspective
Bugisu Cooperative Union (BCU) is a Ugandan agricultural cooperative federation, established
in July 1954. It was started by a group of coffee farmers led by The Late EV,Samson Kitutu. A
new Bugisu coffee ordinance was enacted in 1955 providing for BCU ltd to take over all the
marketing ft,nctions from the Bugisu coffee scheme a~ well as all the schemcs assets excert the
reserve fi.inds which were still held by Bugisu coffee board for more visit the website of Bugisu
cooperative union bugisucooperativeunion,com
Computerized accounting systems in BCU are employed to enhance the financial performance of
the organizations. It is noted that business accounting records cannot be accurately maintained
when the firm expands and when the system is not computerized it is the computer based system
that the firm can use to post numerous transaction to the right ledgers and prepare proper
3
financial statements (Kakuru, 2003). Computerized accounting usage though limited in scope is
considered very important since it enables computerization of the systems and different functions
as it considers two mandatory rules that govern its operations, technology must benefit your
business and if technology does not benefit your business then you don’t need it. For this reason,
the accounting section which the finns considers very important is highly computerized for the
purpose of improving on record keeping, proper maintenance of different loss of cash or loss of
accounting records (Al-kasswna, 2012).
BCU is owned by coffee farmers who are organised in primary societies. Each primary society
keeps a register of its fully paid-up members who elect a committee, which manages society’s
affairs. Each Primary society is represented by two delegates at an Annual General Meeting. In
addition to other functions the ACM elects Board members who in turn appoint and supervise
the managemcnt team, SCU also operates according to International Co-operatives Principles.
The organization has changed the way they present their financial reports with developments in
new innovations of accounting softwares. However lack good financial reporting will not ensure
efficiency and eft’ectives in record keeping hence miss leading reports or accounts. This has
prompted the researcher to investigate into the phenomenon. Bugisu cooperative Union though
operated using the traditional means of accounting in computerization have developed
mechanisms that can enhance the work values, Bugisu cooperative union has employed the
computerization in accounting intended to generate financial performance.
1.2 Statement of the Problem
Computerized accounting systems are used in organizations to enhance the financial
performance of the organizations. The many advantages from the use of these systems have led
many to conclude that computerized accounting Systems in Corporate reporting is the ‘engine of
grn’vih’ in businesc organi7nhinnc (Fren7el ~flfl6). Decpitc the relevance of the cvstemc. conic
companies in Uganda still make use of the manual accounting systems which are often
characterized by keeping a large number of books and are usually associated with errors in
recording large volumes of transactions (Kakuru, 2010). Reasons for the use of the manual
accounting system may be attributed ta factors such as inadequate supply of expertise knowledge
about the Computerized Accounting Systems; high cost of installation and maintenance;
resistance to change; risks of being hacked; power failure; viruses and losing information.these
4
translate into poor accounting and accounting inefficiency. It is based on this that this research
therefore seeks to establish the mechanisms through which financial performance can be
generated through computerized accounting management.
1.3 Purpose of the Study
The study was intended to establish the relationship between computerized accounting systems
and financial performance.
1.4 Objectives of the Study
1. To determine the effect of accounts receivables software on ilnancial performance of
Bugisu cooperative Union.
2. To establish the effect of accounts payable soft~varc on financial pcrlbnnance or Bugisu
cooperative Union.
3. To examine the effect of general Ledger software on financial performancc of Bugisu
cooperative Union.
1.5 Research Questions
I. What is the effect of accounts receivables software on financial performance of Bugisu
cooperative Union?
2. What is the effect of accounts payable software on financial performance of Bugisu
cooperative Union?
3. What is the effect of general Ledger software on financial performance of Bugisu
cooperative Union?
1.6 Scope of the study
1.6.1 Geographical Scope
The research was conducted in Bugisu cooperative union located in bank municipality mbale
district. This particular case study is chosen because it was convenient to the researcher in terms
of its’ type of business, the researche& area nf residence. !anguage and availability of data for
the research work.
1.62 Time Scope
The study focused on the time of 2013-2017. This period being the most recent and given the
limited research timeL frame, the researcher was not able to cover reports ofmore than four years.
5
1.6.3 Subject Scope
The research centered on computerized accounting and financial performance. The focus was
also be on various accounting systems, financial performance of the organization and the effect
of computerized accounting systems on financial performance of organization.
1.7 Significance of the study
a) This information will be of great importance to both government and private companies
such as Local governments employing computerized accounting and those that are yet to
adopt the system of computerized accounting in knowing the pressure points to be
emphasized and wcll managed in-order to pursue the system successfully. -
b) The study will also be of great benefit to the students who will be able to access this
information that will guide them in research and equip them with knowledge as far as
manual and computerized accounting is concerned and the importance of computerized
accounting as far as financial reporting is concerned.
c) This research paper will be of prime benefit to the management and staff of Sironko
district but lbr other branches as well, since it will enable them identify and understand
the risks and problems associated with computerized accounting and financial reporting
and how best to combat such problems.
1.8 Definition of key terms
Pandey (2010) contend that computerized accounting system involves the use of computers in
processing accounting data into information to facilitate quick decision making through timely
preparation of financial reports and financial reporting in this case refers to the way in which
financial information is recorded, processed and conveyed to the end users of this information in
particular. In this study computerized accounting system is measures through accounting
payables software, accounting receivables software and accounting packages.
Sollenberg & Anderson (2009) asserts that financial perfonnance is measured by how efficient
the enterprise is in use of resources in achieving its objectives. It is the measure of attainment
achieved by an individual, team, organization or process. Financial performance is measured
sales, profits and market growth.
S
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter discussed the already existing literature about financial performance. This literature
has been obtained fitm the text books and publications periodicals, research reports and Internet
among others..
2.1 Theoretical Review
Various theories havc been formulated on computerized accounting system and financial
performance. This study was based on the contingency theory of Carlisle (1976). A contingency
theory is an organizational theory that claims that ‘there is no hcst way to organize a colporation,
to lead a company, or to make decisions, Instead, the optimal course of action is contingent
(dependent) upon the internal and external situation. A contingent leader effectively applies his
own style of leadership to the right situation. The theory attempts to relate research on many
management variables, for example, research on professionalism and centralized decision
making or worker education and task complexity. It allows you to analyze a situation and
determine what variables influence the decision with which you are concerned.
The goal of an audit is to test the reliability of a company’s in.fonnation, policies, practices and
procedures. Government regulations require that certain financial institutions undergo
independent financial audits, but industry standards can mandate audits in other areas such as
safety and technology. Regardless of the audit subject, various factors impact a companys final
results, and the contingency theory takes these factors into account during the audit process.
The contingency theory of leadership and management states that there is no standard method by
which organizations can be led, controlled and managed. Organizations and their functions
depend on various e’<ternal and internal factors. The Ilinctions of auditq are themselvec. types of
organizations that are affected by various factors in the environment. The presence of such
factors is why auditing can be maiaged by applying the contingency theory, with a recognition
that processes and outcomes of audits are dependent on variable and contingent factors
On a broad level, the audit process is straightforward. Auditors require access to documents,:
systems, policies and procedures to manage an audit. They must remain compliant with industry
standards, government regulations and internal requests. Audit teams may begin the audit
7
process with meetings where they gather risk and control awareness, after which the field work
begins. During the audit process. auditors perfonu substantive procedures and test controls. They
then draft reports that they submit to management and regulatory authorities. The audit sub
processes. particularly in planning and field work. include contingencies such as business type,
employee skill level, applicable laws, available audit workioree. available technology and
systems. and deadline.
