THE IMPACT OF COMPUTER IN PROCESSING ACCOUNTING INFORMATION IN NIGERIA COMMERCIAL BANKS [A CASE STUDY OF UNION BANK PLC]
The impact of Computer to Nigeria Commercial Banks especially Union Banks Plc cannot be over emphasized. Many banks have realized the used of the computer as a means of improving their chequeing transaction and of keeping necessary data on customers for loans advances and other services. These obvious advantages notwithstanding, must banks have not imbibe the computer culture. For the purpose of this study, this research was based on commercial banks in Nigeria and occasionally drew emphasis from the Union Bank of Nigeria Plc, Head office Enugu Branch.
This study therefore showed the actual contribution of computers to the banking industry and the problem faced by banks, which has not gone into computerization. A good number of banks in Nigeria are computerized and consequently time wastage in banks are reduced, there is increase in banks deposit, there is better storage of information and greater efficiency in banks deposit, there is better storage of information and greater efficiency in banks services, there is reduced workload in banks. The researcher used both primary and secondary data. The primary sources will include the use of questionnaires while the secondary data will include text books, article and other important write-up in various journals.
It is expected that the implementation of the findings and recommendations in this research work ill improve the services rendered by banks to their various customers by increasing usage of computerized services personnel training and encouraged computer. ITC programmes to boost the activities and operations of banks aimed at enhancing and optimizing services to the customers.
Financial accounting can be defined as the process of collecting, recording, presently and analyzing and interpreting financial information for the users of financial statement [Robert, O. Igben 2007] Accounting is the language of modern business, a tool for business decision making. It is used by people associated with business, whether they are managers, owners, investors, bankers, lawyers, and accountant. It provides financial information to people inside and outside the organization who need and are authorized to have such information.
A system like a computer in the most general sense of the word is a group of interrelated components that processed inputs into outputs to meet some objectives. An accounting information system is a group of components that processes raw data into financial information to meet the purpose of these internal and external users, however, when we talk of accounting information system we invariably refer to computer assisted techniques in accounting [Warren, 1997]. The objective of financial information is to provide useful information for making economic decision.
The process of recording, aggregating and summarizing the effects of historical transactions in financial statements under a specified set of rules constitutes the bulk of financial accounting. Organizations such as commercial banks need the accounting information in carrying out their operations and transaction. Fortunately, the electronic computer as an electronic device for storing and analyzing information fed into it, for calculate or for controlling machinery automatically could be used to perform commercial banking products and operations and also aids managerial decision makers in planning and controlling of various business activities [Warren, Reeve, Fess, 1997].
1.1 BACKGROUND OF THE STUDY
Accounting information poses certain qualities necessary to satisfy user‟s need. Two basic qualities for general purpose accounting reports supplied to external user are:
It is important to realize that for the information to be of any use to management or external users, it has to be targeted at a specific decision. It is in this sense that the information may said to be relevant or pertinent to the decision. Relevance of accounting information is judged in relation to the user‟s situation. Also, accounting information signifies faithfulness, constancy and trustworthiness. As stated by Mandadur R. and Maurice H in their book Accounting Information System  page 9, one way of ensuring reliability in accounting information is to ensure adherence to accounting principles.
Also R. W. Hilton and S. J. Swearing in perception of initial uncertainty as a detriment of information value [pg. 109-119] stipulated that „the value of any accounting information depends on its accuracy and its ability to reduce uncertainty”. Accounting information is useful in all types of organizations especially the banking industry where the survival and growth of such organization depends to a large extent, on supplying effective accounting information to internal and external users. The size of an organization determines the appropriate volume and complexity of accounting information for managerial decisions in such areas as purchasing, protection, hiring, borrowing and investment. The computer was initially introduced into most corporate organizations to satisfy the efficiency concerns of processing vast amounts of accounting transaction data at the operational control level.
