1. NAME: EHIEN FRANCES OMOYEMEN
MATRIC NO: RUN 09-10/2311
PROGRAMME: ACCOUNTING
COURSE TITLE: MANAGEMENT INFORMATION SYSTEM
COURSE CODE: ACC 310
LEVEL: 300
LECTURER: MR LAWRENCE
ASSIGNMENT: THE IMPORTANCE OF INFORMATION TECHNOLOGY TO
FINANCIAL REPORTING IN NIGERIA.
2. CONTENTS
1. Introduction
2. Literature review
i. Information technology
ii. Information technology as it relates to management
information system.
iii. Evolution of management information system
iv. Financial Reporting
v. Benefits of Information technology in financial reporting
vi. Financial reporting in Nigeria
vii. Importance of Information technology on financial
reporting in Nigeria
viii. Effects of Information technology in accounting profession
ix. Enhancing effects of Information technology in accounting
profession
x. Challenge of Information technology on accounting
profession
xi. Reaction of accounting profession to information
technology
3. Conclusion
4. References
3. INTRODUCTION
Nowadays, it is evident that the business world is changing at a faster and faster pace. The
reason given for this globalization is high information technology investments and rapid change
of technological change in combination with escalating costs and research developments.
Decisions regarding the building of technical information technology architecture should be
closely linked to the decisions made in designing the information technology organization that
should be linked to the organizational design itself.
As a result, “Information technology plays a critical role in modern business, especially
regarding the accounting function” (Efendi et al, 2006: 117). While it is widely acknowledged
that IT plays an important role (and increasingly so) in the field of accounting, the relationship
between information technology and accounting has been studied very little.
Based on Literature review of earlier research and empirical studies, it has been concluded that
there has been very little about the impact of most recent information technology development
in the accounting field (Granlund 2007). Although information technology plays an important
role in accounting (Efendi et al 2006) and management control (Dechow et al 2007), this
relationship has not been studied enough globally.
Therefore, It is evident that we are in information driven age where information technology is a
driving tool in the public and private sectors. The replacement of mainframe computers with
personal computers which were affordable to most users has ushered us into an era of
proliferation of information, speed of access to and ability to disseminate information.
4. The information technology revolution has brought about a drastic change in the business
environment, its structure and the business process. Information technology has become a
strategic tool that drives the strategic initiatives of organizations and businesses. Manual
processes have been replaced with automated processes, routine bookkeeping and recording
of financial information is being done electronically, and the ease and speed of transacting
business has greatly increases.
The accountant as a major player in the public and private sectors cannot afford to be left out.
To function properly and competently the accountant must take the changes brought about by
information technology in stride, the accounting professional must be proficient in the use of
modern information technology tools in order to remain relevant , solve business problems and
provide value added services to his clients in the public and private sectors.
In this paper we seek to assess the impact of information technology on the Nigerian
Accounting Environment. Has the impact been positive? What is the effect of the impact? What
are the existing challenges and what is being done in view of addressing the challenges posed
by information technology on the accounting profession in Nigeria?
5. LITERATURE REVIEW
INFORMATION TECHNOLOGY
Information Technology refers to the management and use of the information using computer-based
tools. It can refer to both hardware and software. Mostly, it is the term used to refer to business
applications of computer technology rather than scientific applications.
Information Technology (IT) can be used potentially in every sector of the economy.
Information Technology has been a dynamic sector in many developed economies also in India
which is one of the largest countries.
In the 1960s and 1970s, the term information technology (IT) was a little known phrase that
was used by those who worked in places like banks and hospitals to describe the processes they
used to store information. With the paradigm shift to computing technology and "paperless"
workplaces, information technology has come to be a household phrase. It defines an industry
that uses computers, networking, software programming, and other equipment and processes
to store, process, retrieve, transmit, and protect information.
In the early days of computer development, there was no such thing as a college degree in
Information technology. Software development and computer programming were best left to
the computer scientists and mathematical engineers, due to their complicated nature.