Daft (2012) in his book writes that contingency theory. Audit functions are task—oriented and can
be loosely structured. The functions also can vary considerably. depending on the area of a
company under audit and the type of business model, so auditors must carefully managc— their
inspections and take variables into account to get the job done. The contingency theory also can
he applied to an audit team’s structure. Typically. audit team managers receive audit projects.
They then create- ~~cl hoc audit teams for the projects, selecting auditors based on expertise and
experience in the subject areas, and on auditor availability, all of which add up to contingencies
for any given audit project.
Audit teams use a mix of structure and contingency to get the output rolling quickly. The subject
of auditing projects can include such diverse areas as evaluation of production processes,
inspection of company accounts, and assessment of compliance with industry standards.
Selecting auditors with specialized training or those who have a particular skill set in the subject
area minimizes the learning curve and reduces opportunities for errors. The quality and output of
audits remain assured when audit teams use resources according to expertise and experience, and
when auditors are flexible and can adapt to process fluctuations. For example, an auditor
experienced in evaluating financial instruments can be effective in an audit exercise of a bank or
hedge fund, even when the hnanc~aI tns!rument~ the n~t!tu!!on offers do no! lit the typical mould
(Davoren. 1994).
8
2.2 Conceptual review
This is a diagrammatic representation of variables. The framework shows the linkage of
variables under their measurable units.
Independent Vanable
Computerized accounting system
‘ Accounts ReceivableSof ware
m Accounts Payable Soliware I
~ Gcnei-al ledger software
Depen (lent Va na 1)1 C
Financial performance
Source: Adopted from Osinond (2011) and Polo & Oima(20 13
The conceptual flame work above shows the great relationship between dependent and
independent variables. Computerized accounting systems are the independent variable; its
components through accounts receivable software accounts payable soliware. general ledger
Sn fiware. accounting packages and char of accouni The ilepenrieni variable ic financial
performance for the organizations. The intervening variables of government policies. Inflation
and bureaucracy. The intervening variables in positive nature has an effect on financial
performance of the organization
2.3.1 Effect of accounts receivables software on financial performance
Dey (2007) contend that computers have become the Ihundation stone in the communities’
cultures and in different fields of life, it is also considered to hca tool for knowledge. and since
Profits
~ Sales
~ Market growth
Government policies~ Inflation~ Bureaucracy
9
nowadays is also considered to be the information era and it’s systems and searching for the best
uses of it with the. least effort and time, is the reason why the importance of information has
increased in the current years due to the development in technology that was followed by the
development of computers. which lead to saving time, effort and the rapid transformation of data
and information to its users.
The accounts receivable must consists of a detailed listing of customers and the amounts of
money each owes the company or bank and other information like the date the debt was incurred,
address and phone numbers of each customer. Businesses considering the installation of accounts
rcccivablc managcnwnt software must under taken extcnsivc n~search into the available—
alternative solution to ensure it includes the key potentials that would enable accuracy and
integrity of its financial reporting. The right accounts receivable software solution updates the
ledger accounts with appropriate transactions automatically. Invoices are added and customer
payments in regards to outstanding invoices are also deducted. The softwarc checks that
payments have been applied to a specific invoice or identify that it covers multiple invoices.
There should be regular reports generated in detailed, such as an accounts receivable aged listing
so that customers at risk of defaulting could easily be identified (Jahan. 2010).
Gill (2011) assert that the main objective of accounts receivable software is to reach an optimal
balance between cash flow management components. Cash flow management is the process of
planning and controlling cash flow both into and out of a business, that is, cash flows within the
business and cash balances held by a business at a point in time. Efficient accounts receivable
management affords a (inn improve on its profitability by reducing the transaction costs of
raising funds in case of liquidity crisis (Ahmet, 2012).
Accounts receivable software as a component 01 cash how has a direct elect on the profitability
of a business. Cash flow management refers to the management of movement of funds into and
out of a business and involves the management of accounts payable, accounts receivables,
inventory as well as the cash flow planning (Joshi,2007). Efficient firms maintain an optimal
level of cash flow that maximizes their value. Large inventories and generous credit policy may
lead to high sales as well as reduce the risk of stock-out while at the same time stimulating sales.
Delaying payment of accounts payable to suppliers allow firms to access products or services
10
and can be an inexpensive and flexible source of financing, but on the other hand, (Kaur, 2010)
state that it can be expensive if a firm is offering discount for early payment while on the same
token, uncollected accounts receivable can lead to cash inflow crisis.
Accounts receivable software provide a dynamic financial management process and its
effectiveness is directly correlated with a firm’s ability to realize its mission, goals and
objectives. Despite the role cash flow management plays, many firms have not implemented
effective cash flow management practices and the results can be dire, Ahmet (2012). Even
profitable firms can go backrupt if they fail to manage their accounts receivable effectively,
partularly. if they operate in rapid-growth or seasonal industries. For a credit policy ~ki be
effective it should not be static but requires review periodically to incorporate changes in a firms
strategic direction and risk tolerance as well as to ensure that the firm operate in line with
competition to ensure sales and credit departments are benefiting.
Szabo (2012) note that due to the speed in which technology is changing and the dynamics in
business caused by changes in the internal and external environment, the ways in which
businesses are conducted today diffCr significantly from yester years. The competitive nature of
the business environment requires firms to adjust their policies and strategies frequently ror
survival and growth. Although a credit policy ensures decision making process is logical and
simplified it is based on pre-determined parameters at a historical period in time which may not
hold at the current time.
Al-Mwala (2012) state that sales are pointless without due payment and therefore the sales and
accounts receivable functions must work together to achieve the objective of sales maximization
within minimum length of time. flwalahi and flhida (2fll2) note that credit sales arc a sign that
firm is able to maximize its sales and improve its financial performance. The increase in the level
of accounts receivables in a firm increases both the net working capital and the cost of holding
and managing accounts receivable and both lead to a decrease in the value of the firm. Firms
who pursue an increase in the accounts receivable to an optimal level increase their profitability
resulting from the increased sales and market share.
11
Gill, et at (2010) contend that there should oniy be on the basis of customer creditworthiness in
order to minimize the level of default and bad debts. Weston & Copeland (205) state there are six
Cs of credit which credit managers should consider when extending credit: character, capacity
capital, collateral, condition and contribution. They further assert that the six C’s helps finns to
decrease their default rate as they get to know their customers. Information on the C’s can be
obtained several sources including the firms prior experience with the customers, financial
statements for previous years, credit reporting agencies and even the customers financial
institutions (Kalunda, 2012).
