Destiny Accounting Complete Project Work

CHAPTER ONE
INTRODUCTION
1.1 BACK GROUND OF THE STUDY
Banking has over the years transformed from the time of ledger
cards and other manual filling systems into a system based such as
computer based technology. Banking System has moved away from a
situation where all activities are manual based such as all transactions
are carried out manually; in modern day banking transactions are
carried out automatically with the support of ATM (Automated Teller
Machine) and other modern technology equipments and this has also
help reduce the numbers of crowds in the bank, and enhance and
support the operation of banking. (Adekange1986:23-25). With
modern day computer technology, Banks now have the ability to
delights its customers with superior services and empower a
knowledgeable workforce to create and make decisions.
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Computer technology base Banks now have the ability to seize
opportunities and respond to market changes. They (computerized
banks) now also know how to utilize the best of both people and
technology and bringing together the best of teams of talent. They
(computerized banks), can also provide faster and better services to its
customers which can be done in an instant through the use of
computer technology. The advent of accounting information system
(AIS) in the Nigerian Banking Sector marked the beginning of a new
dispensation in banking and has revolutionized traditional banking
practices and redefined the entire frontiers of banking as well as the
entire work place (Adekange, 1986: 23-25).
Without computers, issues like linkage, universal banking
concepts, automated teller machine (ATM) and other innovations
would have been unthinkable. The application of computers has
improved banking performance; and computers and other information
technology have generally been identified as an important tool in
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attaining corporate goals of delivery services effectively to customers
which is crucial to the sustainable growth and profitability of the bank
(Brien, 1983:46).
1.2 STATEMENT OF THE PROBLEMS
The banking sector plays a major role in any nation especially a
country like Nigeria and although it has grown in leaps and bounds
over the past decade, the more significant changes would be
attributable to the character rather than size.
It is also known that there is the existence of computer fraud in
the banking system; these problems need to be combated. Many
studies have been undertaken relating accounting information system
(AIS) to customer satisfaction and customer perception, relatively few
have turned the searchlight into the organization or attempted to
discover the perception of banking personnel of information
technology or the impact if any or the changes introduced by AIS on
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organizational behavior (Donald, 1983: 22-26). Therefore, this study
will examine Accounting information system in the performance of
banking sector in Nigeria.
1.3 . RESEARCH QUESTIONS
With the previously stated problems, this research will attempt to
provide answers the following questions:
1. Is there any significant relationship between accounting
information and corporate profitability in the banking sector in
Nigeria?
2. Is there a relationship between accounting information and
Earnings per share?
1.4 OBJECTIVES OF THE STUDY
The aim of this research is to explain how Accounting
Information System has improved the performance on First Bank of
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Nigerian Plc (FBN) over recent times and years. The specific
objectives are to:
i. Examine the relationship between accounting information
system and profitability in The banking sector in Nigeria.
ii. Determine the relationship between accounting information
system and Earning per share.
1.5 RESEARCH HYPOTHESIS
This purpose is to put the research objectives into testable terms
since for a problem to exist there must be an uncertainty over
the best alternative for satisfactory attainment. The hypothesis
is as follows:
1) HO: There is no significant relationship between accounting
information and Profitability in the banking sector in Nigeria.
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2) HO: There is no significant relationship between accounting
information and Earnings per share in the banking sector in
Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The study will show how modern technology has improved banking
performance in retail commercial banking. It also investigates how
frontline banking personnel has been affected by (Accounting
Information System) AIS such as that performance are now with
greater speed and efficiency.
The project intends to bring awareness about accounting
information and the positive effects on customer’s service delivery in
other to improve the flow of transaction.
1.7 LIMITATION OF THE STUDY
This research study will be aimed at the efficient and effective
impact of accounting information system on the performance of the
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FBN using Ten year financial statement. The major limitations of this
study will be lack of adequate data to cover more years and also some
of this secondary data may not be too reliable because there is a
general belief that management will only publish financial statements
to favors them .
1.8 DEFINITION OF TERMS
Automated Teller Machine (ATM): It is an automatic machine that
recognizes a card linked with an account number to dispense cash.
Bank: Financial institution where money and other valuable goods
are kept by concerned owners for safe custody.
Cheque: The conditional order in writing by which you instruct your
bank to pay on demand a sum from your current account to a named
person or bearer.
Customers: It refers to individuals who have the capacity to deal with
banks.
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Computer: Is a data processing device that can perform substantial
computation, including numerous arithmetic or logic operations
without intervention by a human operator during the processing.
Electronic Fund Transfer (EFT): It is the development of banking
and payment systems which transfer funds electronically instead of
using cash or paper documents such as cheque.
E-Banking: It can be defined as automated delivery of new and
traditional banking practices and services directly to customers
through electronic, integrative communications channel.
E-Commerce: which means “Electronic Commerce?” is the buying
and selling of goods and services on the internet, especially the World
Wide Web. This term is also used as interchangeably with E-business.
Global System for Mobile Communication (GSM): This is a digital
cellular phone technology and it is the most popular standard for
mobile phones in the world.
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Information and Communication Technology (ICT): This is
defined as an umbrella term that includes any communication device
or application, encompassing: cellular phones, computer, network
hardware and software, satellite systems and so on as well as the
various services and applications associated with them, such as
distance learning and video conferencing.
Information Technology (IT): This is that which comprises of
computers, satellite communications, videotext, network, cable
television, software and automated office equipments, electronic mail
(e-mail).
Internet Service Provider (ISP): It refers to a company that sells
access to the internet, allowing computer users to send electronic mail
(e-mail) and browse the World Wide Web (WWW) among other
tasks.
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M-Banking is also known as ‘Mobile banking’ is a term used for
performing balance checks, payments, account transactions, viewing
recent transactions etc via a mobile device such as a mobile phone.
Online Processing: It enables the users to input data to the computer
receive back result almost instantaneously.
Re-Engineering: Is the fundamental rethinking and redesign of an
entire business system or dramatic improvement in quality, speed and
services.
Technology: Is referred to the scientific study and use of applied
sciences otherwise the application of this to practical tasks in industry.
Services: Is the benefit derived by banks customer as a result of the
over the counter and other transactions.
Tele-communication: Is referred to communication through
technology devices such as radio, cables, television, telephones, fax
machines etc.
V.SAT: very small aperture terminal.
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REFERENCES
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Adekange, F.A (1986) “Modern Banking in Nigeria’’ Mac Adams
Publishers, Ogun State, Nigeria.
First Bank of Nigeria Plc (2001- 2007) “WINNING” Newsletter of
the First bank Century II project.
Donald H.S (1983) “Computer Today. McGraw Hill incorporation -
USA.
Brien A.O (1983) “Computer and Information Processing in
business’’. Richard O.Irwin incorporation.
www.firstbank.com
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CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
This chapter helps to review the relevance and important of banking
in Nigeria this will be done by an in-depth review of literature
bordering on: Historical background of banking in Nigeria, Services
provided by commercial banks in Nigeria, Computer revolution ,
Development of Computer, Operation of Computer systems,
Definition of Accounting Information System , Evolving relationship
between bank and Accounting Information System in Nigeria,
Advantages and disadvantages of Accounting Information System in
the banking sector.
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2.1 HISTORICAL BACKGROUND OF BANKING IN
NIGERIA
Modern banking has its origin in the finance of foreign trade. In the
great medieval trading states of Venice, Genoa and later Florence, a
need arouse to exchange one currency with another and the early
money changes also began the practice of accepting deposits of cash
and valuables for safe keeping
(Adekange, 1986: 62). As these merchants and money changes
prospered, they (merchants) were called upon to provide finance for
the rulers of the land in which they were established and by this they
became involved in financing their own and other countries.
Because the origin of modern banking was in the cities of northern
Italy, some of its vocabularies have Italian roots e.g. the word ‘Bank’
comes from the Italian word ‘ Banco’ meaning a bench. It was at
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benches that early Italians carried out their functions of money
changing.
In 1892, the first banking institution was established in Nigeria. This
was the African Banking Corporation (ABC). The assets and
liabilities of (ABC) were taken over by the bank of British West
African (BBWA) in 1894. The bank has the credit of being the first
established banking business in Nigeria. The name was then changed
to standard bank of West Africa and then named first bank in 1978. In
1917 the Barclays bank D.C.O came into the Nigerian banking scene,
it was an International bank based in Britain. The name was then
changed to union bank of Nigeria Limited in 1978 (Oluabuchie1985:
106).
The discriminating lending practices of the owners of the foreign
owned banks in West Africa brought about the forming of indigenous
owned banks.
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In 1931, the Nigerian Merchant Bank was established but failed in
1936, undaunted by these failures; the shareholders of the bank
(Nigeria Merchant Bank) established the first successful indigenous
bank in Nigeria, National Bank of Nigeria Limited on 11th February
1933. The Agbomagbe Bank established in 1945 (Now Wema Bank
since 1969) was also a surviving bank. Other banks established
between the early thirties to fifties failed.
Due to the massive failure of the banks, it was therefore necessary to
control banking industry; the power of central banking was
introduced. The establishment of central bank of Nigeria was on
different view. The nationalist were of the view that a central bank
was needed to perform certain duties such as prevention of bank
failure, while the colonialists were against the view that a central bank
was not needed.
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Notwithstanding, these conflicting interest, the central bank of Nigeria
was established on the 17th of March and began full operation on the
1st of July, 1959.
2.2 SERVICES OFFERED BY COMMERCIAL BANKS
Basic functions of Bank include;
1. Account Keeping Function
a) Deposit Account
b) Current Account
c) Fixed deposit Account
2. Lending function by way of loan or overdraft to customers
3. Transfer of deposit from one account or withdrawal inform of
cash or electronic
Other services offered by commercial banks include;
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a. Safe keeping of valuables
b. Extension of credit facilities to customers
c. Management of customer’s investment
d. Letter of introduction
e. Farm development loan
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a) Safe Keeping of Valuables
Customers usually keep their life insurance policies, will and
jewellery, certificates of occupancy, deed of conveyance in the strong
room of banks for safe keeping these items are deposited in sealed
boxes or envelopes.
b) Extension of Credits Facilities to Customers
The main function of commercial bank is to give credit facilities to
their credit worthy customers. It is important to note that in most
advanced countries the economy is been run on credit facilities,
through this action production is increased, capital Investment are
expanded and a higher standard of living is achieved.
c) Management of Customer’s Investments
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Commercial banks help in managing the investments of customer by
providing financial advice to its clients and helping the client’s
business with risk management portfolio.
d) Letter of Introduction
It is the duty of the bank to provide a letter of introduction to its
customers when the need arise, it can be for visa purposes and other
things.
2.3.1 THE COMPUTER REVOLUTION
The most important technological development of the 20 th century is
the development of computer. This development has caused a
computer revolution which rivals the industrial revolution of the 19 th
century. The development of computer is also termed the information,
electronic revolution or second industrial revolution. This revolution
has improved the human brain power computers make possible
necessary activities in modern science, accounting and medicine etc.