As time passed and technology advanced, such as with the advent of the personal computer in
the 1980s and its everyday use in the home and the workplace, the world moved into the
information age.
6. By the early 21st century, nearly every child in the Western world, and many in other parts
of the world, knew how to use a personal computer. Businesses' information technology
departments have gone from using storage tapes created by a single computer operator to
interconnected networks of employee workstations that store information in a server farm,
often somewhere away from the main business site. Communication has advanced, from
physical postal mail, to telephone fax transmissions, to nearly instantaneous digital
communication through electronic mail (email).
The International Foundation for Information Technology (IF4IT) provides three definitions for
Information Technology:
1.The technology used for the study, understanding, planning, design, construction, testing,
distribution, support and operations of software, computers and computer related systems that
exist for the purpose of Data, Information and Knowledge processing.
2. The industry that has evolved to include the study, science, and solution sets for all aspects
of Data, Information and Knowledge management and/or processing.
3.The Organization in an enterprise or business that is held responsible and accountable for the
technology used for planning, design, construction, testing, distribution, support and
operations of software, computers and computer related systems that exist for the purpose of
Data, Information and Knowledge management and/or processing.
7. Information technology as it relates to management information system.
A management information system (MIS) provides information that is needed to
manage organizations efficiently and effectively. Management information systems involve
three primary resources: people, technology, and information or decision making. Management
information systems are distinct from other information systems in that they are used to
analyze operational activities in the organization. Academically, the term is commonly used to
refer to the group of information management methods tied to the automation or support of
human decision making, e.g. decision support systems, expert systems, and executive
information systems.
Initially in businesses and other organizations, internal reporting was produced manually
and only periodically, as a by-product of the accounting system and with some additional
statistic(s), and gave limited and delayed information on management performance. Data was
organized manually according to the requirements and necessity of the organization. As
computational technology developed, information began to be distinguished from data and
systems were developed to produce and organize abstractions, summaries, relationships and
generalizations based on the data.
Early business computers were used for simple operations such as tracking sales or
payroll data, with little detail or structure. Over time, these computer applications became
more complex, hardware storage capacities grew, and technologies improved for connecting
previously isolated applications. As more and more data was stored and linked, managers
sought greater detail as well as greater abstraction with the aim of creating entire management
reports from the raw, stored data.
8. The term "MIS" arose to describe such applications providing managers with information about
sales, inventories, and other data that would help in managing the enterprise. Today, the term
is used broadly in a number of contexts and includes (but is not limited to): decision support
systems, resource and people management applications, enterprise resource planning (ERP),
enterprise performance management (EPM), supply chain management (SCM), customer
relationship management (CRM), project management and database retrieval applications.
The successful MIS supports a business' long range plans, providing reports based upon
performance analysis in areas critical to those plans, with feedback loops that allow for
titivation of every aspect of the enterprise, including recruitment and training regimens. MIS
not only indicate how things are going, but also why and where performance is failing to meet
the plan. These reports include near-real-time performance of cost centers and projects with
detail sufficient for individual accountability.
Evolution of Management Information System
Kenneth and Jane Laudon identify five eras of MIS evolution corresponding to five phases in
the development of computing technology: 1) mainframe and minicomputer computing, 2)
personal computers, 3) client/server networks, 4) enterprise computing, and 5) cloud
computing
The first (mainframe and minicomputer) era was ruled by IBM and their mainframe computers,
these computers would often take up whole rooms and require teams to run them, IBM
supplied the hardware and the software.
9. As technology advanced these computers were able to handle greater capacities and therefore
reduce their cost. Smaller, more affordable minicomputers allowed larger businesses to run
their own computing centers in-house.
The second (personal computer) era began in 1965 as microprocessors started to compete with
mainframes and minicomputers and accelerated the process of decentralizing computing
power from large data centers to smaller offices. In the late 1970s minicomputer technology
gave way to personal computers and relatively low cost computers were becoming mass
market commodities, allowing businesses to provide their employees access to computing
power that ten years before would have cost tens of thousands of dollars. This proliferation of
computers created a ready market for interconnecting networks and the popularization of the
Internet.