2.3.2 Effect of accounts payable software on financial performance -
The company or organization considering the implementation of accounts payable software
solution must first of all realize that the best ones arc the one that provide a rapid return on
investment. The main characteristics of accounts payable that increase the payback include early
payment awareness that enable the company to make use of discounts offered, More so, the
ability to write cheques to suppliers and to have the correct debits and credits applied to the
company account makes balancing the books easy (Al-kasswna, 2012)
Falope and Ajilore (2009) examined the effect of accounts payables software on corporate,
profitability; Evidence from panel data: analysis of selected quoted companies in Nigeria. They
used the sample of Nigerian quoted non-financial firms for the period 1996-2005. The study
found a significant negative relationship between net operating profitability and the average
collecting period inventory turnover in days, average payment period and cash conversion cycle
for a sample of fifty Nigerian firms listed on the Nigeria stock Exchange. Furthermore, the study
found no significant variation in the effects of working capital management between large and
small firms. These result suggest that management can create value for their working capital in
more efficient way by reducing the number of day accounts receivable and inventories to a
reasonable minimum.
Karaduman, et al (2011), examines the empirical relationship between accounts payables
software and corporate profitability of selected companied iii the Istanbul stock exchange for the
period of 2005—2009. The panel data methods were employed in order to analyze the mentioned
relationship. The cash conversion cycle (CCC) was used as a measure of working capital
12
management efficiency, and return on assets (ROA) used as a measure of profitability. He found
out that reducing cash conversion circle (CCC) positively affects return on assets.
Lyrondi and Lazardis (2000) investigate the cash conversion cycle and liquidity position of the
food industry in cycle as a liquidity level indicator of the food industry in Greece and tried to
determine its relationship with the traditional liquidity measurement and profitability
measurement on return on investment, return on equity and net profit margin, they found
significant, positive relationship between cash conversion cycle and payable deferred period. The
relationship between liquidity measurement variables and profitable mcasurement variable was
not statistically significant and there was no relationship betwcen cash conversion cycle and
leverage ratio. To determine the solvency level of firms according to existing obligation of firms
different techniques may apply as measurement of liquidity Current ration, quick ratio and cash
ratio are among the most traditional liquidity measurement techniques and the most recent
dynamic techniques, cash conversion cycle is applied for measurement of liquidity level of firms.
The relationship of these traditional and modern liquidity measurement techniques are studies by
Lyroudi and MC Carty (1993) for small U.S companies for the period 1984 — 1988 and they
found that cash conversion cycle was negatively related with the study revealed difference
between current ratio but positively related with quick ration. In addition, the study revealed
difference between the concept of cash conversion cycle in manufacturing retail, wholesale and
Service industries. The advantage of using modem liquidity measurement technique is that it will
help to evaluate working capital change and it facilities the monitoring and controlling of its
components, receivable inventories and payable. The smaller value of cash conversion cycle
shows that, the quicker the firms can recover cash from sales of finished products and the more
cash will have hence this will lead to have more liquid assets by firms. If cash conversion is high,
ii will take longer time recover cash, thus high cash ec’twersion cycle implied an exktenee of
problem in liquidity.
Muchina and Kiano (2011) in their study analyzes the influence of accounts payables software
on firms’ profitability jn Kenya. They used fixed panel data of 232 firms. The result indicated
that the average debtor day, stock turnover period and the cash conversion cycle are significantly
affecting the profitability of the firms. They found out also that the manufacturing firms are in
13
general facing problems with their collection and payment policies. Moreover, the financial
leverage, ratio of current asset to current liability and firm size also have significant effect on the
firm profitability. The study also concluded that SMES in Kenya arc following conservative
working capital management policy and payment policy. They suggested that the eflèctive
polices must be formulated for the individual component of working capital and that efficient
management and financing of working capital (current assets and current liabilities) can increase
the operating profitability of manufacturing finns. For efficient working capital management,
specialized persons in the field of finance should be hired by the firms for expert advice on
working capital management in the manufacturing sector.
2.3.3 Effect of general Ledgersoftware on financial performance
A ledger account refers to an accounting record that summarizes all transactions affecting each
individual item such as Bank, Stock Creditors, Vehicles or Capital. In the financial statements
all items have its own ledger account and so in this case the bank can have so many ledger
accounts to manage considering its numerous customers, without computerized accounting
system, it would be virtually impossible to locate one ledger account Gut of hundreds accurately
and conveniently (Habibullah, 2013).
The general ledger software is a very important software solution for all businesses since it is the
main accounting record of the business. Key features companies must look for in general ledger
accounting software are its ability to trace budget and financial data so as to produce accurate
financial statements, detecting fraud so easily, tracking budget and financial data to produce
accurate financial statements that can bring out better income statement, balance sheet, and
general ledger reportage. When the best general ledger software is chosen, it helps to develop
year-end reports and statements quickly and accurately. The general ledger software
automatically passes data from subsidiary ledgers such as accounts payable and accounts
receivable for quick and accurate double entries as well as balance sheet balance sheet (Van,
2005).
General ledger software packages have an effect on financial performance argued that there has
been developed to assist in the accounting field and some of such packages are QuickBooks,
Mind Your Own Business (MYOB), Cash (low Manager, Attaché, Econet and Temenos Even
14
though some of this software mentioned here are developed for small businesses, they are also
designed specifically for accounting purposes in the banks, especially the Temenos software
which is currently in use by Amanano Rural Bank Limited. It functions in such a way that once a
customer’s data is entered, the accounting records of that particular customer are updated
automatically, and also customer’s reports pop-up so easily. Links between the bank and its stalt,
as well as other information are easily accessible and can be produced quickly, accurately and
efficiently (Max, 2011). These accounting packages that have been outlined here earlier bring
out transactions using accounting records such as the general ledger accounts.
— Furthermore, if some of the customers have the same names or sirnihrr names it may be very
difficult Lo identify which account they belong to. To tackle these issues, a bank or business can
use a Chart of Accounts to arrange its ledger accounts. A chart of accounts is a catalogue of all
the accounts, which detects and organizes each ledger account individually by assigning to it an
account nun*er or code (Habibullah, 2013)
General ledger software that emphasizes user capability and empowerment and the design of the
user interftice. The process of building human ware generally consists of these steps: Dcline
users (age, mindset, environmental context, previous product experience and expectations. and
so forth) and what they really want to do. ldenti& tasks they will need to do or capabilities they
will want. Speci& usability objectives (if possible, these should be measurable, such as how long
to do something or how many mouse clicks to get to a specified task point) for each task or
capability. Build a prototype of the user interface (it can be a paper or simulated prototype if time
is short), Provide the prototype and usability objectives to the program designers and coders,
Test the code against the prototype and objectives and, if necessary, redesign or recode the
snftware and lest the product with users or valid test subjects and revise ac necessary.
2.4 Relationship between computerized accounting systems and financial performance
Computerized Accounting Systems are important to businesses in various ways. The use of
computers is time-saving for businesses and all financial information for the business is well
organized (Amidu, 2Q11). Using a Computerized Accounting Systems saves companies time and
money. The use of a computer makes inputting accounting information simple. Transactions are
entered into the system and the system processes and posts transactions accordingly.
15
Computerized Accounting Systems reduce stall time preparing accounts and reduce audit
expenses as records are neat, up-to-datc and accurate. Better use is made of resources and time:
cash flow should improve through better debt collection and inventory control.
A Computerized Accounting System enables businesses to stay organized. Whcn information is
entered into the system, it makes finding the information easy. Employees can look up any
financial information whenever it is needed. There is less room for errors as only one accounting
entry is needed for each transaction rather than two (or three) for a manual system. The
accounting records are automatically updated and so account balances (e.g. customer accounts)
— will always be up-to-date (Shaltoot. 2009),Storing information is vital to a business. After
information is entered into the system, the information is stored indefinitely. Companies perform
backups on the system regularly to avoid losing any information. The introduction of
Computerized Accounting Systems provides the ability to see the real-time state of the
company’s financial position.
