A SURVEY OF ACCOUNTING SYSTEM IN COMMUNITY BANKING
- Project Research
- 1-5 Chapters
- Quantitative
- Chi-Square
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
BACKGROUND OF THE STUDY
From the smallest receipts and payments of a small club to the published accounts of huge public enterprises, accountancy encompasses the installation of bookkeeping and accounting systems, the writing up of accounts, and the creation of every sort of financial statement. One of the key responsibilities of an accountant in practice is to advise clients, both large and small, on the most appropriate accounting system to use in order to give management with up-to-date information (Saira et al, 2010). The language of business is always stated to be according. Every business, including a bank, established under Nigerian company law is obligated to provide a profit and loss account, as well as a statement of assets and liabilities, to its members, shareholders, the public, and other users, including the government, at the conclusion of each accounting period. An accounting system is a method of documenting financial transactions in a business. Depending on the nature of the business conducted by the firm, it might also be referred to as an internal control system (Ismail, 2005). This is due to the fact that financial transactions are measured in monetary terms, necessitating accurate tracking of receipts and payments. It's worth noting that any flaw in an organization's accounting system might result in the company's demise.
Furthermore, banks are obliged to keep an up-to-date record of their transactions with or on behalf of their clients due to the nature of their services dealing with money (Saira et al, 2010).
In community banking, however, this role may be properly performed provided a suitable accounting system is in place to record the bank's day-to-day transactions. Furthermore, accounting is concerned not only with the recording of transactions, but also with the application to which the records are put, as well as their analysis and interpretations for use in making decisions, not only for the benefit of management, but also for the benefit of members, potential investors, government agencies, and so on (Saira et al, 2010). According to recent study, one of the leading causes of indigenous company failure in the country is a failure to keep good accounting records. As a result, these objectives can only be met if a competent accounting system is designed and implemented properly (Ismail, 2005). As a result, the goal of this study is to assess the relevance and suitability of accounting systems in community banking, using "Ogui Urban Community Bank Nigeria Limited" as a case study.
1.2 STATEMENT OF THE PROBLEMS.
Accounting is a profession that is often referred to as a service activity, and accounting is also referred to as the business language, therefore the necessity of an accounting system in any firm cannot be overstated. If there is no suitable accounting system in place, the goals of supplying accounting information for decision making cannot be met (Ismail, 2005). The effects of an inadequate accounting system in banking operations, the unavailability of timely accounting data, account falsification in the banking sector, management's nonchalant attitude toward the information provided by the accounting system, poor decision-making, poor accounting record, and poor audit problem will all be considered during this research project.
1.3 OBJECTIVE OF THE STUDY
The study will aim to accomplish the following objectives:
i. To determine the impact of accounting system in community banking.
ii. To determine whether the strategies used by community bank in their accounting system have been very efficient and effective.
iii. To evaluate the factors that will limit the efficacy of community banks in their efficient application of accounting system in their banking operations or activities.
iv. To assess the roles) of accounting system in proving the activities of community bank.
v. To assess whether they have efficient and effective machinery to implement her planned programmes.
vi. To find out whether accounting system will provide timely accounting data for management decision making.
vii. To find out whether it will facilitate banking activities.
viii. To make recommendations on how to enhance the efficiency and effectiveness of accounting system in community banking.
1.4 SIGNIFICANCE OF THE STUDY
Because accounting systems play such a crucial role in the life of a business, they are referred to as the determining factor, as they determine whether a firm will succeed or fail based on how it records its financial transactions. As a result, the relevance of this project study effort is to provide:
i. Management with an understanding of the value of accounting information in guaranteeing firm profitability and efficiency.
ii. The Accounting System's Importance in Community Banking
iii. Assessment of management's role(s) in establishing an acceptable accounting system in banking operations.
1.5 STATEMENT OF HYPOTHESIS
The following hypothesis forms the basis or the framework for carrying out this research study.
HO1: Accounting systems have no impact in community banking.
HI: Accounting systems have impact in community banking.
HO2: The strategies used by community banks in her accounting system have not been very efficient and effective.
HI: The strategies used by community banks in her accounting system have been very efficient and effective.
HO3: Ogui Urban community bank have no efficient machinery to implement her planned programmes for efficient accounting system.
HI: Ogui Urban community bank have efficient machinery to implement her planned programmes for efficient accounting system.
1.5 SCOPE OF THE STUDY
The study will be limited to “Ogui Urban community bank Nig. Ltd here in Enugu”. The research cannot cover the entire population of the bank hence, a sample will be drawn from selected department in the bank.
1.6 LIMITATION OF THE STUDY
The major factors limiting the extent of this research work are time available for the conduct of the research and inadequate financial resources and those encountered in the course of data collection.
1.7 DEFINITION OF TERMS
i. Deferred tax: This is defined to include taxes due on income which is not taxable within 12 months of the current year as a result of differences between the tax profits and the reported profit.
ii. Deposits: This means all deposit liabilities of banks including other accounts and placements by other banks, current and time deposits.
iii. Dividend: This is referred to the total dividend paid to either the ordinary shareholders or the preference shareholders.
iv. Earnings per share: This computed as profit after taxation less preference dividend by the number or ordinary and founders shares outstanding. To enhance comparability, all shares are assumed to have a per value of one Naira.
v. General Reserves: This includes allover reserves like profit and loss balances exchange revaluation reserves and other reserves.
vi. Interest margin: This is the net of interest income received and paid.
vii. Investment: This includes investment in all calls money, fixed deposit, negotiable certificates of deposits with other banks, bankers acceptances, quoted and unquoted investments.
viii. Loans and advances: All loans and advances given to customers, the advances net of provision is used.
ix. Lateral Acquisition: This is the investigating in other types of business apart from banking.
x. Bills of Exchange: This simply means an unconditional order writing address by one person to another signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to, or to the order of a specified person or to the bearer.
xi. Cheque: A Cheque may be defined as a bill of exchange drawn on a banker payable on demands.
xii. Drawee: This is the bank on whom the cheque is drawn.
xiii. Payee: This is the beneficiary of an order cheque or the bearer of a cheque.
xiv. Open cheque: An open cheque is one that can be cashed over the canter.
xv. Cross cheque: A crossed cheque is one that cannot be cashed over the canter, it has to be paid into an account.
xvi. Profit after taxation: This is profit before taxation. Less taxation charged.
xvii. Capital Reserves: This includes all reserves that is no longer available for distribution as cash dividends like loan, stock redemption accounts, deposit for shares and appropriation for bonus issues.
xviii. Contra Assets and liabilities: These are contingent liabilities arising in the normal cause of business. These commitments may be acceptances, guarantees and other such obligations on behalf of customers. The bank will normally have a corresponding contingent asset due from the customers.
xix. Fixed Asset: This includes asset purchased for lease to customer where they are classified as fixed assets.
xx. Share capital: This includes all issued share capital distinguishing between ordinary and preference shares.
xxi. Shareholders fund: this is the total of share capital statutory capital and general reserves.
xxii. Profit before taxation: This represents gross earnings, less all expenses, including loan, less provision but before taxation.
xxiii. Net Asset per share: This is the total shareholders, fund, less preference shares, divided by the number of ordinary share.
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