As the complexity of the technology increased and the costs decreased, the need to share
information within an enterprise also grew, giving rise to the third (client/server) era in which
computers on a common network were able to access shared information on a server. This
allowed for large amounts of data to be accessed by thousands and even millions of people
simultaneously.
The fourth (enterprise) era enabled by high speed networks, tied all aspects of the business
enterprise together offering rich information access encompassing the complete management
structure.
The fifth and latest (cloud computing) era of information systems employs networking
technology to deliver applications as well as data storage independent of the configuration,
location or nature of the hardware.
10. This, along with high speed cell phone and wifi networks, led to new levels of mobility in which
managers access the MIS remotely with laptops, tablet PCs, and smart phones.
The terms MIS, information system, ERP and, information technology management are often
confused. Information systems and MIS are broader categories that include ERP. Information
technology management concerns the operation and organization of information technology
resources independent of their purpose.
Types of Management Information System
Most management information systems specialize in particular commercial and industrial
sectors, aspects of the enterprise, or management substructure.
Management information systems (MIS): deals with producing fixed, regularly
scheduled reports based on data extracted and summarized from the firm’s underlying
transaction processing systems to middle and operational level managers to identify
and inform structured and semi-structured decision problems.
Decision support systems (DSS): are computer program applications used by middle
management to compile information from a wide range of sources to support problem
solving and decision making.
Executive information systems (EIS): is a reporting tool that provides quick access to
summarized reports coming from all company levels and departments such as
accounting, human resources and operations.
Marketing information systems (MIS): designed specifically for managing the marketing
aspects of the business.
11. Office automation systems (OAS): support communication and productivity in the
enterprise by automating work flow and eliminating bottlenecks. OAS may be
implemented at any and all levels of management
School management information systems (MIS): cover school administration, often
including teaching and learning materials.
Financial reporting
Financial reporting shows the true financial position of company; through this companies can
save from hidden losses, if its accountant highlights critical points in it. In this way, it is helpful
tool to investors for better decision making.
Financial reporting is the system of making corporate financial reports. These corporate
financial reports are income statement, balance sheet, cash flow statement, statement of
retained earnings and financial policies explanation. Corporate financial reporting may be
shown at the end of month or at the end of each quarter or at the end of year.
The first financial Report: Income Statement
it is also called profit and loss account. In income statement, we come to know whether
company is earning profit or suffering loss. We can find the main expenses of company and
main sources of earning. What amount, it is giving in the form of dividend which is showed in
statement of retained earnings. Net income after all adjustments is transferred to reserve and
surplus section in the liability side of balance sheet.
12. Second Financial Report: Balance Sheet
this corporate financial report shows the financial position at given point of time. It provides
the information of all assets and liabilities. This financial report is useful for balance sheet
analysis.
Third Financial Report: Cash Flow Statement
In cash flow statement tells us the net cash flow in operating, investing and financial activities.
These indications are helpful to analyze cash flow. This report explains the sources and
applications of liquidity of company.
Fourth Financial Report: Explanation of Financial Policies and Notes
Big corporate also makes some financial notes and explain the financial policies in detail with
above financial reports. In these policies, company shows its inventory policy, depreciation
policy, debt terms and dividend policy. It also shows list of loss of impairment on fixed assets.
BENEFITS OF INFORMATION TECHNOLOGY IN FINANCIAL REPORTING
Information technology is present in most accounting offices these days via computers, printers
and other equipment. An intrinsic part of financial processes, technology is often taken for
granted in accounting offices. For instance, you can go online and check your cash balance in
the bank when you wish, or you can upload journal entries and not think twice about them.The
benefits of information technology would be looked at in the following context;
Significance
o Information technology plays an important role in accounting processes because it
improves financial reporting procedures and prevents errors in financial statements.
13. Time Frame
o Computerized accounting activities help an accountant perform month-end close
procedures. These activities also help companies report profit information over a
period, such as a month or quarter.