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Computer records in seconds, millions of calculations and record
keeping that would take humans years to complete computers are safe
and are inaccessible to non- users. Computers reduce storage space in
offices and also increase the speed of workers (Capron 1995: 6).
2.3.2 DEVELOPMENT OF COMPUTER
Origin of computing machine
Important advancement of computers were the use of machinery to
perform arithmetic operations and early manual computing devices,
although these were not computers, they were important contributions
to computer development.
The history of computer could be traced back to the age of the
Egyptian civilian. As early as 4000 B.C, people started making
devices that would aid them in their daily work. The first counting
devices invested were the abacus i.e use of pebbles laid out on lined
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board. The abacus in its present form originated from china and is still
in use as a calculator. (Davison 1988: 24-30)
The calculation machine was invented by Blaize Pascal of France and
was later improved on by Graft Fried Heibnitz of Germany in 1671
which could divide and multiply along with its adding and subtracting
ability. The calculator of Pascal and Heibnitz were not reliable and it
took the contributions of different persons during the next centuries
before practical working data processing machine were developed.
2.3.3 ELECTRO- MECHANICAL PUNCHED CARD
MACHINES
A major development in machine computation was the use of
electromechanical machines for the automatic processing of data
recorded by holes in paper cards. This was developed in France by
Joseph Jacquard during the 18th century to control textile weaving
equipment automatically.
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These punch cards were used in data processing and the data
processing machine was made by Hollerith in 1884. Mechanical and
electronical improvements in punched cards machine led to their
widespread use for business and government applications in the late
1930’s.
COMPUTER PIONEERS
Charles Babbage was the first person to propose the concept of the
modern computer. The different machine / Analytical engine was
designed to calculate at the rate of 60 calculations per minute. This
was in 1833; it could also follow instructions received from a
program.
However, it wasn’t completed due to lack of fund. Almost a hundred
years passed before the idea outline by Babbage began to develop.
In 1925, a large scale Electro- mechanical analogy was built by Dr.
Vannevar. In 1944, Dr Howard Aiken having the support of

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developing the 1st large scale electromechanical digital computer
called MARK 1.This used many concepts of Charles Babbage.
ENIAC (Electronic Numerical Integrator and Calculator) was
developed by John Mauchley and Jpresper Ectertjr in 1946 and was
the first operational electronic digital computer. It was large with a
size of 1500 square feet. It weighed over 30 tons and utilizes over
18000 vacuum tubes installed instead of the electromechanical rays of
Mark 1. It was however acts as “stored programme” computer, It
utilizes the digital system. The first stored- programme electronic
computer as the EDSAC (Electronics Delayed Stored Automatic
Computer). It had internal storage of program and represented data in
binary. It was developed under the direction of M.V Willkies at
Cambridge University in 1949.
The Electronic Discrete Variable Automatic Computer (EDVAC)
completed in 1952, were based on the concepts advanced by Dr. John
Van Neumann in 1945. Here, both data and instructions could be