It has proved so effective in the role that virtually no sizable organization can survive competitive pressures without using this tool called the computer. Throughout the 1970‟s computer technology limited the production of accounting information to predetermined formats. The introduction of micro computers in the early 1980‟s brought about rapid rise in the computer at all levels of management and contributed to the development of a new class of programs aimed specifically at meeting the needs of strategic management. Donald H. Sanders in his book “Computer in Society” assets that “that scope of today‟s accounting information system is influenced by the rapid growth of information processing technology and increased complexity of business in general.
Thus, the accounting information of the foreseeable future must establish and maintain the capability for complex manipulation of vast volume of financial and non-financial data with higher speed and greater accuracy. The enhanced power of data handing in a complex environment has altered the character of accounting system. The accounting system of the past was a little more than book-keeping which relied on electronic devices of limited capability and required a great deal of human involvement as almost every step of the process.
Such an accounting information system was not able to cope with the dynamic challenged of business complexities. Its products were unable to satisfy user‟s needs for planning and controlling information. The primary concern of the accounting information system was to manipulate historical data, satisfy audit needs, produce after that fact financial statement and provide preformatted reports for managerial use. Today‟s accounting information system deals with future events as well as historical data.
It must produce projected financial statements as well as historical ones. It must support unanticipated managerial needs for financial information for decision making, in addition to satisfying the needs of auditors. It must develop new and efficient controls, reporting techniques and audits trials in response to the trends towards increasing public access to accounting data reports. For instance, consider the monthly statements provided to bank customers. These must incorporate detailed information about numbers transaction [ranging from cash and cheques deposit, interest charge, tax charges and withdrawal] performed in a variety of ways from a number of locations.
A bank cannot survive today without providing this level of services, yet the capability to do so did not exist a few year ago. However, the advent of the computer has some of its attendant problems. These are training of personnel and finance costs. In conclusion, the computer contributes to increased output, by increasing efficiency and its ability to perform predetermined tasks, faster and more accurately.
1.2 HISTORICAL BACKGROUND OF UNION BANK OF NIGERIA PLC [R.C. 6262]
Union Bank is not a new name in the Nigerian banking sector as it is one of the “big five” in the Nigeria banking industry. Union Bank of Nigeria Plc as popularly known was formally known as Barclays Bank DCO [Dominon Colonial and Overseas]. The bank which commenced operations in Nigeria in 1917 was incorporated as a private limited liability company in Nigeria in 1969, it was later converted to a public
company in 1970. The bank shares are quoted in the Nigerian Stock Exchange. The company is engaged in commercial banking, in the year 2000 the bank changed its accounting year end from 30 September to 31 March and consequently the financial statement cover a period of eighteen months ended 31 March 2001.
Union Bank of Nigeria Plc stands out as big, strong and reliable bank, according to its  Annual Report and account its mission statement to be the foremost financial institution with the most satisfied customers” is an insight on how important their customers are. As at 31st March 2001, the bank had 2 foreign offices in London and South Africa, and a total of 297 branched as a group and 282 branched as a company. According to its 2007 annual report and the total branches increased to 306 and 293 as group and company respectively. As per staff and management strength, Union Bank of Nigeria Plc has the average number of persons employed during the year 2007 as a group and company as displayed in the table below.
Table 1.1 The Related staff cost is as follows:
N‟m N‟m N‟m N‟m Staff salaries and allowances 19,234 14,259 16,959 12,118
Retirement benefits 1,385 1,559 1,139 1,306
Totals 20,619 15,818 18,098 13,424
In the area of employment and employees, it is the policy of the group that there should be no discrimination is considering applications for employment including those from disabled persons. All employees whether or not disabled are given opportunities to develop. As at 31 March 2007, there were 6 disabled persons in the employment of the group.