Computerized Accounting Systems allow companies to distribute financial information easily.
Financial statements are printed directly from the system and are distributed internally and
externally to those needing the information. Reports can be produced which will help
management monitor and control the business, for example the aged debtors analysis will show
which customer accounts are overdue, trial balance, trading and profit and loss account and
balance sheet (Hussein, 2004).
Khameis (2013) entitled impact of accounting information systems on investment decisions: an
applicable study on Jordanian companies”, aimed at investigating the impact of accounting
infnrmation systems on investment decisions in area of the computeri7cd accounting systems
through revising the accounting information systems and showing types of investments decisions
ard linking between them in light of computerized accounting systems. The results revealed the
following factors as appropriate timing ,ability of prediction, inverse feed, honest expression,
neutrality, comparative and software used in the companies pffect the process of investment
decisions except neutrality and comparative factors as it was found that all the qualitative
characteristics of the accounting information were available in great extent in the computerized
16
accounting information system. The study came up with some recommendations that enhance
using the computerized accounting systems and so the efficiency of taking investment decisions
will be increased
Study of Ruel, Huub Bondarouk. Tanya& Velde, Mandy van dcr (2007) entitled measuring
extent of information technology’s contribution in managing human resources in the efficiency
of human resources’ performance: case study of a Dutch Ministry. aimed to measure extent of
information technology’s contribution in managing human resources in thc cfficiency of human
resource? performance through introducing a model designed to a Dutch Ministry and it aimed
-‘to -look at whether this is of benefit to thc-Ministry-t the study concluded that’actual application .. -
of information technology in human resources management is liked with the efficiency of human
resources management. The study recommended conducting further quantitative researches
coiiceniing measuring the efficiency of information technology and introducing other variables
in the model which the researchers concluded.
Dalci & 1’anis (2009) conducted a study on computerized accounting information systems
Effectiveness in the Jordanian Commercial Banks”, aimed to cvaluatc the effectiveness of
computerized accounting information systems effectiveness in thc Jordanian commercial bank
under the technological development through a set of standards that reflect the efficiency of these
systems performance represented in quality, flexibility, simplicity, and reliability, and to achieve
the study’s objectives , questionnaire was developed and distributed to the financial managers
and the employees in the financial departments in the public management of the Jordanian
commercial banks listed in Amman stock exchange . forty questionnaires out of forty five were
retrieved and analyzed. The results showed the computerized accounting information systems in
the Jordanian commercial banks are of a high degree of quality and reliability while their degree
of flexibility and simplicity was moderate.
Vander & Wouters (2012) sought to investigate the effect of computerized accounting systems
on audit risk management. The study employed an exploratory survey design which was
longitudinal and cross-sectional using questionnaires. A sample of 41 was drawn out of the 56
public enterprises that were present in Kisumu County at the time of the study. A descriptive
17
analysis was employed and the findings were that there exists a positive relationship between the
computerized accounting system employed and the audit risk management policy in the public
en terpn ses.
Alshebeil (2010) assessed the factors affecting the budgeting process among SMEs. The study
employed a sample of I 20 flniis. They Ihund that computerized accounting system contributes to
budgeting pi-ocess ata higher magnitude than firm and recommended that inlormation
technology should be given pnority to the budgeting process clue to its functionality.
Wanjau, Macharia and Ayodo (20 12) investigated the factors afibeting adoption of Electronic
commerce among SM Es with the objective of determining the effect of leadership style.
resources. infrastructure and competition on the adoption of electronic commerce among SMEs
in Kenya with specific reference to hospitality industry and concluded that there is a signi lieant
influence of leadership style, resources, infrastructure, competition and positioning.
A study by Nzomo (201 I) investigating tile impact of accounting information systems on
organization effectiveness employed the descriptive research design. The study gathered both
primary and secondary data. Primary data was obtained through interviews and questionnaires to
randomly selected employees from the selected companies. Tile findings of the study indicated
that Accounting Information System is an important mechanism for organizations” effective
management, decision—making and controlling activities.
According a study by Ismail and King (2005) some SME managers are capable of using IT
strategically rather than focusing on administrative efficiency’ suggesting that the use of IT has
expanded towards management accounting context. Information System impact on Firms”
Performance, SMEs accounting information system implementation and success has been
extensively researched. Recent research development focuses on the relationship between firms
strategies alignment with infonnation system. These studies suggested that there arc positive
relationship between strategy and strategic information technology.
18
CHAPTER THREE
METHODOLOGY3.0 Introduction
This chapter r~used on the methods that used to collect data and analyze it. It majorly looks into
the research design, the population studied, sample population, the sample selection procedures
and sampling techniques used, data collection, methods of verifying reliability and validity of the
data and methods, issues concerning ethics and limitations of the research methodology used
including the conclusions drawn from the methodologies used.
3.1 Research design - . -
The study was conducted using a combination of research designs specifically descripiivc and
case study. The descriptive and case study designs are used because of the economy, rapid data
collection and ability to understand a population on different characteristics, The design was
based on both qualitative and quantitative research approaches to attain the data required.
Qualitative approaches ~vere used in order to explore more detailed information and the aspects
which remain unrevealed during quantitative analysis. Quantitative analysis was useful technique
the researcher used to provide more useful and in-depth knowledge in less time and limited cost.
3.2 Study Population
Enon, (1998) defmes population as a whole universe of people that a researcher is targeting to
include in the study for information gathering. The population of the study included the
employees of BCU who were attained from the departments of accounting (13), finance (15),
auditors 7 and administrative employees I O.Therefore the target population was 45 people.
3.3 Sample Size
As sample is a portion of the population got from the research population for providing data
~~‘here generalization can be made to the entire population. This occurs because of resource
constraints and time, an estimated number of 45 respondents was chosen for data collection.
Slovene’s Formula states that, given a population, the minimum Sample size was given by:
N17=
I + Mr
‘9
Where; n = the sample size
N = total popu ation of responcle as.
e the eve! of significance. that is 0.05
N11 =
I + Na
45
I ± 45 (0.05) (0.05)
45
j~45 0.0025
11= 45
1.1125
40.34
Therefore n 40
Table showing the population and sample
i-~uuitors
Administration staff
Total
UI
I0
45
0
9
40
vurposi Ve Sanipi ii~g
Purposive sampling
Category Population Sample Sampling technique
Accounting staff 13 12
Puqosive sampling
~ Finance staff 15 13 Purposive sampling
20
3.4 Sampling techniques
It’s the process of extracting a portion of the population from which generalization to the
population can be made. The researcher employed both non probability sampling methods
specifically purposive sampling methods, Purposive sampling was used to give equal chance to
the respondents.
3.5 Sources of data
In this study two types of data will be used by the researcher, in the secondary and primary data
was used. In recognition to this, the researcher collected data that is relevant to the research
problem. -
3.5.1 Primary Data
Questionnaires and interviews were the common research tools used to collect data. This is
aimed at collecting primary data from BCU order to know the current status of rewards in the
company.
3.5.2 Secondary Data
The secondary data was obtained through notes. correspondences and minules of meetings,
project plan journals. In this study the researcher used documents and other records that are
already published to access information on internal controls in the different organizations.