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represented internally by the binary number system rather than the
decimal system. The compute design formed the concept for the basis
of the present computers.
First Generation Computer
The first generation computers were within the years of 1940 to 1950.
UNIVAC (Universal Automated Computer) was the first
commercially mass- produced computer. It was placed on the market
in 1950 principally for use during the American 1950 census. It was
an intermediate size computer designed for the scientific applications
and business. These computers used vacuum tubes which generated a
hit of heat, it also made use of punch cards and these computers were
very large and occupied a lot of space. (Odiai 2005:21)
Second Generation Computer
These generations of computers were within the years of 1950 to
1964. The vacuum tubes were replaced by transistors and other solid
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state, semi conductor devices. They produced lesser heat, were less
expensive and smaller in size. These computers were more reliable
than the 1st generation computers. (ODIAI 2005:23)
Third Generation Computer
These generations of computers were within the years of 1964 to
1971. It use simple integrated circuits were first released in 1964,
Examples of successful third generation computers include Boroughs,
Honeywell, PDP minicomputer series , IBM 360 series and ICL 1900
series. The computers produced in late 1960s and early 1970s fall into
this category. Computer speed increased to 1000s 0f microseconds.
ICS (Integrated Circuits), also known as microchips, consists of
complete circuits assembled / integrated on tiny pieces of silicon for
easy connection to external devices. This saw the birth of
minicomputers in addition to the existing mainframes. (Odiai 2005:
24)
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Fourth Generation Computer
This in the 1970s used large- scale integrated (LSI) circuits, with
thousands of switches on a chip. LSI made it possible to have the
Central Processing Unit of small computers called microcomputer,
completely contained in a single silicon chip. The 1970s also saw the
beginning of computer networks (interconnection of independent
computers over communication line).
The development of computer network has been even more extensive
in the 1980s ranging from small local area networks to world wide
networks. Microcomputer development has also been intense, using
very large – scale integrated (VLSI) circuits, which provide hundreds
of thousands of switches on a chip.
The rapid growth that has occurred in less than half a century hardly
shows signs of abating. Along the way it has spawned a new science
concerned with computer acquisition, organization and processing of
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data. The field, computer science, ranges from abstract mathematical
theories, which form its foundation, to very concrete techniques for
the development of complex computer- based system. (Adams 1988:
4)
Fifth Generation
There were many predictions that by the end of the last century
computers will have been developed which will be able to converse
with people in human- like manner and which will also be able to
mimic human senses, manual skills and intelligence ( that is think for
itself like man ). Some of these have been achieved and a lot of
breakthrough has been made in this area of research generally called
Artificial Intelligence and robotics. The term fifth generation is often
used to describe such computer systems of the future. Those produced
are yet in the trail stage mostly, there is only very small commercial
usage due to price and reliability in application.
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2.3.4 MODERN COMPUTER SYSTEM
The basic types of computers are the analogy, digital and hybrid.
Computers are frequently classified by type (Digital, Analogy and
Hybrid) purpose (general purpose, special purpose, business and
scientific purposes) by processor- architecture (Unit- processor and
multi- processor) and the size (micro, mini, small, large and super
computers)
The analogy computer measures physical magnitude such as
electronic voltage and gives out its input in form of electronic signals.
Digital computer receives actual inputs and converts them to binary
equivalent before processing while hybrid computers combine the
features of both analog and digital computers.
A special – purpose computer is designed to process one or more
specific applications while the general purpose computer processes a
wide variety of applications. Scientific computers are designed for
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high speed processing of numeric data involving complex,
mathematical calculations. Business computers can efficiently process
large volumes and variety of numeric and alphabetic data required by
payroll and other typical business applications.
Micro – computers are general purpose computers which vary in size
from a computer- on –a chip to a small typewriter size unit. They are
used in consumer products and small business computers. They can
also be used for personal finance professional activities and
entertainment. (Donald 1983: 245)
Mini – computers are small general purpose computer which are large
and more powerful than micro computers. They are used for scientific
and large number of business applications small computers are
designed especially for small business firm. Medium sizes computers
are large, faster and it can handle more input/output and storage
devices than small computers. (Blundell 2007: 8)
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Large computers have faster processing speeds, greater storage
capacity, wider selection of input / output devices and greater
processing devices.
The term super computer describes a small number of extremely large
computer systems. These massive computer systems are extremely
large, fast and advance state- of – the – art for the entire computer
industry.
Most fourth generation computers are multipurpose computers
system; this is because instead of having one CPU with a single
control unit, arithmetic logic unit and primary storage unit, arithmetic
logic unit and primary storage unit are called a uni – processor .The
CPU’s of these computers have several types of processing units.
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2.3.5 OPERATION OF THE COMPUTER
The computer is a system that accepts inputs and produces output in
an organized process. The computer performs the following basic
functions:
Input
Input devices are machines, which transmit information from the
outside world into the computer memory. In most cases, we first have
to put the information into a form suitable for use by the input device,
e.g. by typing or drawing or pointing with a mouse. The point at
which the external device connects to the CPU is the electronic input
or card. The document from which the information is keyed (typed) is
called source document. Examples of input devices are keyboard,
mouse, magnetic tapes, card readers, disk / tape drives, joystick,
scanner etc
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Output
Output devices receive information from computer memory and
transmit it to the outside world, either in human – readable from or in
machine- readable form. Example of output devices are printer,
microfilm, plotters and terminals such as the visual display unit
(monitor), card punchers, disk / tape drivers etc. The point at which
the output device is attached to the CPU is the electronic output unit
or card (Egarievwe 2005: 7)
Processing
The main processing component of a computer system is the control
processing units (CPU). It is made up of two components: the control
unit (CU), which directs the activities of other parts of the system unit
and, the Arithmetic Logic unit (ALU) which performs all
calculations (Capron 1995:50)

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Storage
The storage function of the computer is the primary storage unit and
secondary storage devices such as magnetic disks and tape units.
These devices stores data and program instructions needed for
computer processing.
Control
The control component is the control unit (CU) of the CPU. These
control components interprets the computer program instructions and
transmits directions to the other components of the computer.
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2.3.6 THE COMPUTER ENVIRONMENT
This can be classified into:
Physical Environment
The computer is made up of delicate components. It should be kept in
a room which is cold; temperature should be between 12% and 20%.
There should be steady supply of electricity because fluctuations
make the computer faulty; stabilizer and uninterrupted power supply
(UPS) should be installed for stable supply of electricity.
Security Environment
The environment installation should be protected from unauthorized
access and destruction by anybody. Unauthorized access can be
checked by the use of passwords and other forms of identification,
while theft can be prevented by anti- burglary measures. Full proof
security can be provided by the use of data scrambling techniques

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such as cryptography. Security is very important as many frauds are
being committed with the use of computers.
Social Environments
The best personnel and user of the computer is required because of the
high degree of efficiency and concentration required to operate, use or
work with computer. This is in other to reduce human error. At the
installation of the computer, there is constant interaction with a large
number of people who make different users of the computer. Positive
relationships among people and between personnel in a computer
installation help in realizing the objectives for setting it up.
The computer point out errors in programmes as soon as they are
detected and keep on pointing errors until the programme is
completely corrected. To work successfully with the computer, some
degree of tolerance and equanimity is required.
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2.4 MEANING OF ACCOUNTING INFORMATION SYSTEM
According to Romney (2009) an accounting information system (AIS)
is a system of collection, storage, processing of financial and
accounting data that is used by decision makers. An accounting
information system is generally a computer-based method for tracking
accounting activity in conjunction with information technology
resources. The resulting statistical reports can be used internally by
management or externally by other interested parties including
investors, creditors and tax authorities.
Accounting Information Systems are composed of six main
components:
a. People
b. Procedures and instruction
c. Data
d. Software
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e. Information technology infrastructure
f. Internal controls and security measures
Initially, accounting information systems were predominantly
developed in – house as legacy system and such solutions were
difficult to develop and expensive to maintain.
Today, accounting information systems are more commonly sold as
prebuilt software packages from vendors such as Microsoft, sage
group, sap and oracle where it is configured and customized to match
the organization’s business processes. As the need for connectivity
and consolidation between other business systems increased,
accounting information systems were merged with large, more
centralized systems known as enterprise resource planning (ERP).
Before, with separate application to manage different business
functions, organizations had to develop complex interfaces for the
systems to communicate with each other. In ERP a system such as
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accounting information system is built as a module integrated into a
suite of applications that can include manufacturing, supply chain,
human resources. These modules are integrated together and are able
to access the same data and execute complex business processes. With
the ubiquity of ERP for business, the term accounting information
system has become much less about pure accounting (financial or
managerial) and more about tracking processes across all domains of
business. Romney (2009:40).
A modern accounting information system typically follows a multitier
architecture separating the presentation to the user, application
processing and data management in distinct layers. The presentation
layer manages how the information is displayed to and viewed by
functional users of the system (through mobile devices, web browsers
or client application) the entire system is backed by a centralized
database that stores all the data. This can include transactional data
generated from the core business processes (purchasing, inventory,

