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MAKERERE UNIVERSIY

COMPUTERIZED ACCOUNTING SYSTEMS AND CASH MANAGEMENT IN

FINANCIAL INSTITUTIONS

CASE STUDY STANBIC BANK –KAMPALA

BY

BITWABABO DENIS

07/U/7515/EXT

207015098

ARESEARCH REPORT SUBMITTED IN PATIAL FULFILMENT FOR THE

REQUIREMENT FOR THE AWARD OF BACHELOR OF COMMERCE OF

MAKERERE UNIVERSITY

MAY 2011

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DECLARATION

I, Bitwababo Denis declare that this is my original work and has not been presented by any other

scholar for the award of degree. Any other author’s work has been clearly indicated.

Signature……………………………..Date…………………………………………….

BITWABABO DENIS

07/U/7515/EXT

207015098

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APPROVAL

I, the undersigned supervisor of this research study accept that this is adequate for the award of a

Bachelor of commerce degree of Makerere University.

Signature…………………………………….Date…………………………………

MR TUSUBIRA NYENDE FESTO

SUPERVISOR

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DEDICATION

This work is dedicated to my parents late Bangirana Fredric, Mrs Ruth Bamushabire, my brothers

Bangumya Benard, Kamusiime Keneth, Akampurira Asaph and my sisters Tumuhibise Deckline

and Natukunda Grace for the care and support throughout my education.

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ACKNOWLEDGEMENT

Single handedly, this work could not be done. Therefore I wish to acknowledge the following

Attribute goes to my supervisor Mr Tusubira Nyende Festo for his splendid parental guidance

throughout this research work.

My teachers, great lecturers who labored much to transform my level of thinking since child hood.

Sincere thanks to my brother Bangumya Bernard who contributed too much to my education

financially and morally.

Special thanks to management and staff of Stanbic bank especially Mr Mumpe Drakeson who

collected my questionnaires and all those who responded to my questions.

My golden loving friends Miss Nagasha Patience, Jennifer, Mr Ngabirano Lauben, Nuwagaba

Devis, Bachondoza Wilson,Bukenya Wilson for the courage and advice rendered to me.

My parents late Mr Bangirana Fredric, Mrs Ruth Bamushabire, brothers and sisters who

contributed substantially in moral and financial support.

My the living God who has empowered me for all the days and the gift of life.

BLESS YOU ALL.

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ABSTRACT

This study is about computerized accounting systems and cash management in financial

institutions. Case of Stanbic bank head office Kampala Crested Tower. The study addressed

objectives,benefits,problems associated with computerisation,how cash is managed, impact of

computerized accounting on cash management as well as the relationship between two variables

and coming up with the recommendations to the stake holders of the bank.

Descriptive and analytical research was used to examine findings and come up with conclusions.

Stratified random and purposive sampling was used to select elements from the different

departments and levels of management with a sample size of 31 respondents. Questionnaires,

interviews, sampling and use of related literature from text books, journals, magazines and internet

were also used.

The findings of the study indicated that though computerized accounting systems have impact on

cash management, the relationship is weak sending an overall negative signal to the stake holders

and management that computerized accounting alone cannot fully manage institutional cash but

also strengthening other means because there are some activities which cannot be detected by

computers such as money laundering and other related activities which requires tight supervision

from the management.

Also from the findings, there is a direct relationship between computerized accounting systems and

cash management therefore for the institution to perform excellently, it must manage its resources

well. The correlation coefficient shows r =.493**, sig. =.005. The regression analysis shows that in

every computerized accounting system there is 0.383 of cash and cash management. Significant at

0.006 implying that computerized accounting systems affect cash and cash management. This

indicates that more effort is needed by financial institution channels towards improved cash

management despite of the computerized accounting systems put in place.

The researcher recommends that the institution should insist on keeping optimal cash and ensure

tight supervision with both in the systems and at all departmental levels. Security of cash must

continuously be improved all the time. Strict cash budgeting should be continuously implemented

effectively and all expenditures should be done according the budgets. Disbursement must be

controlled to only priority areas. Regular changing of pass word to the employees and other

managers should be encouraged to ensure data integrity.

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ABBREVIATIONS AND ACRONYMS

Freq. - Frequency

S.A - Strongly Agree

A - Agree

NS - Note Sure

D - Disagree

SD - Strongly Disagree

% - Percentage

ATM - Automated Teller Machine

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TABLE OF CONTENTS

DECLARATION...............................................................................................................................i

APPROVAL.....................................................................................................................................ii

DEDICATION................................................................................................................................ iii

ACKNOWLEDGEMENT...............................................................................................................iv

ABSTRACT......................................................................................................................................v

ABBREVIATIONS AND ACRONYMS.........................................................................................v

TABLE OF CONTENTS..................................................................................................................v

LIST OF TABLES............................................................................................................................v

CHAPTER ONE.............................................................................................................................5

1.0 INTRODUCTION......................................................................................................................5

1.1 Back ground................................................................................................................................5

1.2 Statement of the problem............................................................................................................5

1.3 Purpose 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 Subject scope...........................................................................................................................5

1.6.2 Geographical scope..................................................................................................................5

1.6.3 Time scope...............................................................................................................................5

1.7 Significance of the study.............................................................................................................5

CHAPTER TWO............................................................................................................................5

LITERATURE REVIEW.................................................................................................................5

2.1 INTRODUCTION......................................................................................................................5

2.2 Accounting systems;...................................................................................................................5

2.2.1 Evolution of computerized accounting....................................................................................5

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2.2.2 Computerized accounting system............................................................................................5

2.2.3 Features of computerized accounting systems;.......................................................................5

2.2.4 Benefits of computers..............................................................................................................5

2.3 The concept of cash and cash management................................................................................5

2.3.1 Motives for holding cash.........................................................................................................5

2.3.2 Importance of cash management.............................................................................................5

2.3.3 Cash management policies.......................................................................................................5

2.3.4 Strategies to ensure good cash management............................................................................5

2.3.5 Determining optimal cash balances.........................................................................................5

2.3.6 Investing surplus cash..............................................................................................................5

2.3.7 Computerized accounting systems and cash management......................................................5

CHAPTER THREE........................................................................................................................5

METHODOLOGY...........................................................................................................................5

3.1 INTRODUCTION......................................................................................................................5

3.2 Research Designs........................................................................................................................5

3.3 Study Population.........................................................................................................................5

3.4 Sampling methods and Procedures.............................................................................................5

3.5 Sources of data............................................................................................................................5

3.6 Data collection methods..............................................................................................................5

3.6.1 Questionnaire...........................................................................................................................5

3.6.2 Interviews.................................................................................................................................5

3.7 Data processing and analysis......................................................................................................5

3.8 Limitations to the study..............................................................................................................5

CHAPTER FOUR...........................................................................................................................5

PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS...........................................5

4.1 INTRODUCTION......................................................................................................................5

4.2 General Findings.........................................................................................................................5

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4.2.1 Findings on the nature of respondents.....................................................................................5

4.2.2 Findings on the length of time worked in Stanbic Bank..........................................................5

4.3 Findings on the computerized accounting systems.....................................................................5