3.6 Data Collection methods
During the process of data collection, tl~ study employed a variety of methods and these varied
depending on the category of respondents. This included questionnaires.
3.6.1 Questionnaire
These are inter-related questions designed by the researcher and given to the respondents in order
to fill in data/information. Here, self-administered questionnaires were employed containing both
open and close-ended questions. This reduced costs of movement and also because the researcher
is dealing with literate people who have thc capacity of filling the forms.
3.7 Data analysis
Quantitative data and information collected using interview guide itnd responses from numer~us
respondents were coded, (closed-ended questions were coded appropriately), and entered and
21
analyzed statistically using specially designed computer based packages for data analysis known
as Statistical Package for Social Scientists (SPSS). The analysis provided the mean, standard
deviation, to measure the level of computerized accounting system and financial performance of
the organizations further more frequency and percetages computerizcd accounting systems and
financial performance.
3.8 Validity and Reliability
3.8.1 Validity
The validity of the data collection instruments was done with the help of an expert (the
supervisor to the researcher) to edit the questionnaires and Interview guide. The researcher for
this case forwarded the structured questionnaires to Supervisor who is an expert in the area
covered by the research for editing and reviewing.
3.8.2 Reliability
The reliability was done by testing the instrumcnts for the reliability of values (Alpha values) as
recommended by Cronbatch, (1946). Cronbatch recommends analysis for Alpha values for each
variable under study. Sekaran (2001) states that Alpha values for each variable under study
should not he less than 0.6 for the statements in the instruments to be judged reliable.
3.9 Ethical Considerations
The researcher was chosen a topic and supervisor at the University, upon approval of a research
topic by the supervisor; the researcher attained permission from the university to conduct the
data collection from Bugisu cooperative union.
Information was attained on freewill without compulsion or forcing of respondents. The
questionnaires were not include the names of the respondents for issues of privacy and
confidentiality of information attained.
Maintaining the privacy and confidentiality of the respondents that is to say keep their personal
issues private and non disclosure of response from particular respondents to maintain integrity
and also protect them from potential victimization
3.10 LimitatIons
i) Lack of co-operation by some respondents is a possible constraint to this study. In
Uganda it is common that researchers are viewed in a negative way, usually staff thinks it
22
is a problem of finding exercise that rendered most of the jobless at the end of the
exercise. This study however emphasized to the respondents that the study is purely fix
academic purposes. Under circumstances that the respondents fell reluctant to participate
in spite of the assurance, the researcher encouraged them to volunteer willingly
ii) The cost of the research was high in regard to the already incurred cost of accessing
relevant stationary, printing and the yet to be incurred cost of photocopying, binding,
transport, and telephone charges. The financial constraints were solved by seeking aid
from other sources such as family and friends.
iii) The problem of insufficient time was solved by making sure that the researcher got
enough/ sufficient time and maximum concentration.
23
CHAPTER FOUR
DATA PRESENTATION, INTERPRETATION AND ANALYSIS OF FINDINGS
4.0 Introduction
This chapter comprises oF the findings that were gathered by the researcher liom the
respondents. The study is intended to establish the relationship between computerized accounting
systems and financial performance. The study objectives were to determine the effect of accounts
receivables software on financial performance, to establish the effect of accounts payable
softv% are on financial performance and to examine the effect of general Ledger software on
financial perlhrmance of Bugisu cooperative Union. The presentation and interpretation of data
in this chapter has been done \vith the aid of quantitative and qualitative methods for example the
use of tables and personal analysis and in~crpretation are all presented.
4.1 l3io—data of the respondents
4.1.1 Gender of respondents
Table 4.1: Shows gender of respondents
Respondents Frequency Percentage
Male 2X 70Female 2 30
Total 40 100Source: Primary data, 2019
24
Figure 1: Gender of the Respondents
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
I..
Male Female
Gender
Source: Primary data, 2019
Results from table 4.1 above show that the majority of respondents are male that is 25
respondents representing 700o of the total respondents and 300o of the respondents. This implies
that both genders were involved in data collection. The data was collected from the genders
represented
4.1.2 Age of respondents
Table 4.2: Show age of respondents
Age category Frequency Percentage
18-27 5 12.5
28-37 17 42.5
38-49 12 30
50+ 6 15
Total 40 100
Source: Primary Data, 2019
Age of respondets
500o
40° o
300o
20° o
100o
0°o18-27 28-37 38-49 50+
Source: Primary Data, 2019
Results in table 4.2 present findings on the age of respondents, 28-37 was the majority age group
with 17(42.5°o) of respondents followed by 38-49 with 12(30°c), next were 18-27 with (17.5°o)
and finally 50+ above with (I 5°o) of the total respondents. From the above analysis, it can be
construed that the majority of the respondents are mature people and therefore they have an
active memory. It is possible that the nature of respondents present a mature understanding
which implies that age categorization prevail in the business performance.
4.1.3 Academic qualification of respondents
Table 4.3: Shows academic qualifications of the respondents
Academic qualifications Frequency Percentage
Certificate
Degree
Diploma
Masters
4 0•
Others
Total
Source: Primary data, 2019
Education of respondents
200o
‘315°o
1000
500
000
Masters Phd Others
Source: Primary data, 2019
Results in table 4.3 above present that the majority of the respondents were masters representing
132.5°o, Certificate had 200o of the respondents, as well as degree with l7.5°o Diploma had
10% , Phd had 100o and finally others with 100o also. This implies that the respondents are well
educated and therefore the information obtained from them can be relied upon for decision
making.
300o
25° 0
Certificate Diploma Degree
4.1.4 Findings on working experience
Table 4.4: Shows findings on working experience
Marital Status Frequency Percentage
lMonth—2years 6 15
3- 5years 20 50
Oyrs —9 years — 10 —. 25
lOandabove 4 10
Total 40 100
Source; Primary data, 2019
Working experience
I Month-2 years
3-5 Years
6-9 Years
10 and above
Results in table 4.4 shows that majority of the respondents were 3-Syears SO0o, óyrs 9 years
had 125° 0 of the respondents, 1500 of the respondents were for I Mont 2years and finally
followed by 10 years and above with 10°o. The findings imply that many respondents had
worked for BCU for quite long; the information attained can be relied upon for decision making.
28
4.2 Effect of accounts receivables software on financial performance of Bugisu cooperative
Union.
The first research objective was to assess the eRect of accounts receivables software on financial
performance of Bugisu cooperative Union. The results based on the data collected are presented
in the table provided below.
Table 4.5 Effect of accounts receivables software on financial performance of Bugisu
cooperative Union.
>, Total— — 0 —— —~ .•:~~ 9)
.:;!- 1) — —
.~ 2~
T~ ~ T~f~2~ T ~ % f % f %
Accounts receivables 10 25 16 40 4 10 6 15 4 10 40 100
software trucks the debtors
for payment
Accounts receivables 12 30 18 45 6 15 2 5 2 5 40 100
software helps in trucking
the bad debts
Accounts receivables 12 30 10 25 12 30 2 5 4 10 40 100
software contribute the
management of the debtors
on the timely basis
There is sufficient 10 25 10 25 8 20 10 25 2 5 40 100
accounting software use for
managing the profits of the
organization
The debtors soft ware 15 37.5 12 30 4 10 2 5 7 17.5 40 100
enhances the functioning of
the organizations
29
Accounts receivables 10 25 18 45 2 5 4 10 6 15 40 100software helps i-educe risks
to loss of profits
Totals 69 172.5 84 210 36 90 26 65 25 62.5 40100
Source: Primary Data, 2019
From the table above regarding the effect of accounts receivables software on financial
performance of Bugisu cooperative Union, it can be seen that accounts receivables software
trucks the debtors for payment according to 25% respondents who strongly agreed and 40%
agreed 10% were registcred for not sure 15% disagreed and 10% strongly disagi ecd.