Recording Procedures
o An accountant uses computerized accounting software to make journal entries in
financial accounts, such as assets, liabilities, revenues, expenses and equity. The
accountant debits an asset or expense account to increase its amount and credits it to
reduce the account balance. The opposite is true for revenue, liability and equity
accounts..
Speed
o Speed is the hallmark of information technology. The utilization of multiple technologies
results in faster and more accurate results. However, keep in mind that each piece of
technology purchased, be it hardware or software must be compatible to deliver the
best performance. If one piece malfunctions or is not usable, the system is not effective.
For example, if the network holding accounting application fails, then work gets bogged
down and the system is not effective. In order to be effective as far as speed is
concerned, the accounting system should work seamlessly with proper hardware and
backup systems.
14. Accuracy
o Accounting work is very detailed and accuracy in recording and reporting is greatly
valued. Technology has had a positive effect in accounting applications because
calculations done by a computer program experience very few errors. For example, an
invoice may have several line items and sales taxes associated with it. If the invoice is to
be developed manually, the likelihood for errors is high, but that is not the case if
software is used with a proper setup.
Flexibility
o An accounting department also needs flexible technology that can adapt as business
practices change. To be effective, information technology associated with accounting
must be flexible to accommodate the changes. Software, for instance, must be able to
be updated to offer new processes, such as credit card processing, and the ability to
send invoices online. Otherwise, the software will become obsolete. Accountants also
use software for taxes and other accounting needs that change often. Technology must
be nimble enough to catch up with the changes.
Cloud
o The latest trend with accounting applications is Web hosting off-site. Instead of
installing a program onto your computer and saving data there, the program resides on
a server in a different location; the saved information is accessed via the Internet.
15. That's also called "working in the cloud." Businesses can save money in software and
hardware purchases by signing up with a cloud provider and using its programs and
space for saving data, meaning there is no need to get a bigger hard-drive or worry
about program versions. The other advantage of the cloud is that you have access to
your information anywhere you may be.
FINANCIAL REPORTING IN NIGERIA
Accounting information about a business entity is required by variety of users ranging from
shareholders, investors, government, customers, employees to management, competitors etc.
Thus, the information expected to be provided in financial statements are those that are
quantitative and qualitative in nature to aid their relevant users in making informed economic
decisions. All accounting information that will assist users to assess the financial liquidity,
profitability and viability of a reporting entity should be disclosed and presented in a clear
logical and understandable manner. In the past, all listed companies presented their financial
report manually. This was done through the printed-based annual report or the paper-based
annual report. The printed-based annual report entails writing and printing of financial
information. It is mandatory in practice to send a copy of the annual financial report to the
Nigerian Stock Exchange (NSE). Moreover, the Nigerian Stock Exchange produces a fact book
annually that contain five years financial summary of all the listed companies on the stock
exchange.
16. Financial Reporting is regarded as an important and effectual means of dissemination of
financial information. Lymer et al. (1999), define web-based reporting as “the public reporting
of operating and financial business data by a business enterprise via the World Wide Web or
internet-related communication medium”. The paper-based form of reporting has certain
problematic features as increased cost associated with printing, limited copies available to only
selected market, less timely information, historical disclosure the use of obsolete technology.
Importance of information technology on financial reporting in Nigeria
Rapid developments in information and communication technology have led scholars and
people in many countries to consider the impact of web-based financial reporting and several
other issues relating to the topic. Initially, the internet was used mainly for the purpose of
sending and receiving emails but the use now widely covers areas such as dissemination of
information and e-commerce applicable to all human fields. The practice of Financial Reporting
on the net is rather new in Nigeria. Companies throughout the world use different computers
software for financial reporting purposes among which are Microsoft Word and Microsoft Excel
which were previously used for distributing and exhibiting financial as well as other forms of
information through internet. The major technologies currently employed in internet Financial
reporting are HTML (Hypertext Markup Language) and Adobe Acrobat. Microsoft Word and
Microsoft excel are two widely used application software. These types of files can be imported
into the database of the receivers system for further processing. At the same time, credibility
and authenticity of financial information is quite impossible to ensure because the downloaded
files can be manipulated. (Khan et al, 2008). Hypertext Markup Language (HTML) consists of
text, graphics and formation information.