4.3.1 Findings on objectives of computerization..............................................................................5

4.3.2 Findings on the benefits of computerization..........................................................................5

4.3.3 Problems of computerization...................................................................................................5

4.4 Findings on cash and cash management.....................................................................................5

4.4.2 Findings on the relationship between computerized accounting system and cash management......................................................................................................................................5

CHAPTER FIVE............................................................................................................................5

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS.............................5

5.1 INTRODUCTION......................................................................................................................5

5.2 Summary of major findings........................................................................................................5

5.3. Relationship between computerized accounting and cash management...................................5

5.3.1 Conclusion...............................................................................................................................5

5.4. Recommendations......................................................................................................................5

5.5Areas for further research............................................................................................................5

REFERENCES:................................................................................................................................5

INTERVIEW GUIDE.......................................................................................................................5

INTRODUCTORY LETTER...........................................................................................................5

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LIST OF TABLES

Table 1: Table showing the nature of respondents....................................................5

Table 2: Respondents by Gender......................................................................................5

Table 3: Table showing the length of time served in the bank...........................................5

Table 4 : Showing the objectives of computerization........................................................5

Table 5: Showing on the benefits of computerization........................................................5

Table 6: Showing problems of computerization................................................................5

Table7: Showing response on cash planning......................................................................5

Table 8: Showing response on cash flow...........................................................................5

Table 9: Showing the response on optimum cash levels....................................................5

Table 10: Showing problems on cash management and controls put in place....................5

Table 11: Showing descriptive statistics of computerized accounting systems and cash

management.......................................................................................................................5

Table 12: Table showing the relationship between computerized accounting systems and

cash management correlation.............................................................................................5

Table 13: The regression analysis of computerized accounting and cash management.....5

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CHAPTER ONE

1.0 INTRODUCTION

This chapter aims at giving the back ground of computerized accounting system and cash

management, problem statement of the study, purpose, research objectives and questions of the

study as well as the significance.

1.1 Back ground

Many organizations irrespective of their sizes have resorted to computerized accounting

system because of benefits associated with it such as speed in processing automatic documents

presentation, accuracy of data, up to date information, availability of information, staff

motivation and ability to deal with multiple currencies easily (Indra,2007) thus making

decision easier. According to her, she defined accounting as the method in which financial

information is gathered, processed and summarized into financial statements and reports.

For an organization to achieve the benefits of computerization it must have a well coordinated

good accounting system .According to Mtetwe (2010), accounting system is the part of the

organization management information system which must be able to produce reports like trial

balance, aged debtors and aged creditors and assist managers in discharging their stewardship

role.

Computerized accounting is the beneficial use of current technological advances. The system

doesn’t have only arevolutionalised types of accounting application to but also create new

types of accounting application to the business (Burdick, 2010). As compared computerized

accounting system and manual accounting which were used in the past in the financial sector,

computerized accounting provide more benefits than manual ones thus allowing for more

accurate and calculations in less time as compared to manual accounting system. Errors are far

less common thus eliminating human errors (Alexa,2010). According to him; computerized

accounting is based on accounting software. Accountants must enter the financial data into the

accounting program and the software use mathematical algorithms to calculate and compute

the information into ledger and financial statement. Though computers in the accounting

systems have improved the control of fraud and criminal difficulties with the expansion of the

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scope, computerized based corruption, fraud and other criminal activities such as money

laundering practices have increased in financial sector(Anti-Money Laundering Bill, 2009).

Even though Stanbic bank introduced type of computerized accounting system known as

“Bank Master” for efficiency and effectiveness, there are some problems of cash management

such as money laundering practices which

Cannot be detected by the system except by other means from the management such as regular

monitoring of accounts.

The system has different options for calculating profits, money available on accounts and

losses or error detection. However as a result of increase in number of customers, the system

tends to be over loaded this requires high costs of maintaining and updating .Also the system is

affected by network breakdown especially from telecommunication networks which supply

internet hence giving chance system hackers to track account holder’s password and access

their accounts illegally and withdraw their money.

It is important to note that computerized accounting systems have a direct relationship with

cash management in every computerized organization or company. The Automated machines

can make payments and receive cash on behalf of financial managers of the company (Nadu,

2010; Steiner, 2011). According to Franser (2011), it is important for the company to remain

healthy and strong with enough cash balances because cash is a life blood of every business

and if managed poorly business can go into cardiac arrest. He also argued that if companies do

not consider cash management issue, probably determining business short term stability and its

long term survival could be hard. He continued argued that the biggest cash management

mistake is that business owners make huge risk when investing spare cash.

Cash management therefore is abroad term to refer collection, concentration and disbursement

of cash. It encompasses bank’s level of liquidity management of cash balances and short term

investment strategies (Tamil Nadu, 2010). According to Muthuraman and Kumar (2010), cash

management is a marketing term to certain services offered primarily to large business

customers. It may be used to describe all bank accounts which involve checking accounts

provided to business of a certain size. It is more often used to describe specific services such as

cash concentration, zero balance accounting and Automated clearing house facilities. Although

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research has examined the impact of computerized accounting systems on management of cash

in different financial institutions the empirical research has not examined fully the professional

services industry hence the impact of computerized accounting on management of cash is of

considerable interest to both academic inquiry and practice.

1.2 Statement of the problem

The management and control of cash is evidently a challenge affecting financial institutions

such as banks and insurance companies. If it is not well addressed, it could result into collapse

of some financial institutions which are financially weak especially the upcoming financial

sectors. In1990’s, the financial sector in Uganda witnessed a spiral of bank failures with Teefe

bank closing its operations. In1993 and between 1998 and1999 International credit bank,

Green Land bank, cooperative bank ltd and Trust bank were also closed by the central bank as

imprudent banking practices including cash management associated problems(service sector

report,2000). Recently, there has been an increasing trend of money laundering in the country

where criminals such as drug traffickers, embezzlers, corrupt politicians, public officials,

mobsters, terrorist, and con arts who use financial institutions to make “dirty moneys” into

clean money.(Anti-Money Laundering bill,2009).This makes bank of Uganda have little

intervention in managing such cash. All those have impact on cash management despite of

computerized accounting systems that have been put in place therefore a survey need to be

undertaken to enable financial institutions to have good liquidity as well as good cash

management systems.

1.3 Purpose of the study

The purpose of the study is to establish the impact of computerized accounting on cash

management in financial institutions.

1.4 Objectives of the study

(i) To establish objectives, benefits and problems of computerization in connection with cash


(ii) To examine how cash is being managed in financial institutions.

(iii) To assess the impact of computerized accounting on cash management in financial

institutions

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(iv) To examine the relationship between computerized accounting systems and cash


1.5 Research questions

i) What are the objectives, benefits and problems of computerization in connection with cash

management in financial institutions?

ii) How cash is being managed in financial institutions?

iii) What impact do computerized accounting systems have on cash management in financial

institutions?

(iv)What relationship is between computerized accounting and cash management in financial

institutions?

1.6 Scope of the study

1.6.1 Subject scope

The study concentrates on computerized accounting systems as the independent variable and

management of cash as dependent variable.