30% of the respondents strongly agreed that accounts receivables software helps in trucking the
had debts, 45% of the respondents agreed, and 15% were not sure, 5% disagreed and 5% of the
respondents strongly disagrccd.
The Accounts receivables software contribute the management of the debtors on the timely basis
had 30% of the respondents who strongly agreed and also 25% who agreed, 30% of the
respondents strongly agreed, 5% disagreed and 10% were not sure.
There is sufficient accounting software use for managing the profits of the organization had
25% of the respondents who strongly agreed, 25% agreed, 20% were not sure, 25% disagreed
and 5% strongly disagreed.
The debtors soft ware enhances the functioning of the organizations had 37.5% of the
respondents who strongly agreed, 30% agreed, 10% who disagreed and 17.5% who strongly
disagreed or were not sure.
Accounts receivables software helps educe risks to loss of profits according to the responses
with 25% of the respondents, 45% agreed while 5% were not sure 10% disagreed while 15%
respondents strongly disagreed.
The presentation and analysis on average on the effect of accounts receivables software on
financial performance of Bugisu cooperative Union accounts receivables software trucks the
debtors for payment had 65%, accounts receivables software helps in trucking the bad debts 75%
30
Accounts receivables software contribute the management of the debtors on the timely basis
55%. there is sufficient accounting software use for managing the profits of the organization
50%. the debtors soft ware enhances the functioning of the organizations 67.5% and the accounts
receivables software helps reduce risks to loss of profits 70%. On average, the accounts software
had a moderate effect on financial performance of SQU.
4.3 Effect of accounts payable software on financial performance of l3ugisu cooperative
U ilion.
The second objective of the study was to establish the eiThei of accounts payable sofiware on
financial performance of Bugisu cooperative Union. The study findings provided in thc means of’
the study are provided under the responses provided below.
4.6 Effect of accounts payable software on linancial performance of Bugisu cooperative
U 111011.
Strongly Agree Not Disagree Strongly TotalAgree Sure Disagree
__ __zzzzr~r ~z: : r. z~zr’~Accounts payable software 15 37.5 6 15 2 6 15 9 22.5 40 100
helps in payment of
creditors in time
Accounts payables 16 40 8 20 4 10 6 15 6 15 40 100
software helps in managing
the creditors in a timely
manner
Payablcs soliware enhances 10 30 4 10 4 10 8 20 12 30 40 100
the risk management in the
organization -
There is efficient 20 50 4 10 0 0 8 20 8 20 40 100
management of creditors in
the organization through
31
the software
The organization uses the
credit software for
managing the creditors for
Totals
16 I 40 6 1514 10 15 40 100
Source: Primary Data, 2019
The study findings on the effect of accounts payable software on financial performance of
Bugisu cooperative Union. The data collected is presented as per the effect variables taken under
consideration is provided and presented below.
Concerning accounts payable software helps in payment of creditors in time 37.5% of the
respondents strongly agreed, 15% agreed. 5% of the respondents were not sure, 15% disagreed
and 5% strongly disagreed.
Accounts payabies software neips in managing the ercuitors in a tin~ciy manner naG 40’2o
respondents who strongly agreed, 20% agreed, 15% were not sure, while I 0%disagreed and 15%
strongly disagreed.
Payables software enhances the risk management in the organization had 30% who strongly
agreed, 10% agreed, 10% were not sure. 20% disagreed and 30% strongly disagreed.
ensuring the supplies
There is support for the
nitgen~nt and
attainment of credit that
enables Ii nanc al position
establishment
$
2 5 8
3$
20
20
95
6
25 2 5
105 43 107.5
1$ 45 10
34 85 42
40 100
79 202.5
32
There is efficient management of creditors in the organization through the software had 50% of
the respondents who strongly agreed. 10% agreed, none were not sure, 18% disagreed and 22%
strongly disagreed.
The organization uses the credit software for managing the creditors for ensuring the supplies
had 40% of the respondents who strongly agreed, 20 agreed, 15% were not sure, 10% disagreed
and 15% strongly disagreed.
There is support for the management and attainment of credit that enables financial position
establishment had 5% of the respondents who strongly agreed, 20% agreed, 45% were not sure,
25% disagreed and 5% of the respondents strongly disagreed.
The study results on the effect of accounts payable software on financial performance of Bugisu
cooperative Union. Concerning accounts payable software helps in payment of creditors in time
52.5%, accounts payables software helps in managing the creditors in a timely manner 60%,
payables software enhances the risk management in the organization 40%, there is efficient
management of creditors in the organization through the software 60%, the organization uses the
credit software for managing the creditors for ensuring the supplies 60% and there is support for
the management and attainment of credit that enables financial position establishment 25%. The
study results indicate that the payables software account to financial performance at a low extent.
33
4.4 Effect of general Ledger software on financial performance of Bugisu cooperative
Union.
The third objective of the study was to examine the effect of general Ledger software on
financial performance of Rugisu cooperative Union. The study results based on the lindings xvei-e
presented below.
Table 4.7: Effect of general Ledger software on financial performance of Bugisu
cooperative Union.
Strongly Agree Not ~Agree Sure Disagree
F % f % F % f % F ~flT~General 1ed~7r~ii~I J11T30 ~bi~~transforms the data fordecision makingGeneral ledger software 18 45 8 20 2 5 10 25 2 5 40 100enables the detection offraud in the organizationGeneral ledgers transform 26 65 0 0 10 25 2 5 2 2 140 100the accounting inlormationfbr profits determinationsGeneral ledgers helps in 10 25 14 35 $ 20 6 15 2 5 40 100measuring the financialperformance oforganization
General ledger software 18 45 4 10 6 15 0 0 12 30 40 100enables the trackingbudgets for theorganization
Accounting software 20 50 2 5 6 15 8 20 4 10 40 100provide a financial data topruouce accurate financialstatementsTotals
[__________ lO4l2602~W032 8026 62 40 100Source: Primary Data, 2019
34
The data collected on the effect of general Ledger software on financial performance of Bugisu
cooperative Union of Uganda shows that:
Concerning the aspect General ledger software transforms the data for decision making had 30%
respondents and 25% who strongly agreed and agreed respectively, 20% were not sure, 15%
disagreed and none strongly disagreed.
General ledger software enables the detection of fraud in the organization had 45% of the
respondents who strongly agreed, 20 agreed, 5% were not sure, 25% disagreed and 5 strongly
disagreed.
General ledgers transform the accounting information for profits determinations had 65%
strongly agreed with, none agreed. 25% were not sure, 5% disagreed and 5% strongly disagreed
25% of the respondents strongly agreed in respect to general ledgers helps in measuring the
financial performance of organization 35% agreed, 20% were not sure, 15% disagreed, 5% of the
respondents strongly disagreed.