17. There are also hyperlinks that point to other documents for further and detailed information
(Westarp et al, 1999). Many companies offer financial information in downloadable formats
known as Portable Document Format (PDF) file. When downloaded and printed, these files can
provide an exact duplicate of the printed annual reports (Gray, 2004). (XBRL) is a freely
available electronic language for financial reporting. According to Richard and Smith (2004),
XBRL is an XML (Extensive Markup Languages)-based framework that provides the financial
community with a standard-based method to prepare and published financial statements in a
variety of formats and automatically exchange the information they contain. XBRL is XM-based.
It uses the XML syntax and related Xml technologies such as XML-Schema, X-Link, X-Path and
Namespaces.
Practices in the Public and Private Sectors:
The organizations in the public and private sector form a core of the accountants working
environment. The accounting professional functions either as an employee in these
organizations or as an external consultant rendering services to them. Information technology
and the resulting information systems have had a tremendous effect on organizations.
Information systems are becoming powerful instruments for making organizations more
competitive and efficient. Information technology is being used to redesign and reshape
organizations, transform their structures, scope of operations, reporting and control
mechanism, work practices, workflows products and services. (Institute of Chartered
Accountants of Nigeria [ICAN], 2006)
18. The organized private sector is at the forefront of the use of technological innovations to
improve its service delivery. Considering the fact that they are profit oriented they must
constantly improve on efficiency and effectiveness in order to be able to survive the
increasingly stiff competition. Though the public sector has been less responsive to the
innovations of information technology, it has also been impacted. To examine the effect of
information technology on both sectors we shall consider some areas in which they have been
impacted.
Change in Organizational Structures: The explosion in the use of information systems has
brought about the phasing out of bogus bureaucratic organizations with many hierarchical
levels of management. The bogus bureaucratic structure has given way to a flatter structure
where there are less hierarchical levels. Because more information is available to employees
lower down the line they have assumed more decision taking roles and now actively participate
in the decision making process. Modern organizations are using information technology to
create more flattened structure that is very responsive to today’s market and business
competitive demands. (ICAN, 2006)
Change in Organizational Processes: Organizational processes that were previously manual
have now been fully or partially automated. Methods of storing information and data retrieval
have moved to the use of data bases instead of the old file cabinets. The payment process
adopted by the Federal Government gives credence to the wide reaching effect of information
technology on the organizational process. Commencing for 1st January 2009, payments to
employees and contractors are now to be made by electronic telegraphic transfers.
19. A circular to that effect was released by the Federal treasury; it was dated 22nd October 2008
and signed by the Accountant General of The federation, Ibrahim Dankwambo. The Federal
Inland Revenue Service in October 2008 issued a circular to the effect that from January 2009
remittances of the Pay as you Earn Income Tax and Withholding Tax would be done
electronically and the receipts and credit notes would be generated electronically. Employees
and companies have been given personal tax identification numbers which is used to track the
taxes paid by them. By the use of information technology the Federal Inland revenue Service
has been able to generate more revenue, be more efficient and effective in service delivery.
Information technology solutions are currently being deployed to solve identity management
issues. The National Identity Management Commission in strategic partnership with leading
information technology experts is using biometric data capture to obtain and store the data of
registered individuals in a central data base. The National Pension Commission (PENCOM)
currently uses the biometric data capture machines for registration and verification of
pensioners.
The organized private sector to maintain its competitive cutting edge is championing the cause
of the implementation of information technology in it operations. The financial sector is a
typical case in point, most of its processes have been computerized, and thus there is a heavy
dependence on information technology for the smooth running of its operations.
20. Effects of Information Technology in the accounting profession
Technology has had many effects on the accounting profession. Not all of these effects can be
labeled as positive or negative. Many outcomes of the interaction of technology and accounting
are simply changes to the profession. Some of these changes include the hiring pattern of
enterprises, the education and training of accountants, and the changing of the profession as a
whole.