1.6.2 Geographical scope

Because of limited time and finance, the study concentrates on the accounts and cash budgets

of head office Stanbic bank- Kampala.

1.6.3 Time scope

The study concentrates on 2010 but following trend from 2008.

1.7 Significance of the study

i) To Stanbic, the study will help it to improve on managing its cash flows so as to overcome

financial losses and help it to achieve fully the benefits of computerization.

ii) To the researcher, for the purposes of fulfilling his academic requirements.

iii) The study will add on the pool of already existing knowledge for other researchers.

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CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION.

This chapter is aimed at giving an insight to the related literature about computerized

accounting and cash management. The way two variables affecting each other will be analyzed

as well as the relationship between them after which conclusion will be made.

2.2 Accounting systems;

Accounting system is a set of records, report and analysis of financial information (lock ridge,

2010). Larson and Pyle, (1988) do not differ much. They define accounting system as a set of

records, reports and procedures that are used by business in recording transactions and

reporting their efforts. According to Hermanson et al (1987), accounting system is a set of

records plus procedures and equipment regularly used to process business transactions.

2.2.1 Evolution of computerized accounting

Manual system of accounting had been traditionally the most popular methods of keeping

records of financial transactions of organization (Burdick, 2010). Conventionally the

accountants use to maintain books, Journals, and ledgers so as to prepare a summary of

transactions and final accounts manually. The technological innovations lead to the

development of various machines capable of performing variety of accounting information.

Machines were capable of computing discounts, adding net total and posting requisite data to

relevant accounts. They have features of typewriters and various kinds of calculators which

helped them to perform their operations. With a substantial increase in the number of

transactions, technological advanced further with exponential increase in speed, storage and

processing capacity (Osmond et al, 2011).The maintenance accounting data on real time

(spontaneous) basis become almost essential, Such systems of maintaining accounting records

become a convenient with computerized accounting system(Indra,2007; Walter ,2006).

2.2.2 Computerized accounting system.

Many businesses have large number of transactions. To record such volume of transactions

cannot be handled by manual accounting system therefore computerized accounting system is

5

thus recommended (Brock and Palmer, 1981).Computerized accounting system therefore

involves the use of technological advances especially with the use of computers to create new

types of accounting application to business in facilitating quick decision making (Burdick,

2010).

2.2.3 Features of computerized accounting systems;

According to Mtetwe (2010), he says that for organization to understand the nature of

computerized accounting, one should consider the characteristics of the accounting system

which includes; Audit trail; Audit trail is very important as it enables auditors and senior

managers to monitor transactions entered in the accounting system and ensure that there is

information integrity. The system should document the changes that have been made and be

able to track what was changed.

Compatibility with other programs; A good accounting system must be compatible with other

system and easily be configurable so that it can communicate with other programs like excel

and cystal.

Error detection: If an accounting system doesn’t detect error, then it is not a good accounting

package as it is failing to perform the basic functionality. Accounting package should decline

to post transactions that do not balance for example total debit should be equal to total credit

and if this is not the case, then accounting system should automatically flag this error.

Internal controls; Internal controls are the eyes and ears of every organization and good

accounting system should embed these internal controls into the system which enables in

prevention and detection of frauds and errors. A good accounting system should not allow

users to delete data that has been posted into the system. Though computerized accounting is

recommendable to large organizations with huge volumes of transaction, the system is not

simpler as people expect. It is believed that even the best accounting system cannot

automatically convert a clerk into a book keeper (Brun, 2010)

2.2.4 Benefits of computers

Time saving: With computers automatic output of reports such as details whether firms are

meeting their sales targets can be achieved quickly and on demand (Frank wood, 2002).

6

Furthermore computers allow accountants to process large amount of financial information and

process it quickly through computerized accounting system (guide to computerizing your

accounting system, 2000). According to Hermanson et al (1987),computers facilitates quick

decision making in a timely manner especially in preparing financial reports hence time

saving.

Better external reporting: Reports issued to outside investors and stake holders have been

improved by computerized accounting system. Improved reporting allows investors to

determine if a company is good investment opportunities and has potential to be a high value

company (Osmond ,2011) Also effective reporting allows managers to monitor expenditure

against line items budgets, track account balances and predict future cash flow needs (Frame

wood 2002)

Computerization doesn’t only improve on reporting to the outside investors and stake holders

but also facilitate quick decision making (Hermanson et al, 1987). In addition to external

reporting, computers improve accuracy. Most computerized accounting systems have internal

checks and balance measures to ensure that all transactions and accounts are properly balanced

before financial statements are prepared (Benefits of computer in business 2011).

Internal storage capacity; the computer can store data and instructions for previous internally in

its memory. This enables it to recall instructions for previous work this allows it to process the

data with little human intervention (Brock and Palmer, 1981). The system allows managers to

move easily and identify problems such as need of cash, diminishing sales thus eliminating the

need for manual investigation which is time consuming (guide to computerizing your

accounting system 2000)

Little human effort; since much of the work is done by computer through operating

instruments, human effort is conserved. This is added advantage of computerization (Herman

son et al, 1987).

Nevertheless, the extant of benefits of computerization varies from one industry to another

with each industry deriving different benefits. Once computer system is working properly,

managers find themselves extracting reports easily which cannot be achieved when using

manual systems.

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However, there are some Problems associated with computers and these includes;

Hidden costs; these are costs of purchasing equipment and looking for suppliers. Also future

costs like updating system, seeking technical support and storing data have also to be incurred

(Guide to computerizing your accounting system 2000). Cost benefits analysis need to be done

to justify the use of computers (Brock and Palmer, 1981).

Lack of intelligence and judgment; Computer systems have no intelligence or judgment of

their own .They can only do what they are told to do (Brock and palmer ,1981) thus well

functioning system need to be designed to achieve results (Paradigm college Accounting

resource centre 2001)

Audit trail; This is difficult to follow because the accountants cannot read the files since

journals and ledgers are kept on disks or tapes that can only be read by the computer (Brock

and palmer, 1981) computerized accounting system therefore should be error free and should

be checked and up dated on a regular basis to ensure accurate and current data. Also in this

way, risks like viruses and other threats of data integrating will be controlled (Guide to

computerizing your accounting system 2000).

2.3 The concept of cash and cash management.

Cash management is a broad term refers to collection, concentration and disbursement of

cash .I t encompasses banks level of liquidity, management of cash balances and its short term

investment strategies (Nadu, 2010). Cash management is concerned with managing of cash

flows in and out of the firm and balance held by the firm at a point of time by financing deficit

or investing surplus cash (Pandey, 1999). Van Holmes (1995) defines cash management as

managing of monies of firm in order to maximize cash availability. In these days, cash is an

important asset as it keeps the business running on continuous basis and also ultimate output

realized by selling the products or services. It includes coins, Currency and cheques held by the

firm and balances in the bank account. Sometimes near cash items such as marketable

securities, are also included as cash (Frank wood, 2002).

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2.3.1 Motives for holding cash.

According to Kakuru (1993), it is essential to keep some organizational resources in cash due

to the generally recognized motives for holding cash by any other business units. They include

the following

i. The transaction motives which recognizes that business has to carry daily transactions.