General ledger software enables the tracking budgets for the organization had 45% of the
respondents who strongly agreed, 10% agreed, none of the respondents disagreed, 15% of the
respondents were not sure and 30% strongly disagreed.
50% of the respondents strongly agreed with accounting software provide a financial data to
produce accurate financial statements 5% agreed, 20% disagreed and 10% of the respondents
strongly disagreed and 15% of respondents were not sure.
The study results on the effect of general Ledger software on financial performance of Bugisu
cooperative Union. General ledger software transforms the data for decision making had 55%,
general ledger software enables the detection of fraud in the organization 65%, general ledgers
transform the accounting information for profits determinations 65% and general ledgers helps in
measuring the financial performance of organization 60%, general ledger software enables the
tracking budgets for the organization 45% and accounting software provide a financial data to
produce accurate financial statements 55%. The general ~oftware has a moderate effect on
financial performance of BCU.
35
CHAPTER FIVE
SUMMARY, DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This chapter contains a summary and discussions of the findings to the research topic entitled to
establish the relationship between computerized accounting systems and financial performance.
The findings were obtained basing on the specific objectives of the study.
5.1 Summary of findings
The presentation and analysis on average on the effect of accounts receivables software on
financial performance of Bugisu cooperative Union accounts receivables software trucks the
— debtors for payment had 65%. accounts receivables software helps in trucking the bad debts 75%
Accounts receivables software contribute thc management of the debtors on the timely basis
55%, there is sufficient accounting software use for managing the profits of the organization
50%, the debtors soft ware enhances the fhnctioning of the organizations 67.5% and the accounts
receivables software helps reduce risks to loss of profits 70%. On avcrage, the accounts software
had a moderate effect on financial performance of BCU.
The study results on the cfl~ct of accounts payable software on financial performance of Bugisu
cooperative Union. Concerning accounts payable software helps in payment of creditors in time
52.5%, accounts payables software helps in managing the creditors in a timely manner 60%,
payables software enhances the risk management in the organization 40%, there is efficient
management of creditors in the organization through the software 60%, the organization uses the
credit software for managing the creditors for ensuring the supplies 60% and there is support for
the management and attainment of credit that enables financial position establishment 25%. The
study results indicate that the payables software account to financial performance at a low extent
The study results on the effect of general Ledger software on financial performance of Bugisu
cooperative Union. General ledger software transforms the data for decision making had 55%,
general ledger software enables the detection of fraud in the organization 65%. general ledgers
transform the accounting information for profits determinations 65% and general ledgers helps in
measuring the financial performance of organization 60%, general ledger software enables the
tracking budgets for the organization 45% and accounting solhvarc provide a financial data to
36
produce accurate financial statements 55%. The general software has a moderate effect on
financial performance of BCU.
5.2 Discussion of findings
5.2.1 Effect of accounts receivables software on financial performance of Bugisu cooperative
Union
The study results regarding the effect of accounts receivables software on financial performance
of Bugisu cooperative Union accounts receivables software trucks the debtors for payment, the
accounts receivables present a moderate effect on financial performance. The results are in
agreement with those of Gill (2011) assert (hat the main objective of accounts receivable
software is to reach an optimal bal~ncchetween cash flow m&nagement components. Cash flow
management is the process of planning and controlling cash flow both into and out of a business,
that is. cash flows within the business and cash balances held by a business at a point in time.
Even Joshi (2007) contend that accounts receivable software as a component of cash flow has a
direct effect on the profitability of a business. Cash flow management refers to the management
of movement of ftinds into and out of a business and involves the management of accounts
payable, accounts receivables, inventory as well as the cash flow planning. The results are finally
in agreement with those of Al-Mwala (2012) who state that sales are pointless without due
payment and therefore the sales and accounts receivable flrnctions must work together to achieve
the objective of sales maximization within minimum length of time. Owalabi and Obida (2012)
note that credit sales are a sign that firm is able to maximize its sales and improve its financial
performance.
5.2.2 Effect of accounts payables software on financial performance of Bugisu cooperative
Union
The study results regarding the effect of accounts software on financial performance of Bugisu
cooperative Union accounts, the accounts payable software present a moderate effect on
financial performance, the results are in line with those of Falope and Ajilore (2009) examined
the effect of accounts payables software on corporate, profitability; Evidence from panel data:
analysis of selected quoted companies in Nigeria. They used the sample of Nigerian quoted non
financial firms for the period 1996-2005. The study found a significant negative relationship
between net operating profitability and the average collecting period inventory turnover in days,
37
avenge payment period and cash conversion cycle for a sample of fifty Nigerian firms listed on
the Nigeria stock Exchange. The results are in agreement with those of Karaduman, ci at (2011),
examines the empirical relationship between accounts payables software and corporate
profitability of selected companied in the Istanbul stock exchange for the period of 2005 —2009.
The panel data methods were employed in order to analyze the mentioned relationship. The cash
conversion cycle (CCC) was used as a measure of working capital management cfficicncy, and
return on assets (ROA) used as a measure of profitability. He found out that reducing cash
conversion circle (CCC) positively affects return on assets. The results also agree with Muchina
and Kiano (2011) in their study analyzes the influence of accounts payables software on firms’
profitability in Kcnya. They used fixed panel data of 232 firms. The rcsult indicated that the
avèrag~i debtor day, stock turnover period and the cash conversion cye1e~ arc significantly
affecting the profitability of the firms. They found out also that the manufacturing firms are in
general lacing problems with their collection and payment policies. Moreover, the financial
leverage, ratio of current asset to current liability and firm size also has significant effect on the
finn profitability.
5.2.3 Effect of general Ledger software on financial performance of Bugisu cooperative
Union
The study results on the effect of general Ledger software on financial performance of Bugisu
cooperative Union. General ledger software transforms the data for decision making, the ledger
software has a moderate effect on financial performance of BCU, the results are in agreement
with those of Habibullah (2013) who argued that if some of the customers have the same names
or similar names it may be very difficult to identify which account they belong to. To tackle
these issues, a bank or business can use a Chart of Accounts to an’ange its ledger accounts. A
chart of accounts is a catalogue of all the accounts, which detects and organizes each ledger
acenunt individually by assigning to it an account number or code. The results are in agreement
with Van (2005) the general ledger software is a very important software solution for all
businesses since it is the main accounting record of the business. Key features companies must
look for in general ledger accounting software are its ability to trace budget and financial data so
as to produce accurate financial statements, detecting fraud so easily, tracking budget and
financial data to produce accurate financial statements that can bring out better income
statement, balance sheet, and general ledger reportage. When the best general ledger software is
38
chosen, it helps to develop year-end reports and statements quickly and accurately. The general
ledger software automatically passes data from subsidiary ledgers such as accounts payable and
accounts receivable for quick and accurate double entries as well as balance sheet balance sheet.
In the financial statements all items have its own ledger account and so in this case the bank can
have so many ledger accounts to manage considering its numerous customers, without
computerized accounting system, it would be virtually impossible to locate one ledger account
out of hundreds accurately and conveniently (Habibullah. 2013).