Health, safety at work and welfare of employees are maintained as the group provides to all levels of employees subsidies for medical, transportation, housing, etc. Management, professional and technical expertise are the groups major assets and investment in their further development. A range of training provided to its employees whose opportunities for career development within the group have been enhanced thus has extended the group‟s expanding skill base. Incentive scheme designed to meet the circumstances of each individual are implemented wherever appropriate and some of those scheme include bonuses, children education grant, scholarships, etc. The organization remains committed to ensuring that their employees work in the most conducive environment, as they are aware of the value of knowledgeable and well-compensated employees in boosting the productivity of any organization.
The organization believes that with the innovative approach of the bank management, the extensive use of information technology in service delivery and unalloyed loyalty of staff would propel the organization to higher pedestal. Given the magnitude of the business solution gap in the Information Technology [IT] platform and the desire to procure the state of the art software, the bank selected robust banking application software, „FLEX CUBE”. With the sophistication of the bank communication network and using the flex cube software as the backbone, new electronic product such as „UNION E-LINK” and “Telephone banking” are currently being enjoyed by customers and the bank is a leading investor in the value card consortium of over 30 banks in that regard, the bank is reposting itself for EMV-compliance to
enter the global electronic market, which eventually would include internet banking.
Indeed, this is to highlight that the organization has not only stood out as vibrant and productive in the Nigeria banking industry but have delved into and excelled in stock broking, insurance, mortgage, trusteeship and merchant banking. Hence the organization has the following subsidiaries: i. Union Stockbrokers Ltd ii. Union Assurance Company iii. Union Homes Savings and Loans Ltd iv. Union Trustees Ltd v. Union Merchant Bank Ltd vi. Consolidated Discounts Ltd The management of Union Bank has long foreseen the inevitability if the universal banking system and this was the primary reason for diversifying into other financial sub-sectors.
In retrospect, the decision to establish the various subsidiaries was been well justified given their rising profiles and performance. Currently the organization has three full-fledged subsidiaries in union merchant bank Ltd, Union homes savings and loans Ltd, Union. Trustees Ltd while the associated companies where they hold substantial and/or controlling shares include union assurance Ltd, consolidated discounts Ltd, Banque International Du Benin and values card Nigeria Plc. The organization started its renewal a change Agenda code named “stallion 2000” with the submission of its report and recommendations in late 1998.
THE IMPACT OF COMPUTER IN PROCESSING ACCOUNTING INFORMATION IN NIGERIA COMMERCIAL BANKS [A CASE STUDY OF UNION BANK PLC]
1.3. STATEMENT OF PROBLEM
The banking industry is one of the major contributors to the economic development of any nation in the world. However, the existing banking facilities in the country at this time cannot effectively cope with the requirements of modern banking” The above stated problems have further resulted to sub-problems of slow banking operation, slow storage and retrieval system, time wastage and reduced customers patronage. Therefore, it became very apparent and necessary for banks to search for a better method, which would seek to improve and speed up banking operations in the country.
1.4. OBJECTIVES OF THE STUDY
The purpose of this study is to actually identify the impact the computer has exerted on the banking business since it was introduced into the banking industry. It is geared towards identifying how the use of computer could increase the effectiveness of accounting information towards the realization of set goals of our banks. However, the case study would pay attention on Union Bank of Nigeria Plc in trying to establish the impact and importance of computer in processing accounting information in the commercial banks.
The study is designed to bring into focus an overview of the application of computer to the various accounting information system sand the services rendered by our banks. This study would look into desirability of these computers to our banking system and would give in-depth study into simplified activities of computer in the business. It would recognize its important contributions to the exploitation of resources for organizational benefits.
Nevertheless the context of this study tends ot be directed actual banking functions. It would also help in laying a foundation for anybody who does not have an experience in the application of computers to processing of accounting information for banking operations. The history and gradual development of commercial banking in Nigeria and various services rendered by banks would also be investigated. Also the public mis-conception about the application of computers in processing accounting information would be brought to light, this will in turn lead to how to correct these misconceptions.