Cash is needed to pay labor, materials, supplies and utilities.

ii. Precautionary motives. Cash is needed to cushion the business against any other

unforeseen problems like break down in machinery, failure of the electric systems and

emergency for work force problems.

iii. Speculative motives. The business maintains cash balances in order to take advantage

for any profitability ventures that may unexpectedly crop up like a sudden fall in price

of materials.

2.3.2 Importance of cash management.

According to Pandey (2000), cash management is important because of the following reasons;

Cash management is important because it is difficult to predict cash flows accurately

particularly the inflows and there is no perfect coincidence between inflows and outflows of

cash in some periods.

Cash management is important because cash institutes the smallest portion of the total current

asset yet management considerable time is devoted in managing it.

Cash management assumes more importance than any other current assets because cash is the

most significant and the least productive asset that a firm holds. It is significant because it used

to pay firm’s obligations. However cash is unproductive unlike inventories or fixed assets. It

does not produce goods for sale. The main aim of cash management is to maintain adequate

control over cash position to keep the firm sufficient liquid and to use excess cash in some

profitable way.

2.3.3 Cash management policies.

These are set of guidelines established by the business to ensure that it has optimal cash

balances at any time. The organization seek to match cash receipts and disbursement so that

there is no redundant

Surplus cash balances or potentially establishing cash deficits (Kakuru, 1993)

9

Chart 1 Cash Management Cycle.

Source IM. Pandey Pg 912

2.3.4 Strategies to ensure good cash management.

Strategies used to ensure adequate cash are aimed at reducing excess or limited cash. In order to

achieve the aims of good cash management, some strategies are laid down. Different writers

have attempted to discuss these strategies. However, Pandey, Julius Kakuru and Van Holmes

suggest a number of strategies To them cash management has the following strategies.

Cash Planning; Pandey (2005) defines cash planning as a technique to plan and control cash. It

protects the financial condition of the firm by develop a project cash statement from a fore cast

of expected cash inflows and out flows from a given period .Cash planning may be done weekly

daily or monthly. When cash is properly planned, long term cash forecasts can be made to give

accompany idea of financial requirements in a distant future. According to Kakuru (2001), the

major uses of long term cash forecasts are;

i) It indicates company’s future financial needs especially for its working capital requirements.

ii) Helps in evaluating proposed capital projects. It pin point the cash required to finance these

projects as well as the cash to be generated by the company to support them.iii) Helps to improve

corporate planning long term forecasts compel each division to plan for the future and to

formulate projects carefully. However cash planning cannot be achieved without managing cash

flows. Managing cash flows; the flow of cash should be properly managed .Cash inflows should

be accelerated while cash out flows is decelerated. It is very important to note that financial

Cash Collection

Deficit

Surplus Cash payments

Information and control

Business operation

Borrow

Invest

10

manager should always strive to minimize the deviations from the projected cash flows. To get

an optimal level of cash, Boumol’s model can be used (Pandey, 2000).

Cash Control system; It embodies the overall attitude, awareness and actions of management

regarding the control and its importance in the entity. The control system has an effect on

effectiveness of the specific procedure. A strong control system for example should be one with

tight budgetary controls over cash received, cash bank, petty cash, cash cheques and effective

control of cash balance brought down.

However a strong cash system doesn’t ensure effectiveness of cash control factors reflecting in

the control system include management philosophy and operating style and the entity’s

organizational structure and methods of assigning authority and responsibility.

Procedures illustrating good cash control system.

Control over cash received; This entails safe guarding against possible interception between the

receipts and opening of the post for example by using a locked mail box and restricting access to

the key, supervising the opening of the post by eth responsible official s and where true volume

of mails is significant at least two persons should be present where the mail is opened .There

should be division of duties between custody the asset and recording the transaction. These

should be independent of the cashier; records should be made at the time of opening of post of

cheques and cash received.

Control over cash collection; this entails clearly defining authority to cash collection, follow-up

of the debts collection. Collections should be recorded when received for example in a rough

cash book or copies of receipts which should be given to cashier ,the cashier’s cash receipts

should be reconciled to the eventual banking and a responsible official should check the cashier’s

own receipt book with cash book entries. Cash surplus and deficit should be investigated.

Control over cash banking; where cash receipts are on a daily basis, then banking should be on

daily basis. It should be in exceptional cases. Where cash receipts are used before banking there

should be strict of disbursements each day receipts should be recorded properly in cash book,

periodically comparisons should be made between the slit of cash and cheques received and

11

banked. The bank statements should be received promptly. The person responsible should be

independent of the receipts and payments.

Control over cheque payments; unused cheque books should be held in a secure place. The

person who prepares cheques should have no responsibility over payment ledgers, cheques

should be signed only where evidence of a properly approved payment voucher is available.

Such evidence may take form of invoice pay roll, petty cash book, the cheques should be

evidenced by signing the supporting documentation and those approving the original document

should be independent of those signing cheques

Control over petty cash; all petty cash expenses should be budgeted for, rules should exist

preferably preventing the issues of cashing cheques, periodically the petty cash book should be

reconciled by an independent person. Surprise cash counts, a maximum amount should be put in

place on petty cash payment to discourage normal procedure being by passed, vouchers should

be concealed once re imbursement has taken place, the level and location of cash flows should be

laid down formally and based on needs, there should be strict access to the floats, they should be

securely laid for example in a locked drawer restricted access keys, all expenditure should

require a voucher by responsible official not the petty cashier. Therefore balancing a check book

for every large business is not a simple process (Nevile, 2010).

2.3.5 Determining optimal cash balances

The firms need cash not for only meeting daily operating expenses but also due others like

payment of dividends, interest rates and tax inter-alias. The test of liquidity is really the

availability of cash to meet the firm’s obligations when they become due (Pandey, 1995). The

operating cash balance is maintained for transaction purposes and an additional amount may be

maintained as buffer or safety of stock. Therefore it’s a duty of the financial manager to

determine the appropriate cash balance. However this judgment differs from firm to firm and

different managers can arrive at different appropriate cash balances.

The most important issue is that financial manager has to look at the tradeoff between the risks

and return which arises if the firm maintains a small cash balances or when the firm maintains a

big cash balances. Thus the firm should maintain an optimal cash balance neither too small nor

too big. To find out the optimal cash balance, the transaction cost and risk of too small balance

12

should be matched with the opportunity cost of too large balance (Salomon and Pingle, 2000).

Never the less when determining optimal cash balance it should be noted that the surplus cash

has to be invested in order to earn a return to the firm.

2.3.6 Investing surplus cash.

Once the firm has established an optimal cash balance, the residual of its assets should be

invested in marketable securities such as bonds, treasury bills, shares and other money market

instruments. However, there is a close relationship between cash and marketable securities.