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accounting) or static, master data that is referenced when processing
data (employee and customer account records and configuration
setting) As transaction occur, the data is collected from the business
events and stored into the system’s database where it can be retrieved
and processed into information that is useful for making decisions.
The application layer retrieves the raw data held in the database layer,
processes it based on the configured business logic and passes it onto
the presentation layer to display to the users, For example consider the
accounts payable department when processing an invoice with an
accounting information system, an accounts payable clerk enters the
invoice, provided by a vendor into the system where it is then store in
the data base. When goods from the vendor are received a receipt is
created and also entered into the AIS. Before the account s payable
department pays the vendor, the system’s application processing tier
performs a three way matching where it automatically matches the
amounts on the receipt and the initial purchase order. Once the match
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is complete, an account payable is sent to manager for approval, from
here a voucher can be created and the vendor can ultimately be paid.
Test hallmarks of reporting as people do not have to look through an
enormous number of transactions for instance, at the end of the month
a financial accountant consolidates all the paid vouchers by running a
receipt on the system. The system’s application layer retrieves the
data from the database and provides a report that particular month
with large corporations that generate large volumes of transactional
data; running reports with even AIS can take days or even weeks.
Romney (2009:45-47)
After the wave of corporate scandals from large companies such as
Tyco International, Enron and WorldCom, major emphasis was put on
enforcing public companies to implement strong internal controls into
their transaction –based systems. This was made into law with the
passenger of the Sarbanes companies which must generate an internal
control report stating who is responsible for an organization’s internal