An increased need for education results from advancements in technology. Accountants must
be familiar with these new software programs, expert systems, and communications systems to
utilize them efficiently. Accountants in the 21st century should expect to be involved in
continuing education. Software systems can become obsolete within months of their creation.
For accountants, this means the need for continued education.
Technology in accounting affects the hiring patterns of accounting firms. Fewer entry-level
positions will be needed as these responsibilities are taken over by computers. In 1994, Charles
B. Eldridge, a partner of Ernst & Young, said ‘Hiring into our audit practice has declined over the
last several years as a result of changes in that area and the impact of technology.’ A
representative of Peat Marwick, who is experiencing the same hiring pattern, said this
reduction ‘is not a temporary measure (Journal of Accountancy, 1994c).’ This hiring pattern
extends beyond accounting firms into most corporations. Many firms will replace their manual,
clerical functions with computers ( Journal of Accountancy, 1994a). In the 21st century, the
newest generation of accountants should look to specialization and consulting to ensure a
position in the profession.
21. Consulting already makes up a large portion of business for accounting firms, and this area will
continue to grow in the 21st century with the expansion of technology consulting. A major
component of this consulting is network management. Consultants in this field will be
responsible for the implementation of many of the new technologies already discussed.
Internet access requires consultants to be responsible for the education of their clients on how
to make their own companies more efficient through the use of the WWW. Research
capabilities and security issues will need to be addressed. The introduction of Intranets in the
last couple of years has broadened the options for businesses and their consultants. Businesses
can create their own version of the Internet on a smaller, personal scale called an Intranet.
These Intranets resolve some of the security issues associated with the Internet, because they
cannot be accessed by users outside the company. With this onslaught of technology, many
businesses can be overwhelmed by the numerous decisions in selecting software packages. For
this reason, Jeff Zulusky, an intranet specialist, says ‘there is a renewed tendency among
*business executives+ to trust their accountants as technology advisors’ (Accounting Today,
1997).
The accounting profession has definitely been influenced by the recent bombardment of
technology within the industry. Some ‘business thinkers’ believe the accounting profession
should be entirely revamped. It is true that some technological changes have made many of the
current accounting practices no longer relevant. An example is the ledger account (Journal,
1994b). Previously, this account was very important as a historical record of transactions and
was used to expedite the preparation of financial statements ( Knapp, 1996, p. 82).
22. With today’s timely information, the ledger account becomes less important. Computers have
taken over as the record keeper for this type of information.
ENHANCING EFFECTS OF INFORMATION TECHNOLOGY ON THE ACCOUNTING
PROFESSION
Tool for enhanced performance: Information technology is enhancing accounting processes and
procedures. Through the use of software, hardware, databases and network systems, financial
information can be captured processed and transmitted at the touch of a button. Powerful
analytical software futures exist today that that provide management accountants with the
capabilities to perform data analysis forecasting, trend analysis and other managerial
accounting functions. Databases provide easier and faster access to historical and current
financial records, thus making auditing and financial analysis much faster and effortless than
the traditional methods that involved flipping through massive paper documents. (ICAN, 2006)
Reduction of Human Error: Technology has been the major key in the accounting profession
therefore eliminating the possibility of human error. Now, with the current technology tax
software programs accountants can perform an individual's tax return in a matter of minutes.
By simply, clicking on a few buttons, answering a few questions, providing the individual has the
correct information and can easily prepare their own returns. Regardless of how hard a person
try to be error free, it is nearly impossible, to compete with the accuracy of information
processing systems. An example would be tax preparation. Without the help of computers and
its software such as excel, quick books the accuracy of the work I produce would lend itself to
costly errors as well as costly hours invested.
23. Human error is one of the greatest obstacles that technology has helped the accounting
profession overcome. Accountants are no longer pushing pencil and stacks of paper. (Mega
essays.com, 2009)
Stimulus for Development: The monumental challenges posed by the use of information
technology on the accounting profession has stimulated the development of the profession in a
bid to come to speed with the current demand being place d on the accounting professional.