Therefore the investment in marketable securities should be properly managed. Excess cash

should normally be invested in marketable securities which can be conveniently and properly

turned into cash in near future. For accounting purpose, marketable securities and time deposits

are shown as “cash and cash equivalents” on the balance sheet in financial statements (Van

Holmes, 1995). It is the duty of financial manager to look at a number of securities that may be

available in the market in order to decide about the portfolio of marketable securities in which

the surplus cash should be invested basing on the features such as security safety, maturity

period, marketability, coupon rates and taxability (Pandey and Van Holmes, 1995)

2.3.7 Computerized accounting systems and cash management.

The theoretical literature of computerized accounting and cash management have been debated

overseas (Peacock, 1985; Peel and Wilson, 1996; Chiltenden et al, 1998) which have fair

academic literature on the impact of computerized accounting on cash management in financial

institutions. The issues of computerized accounting relating to cash management typically focus

on control of debtors and creditors (Chittenden et al 1998), cash flow and cash collection that is

cost saving money to settlement accounts (Chiltenden et al 1998). Computerized accounting

system creates accuracy towards response of positive to record keeping system (MacMohon and

Holmes,1999) Thus eliminating errors while preparing accounts as long as the system is properly

programmed un like human or manual system (Kisakye, 2001)

Computerized system has increased work load which cannot be handed by human labor (Petzve

and Mulphy, 2001) thus cost saving money on employing human effort. Also computerized

accounting saves time while managing cash. Once the transaction is made the system process

data faster and automatically. (Kiskye, 2001) Further more time saving is an important factor in

retail whole sale and service industry like banks (Breen and Sciulli, 2002).

13

The issues of computerized accounting relating to cash management also focus on electronic

fund transfer, automated teller machines, debit and credit cards for depositing and with drawing

money (Alexandra, 2010). Today, electronic fund transfer is having great impact on

management, market planners and system designers and is beginning to become an important

area of operations for business men and accountants. The effect of electronic fund transfer (EFT)

on internal control and audit is subject to an article in the Anderson Chronicle (1976). According

to TanBeng (2000), Electronic fund transfer is a system of transferring money from one bank

account directly to another without paper money exchanging hands. Electronic fund transfer

involves the transfer of funds initiated through an electronic terminal including credit card,

automated teller machines, fed wire and point of sale (Waliam, 2010).

Computerized accounting systems through the use of electronic fund transfers have created

many benefits which helps both financial institutions and business men to perform their

operations through the following; It has increased reliability through proving accurate

information tracked from using debit and credit cards which saves money and reduce carbon

(Thomas and William, 2010),reduced hard cash that is with electronic fund transfers, one can

easily transfer money from one bank account to another without exchange of physical cash

(Market watch, 2007).The system doesn’t only reduce hard cash but also abolish paper money

and eliminate most crimes.

Conclusion

Computerized accounting systems generally offer several benefits like time saving effective

reporting, improved accuracy, handling volume of transactions and storage capacity. It is

necessary for financial institutions to fully computerize their system in order to manage their

cash flows which are becoming a dynamic in transaction banking and therefore an important job

in today’s scenario. Computerized accounting system need to be flexible enough to

accommodate changes in cash management systems. Many companies have computerized

accounting systems but they are yet to reap their benefits as shown above. This study is therefore

aimed at finding out the impact of computerized accounting on cash management and how cash

is being managed in Stanbic bank so as to reduce on customers’ complaints as well as financial

loss from different transactions

14

CHAPTER THREE

METHODOLOGY

3.1 INTRODUCTION

This Chapter aims at providing a brief account on how research was carried out. It gives

among other research designs, study population, data collection, data presentation, analysis and

anticipated limitations to the study.

3.2 Research Designs

The research used descriptive and analytical research so as to describe observations and

examine findings to come up with conclusions and recommendations. Also quantitative and

qualitative designs were used to establish the relationship between computerized accounting

system and cash management in Stanbic Bank.

3.3 Study Population

The study population comprised of 2 staff from Global market department, 4 from Sales, 2

from Service, 5 from Operations, 4 from Accounting department, 3 from Information

Technology, 3 from Finance, 4 from Credit and 3 from Risk department giving a total of 31

staff members.

3.4 Sampling methods and Procedures

A simple random sampling was used to select respondents from the various groups in the

defined population so as to minimize and eliminate possible bias and give equal probability of

selection to the unit in the population. In addition, purposive sampling was used on heads of

department managers and senior accountants to get those who understand the subject better as

policy makers and then stratified and sampling used on different categories of staffs to gather

different information as per strata to solve the problem of unequal representation and select

amore reliable sample.

3.5 Sources of data

Primary source: This was used to gather primary data by use of responses to the questionnaires

and notes taken from the interviews.

15

Secondary source: Secondary data was extracted from the bank records such as financial

reports. Other secondary source such as text-books, journals and articles. Other publications

and surfing on the Internet was used.

3.6 Data collection methods

3.6.1 Questionnaire

This was administered to the various respondents since they cover all the aspects of the study

and provide enough data. They contained only closed ended type of questions, self

administered questionnaires were used because the population was educated enough to

interpret the questions.

3.6.2 Interviews

Face to face interviews were used on heads of departments and support staffs to extract more

data in areas where clarification was necessary and this aided in depth probing. Also interview

guides were used to conduct interviews.

3.7 Data processing and analysis

On gathering the required data, it was coded and edited for accuracy and completeness. This

involved checking thoroughly that questions in the questionnaire were all answered and that

answers given were all consistent. Data was analyzed using frequency distribution tables,

charts and graphs. Also special package for social scientist (SPSS) was used to calculate

Pearson’s correlation as a way of establishing the relationship between computerized

accounting systems and cash management.

3.8 Limitations to the study

While carrying out the study, the following constraints were encountered:

Financial constraints: The study was limited by lack of funds to facilitate the whole process of

conducting research.

Outdated literature: The related literature was not up-to-date. Most of it was old and out of

fashion. Despite of this, effort was made on the online to get relevant current data which was

costly, tiresome and time consuming.

16

Time period: The length of period in which the research needed was short. It involved

preparation of tests as well as final exams which was not favoring. However, efforts were

made to ensure that all the important areas on the aspects of the study were covered.

Limited access to the information: Websites of some organizations were not willing to provide

the information necessary for the researcher to make an ideal conclusion on findings in the

possible time.

Apparatus used such as flash disks which are commonly used to store the collected data were

at risk of being attacked by viruses and failure to open at the time of compiling data. This

distorted the mind of the researcher.

17

CHAPTER FOUR

PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1 INTRODUCTION

This Chapter presents findings of the study on the relationship between computerized

accounting systems and cash management in Stanbic Bank. The presentation is in form of

tables, figures, charts, graphs and percentages.

4.2 General Findings

4.2.1 Findings on the nature of respondents

The findings of the study were gathered from the Global market staffs, Sales, Services,

Operations, Accounting, Information Technology, Finance, Credit, Risk management staffs

and heads of departments.

Table 1: Table showing the nature of respondents

Nature Frequency Percentage

(%)

Global market staff and sales 6 19.4

Service and operations 8 25.9

Accounting and Finance 7 22.6

Information and technology 3 9.7

Credit and Risk management 7 22.6

Total 31 100.0

Source: Primary data

The research shows that a sample of 31 representing 100% of the respondents from the

different departments in which computerized accounting commonly practiced participated in

the study thus removes bias from the findings

18

Table 2: Respondents by Gender


Findings on the respondents by gender indicates the bank averagely employees both male and

female as represented by 58.1% and 41.9%. This therefore shows that the bank doesn’t

discriminate categories of employees and gender sensitive.