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control structure and outlines the overall effectiveness of these
controls.
Since most of the scandals were rooted in the company’s accounting
practices, much of the emphasis of Sarbanes Oxley was put on
computer- based accounting information systems. Today, AIS vendors
tout their governance, risk management and compliance features to
ensure business processes are robust and protected, and the
organization’s assets (including data) are secured.
When AIS is initially implemented or converted from an existing
system, organizations sometimes make the mistake of not considering
each of these six components and treating them equally in the
implementation process. This results in a system being “built three
times” rather than once because the initial system is not designed to
meet the needs of the organisation, the organisation then tries to get
the system to work and ultimately the organisation begins again,
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following the appropriate process. Following the proven process that
works as follows, results in optimal deployment time, the least
amount of frustration and overall success. Most organisations even
larger ones hire outside consultants either from the software publisher
or consultants who understand the organisation and who to help the
organisation select and implement the ideal configuration, taking all
components into consideration. Certified Public Accountants (CPAs)
with careers dedicated to information systems work with small and
large companies to implement accounting information systems that
follow a proven process. Many of these CPAs also hold a certificate
that is awarded by the American Institute of CPAs – the Certified
Information Technology Professional (CITP). CITPs often serve as co
– project managers with an organization’s project manager
representing the information technology department. In similar
organization, a co – project manager may be an outsourced
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information technology specialist who manages the implementation of
the information technology infrastructure Romney (2009:47).
The steps necessary to implement a successful accounting
information system are as follows:
a. Detailed Requirements Analysis
b. Systems Design ( Synthesis)
c. Documentation
d. Testing
e. Training
This is prior to data conversation.
a. Data conversation
b. Launch
c. Support
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2.5 RELATIONSHIP BETWEEN BANKING AND
ACCOUNTING INFORMATION SYSTEM
The usage of computers in the banking industry was first
experimented in 1955 by two (2) banks based in San Francisco and
New York at the introduction of IBM 650 model. By 1960, the
American Bankers Association issued its standard cheque under the
common machine independent research into the system. This deposit
was being processed uniformly by all computerized banks across the
century. The method of magnetic ink characterized them going
through perfection, advanced the process of reading and sorting
cheques. The performance of the banking sector is measured not only
by the number and variety of services provided but also more
significantly by the speed, safety and efficiency with which these
services are provided. One way of enhancing these services is the
application of information technology.
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Technology in banks now cover almost every phase of banking
operations from the routine operations such as processing of cheque
with electronic data process to the very sophisticated investment and
management information analysis.
Bankers of today are able to manage corporate investment better and
with more assurance of profitability because decision accountability
is braced with more facts and fewer psychic visions.
Banks are now able to apply computers in the banking sector in the
area of fund transfer, that is, the transfer of funds electronically from
one location to another.
The increasing volume, complexity, competitiveness and customer’s
globalization has led to an increase in technological development in
the Nigerian banking industry, which includes the introduction of
computers and other technological devices to cope with increase in
volume of transactions, credits risk management and product
46
development. It is important for us to note that back bone of
accounting g information is the computer; that is why so much
attention is given to it other technological breakthrough we have in
the Banking sector over the past years are the automated teller,
machine commonly known as ATMs, mobile banking, internet
banking, electronic banking and smart cards Romney (2009:60-61).
A whole new range of customer service has been made possible
through the development of information communication technology.
They include the following:
a. Electronic fund transfer
b. Credit card system
c. Reconciliation of paid cheques
d. Investment portfolio valuation
e. The automatic clearing system
f. Accounting and invoicing
47
g. Share registration
h. International business (Woheren, 2000: 20 – 22 )
The following system are being operated at present
1. Signature Verification
This is designed to solve the problem of verifying signatures when
verification is requested for, the specimen is retrieved
automatically from micro – file it is displayed on a monitor and
then refilled.
2 Automated Teller Machines
This is a machine that dispenses cash to a customer. It is linked to a
computer and it consists of a small video terminal and a bank of key
buttons. It involves the bank customer activating the machine by
inserting into a slot, a small plastic card and punching the personal
identification number. The terminal displays a message offering a
48
choice of transactions e.g withdrawals, balance inquiry, transfer of
funds from one account to another, pay bills and you can even
recharge your phone with the machine. The ATM has emerged the
most popular form of electronic banking in Nigeria as almost every
account holder owns an ATM card both savings and current account.
It is important to note that the machine works 24 hours of the day and
seven days in a week and it can be located anywhere. This shows that
banking transaction can take place outside the banking premises at
any time of the day. There are currently about 7000 ATM points in
Nigeria and that is seen to double in the next few years with first bank
having about 600 of it. It has also come as a source of income to
banks with charges for every transaction made. The automated teller
machine has also increase the speed of transaction and efficiency of
banking in the country. It was formally called dispensers and was
introduced into the banking world in 1967, (Woheren, 2000: 20 – 25).
49
3 Smart Cards
The first bank of Nigeria PLC brand of smart is known as the “first
card’’ (www. firstbank .com)
It is an electronic purse into which monetary value can be loaded and
unloaded. It is being introduced into the Nigerian market by First
Bank.
The first card is an alternative to physical cash that is prone to the
danger of theft loss and the problem of volume handling. Security
risks involved in moving cash from the premises of the companies to
branches of banks would be eliminated while bullies services cost will
be saved also. This would in turn improve returns on treasury
operations and enhance time efficient and faster fund movement.
Furthermore, the administrative cost of cash handling and
management would be reduced significantly.
50
Retail banking revolution has begun which is reducing the delay of
long quenches of swift transaction.
51
4. Electronic Fund Transfer (EFT)
This was introduced in FBN PLC (First Bank of Nigeria Plc) in 1996.
It is banking and payment system that transfers fund electronically
from one place to another. With the Western Union Transfer, it’s
possible for someone in any part of the world to send money to their
relatives which they will receive delay. (Woherem, 2000: 25- 26)
5. Mobile Banking
Mobile banking refers to provision of banking and financial services
with the help of mobile telecommunication devices. The scope of the
offered services may include facilities to conduct bank and stock
market transactions, to administer accounts and to access customized
information.
The benefits of mobile banking include checking the account balances
of customers, receiving SMS from the bank on deposit or withdrawal
52
of money from their account in FBN this function is also available to
its savings and current account holders.
These services are provided to the customers in collaboration with the
mobile service operators or commonly called GSM service providers
and banks.
It is important to note that these services were not available until
August 7, 2001 where the then President of Nigeria ‘Olusegun
Obasanjo’ approved the services to go on operation. It was the vision
of the president that led to the backbone of mobile banking in Nigeria
as without mobile phone operators, mobile banking would not be a
reality in Nigeria. The limitation of mobile banking includes:
availability of services to the mobile user like epileptic supply of
services to customers. Out 67% of people that are aware of mobile
banking, only 48% uses it; that shows we have a long way to go in the
area of awareness of electronic banking. (Ovia, 2003: 7 – 8)
53
6. Internet Banking
Online banking involves the use of internet to perform banking
activities. It allows customers to check their account balances of
account holders with just the click of the mouse a banking transaction
are done. The customer needs not to worry about whether a check has
been cleared or a deposit has been made. Through online banking, the
status of the customer account can be accessed at anytime as far he
has access to the internet services, the customer does not have to wait
for the end of the month before he sees his statement. Online banking
gives the ability to pay bills electronically; electronic payments can be
credited the same day or next. The transfer of money from one
account to the other is also another powerful tool of online banking,
another function of internet banking is the transfer of information to
customers through the use of electronic mail commonly called e –
mails.
54
All of the applications mentioned above involve the use of internet;
this is to show that the internet is infrastructure of the current age and
the backbone of electronic banking as shown above.
Electronic banking also involves developing new relationship with
the customers as they will have personal relationship with the bank
involved. Today any bank manager or executive that feels Electronic
banking is not important is being left behind (www.Firstbank.com).
55
7. Software Security of The Data Base in Bank
For electronic banking to be effective the area of security must be
added with all seriousness. The convenience associated with
electronic banking increases the need of security; the core security
areas which must be addressed include confidentiality, integrity and
availability. A key concern is that of privacy. You cannot afford to do
business on the net without addressing privacy issues of your clients.
Security in online banking is typically provided with the use of ID and
password and other security measures must be put in place in other to
avoid fraudsters and other security concerns (www. firstbank .com).
2.6 SAVING ACCOUNT
Banking operations were done manually when FBN was established
in 1894. When savings accounts were being opened, the necessary
forms are complete manually and the necessary documentation is
done, i.e the forms such as signature cards, mandates, ledger cards are
56
filed in the appropriate placed or file cabinet. Payments are made
through the cashier in the cubicle, this is done after the officer must
have confirmed the amount in the account, the customers signature by
comparing signature on withdrawal slip with that on the signature
card after the officer in charge of saving department has approved of
the payment, the slip is passed back to the cashier who then makes
the payment.
The cash is then counted, the entry is made manually into the
cashbook then the voucher is passed to the waste department who
collects the voucher manually and there after hands the voucher over
to the ledger keeper for posting into various ledger accounts. This
process took a long time and the bank workers closed very late. The
book accounts were balanced manually on the 15 th day of the month
and the last date of the month. The balancing of account took a long
time and it could remain unbalanced for as long as two weeks or
57
more, it also took a long time to calculate the interest for each
account.
As a result of the short – coming inherent in the manual banking
system, there was a need for an improvement. The banking system,
was mechanized which was an improvement in the manual system
(www. firstbank .com).
The ledger sheets in mechanized form were loose sheet, unlike the
manual system were they bounded in a book. Entries into the ledger
code and statement were made with the aid of an accounting machine
which posted transactions and also calculated the balance at the same
time in the wasted department, work that was done manually was now
done with the aid of machines. Daily transactions made were recorded
and entries made into the general ledger with the aid of a waste
machine before they were sorted into their various regions.
58
The mechanized system was a little improvement on manual banking
due to the introduction of machines. Despite the slight improvement,
customers were still delayed in long queues, banking hall were always
congested. There was the need for an improved banking system that
would usher in fast and efficient services delivery system.
The era of banking which is the computerized system is different from
the manual and mechanizes system.
In the computerized savings system, the computer does all the work
which was done manually. When a customer wants to open an
account, he fills the necessary documents such as signature cards,
mandate and other relevant documents. The officer checks it in other
to ensure that the documents have been filled correctly. After that he
keys the information such as the name, addresses, occupation etc of
the customer, account is created, he then creates a general ledger
which opens the accounting period containing information such as
59
when the account was opened etc. The signature card is scanned or
photocopied into the computer with the aid of a scanner or
photocopier. The signature and passport picture is copied into the
computer.
When a customer wants to withdraw money, time used in sorting for
customers’ signature card in the file cabinet is eliminated. This is
because information required of the customer is in the computer
before the teller. All the teller/ cashier needs to do is to key in the
necessary request and all information required of the customer is
displayed on the screen. The teller can verify the signature on the
withdrawal slip and his identity card with that on the screen. He can
also compare his picture on the screen to that of the computer. The
time the computer waits to withdraw money is significantly reduced
because the time used in sorting for necessary information of his has
been eliminated.
60
In FBN Plc, IKPOBA HILL branch, each teller has a computer in
front of him and a note counter. All necessary information required of
the customer is gotten from the screen in front of him. He is able to
count money faster and accurately with the aid of the note counter.
The cashier can also update the balance and calculate the interest on
the customer’s account with the aid of the computer i.e the computer
automatically balances the customer’s account.
After closing to the public, no time is spent storing the signature cards
and ledger card and arranging it in the file cabinet as it used to be in
the case with the manual system. Close to twenty savings account are
opened on a daily basis because the process is faster now, customers
are also attended to very fast, queuing time is reduced, customer do
not spend more than five minutes with the cashier in withdrawing
money. So it is rare to find the banking hall congested. The banking
officials are more efficient, friendly and courteous to customers and
are less tired because they are working with better facilities and
61
equipment which reduces stress on them. With the computerized
system, volume of data has reduced and vital documents are not
carried from one place to another which would have led to loss of the
documents. Difficulty in record keeping i.e. filling, storage and
retrieval of records has been eliminated. With the computerized
system customers dissatisfaction has been eliminated. Operations of
banking systems have also been improved. It is important to note that
savings account holders have access to ATM cards and mobile
banking as this has saved the customers from going to the bank a lot
less; therefore, savings the time of both the customer and the banker
as banking transaction can be done at any place or time such as
balance enquiry, withdrawal, funds transfer etc (www.
firstbank .com).
62
2.7 ADVANTAGES OF ACCOUNTING INFORMATION
SYSTEM IN BANKING
According to Sheila (2006:55), accounting is known as the language
of business, and as such it benefits management in many ways.
Accounting involves recording transactions and compiling them in
reports. An important advantage of accounting information system
over other types of information is that it is based on numbers,
measurable data. It is black and white: you have a profit or you have a
loss--the numbers speak for themselves.
a. Objective
One Advantage of accounting information system is that it is
objective and based on generally accepted accounting principles.
These are rules to be followed in accounting to make reports standard
and comparable. Data entered in an accounting system is verifiable
data, not opinions or wishes. Accounting information is unbiased.
63
b. Reliable
Another advantage of accounting information is that it is reliable. For
example, when you see $40,000 in accounts payable, you owe that
much to others. If you have questions about that, reports can show
you how that number was calculated. Numbers do not come out from
pies-in-the-sky. To make it to an accounting system, data has to make
sense and to have proper documentation to back it up. In a well-run
accounting department, reconciliations are made and procedures are in
place to assure reliability and accuracy of information Sheila
(2006:56).
c. Analysis Tool
Accounting reports can be analyzed to provide management with
financial information that can be used to run a business, plan ahead
and to make changes when business is not going as expected. If sales
of a certain item are flat and not as expected, accounting reports show
64
this reality and management can make decisions about it--a clear
advantage of accounting information Sheila (2006:56).
d. Integration
AISs offer a system of accounting that is fully integrated. When
recording accounting transactions manually, several entries are
typically required for every transaction. With AIS, when a transaction
is recorded, the computer posts all entries correlating with the
transaction. This saves an accounting clerk time and helps them to
avoid mistakes Sheila (2006:56-57).
e. Speed and Accuracy
An AISs offers a faster way of recording financial information. It
also allows employees to find customers’ information more quickly. If
employees need to locate an invoice total, price or date of a
transaction, a computerized system offers a faster method of
information location. Accuracy is easier to obtain with a computerized