5.3 Conclusions
The study was intended to establish the relationship bctwccn computerized accounting systems
and financial performance. The objectins were to determine the effect of accounts rcceivables
software on financial performance of Bugisu cooperative Union, to establish the effect of
accounts payable software on financial performance of Bugisu cooperative Union and to
examine the effect of general Ledger software on financial performance of Bugisu cooperative
Union.
On the first research objective, the study findings imply that accounting software of receivables
has an effect on financial performance of the organizations; the findings conclude thai enhancing
computerized aècountings through accounting receivables software facilitates financial
performance.
On the second objective, the study concludes that payables software too enhances the
performance there is need for consolidating the management of the payables software. The study
concludes that developing accounts payables and responsive payment facilitates financial
performance.
Finally on the third objective of the study conclude that effective use of the accounting ledger
software enhances the performance of the organization BCU, hence the need to manage the
organization ledger software for developing the organization competence for financial
performance.
39
5.4 RecommendatIons
The study on the first objective recommend that there is need to improve it management need to
enhance operations and search for a more reliable customer base since the prevailing is not
sufficient enough to guide work in the organizations. There is need for strong cost reduction by
management so as to save on the finances lost through operations that arc not effectively guided
in work.
On the second objective, there is need for consideration and employment of the payables
accounting system as means to improving the performance of the software in managing the
organization for fmancial performance.
On the third objective the Ledger systems need to be developed enhanced both in the manual and
automated system in order to develop the form of accounting software assessment necessary for
enabling the organization accounting systems for the organizations.
5.5 Areas of future study
The study could not explore all the study avenues hence loopholes could be cited, the researcher
recommends for the adoption of the following further areas of computerized accounting systems
and accounting efficiency.
• Computerized accounting and profitability of organizations
• Computerized accounting and sales tracking in the organization
40
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44
Appendix I. Research Questionnaire
I, am a third year student of’ Kampala International University Uganda pursuing a hacheloVs
degree in Business administration— Accounting and Finance. I kindly request you to please fill
on the space provided in these questionnaires with appropriate response according to your
knowledge. Your response will he kept conhclentially and be assured that this is purely a
academic oriented. The purpose of this attitude survey is to obtain your opinion on”
Computerized accounting systems and financial performance of’ Bugisu cooperative Union.
Your views and those of all the other staff of the organization who are being asked to complete
this questionnaire will provide available input to the work currently being carried out to devise
new approaches to pay and performance appraisal. Feed back on the overall results of the survey
will he provided to all staff.
Section A: Particulars of Respondents
Gender
Male Female
2. In which age bracket are you?
18-27 ~ 38-49
28-37 ~ 50+
3. What is your level of Education?
Cerilicate ____ Degree
Diploma ~ Masters
Others PhD
4. For how long have you been working in Juba city council?
I Month — 2years ~ 3- 5years Gyrs — 9 years ~ I 0 and above
45
Under the following sections, please tick according to your level of agreement
5. SA Strongly Agree
4. Agree
3. Not sure
2. Disagree
I. Strongly Disagree
Please evaluate the statement by ticking in the box with the number that best suits you.
Section A: Effect of accounts receivables software on financial performance of Bugisu
cooperative Union.
NO Scak 1123451 Accounts receivables software trucks the debtors for payment
2 Accounts receivables soltware helps in trucking the bad debts —
3 Accounts receivables software contribute the management of the
dehtors on the timely basis
4 There is sufficient accounting software use for managing the profits
of the organization
5 The debtors soft ware enhances the functioning of the organizations
6 Accounts receivables software helps reduce risks to loss of profits
Section C: Effect of accounts payable software on financial performance of Bugisu
cooperative Union.
ft Scale 1 2 3 4 5
I Accounts payable software helps in payment of creditors in time
2 Accounts payables sofhvare helps in managing the creditors in a timely
manner
3 Payables sofi;vare enhances the risk management in the organization
46
4 There is efficient management of creditors in the organization through
the software
5 The organization uses the credit software lhr managing the creditors for
ensuring the supplies
6 There is support for the management and attainment of credit that
enables financial position establishment
Section D: Effect of general ledger software on financial performance of Bugisu
cooperative Union.
# Scale 1 2345
I General ledger software transforms the data for decision making
2 General ledger software enables the detection of fhiud in the
organization
3 General ledgers transform the accounting information for prolits
deteini in a ti 0 as
4 General ledgers helps in measuring the financial perlhrmance of
organization
5 General ledger software enables the tracking budgets for the
organization
6 Accounting software provide a financial data to produce accurate
financial statements j — —
47
Appendix II: Research Budget
Items QTY UNIT COST AMOUNT
Stationery 40000/=
Transport J 50.000/=
Preparing questionnaires I 00,000/=
Data collection and analysis 200,000
Editing data, printing and binding 4 20,000 80,000/=
A iii mc — 50.000 5 0.000/c —
Misc ci Ia neous 20.000 20.000/=
TOTAL 500,000/=
48
Appendix III: Time frame and Activities
July 2018 Submitting the research report
TIME ACTIVITIES —_____________
March 201 8 Introduction (chapter one)
April 20 I $ Literature review ol the proposal
May 2018 Writing the methodology
June 2018 — Designing the questionnaire
June 2018 Review and finalizing and printing copies.
49
I/A H fl Al A Ggaba Road, Kansanga P0 BOX 20000 Kampala, UgandaTel: *256 777 295 599, Fax: *256(0)41 - 501 974
INTERNATI ONAL E-mail: mugumetm~grnaiI.corn,
UNIVERSITY Website: http://www.kiu.ac.ug
COLLEGE OF ECONOMICS AND MANAGEMENTDEPARTMENT OF ACCOUNTING AND FINANCE
FEBRUARY, 08TH 2019
To whom it may concern
Dear Sir/Madam,
RE: INTRODUCTORY LETFER FOR BUTEME CARO 1161-05014-04251
This is to introduce to you the above named student, who is a bonafide studentof Kampala International University pursuing a Bachelor’s Degree in BusinessAdministration, Third year Second semester.
The purpose of this letter is to request you avail her with all the necessaryassistance regarding her research.
Topk: - COMPUTERIZED ACCOUNTING SYSTEMS ANDFINANCIAL PERFORMANCE OF COOPERATIVE UNIONSIN MBALE DISTRICT
CASE STUDY: - BUGISU COOPERATIVE UNIONS
Any information shared with her from your organization shall be treated with
‘our positive response.
AND FINANCE
THE REPUBLIC OF UGANDA
BUGISU COOPERATIVE UNIONOFFDCE OF THE MANAGDNGDDRECTOR
RO BOX 2307, Mbale, Uganda 12th February, 2019
Tel: ±2564343565
Our Ref: CR1204/i
Your Ref
The Head of Accounting & Finance,
Kampala International University,
RO.BOX 20000,
Kampala, UGANDA
ACCEPTANCE OF Mrs. BUTEME CAROL FOR HELD RESEARCH ~NBUGDSU COOPERATDVE UN~ON
[is is to acknowledge receipt of your letter dated 07th February, 2019 regarding the research informationir the above mentioned student.
e purpose of this letter therefore, is to inform you that we have accepted her to carry out her research:udy in Bugisu Cooperative Union
u are also advised to avail the evaluation criteria to the work based supervisor to guidee student appropriately.
ours, ,
(~\~~j-~UGlSU COOpERA1iv[.UNION
4ANAGING DlRk~t~~CTOR
UGISU COOPERATIVE UNION