4.2.2 Findings on the length of time worked in Stanbic Bank

Table 3: Table showing the length of time served in the bank

Period Frequency Percentage (%)

Less than 1 year 4 12.9

Between 1 and 2 years 4 12.9

Between 3 and 5 years 16 51.6

Above 5 years 7 22.6

Total 31 100.0


From the response obtained, it was found that most of the employees have been in the bank for

more than 2 years that is between 3 and 5 years representing 51.6%, above 5 years (22.6%),

between 1 and 2 years representing 12.9% and less than 1 year also representing 12.9%. It was

analyzed that most of the respondents had worked in the bank for more than 2 years and have

experience on how the systems operate.

Gender Frequency Percentage

(%)

Male 18 58.1

Female 13 41.9

Total 31 100.0

19

The bar graph showing length of period employees served in the bank

Length of period served

Length of period served

Above 5 years3-5 years1-2 yearsLess than 1 year

Perc

ent

60

50

40

30

20

10

0

4.3 Findings on the computerized accounting systems.

4.3.1 Findings on objectives of computerization

Table 4 : Showing the objectives of computerization

Objectives SA A NS D SD

Freq % Freq % Freq % Freq % Freq %

Speed in data processing 20 64.5 11 35.5 - 0 - - - -

Accurate data 17 54.8 13 41.9 1 3.2 - - - -

Ease data comparison 3 9.7 27 87.1 1 3.2 - - - -

Make decisions quickly 2 6.5 2.6 83.9 2 6.5 - - 1 3.2

Increase customer base 6 19.4 17 54.8 3 9.7 5 16.1 - -


According to the findings, the objectives of computerizing the accounts department include:

Speed in data processing: 64.5% of the respondents strongly agreed that the aim of

computerization is to increase speed in data processing, 35.5% agreed none disagreed. This

saves time, increase the number of transactions, reduction of errors and provide customer

satisfaction.

20

Accurate data: 54.8% of the respondents strongly agreed that accuracy was the major objective

of computerization, 41.9% agreed while 3.2% were not sure. This can help to reduce errors,

customer complaints and enables the bank to operate at a low cost.

Ease data comparison: 87.1% of the respondents agreed that the aim of computerization is to

ease data comparison, 9.7% strongly agreed and 3.2% were not sure. This enables the bank to

access information and compares it with the current years thus making good financial analysis

and decisions.

Decision making quality: From the findings, it is believed that 83.9% agreed that the objective

of computerization is to help managers in making decisions quickly, 6.5% strongly agreed,

6.5% not sure while 3.2% strongly disagreed with the objectives. This is because of accurate

information and less bureaucracy involved in departments and thus enables the management to

decide on the operations of the bank.

4.3.2 Findings on the benefits of computerization

Table 5: Showing on the benefits of computerization

Benefits SA A NS D SD


Reduce Errors 8 25.8 18 58.1 4 12.9 1 3.2 - -

Reduce Costs 9 29.0 20 64.5 2 6.5 - - - -

Increase Efficiency 14 45.2 17 54.8 - - - - - -

Improves Reporting 11 35.5 15 48.4 5 16.1 - - - -

Increase data storage

capacity

17 54.8 14 45.2 - - - - - -


From the findings, the benefits include: Reduced errors: From the findings, 58.1% confirmed

and agreed that computers reduce errors, 25.8% strongly agreed, 12.4% were not sure while 3.2

21

disagreed on the benefit. This allows the bank to handles large volume of transactions which

are free from human errors hence efficient cash management.

Improved reporting: 48.4% agreed that cash management has greatly improved especially with

the use of bank master accounting system or software, 35.5% strongly agreed and 16.1% were

not sure on the benefit. Improved reporting enables financial analysts and managers to make

timely decisions

Increased efficiency: 54.8% agreed that there has been efficiency as a result of

computerization, 45.2 % strongly agreed and none disagreed. Thus enabling the bank to have

accurate data and high volumes of transaction at a low cost.

Data storage capacity: 54.8% strongly agreed that computers increase data storage capacity,

45.2% agreed and none disagreed with the benefit. Computers can keep millions of records

which can be accessed any time when required and reduce space wastage as compared to

manual accounting systems.

4.3.3 Problems of computerization

Table 6: Showing problems of computerization

Problems SA A NS D SD


System break down 2 6.5 11 35.5 5 16.1 8 25.8 3 9.7

Staff retrenchment 5 16.1 20 64.5 - - 3 9.7 3 9.7

Expensive hard ware 3 9.7 19 61.3 4 12.9 2 6.5 1 3.2

Power Shortage 1 3.2 14 45.2 3 9.7 9 29.0 4 12.9

Frauds 3 9.7 14 45.2 7 22.6 4 12.9 1 3.2


22

System breakdown: 35.5% of the respondents agreed that computers face a problem of system

breakdown, 6.5% strongly agreed, 16.1% were not sure, 25.8% disagreed while 9.7% strongly

disagreed. This indicates that there is a high possibility of losing information and therefore

bank may not be able to fulfill its financial goals.

Staff retrenchment: 64.5% agreed that as a result of computerization, many employees lost

their jobs and be done by computers such as ATMs, 16.1% strongly agreed while 9.7%

strongly disagreed with the problem. Though a biggest percentage of 64.5% agreed with

problem, this was for the employees benefit but not for the bank which aims at reducing costs

so as to maximize cash inflows.

Expensive hardware: Despite of the computerization, computer hardware are expensive as

evidenced by support of 61.3% which agreed with the issue, 9.7% strongly disagreed, 12.9%

were not sure while 6.5% and 3.2% agreed and strongly disagreed respectively. Although the

bank experienced such problem it had tried to do regular replacement of computer soft ware

and hard ware to address the problem.

Power shortage: From the findings, it was believed that computers cannot work in absence of

power, 45.2% agreed that computers experience power shortage, 3.2% strongly agreed, 9.7%

were not sure, 29.0% disagreed while 12.9% strongly disagreed with the problem. Despite the

power shortage problems, the bank had tried to put up some standby systems like generators to

solve such problem.

Frauds: Another problem confirmed was that computerization encourages frauds. 45.2%

agreed with the problem, 9.7% strongly agreed, 22.6% were not sure, 12.9% disagreed while

3.2% strongly disagreed with the matter. This clearly indicate that the bank is at risk of losing

its money from unknown hands there fore regular changing of password is the way forward to

deal with system hackers thus increasing cost of operation which may not be planned for.

23

4.4 Findings on cash and cash management

Table7: Showing response on cash planning

Variables SA A NS D SD


Cash planning is

carried out

13 41.9 17 54.8 1 3.2 - - - -

Prepare budgets

periodically

6 19.4 23 74.2 1 3.2 1 3.2 - -


Cash planning: From the findings, the researcher found that the bank carries out cash planning

as evidenced; 54.8% of the respondents who agreed on the issue of cash planning, followed by

41.9% who strongly agreed and finally 3.2% of the respondents who were not sure about cash

planning performed by managers of the bank. There fore no doubt on the going concern of

banking business. Cash planning gives management to plan ahead and predict the future.