The development of improved curricula in the colleges and universities, the introduction of
mandatory continuous professional education by the accounting regulatory bodies and the
raising of technical competence standards for the accounting professional has served to
improve the skill set of the accountant and invariably has caused the profession to move
forward, placing it on a better platform to serve its clients better.
CHALLENGES OF INFORMATION TECHNOLOGY ON ACCOUNTING PROFESSION
Accountants are going through an identity crisis as advancement in Information Technology
impacts on their age-long practices and mode of service delivery. Traditional accounting work is
fast disappearing as businesses get global and are spurred on by technology. Thus, as we stand
on the threshold of information technology revolution across the world, two parallel
movements seem to be driving change in the accounting profession. (Omoregie, 2001)
Accountants must brace up to the challenges posed by information technology on the
accounting profession. The accounting professional must align with the technological
innovation so they can flow along with the changes and be able to cope with the challenges. To
have an insight we shall consider some of the new challenges.
24. Unfamiliarity with new information technology tools: More organizations have automated their
processes and use new information technology tools in their business dealings. Accounting
information systems have been developed to facilitate the accountant’s work; numerous
accounting packages and software are currently in use, and there is a constant stream of newer
versions of existing accounting packages. In this state of constant flux some accountants find it
difficult to keep abreast with the constant change, while some do not have the technical
knowhow needed to adequately harness the vast array of information technology tools at their
disposal.
Resources needed for Training: In view of the identified technological gap between available
tools and the accountants technical competence there is a dire need to upgrade the skill set of
the accounting professional. To achieve this there is a need to train and retrain accounting
professionals in the use of modern information technology tools. The cost of training and also
the time constraint poses a challenge to some accountants.
Employer Requirements: As we begin the 21st century, business organizations are facing an
explosion of global competition and innovation. Facilitating this explosion is the increasing
ability of organizations to make good business decisions based on the large amounts of
information their enterprise produces. Economists predict that by 2010 the majority of …
workers will be knowledge workers--those who make their living working with information. In
this environment, it is necessary for a successful business to integrate information technology
into its basic processes, and, to do that, it needs qualified, skilled information technology
employees.
25. In addition, these organizations need executive management and other functional workers
who have IT skills. In fact, a company needs all its workers--accountants and financial
executives included--to have a high level of computer and technical skills. There is a growing
need for professionals with information technology skills; the accounting professional is not an
exception as they play key roles in the business process. The modern trend is that employers
require even university graduates to possess a high level of technical expertise in the use of
modern information technology tools.
Organizing and interpreting vast amount of available data: Digital technology has made it easier
for to collect vast amounts of information and also provided means of transmitting this
information from one place to the other quickly, this has led to an incredible proliferation of
data. Filtering, sorting, compiling, analyzing and disseminating financial data in ways that add
real value to a corporation have become daunting tasks.
In the light of the challenges posed by the information technology revolution on the accounting
profession worldwide and in particular on the Nigerian accounting environment it behooves the
accounting professional to brace up to the new challenges, upgrading their technical skills in
the use of modern information technology tools so as to flow along with the changes and
continue to remain relevant in the scheme of affairs in the corporate setting.
26. REACTION OF ACCOUNTING PROFESSION TO THE INFORMATION TECHNOLOGY CHALLENGE.
In the world over accounting regulatory bodies are taking proactive measures to ensure that
accounting professionals are adequately equipped to meet the increasing technical demands of
employers of labor, and to function effectively and competently in this information age.
Educational institutions are also developing new curricula and course contents that adequately
train the accountants for the use of information technology tools. “To this end the Education
Committee of the International Federation of Accountants issued the International Education
Guideline (IEG) 11. The Guideline, which is on Information Technology for Professional
Accountants is intended to assist member bodies of IFAC to prepare professional Accountants
to work in the Information Technology environment. According to the Guideline, the society
expects professional accountants to do their work competently, and to do so, the professionals
must demonstrate competence in the use of IT computer-based information systems.