65
system as well because an accounting clerk enters only one set of
numbers, which is then transferred automatically to several different
areas in the system Sheila (2006:57).
f. Automatic Document Production
A computerized accounting system does the work an accountant once
did with a manual system. Computerized systems can be set to
automatically pay bills and print checks. They can also create
purchase orders, invoices and credit memos. Payroll tasks are also
done automatically. The computer operator sets the system to do these
specific tasks at different times of the month. The computer system
then automatically completes these tasks when they are scheduled
Sheila (2006:58).
g. End – of – Month Activities
This type of system offers end – of - month advantages for businesses.
Adjusting and closing entries are recorded easily on the system. The
66
creations of financial statements are made easy with a computerized
system. All of the company’s financial information is stored in the
system, allowing financial statements to be calculated easily and
quickly. An AIS is also great for aging reports for management.
Aging reports show managers the total amount of money owed to
them in Accounts Receivable as well as the total amount the company
owes in Account Payable, Sheila (2006:59). These aging reports also
show current amounts and past due amounts including how past due
payables or receivables are.
h. Storage and Back – up
AIS systems are great storage devices. It is always recommended with
computers to back - up information stored to avoid the loss of the
information. Regular back – ups of the information should be
scheduled daily, weekly, and monthly or whenever the company
67
determines it needs to be. Computers are convenient place to store
information because it does not take up a lot room and the information
is all conveniently located in one place Sheila (2006:59).
2.8 LIMITATION OF ACCOUNTING INFORMATION ON
BANKING
Despite all the advantages listed above of accounting on banking
operations, there are also some limitations not only to customers and
banks but also the economy as a whole, Davison R. B. (1988:20).
Learning the System
Learning an accounting information system can often be difficult and
time – consuming. Individuals must be trained on a system, and this
can cause a disadvantage to companies in terms of time and
manpower. An accounting information system is made up of many
different components, and almost all systems are computerized.
Because of their complexity, some people may find them hard to use.
68
It can take weeks or months for a person to understand an accounting
system, and usually the individual still does not understand
completely what the system is capable of. If the employee quits
working at the organization it can take weeks or months, once again,
to train another employee Davison R. B. (1988:22)..
a. Loss of Information
Accounting information systems are usually computerized. Because
of this, there is always a risk of losing information through power
outages or system crashes. When this happens, there is a chance that
all the information in the system could be lost. Companies take
precautions for this problem by backing up their files regularly and
performing standard maintenance on all computer systems. They also
install antivirus software as another precaution. Still, none of these
steps eliminates the potential problem that may occur. Accounting
information system stores a company’s financial information for
69
years. If a system crash occurs, it causes a major disadvantage to the
company. All or some information is lost and there is a chance it
may never be recovered Davison R. B. (1988:22-24)..
b. Re-Evaluation
Companies often change their way of doing business to keep up with
the latest trends. To keep up in a demanding business world, these
changes may impact an accounting system. An accounting
information system is difficult to set up because every company is
unique in its own way. In order to keep up with changes, accounting
information system must be re -evaluated often. Changes often need
to be made in a system in order to process information efficiently.
This can be a disadvantage to companies because it takes time for the
re-evaluation and it costs money Davison R. B. (1988:24).
70
REFERENCES

Oluabuchie G (1984- 1985) “Towards Modern Computerized Banking
in Nigeria’’. Banking Manual Alfer Communication Ltd
Lagos No 67 pg 106.
H.L Capron (1995) “Essentials of Computing’’
Dovison R.B (1988) “A Guide to the computer’’ Longman University
of West Indies – USA
Tom I. Odiai, Ben C. Orhionkpaiyo, Evelyn B.D Oduntan (2005)
“Introduction to Computer Science and Information
Technology.
J. Mack Adams, Philippe J. Gabrini, Barry L. Kurtz (1988) ‘’An
introduction to Computer Science with Modula -2.
USA.
Barry, G Blundell with Nawaz khan, Aboubarker Lasebae and
Muthana Jabbar (2007) “Computer System and
Networks.
S.U Egarievwe, S.C Chiemeke (Mrs) (2005) “General Introduction to
Computer Science.
71
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 INTRODUCTION
This chapter set out to examine materials, methods and procedures for
data collection and analysis for study under consideration. It attempts
to give an insight into the way and manner this research study was
carried out.
3.2 RESEARCH DESIGN
According to Asika (2008: 27) Research design means the structuring
of investigation aimed at identifying variables and their relationships
to one another. This is used for the purpose of containing data to
enable the researcher test hypotheses or answer researcher through the
various stages of the research.
72
In this study, the case study research design is adopted. A case study
research design examines all variables relating to a particular
phenomenon in order to provide a good understanding of the situation.
In this case, we seek to understand the impact of accounting
information system on the performance of the banking sector in
Nigeria (specifically, First Bank of Nigeria Plc). A case study is
designed rather than prescriptive goals and the researcher is able to
discover and address issues as they arise in the study.
By seeking to understand as much as possible about single group of
subjects, case study specialize in deep data information based on the
particular context that can result in more useful finding. The weakness
lies in the fact that case study has long been stereotyped as weak
sibling in science methods and this is criticized as too subjective. It is
also seen as lacking in precision. Also, results may not be
generalisable and are difficult to replicate rarely offering problem –
solving prescription.
73
In this study, a non probabilistic method was adopted in the choice of
banking to use after considering the availability of their up – to – date
annual reports.
3.3 TYPES AND SOURCES OF DATA
There are two types and sources of data; the primary and secondary
sources.
The primary data refers to the data generated by the researcher in the
course of the research through observation, interview, and
questionnaires e.t.c.
The secondary data on the other hand refers to already existing data
which could be used to support meaningful result. In this research, we
will use secondary data which comprises of the financial statement of
the First Bank of Nigeria Plc.
74
3.4 METHOD OF DATA ANALYSIS
The data will be analyzed by employing the multiple regression
analysis to examine the relationship between the variables included in
the study. A multiple regression analysis is a method for explaining a
phenomena and predicting of future events. In multiple regression
analysis, a sector of predictor variable is used to explain variability of
the criterion variable. The regression function incorporates most of
the important variables that are related to given criterion variable.
Moreover, it enables us to study how one of those variables affects the
criterion variable when all other predictor variables are constant. It
also permits an intimate analysis of the various relationships which is
not possible in the natural setting when all variables are changing
simultaneously.
75
3.5 DATA ANALYSIS TECHNIQUE
Although there is no consensus on the technique that is most suitable
for an econometric model, but parameter estimates obtained by the
Ordinary Least Square (OLS) have some optimal properties and, the
computational procedure is fairly simple as compared with other
techniques. Similarly, the OLS has been used in a wide range of
economic relationships with fairly satisfactory results. Finally, the
OLS is simple to understand.
The few disadvantages of OLS are the problem of auto correlation and
multi- co- linearity. However, where these problems are present, they
can be corrected through the Cochrane- Orcutt Iterative (COI)
method.
3.6 MODEL SPECIFICATION
In the course of this research, the following models were developed to
help us analyze our data: The models are;
76
AIFO=f(ROCE, NPM) ---------------------------- (1)
AIFO=f(DPS, EPS) --------------------------- (2)
Specifying model (1) in econometric form, we have
AIFO= ao + a1ROCE +a2NPM --------------------- (3)
Where:
ao =Intercept term
a1 =Impact on ROCE
a2 = Impact on NPM
ROCE= Return on Capital Employed
NPM= Net Profit Margin.
Specify model (2) in econometric format, we have;
AIFO=a0+ a1DPS + a2EPS ------------------------------------ (4)
Where:
77
ao = Intercept term
a1 = Impact on DPS
a2= Impact on EPS
DPS= Dividend per share
EPS= Earning per shares
3.7 DEFINITION OF VARIABLES
Return on Capital Employed: According to Okwuosa (2005:486)
this indicates the overall profitability of the business. The profit to be
used depends on the definition of the capital employed. It is profit
before tax where capital employed is defined as shareholder funds and
profit before interest and tax where capital employed is defined as
shareholder fund plus long term liabilities.
The higher the percentage the more profitable the enterprise will be
deemed to be.
78
Profit before Taxation∧Interest
ROCE=
Capital Employed
Net Profit Margin: According to Okwuosa (2005:485) this indicates
the net margin due to the business after taking into account all
revenue expenses. The higher the percentage the more efficient the
enterprises will deem to be in controlling its revenue expenses.
Net profit (before tax )

NPM= X 100%
Sales
Earnings per share: According to Okwuosa (2005:490) this indicates
the amount of net profit after tax (but before taking into account of
extraordinary items) attributable to each share in issue and ranking for
dividend during the period.
Profit after Tax before extraordinary items less Preference Dividend

EPS=
No . of ordinary shares∈issue∧Ranking for dividend
Dividend per share: According to Okwuosa (2005:490): this
indicates the dividend and retention policy of the company when used
in conjunction with EPS.