Budget preparation: It was also observed that different cost centers send their budgets to the

accounts department which are then put together to make the budget for the whole company as

seen by 74.2% responses who actually agreed with the issue of budget preparation, followed by

19.4% who strongly agreed, 3.2% who were not sure and finally 3.2% strictly disagreed.

Budget preparation being received a biggest positive response of 74.2% indicates that the bank

really utilizes its resources.

24

Table 8: Showing response on cash flow



Cash is supported by

documents

15 48.4 13 41.9 2 6.5 - - - -

Authorization of all cash

payment

5 16.1 8 25.8 3 9.7 11 35.5 4 12.9

Cash from the client are

all credited

20 64.5 9 29.0 2 6.5 - - - -


Expenses document support: 48.4% strongly agreed that expenses are supported by documents

like receipts, invoices and vouchers as evidence of cash being fully controlled followed by

response of 41.9 who actually agreed with the matter and lastly 6.5% were not sure about the

issue. This shows that the bank has strong internal controls which aims at reducing forgery and

minimize unnecessary expenditure.

Authorization of all cash payments: From the findings, 35.5% disagreed about the

authorization of all cash payments by the Financial Manager, 12.9% strongly disagreed, 9.7%

were not sure, 25% agreed with the matter while 16.1 strongly agreed with the issue. This

indicates that there are internal controls; however the bank could be at risk of experiencing

liquidity problem if the Finance Manager authorizes all payments.

Cash received from the clients: 64.5% strongly agreed that all cash received from the clients

are credited on their account, 29.0% also agreed with the system while 6.5% were not sure.

This shows that good arrangement is put in place to address customers’ complaints.

Table 9: Showing the response on optimum cash levels

25



Financial manager

determines appropriate

cash balances

2 6.5 23 74.2 6 19.4 - - - -

Operating cash is

maintained for

transaction purpose

1 3.2 24 77.4 4 12.9 1 3.2 - -

No amount of optimum

cash is kept for safety

sock

1 3.2 2 6.5 3 9.7 16 51.6 4 12.9


Determination of appropriate cash balance: 74.2% of the respondents agreed that the Finance

Manager determines appropriate cash balances, 6.5% strongly agreed while 19.4% were not

sure of the matter. This implies that bank maximizes its operations.

Cash maintained for transaction purpose; 77.4% agreed that cash is maintained for transaction

purpose.3.2% strongly agreed, 12.9%were not sure while 3.2% disagreed with the matter. Thus

cash is maintained basing on transactions planned.

Optimum amount of cash kept for safety stock;3.2% strongly agreed that no optimum amount

of cash is kept for safety stock,6.5%agreed,9.7%were not sure,51.6% disagreed while12.95

strongly disagreed. This implies that in case of un expected financial need may not be solved

hence dissatisfaction of customers.

Table 10: Showing problems on cash management and controls put in place

26



Experience of money

laundering

- - 18 58.1 10 32.3 2 6.5 1 3.2

Due controls on cash

reserves and ATM

15 48.4 16 51.6 - - - - - -

Strict supervision on

cash controls

15 48.4 16 51.6 - - - - - -


Despite of the above control systems put in place, the bank experiences money laundering as

confirmed by the respondents whose 58.1% strongly agreed with the problem, 32.3% were not

sure, 6.5% disagreed while 3.2% strongly disagreed with the matter but the biggest percentage

indicates that the bank is experiencing money laundering problem. This implies that there are

problems in cash management, never the less, the bank tried to ensure that there is strong

control for cash reserves and ATM as well as having strict supervision on cash controls to

ensure that this problem is minimized.

Table 11: Showing descriptive statistics of computerized accounting systems and cash management

Variables N Minimum Maximum Mean Standard deviation

Computerized accounting

31 1.92 2.88 2.3093 .2422

Cash management 31 1.3 2.77 2.2351 .2697

Where N=population size, from table above, it is clearly indicates that cash management

systems and computerized accounting systems are important shown by standard deviation of

0.2697 and0.24422 respectively with insignificant figure of 0.0275.

27

4.4.2 Findings on the relationship between computerized accounting system and cash

management

Table 12: Table showing the relationship between computerized accounting systems and cash management correlation

Computerized

accounting systems

Cash

management

Computerized

Accounting systems

Pearson correlation

Sig: (2 tailed)

N

1.000

31

.493**

Cash

Management

Pearson correlation

Sig. (2-tailed)

N

.493**

.005

31

1.000

31

*Correlation is significant at the 0.05 level

Source: Statistical page for Social Scientist (SPSS) output

The Pearson correlation reveals that there is a significant weak positive relationship between

computerized accounting and cash management (r = .493**, Sig .005). It has been established

that without computerized accounting systems, financial institutions would find it difficult in

putting in consideration its various benefits and assets on cash management.

28

Table 13: The regression analysis of computerized accounting and cash management

Coefficientsa

1.351 .451 2.996 .006

.383 .194 .344 1.971 .058

(Constant)ComputerizedAccounting Systems

Model1

B Std. Error

UnstandardizedCoefficients

Beta

Standardized

Coefficients

t Sig.

Dependent Variable: Concept of Cash and Cash Managementa.

From the table above a model can be developed which aims at measuring and telling how

strong the independent variable is associated with dependent variable by considering the

direction of gradient(b= +0.383) and constant ( a= +1.351) and be able to make predictions.

Y=a + bX

X is the dependent variable which is “concept of cash and cash management”, Y is

independent variable which is “computerized accounting systems”, and ‘a’ is constant while’

b’ is the gradient.

Y = 1.351 + 0.383X

This implies that in every computerized accounting system there is 0.383 of cash and cash

management. Significant at 0.006 implying that computerized accounting systems affect cash

and cash management

29

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 INTRODUCTION

This Chapter gives precise summary of the major findings of the study, draws appropriate

conclusions as well as recommendations. The summary of major finding briefly highlights on

the outcome of the research objectives as well as answering research questions. The

recommendations are based on the discussions of the findings and analysis as well as

interpretation of these findings.

5.2 Summary of major findings

From the study, the following were revealed:

From the findings shows that Stanbic bank computerizes with objective of increasing speed in

data processing which was mentioned by the majority of the respondents followed by accurate

data, increase customer, ease data comparison and making decisions quickly.

More so, the study found out benefits that accrue from computerization which include increase

data storage capacity given by the highest number of respondents, increase efficiency,

improved reporting, reduce costs and errors.

Despite all benefits, computerization created some problems as per from the findings, the

major problem is system break down which mentioned 11[35.5%]. However staff retrenchment

received the highest response of 20[64.5%] but this doesn’t imply to the most problem because

most of the questionnaires were given to the staff of the bank therefore they mentioned that to

defend themselves.

The study also addressed how cash is being managed in the bank, carrying out cash planning,

forecasting cash flows and determining optimum cash levels.

5.3. Relationship between computerized accounting and cash management

There is a positive and direct relationship between computerized accounting and cash

management.