(Omoregie, 2001)
Narrowing down the focus to the Nigerian context we shall consider the measures taken by the
Institute of Chartered Accountants of Nigeria (ICAN), the body that is designated to regulate the
practice of accountancy in Nigeria (ICAN is also a member of the International Federation of
Accountants-IFAC), to ensure that the accounting professional is equipped to handle the
challenges of the information age.
27. The introduction of the Technology Competence Initiative (TCI): ICAN introduced this initiative
in response to the issuance of the International Education Guideline by IFAC; TCI is the
professional bodies instrument for empowering the accountants for the challenge of
information technology. TCI is a deliberate effort of the Institute aimed at building Information
Technology competence in Chartered Accountants. This is expected to enable them serve their
clients, employers and the nation at large more effectively in the knowledge economy
environment. (Omoregie, 2001)
It was decided recently by the ICAN Council that TCI is a precondition for the induction of new
members; the standard has been raised to accommodate the current information trend.
Introduction of the Mandatory Continuous Professional Education (MCPE) programme: In
addition, it is contemplated that special certificate courses in IT for members could be
organized by the Institute in conjunction with other organizations through its MCPE
programme. Such courses that would serve as proof of proficiency of members could earn
MCPE credit hours. Given the rapidity of the changes in information technology, their likely
effects on the accounting profession in this 21st century are going to be so overwhelming and
wide ranging that the character and complexion of the profession will almost certainly change
beyond recognition by the present breed of accountants. What we are presently experiencing,
in fact, represents a tip of the iceberg. Thus, it should be expected that the competence and
relevance of present day accountants will be severely tested. This is a serious challenge to the
very essence of accounting services.
28. The enormity of these challenges has made a more aggressive, continuous pursuit of
knowledge the inevitable strategic option of our time. Therefore, the intensification of the
current continuing professional education training programme will continue such that the
mandatory aspect becomes unnecessary. Chartered accountants of my dream should be
professionals who would not be coerced to learn by fear of sanctions but by the constant need
to the fight obsolescence of knowledge. (Omoregie, 2001)
Introduction of Accounting Information System (AIS): Universities and Colleges in the developed
countries have introduced Accounting Information Systems as a major course on its own and in
some universities it is a major component of the curriculum in the training of accountants. The
emergence of accounting information systems programs: as more and more companies seek
out accounting professionals with IT skills, some universities now are offering a major in
accounting information systems, which mixes topics from each area to provide students with
the requisite skills employers want. (Dillon & Kruck, 2004). The Nigerian University system is
currently grappling with the development of adequate information technology curricula for the
training of accountants.
29. CONCLUSION
Information technology has greatly influenced the tenor of human existence; there is no sphere
of human endeavor that has not been affected by the innovations brought about by
information technology. The accounting profession is no exception, the business environment
in which the accountant functions has undergone, structural and procedural changes and these
have impacted the practice of accountancy in theses business environments. The challenge of
technical gap, posed by constant technological innovation has caused the accounting profession
to mandate it professionals to increase their technical competence by the introduction of
mandatory continuous professional education. Accounting information systems curricula are
being introduced as major courses of study, and as part of the accountant’s course content.
Information technology has made available data processing and analytical tools that has
simplified the accountants work, making it faster, error free, efficient and effective. From this
forgoing study we can conclude that information technology has had a tremendous positive
impact on the accounting profession in Nigeria as it has spurred the profession to higher levels
of technical competence and professionalism.
30. REFRENCES
Institute of Chartered Accountants of Nigeria. (2006)
Management information systems, professional examination I study manual. Nigeria: VI
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Effects of Technology on Accounting Profession.
Omoregie, P.A. (2001).
The future of the ACA holder. At the 31st Annual Accountants Conference of the Institute
of Chartered Accountants of Nigeria, Abuja, Nigeria.
Laudon, Jane P. (2009).
Management Information Systems: Managing the Digital Firm, 11 Ed, p. 164.
International Journal of Trade,Economics and Finance, Vol 1,No 1, June,2010
Ryan B & Rodhe (2007).
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Grandlund M. (2007).
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