79
Total Dividend less Preference dividend
DPS = No . of ordinary shares ∈issue∧ranking for dividend
Accruals: According to Millichamp; this is an amount set aside
for a specific liability such as where the expenditure has been incurred
in the period but for which no invoice has been received.
80
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND
INTERPRETATION
4.1 INTRODUCTION
The purpose of this research work is to analyze the impact of
accounting information on the performance of banking sector in
Nigeria, using First Bank of Nigeria plc as our case study. This
chapter of the research work presents the data obtained, analysis
carried out on the data and the interpretation of result obtained during
the regression analysis to produce relevant and reliable information
which forms the basis for which conclusions would be drawn and
recommendations made.
A longitudinal survey of First Bank plc from 2001 to 2010 was taken.
The variables to be tested were computed from the various years’
financial statements.
81
4.2 DEFINITION OF VARIABLES
Return on Capital Employed: According to Okwuosa (2005:486) :
This indicates the overall profitability of the business. The profit to be
used depends on the definition of the capital employed. It is profit
before tax where capital employed is defined as shareholder funds and
profit before interest and tax where capital employed is defined as
shareholder fund plus long term liabilities.
The higher the percentage the more profitable the enterprise will be
deemed to be.
ROCE = Profit before Taxation and Interest / Capital Employed
Net Profit Margin: According to Okwuosa (2005:485) : This
indicates the net margin due to the business after taking into account
all revenue expenses. The higher the percentage the more efficient the
enterprises will deemed to be in controlling its revenue expenses.
82
Net profit (before tax )
NPM= x 100%
Sales
Earnings per share: According to Okwuosa (2005:490) : This
indicates the amount of net profit after tax (but before taking into
account of extraordinary items) attributable to each share in issue and
ranking for dividend during the period.
Profit after tax before extraordinary item less Preference Dividend

EPS = No . of ordinary shares∈issue∧Ranking for Dividend
Dividend per share: According to Okwuosa (2005:490): This
indicates the dividend and retention policy of the company when used
in conjunction with EPS.
Total Dividend less Preference dividend

DPS = No . of ordinary shares ∈issue∧ranking for dividend
4.3 DATA PRESENTATION
Under this section, the data obtained from the various financial
statements are presented in a tabular form as shown below;
83
Table 4.1: COMPUTATION OF VARIABLES FROM FIRST BANK
PLC
YEAR ACCRUALS ROCE NPM EPS (K) DPS (K)

(#’M) (%) (%)
2001 43,222 293.3 21.3 288 221
2002 4,680 367.6 36.5 235 130
2003 5,668 132.1 28.5 430 150
2004 5,479 127.7 28.9 399 155
2005 2,826 128.8 29.4 335 160
2006 3,787 104.3 25.5 333 100
2007 58,773 134.9 27.9 156 100
2008 58,773 124.8 29.1 233 0
2009 4,482 603.1 4.4 0 4
2010 4,014 124.5 16.2 83 0
Source: Computed from First Bank plc Financial Statements 2001 –
2010.
84
From the computed variables shown in the table above, it was
observed that the highest figure of accruals was in 2007 and 2008
with a figure of #58,773,000,000 while the lowest figure was in 2005
with a figure of #2,826,000,000.
On the figure of Return on Capital Employed (ROCE) computed, it
was observed that the highest figure for ROCE was in the year 2009
with a ROCE of 603.1%. This was followed by 367.6% which came
up in the year 2002. The lowest figure for ROCE was in 2006 with a
ROCE of about 104.3% followed by that of 2010 which was 124.5%.
On the figure of Net Profit Margin (NPM) computed, it was observed
that the highest figure for NPM came up in 2002 with a figure of
36.5%. This was followed by 29.4% which came up in the year 2005.
The lowest figure for NPM came up in the year 2009 with a figure of
4.4%. This was followed by 16.2% which came up in the year 2010.
85
On the figures of Earnings Per Share (EPS) computed, it was
observed that the highest figure for EPS came up in 2003 with an EPS
of 430k. This was followed by 399k which came up in 2004. The
lowest figure for EPS in the years under review came up in 2009 with
a nil figure for EPS. This is followed with an EPS of 83k which came
up in 2010.
On the figures of Dividend per Share (DPS) computed, it was
observed that the highest DPS came up in the year 2001 with a DPS
of 221k. This is followed by 160k which came up in the year 2005.
The lowest figures for EPS came up in the year 2008 with a nil DPS
followed by 4k which came up in the year 2009.
4.4 DATA ANALYSIS AND INTERPRETATION
In this section, the data computed above was analyzed using the
regression tool with the e-view software. The result of the analysis is
presented in two stages based on the models developed in the
86
previous chapter. The model (3) will be analyzed first followed by the
model (4).
For the purpose of clarity, the model (3) is re-presented below:
AIFO = a 0 + a 1ROCE + a 2NPM. ………………….. (3)
The data was analyzed using e-view and the result is shown below:
Table 4.2: E-view regression result
Dependent Variable: AIFO
Included observations: 10
Variable Coefficient Std. Error t-Statistic Prob.
C 23273.25 13496.77 1.724357 0.1283
ROCE -3476.551 5169.688 -0.672488 0.5228
NPM 1417.874 1260.115 1.125194 0.2976
R-squared 0.177492 Mean dependent var 19170.40
Adjusted R-squared -0.057511 S.D. dependent var 24138.96
S.E. of regression 24823.39 Akaike info criterion 23.32028
Sum squared resid 4.31E+09 Schwarz criterion 23.41106
Log likelihood -113.6014 F-statistic 0.755276
Durbin-Watson stat 1.141798 Prob(F-statistic) 0.504651
87
Source: e-view output.
We can re-write the regression equation as:
AIFO = 23273.25 – 3476.551ROCE +1417.874NPM
T-Ratio= (1.724357) (-0.672488) (1.125194)
R – Squared = 0.177492 F – Stat = 0.755376
D W Stat. = 1.141798.
From the result presented above, we can see that autonomous
Accounting Information (AIFO) is positive when all other variables
are held constant.
Consequently, a unit change in AIFO will result into a negative
change of about 3476.551 units in ROCE less the autonomous
component and all variables held constant.
88
A unit change in AIFO will result in a positive change of about
1417.874 units in NPM less the autonomous component and all other
variables held constant.
Using the T- ratio to test for their statistical significant, we find that
none of the variables are statistically significant. This is due to the fact
their observed T- values are either negative or far less than the ‘rule of
thumb’ of 2.
From the R- squared of 0.177492, the regression co-efficient indicate
that about 18% of the changes in the dependent variable is explained
by the changes in the independent variables.
The F- value of 0.755376 indicates that the parameter estimate cannot
be dismissed at 5% level of significance.
The D.W statistic of 1.141798 indicates the presence of auto –
correlation since it is not up to the rule of Thumb of 2. This can be
corrected with the use of the Cochrane-orcutt iterative method.
89
The result of the Cochrane-orcutt iterative method is given below;
Table 4.3: Cochrane-Orcutt Iterative Method.