30

5.3.1 Conclusion

Computerized accounting systems play important roles for the bank to achieve its objectives

such as speed in data processing, provision of accurate data, easy data comparisons and make

timely decisions. Because of direct relation ship between the two variables, it has enabled the

bank to manage its cash through planning, making forecasts for cash flows, running multiple

accounts and monitoring of cash balances .It is also important for the bank to realize the

benefits of computerization toward the management of cash so as to take the competitive

advantage and address some of the challenges associated with cash management such as

money laundering.

5.4. Recommendations

Much as there is a positive correlation between computerized accounting systems and cash

management and the bank having achieved a lot from computerization, the researcher

recommended that:

Computer software should be upgraded on regular basis such that it is up-to-date with the

current trends and technological changes, data or information should be kept in both soft and

hard copy form and in case of any breakdown can easily be recovered. There must be a law in

place against money launderers if any caught in the practice should be dealt with accordingly.

Segregation of duties should be continuously followed to ensure that the person who processes

the order is not the one who makes payments.

The researcher also recommends that the institution should insist on keeping optimal cash and

ensure tight supervision with both in the systems and at all departmental levels. This will help

to clear liabilities due and operational activities. Security of cash must continuously be

improved all the time. Strict cash budgeting should be continuously implemented effectively

and all expenditures should be done according the budgets. Disbursement must be controlled to

only priority areas. All departments should be fully computerized so as to be continuously

taking the benefits of computerization. Regular changing of pass word to the employees and

other managers should be encouraged to ensure data integrity.

31

5.5Areas for further research

The study concentrated on the effects of computerized accounting systems on cash

management. However, there are other factors affecting cash management such as poor debt

collection policies, high costs of operation and poor governance are areas for further research.

Internal controls over cash received, paid and motivation of employees are motivation are also

areas of interest for further research.

Further still, in studying computerized accounting systems, its objectives, benefits and

problems have been considered. However, there are other aspects like methods of processing

(batch processing and online processing) that need to be considered.

Lastly, the components of the computerized accounting systems (hardware, software and

people) have not been extensively covered by the study. Thus future researchers are

encouraged to explore deeper into those areas.

32

REFERENCES:

Alan Sangster (2002), Business Accounting1 9th Edition, Pitman publishing London.

I.M.Pandey (1998), Financial Management 7th Edition UBS publisher’s ltd New Delhi.

Horace.B.Brock &Charles E.Palmer (1981), Accounting Principles and applications

Complete 4th Edition MC Graw-Hill, Inc New York.

Kermit.D. Larson &William.W.Pyle (1988), Fundamental accounting Principles, 11th

Edition, Irwin Homewood, Illionors .

Meigs B. Walter &Meigs Robert (1993), Financial Accounting 5th Edition, MC Graw hill,

New York.

Oliver E.C &Chapman R.J (1993), Processing and Information technology 8th Edition, DP

Roger H Publication, London..Hermanson et al (1987), Accounting Principle, special

Edition Business Inc Plano, Texas.

Walter J C (2003), Objectives of the Financial Reporting Black well publishing October

2003, Vol. 39 issue 3.

Karungi (2002), The Impact of Computerized accounting on effectiveness on internal.

Controls, Makerere University

Lainer, S (1997), Computerized Accounting Systems 1st Edition Prentice Hall International

(U.K) ltd London.

Redemacher R.A &Gibson H.L (1983), Introduction to Computers and Information

Technology 1st Edition South West Publishing Company.

33

Sabiiti G.B (2000), Evaluation of Computerized Accounting Information Systems in.

Cooperative Unions

Krish N & Williams (1986), Audit and control issues for the small computerized Business

1986 vol. 17 issue 65.

Hayale Talal &Abu Khadra (2006), Accounting and Information Resource Management

Oct.2006 vol.13 issue7.

Huang Rong & Natajan R (2009), Financial Performance and Incentives in Industry June.

2009 vol.47 issue9.

Bates Thomas &Kahle(2009),Financial Risk and Management in Business Oct.2009

vol.64

Willinger.G &Lee (2011), Cash Flow Corporation Mar 2011 vol.1 issue 1.

INTERVIEW GUIDE

SURVEY QUESTIONNAIRE FOR ADEGREE OF BACHELOR OF COMMERCE

TITLED “COMPUTERIZED ACCOUNTING SYSTEMS AND CASH MANAGEMENT

IN FINANCIAL INSTITUTIONS”.

Dear sir/madam,

34

I am a Bachelor of commerce student of Makerere University undertaking a survey to fulfill one

of my objectives which is “to assess the impact of computerized accounting systems on cash

management in financial institutions”.

I kindly request you to sacrifice some few minutes of your precious time to complete this

questionnaire. Kindly complete the questionnaire as truthfully as possible.

Do not disclose your identity. The information provided here in will be treated with utmost

confidence and will only be used for the purpose of this research strictly academic purpose.

Thank you.

Researcher

Bitwababo Denis.

SECTION A: Personal Data (please tick where appropriate).

1). Gender.

Male Female

2). Department……………………………………………………………………….

3). Your current position in the company……………………………………..

4). Length of period served in this company.

PART B: COMPUTERIZED ACCOUNTING SYSTEMS

NOTE: SA: Strongly agree, A – Agree, NS – Not sure, D – Disagree, S.D – Strongly

disagree

Less than 1 year 1-2 years 3-5 years Above 5years

35

Computerization SA A N.S D SD

5) Computers in accounting departments are networked

6) The aim of computerization is to increase speed in data processing

7) The aim of computerization is to give accurate data.

8) The aim of computerization is to ease data comparison

9) The aim of computerization is to help managers in decision

making quickly

10) The aim of computerization is to increase customer base

11) Computers reduce errors

12) Computers reduce costs

13) Computers increase efficiency

14) Computers improve reporting

15) Computers increase data storage capacity

16) Computers increase errors in reporting

17) Computers face system breakdown

18) Computers increase costs

19) Computers encourage staff retrenchment

20) Computers delay in reporting data

21) Computers hardware are expensive

22) Computers software are costly

23) Computers experience power shortage

24) Training of staffs has become expensive on computer usage

25) Computerization encourages frauds

26) The bank has stand by systems to curb any breakdown

27) The bank regularly replace computer soft ware and hard ware

28) The bank recruits more staffs to avoid delays

SECTION C: CONCEPT OF CASH AND CASH MANAGEMENT

NOTE: S.A – Strongly Agree, A – Agree, NS – Not sure, D – Disagree, SD – Strongly

disagree

36

Cash management SA A N.S D SD

1. The bank carries out cash planning

2. Accounts department prepares budgets periodically

3. Expenses are supported by documents like receipts, invoice

and vouchers

4. Financial managers authorize all cash payments

5. Cash received from clients are all credited on their accounts

6. Bank experience money laundering

7. The financial manager determines appropriate cash balances

8. The operating cash balances are maintained for transaction

purposes

9. No amount of optimal cash is kept as safety stock

10. The bank periodically receives excess cash

11. The excess cash is put into income generating activities

12. The bank ensures that there is due control for cash reserves

and ATM

13. The bank has strict supervision on cash controls

THANK YOU FOR YOUR TIME AND PATIENCE.

INTRODUCTORY LETTER

37

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