Sample(adjusted): 6 10
Convergence achieved after 8 iterations
C -72149.98 37864.34 -1.905487 0.3077
ROCE 77.19631 63.55581 1.214622 0.4385

NPM 3310.267 1210.084 2.735568 0.2231
AR(5) -0.474422 0.268201 -1.768905 0.3276
Adjusted R-squared 0.737138 S.D. dependent var 29949.79
Inverted AR Roots .70 -.51i .70+.51i -.27+.82i -.27 -.82i
-.86
AIFO = -72149.98 + 77.19631ROCE + 3310.267NPM
T-Ratio = (-1.905487) (1.214622) (2.735568)
90
R – Square = 0.934284, R-Square Adjusted = 0.737138
D W Stat = 1.963263 F- stat = 4.739033
From the Cochrane-orcutt iterative method presented above, we can
see that autonomous Accounting Information (AIFO) is negative
when all other variables are held constant.
Consequently, a unit change in AIFO will result into a positive change
of about 77.19631 units in ROCE less the autonomous component and
all variables held constant.
3310.276 units in NPM less the autonomous component and all other
only NPM is statistically significant. This is due to the fact it’s
observed T- value is more than the rule of thumb of 2. All other
91
variables are statistically insignificant because their T-values are
either negative or far less than the ‘rule of thumb’ of 2.
The D.W statistic of 1.9632 indicates the absence of auto – correlation
since it is in the neighborhood of the rule of Thumb of 2
TEST OF HYPOTHESIS ONE
The hypothesis will be tested by considering the f - tabulated and f-
calculated values.
DECISION RULE: Reject the null hypothesis if the f-calculated is
greater than the f –critical (table value) at 5% level of significance.
DECISION: A comparative analysis of both the f - calculated value
of 4.739033and and f- tabulated of 0.323 shows that the f- calculated
92
is higher than the f-tabulated. We therefore reject the null hypothesis
and accept the alternate hypothesis which means that there is a
significant relationship between accounting information and
profitability.
In analyzing model (4), the model is represented for the purpose of
clarity;
AIFO = a 0 + a 1EPS + a 2DPS ………………………… (4)
The data was analyzed using e-view and the result is shown below:
Table 4.4: E – View Regression Result

C 25299.77 18452.98 1.371040 0.2127
EPS -36.17568 94.54212 -0.382641 0.7133
DPS 28.29033 167.9387 0.168456 0.8710
93
We can re-write the regression equation as:
AIFO = 25299.77 – 36.17568EPS + 28.29033DPS
T-Ratio= (1.371040) (-0.382641) (0.168456)
R – Squared = 0.023737 F – Stat = 0.085100
D W Stat. = 1.537758
Accounting Information (AIFO) is a positive 25299.77 when all other
variables are held constant.
Consequently, a unit change in AIFO will result into a negative
change of about 36.17568 units in EPS less the autonomous
component and all variables held constant.
94
28.29033 units in DPS less the autonomous component and all other
none of the variables are statistically significant. This is due to the fact
their observed T- values are either negative or far less than the ‘rule of
thumb’ of 2.
that about 2.4% of the changes in the dependent variable is explained
The F- value of 0.085100 indicates that the parameter estimate cannot
be dismissed at 5% level of significance.
The D.W statistic of 1.537758 indicates the presence of auto –
correlation since it is not in the neighborhood of the rule of Thumb of
95
2. This can be corrected with the use of the Cochrane-orcutt iterative
method.
The result of the Cochrane-orcutt iterative method is given below;
Table 4.5: Cochrane-orcutt iterative Method

C -49591.29 14758.59 -3.360164 0.0783
EPS 164.6104 67.34294 2.444360 0.1344
DPS 135.1461 88.43787 1.528147 0.2661
AR(4) -2.076905 0.606370 -3.425146 0.0757
Inverted AR Roots .85+.85i .85+.85i -.85 -.85i -.85 -.85i
Estimated AR process is nonstationary
Source: E-View output
AIFO = -49591.29 +164.6104EPS + 135.1461DPS
96
T-Ratio= (-3.360164) (2.444360) (1.528147)
R – Squared = 0.860995 F – Stat = 4.129307
D W Stat. = 1.875554
Accounting Information (AIFO) is a negative 49591.29 when all other
variables are held constant.
Consequently, a unit change in AIFO will result into a positive change
of about 164.6104 units in EPS less the autonomous component and
all variables held constant.
135.1461 units in DPS less the autonomous component and all other
only EPS variable is statistically significant because it’s observed t-
97
value is more than the rule of thumb of 2. The other variables are
statistically insignificant. This is due to the fact their observed T-
values are either negative or far less than the ‘rule of thumb’ of 2.
The D.W statistic of 1.875554 indicates the absence of auto –
correlation since the value is in the neighborhood of the rule of
Thumb of 2
TEST OF HYPOTHESIS TWO
The hypothesis will be tested by considering the f - tabulated and f-
calculated values.
DECISION RULE: Reject the null hypothesis if the f-calculated is
greater than the f –critical (table value) at 5% level of significance.
98
DECISION: A comparative analysis of both the f - calculated value
of 4.129307 and f- tabulated of 0.201085 shows that the f- calculated
is higher than the f-tabulated. We therefore reject the null hypothesis
and accept the alternate hypothesis which means that there is a
significant relationship between accounting information and Earnings
per Share.
99
CHAPTER FIVE
SUMMARY OF FINDINGS CONCLUSION AND
RECOMMENDATIONS
5.1 INTRODUCTION
This chapter will make attempt to present the summary of findings of
the entire study, draw conclusion on the subject matter under study
and proffer the necessary recommendations.
This study provides an in-depth analysis of the impact of accounting
information on the performance of the Banking sector in Nigeria with
a particular focus on First Bank Nigeria Plc. In embarking on this
research therefore, an attempt was made in the first chapter to present
issues at stake as regards the impact of accounting information on the
performance of the banking sector in Nigeria. The chapter reflected
the introductory background, statement of the problem, objective,
100
scope, significance and limitations of the study. In this chapter our
hypotheses were also formulated.
For easy comprehension of the basic argument arising from the
researcher’s findings, the next chapter was committed to the review of
past relevant related studies. This helped as a way of examining the
statement of relationships among variables under investigation and
also provides the research basic foundation, greater insights and ideas
on the phenomena involved in the research study. Information’s were
gotten from textbooks, journals, internet e.t.c
The methodology of the research which provides the necessary
framework for possible replication of the study was treated in chapter
three. This includes research design, research population/sample size
and method of data analysis.
The fourth chapter was all about the data analysis and interpretation.
The secondary data’s obtained from the financial statements of First
101
Bank Plc were presented in tables for easy understanding, our null
hypotheses which was stated in chapter one were tested using
regression analysis with the e-view and they were interpreted.
In this concluding chapter, findings are summarized based on the
summary of the findings, while recommendations are based on all of
the above.
5.2 SUMMARY OF FINDINGS
The findings obtained from this study can be summarized as follows:
1. There is a significant positive relationship between Accounting
information and profitability as represented by ROCE.
2. There is a positive significant relationship between Accounting
Information and Net Profit Margin.
3. There is a positive relationship between Accounting
Information and Earnings per Share.
102
4. There is a positive relationship between Accounting
Information and Dividend per Share.
5.3 CONCLUSION
This study was embarked on in order to determine the impact of
accounting information on the performance of the Banking sector
in Nigeria with a particular focus on First Bank plc. We obtained
data spanning 2001 to 2010 and computed various variables to
enable adequate analysis to be carried out. From the result of the
analysis, we discovered that accounting information has a positive
relationship with ROCE and EPS and also with NPM and DPS.
We can therefore conclude that accounting information is very
vital for in enhancing the returns on capital employed and
shareholders decisions.
103
5.4 RECOMMENDATIONS
From the findings in this study, we recommend that;
1. Managers of Banks should enhance the quality of their
financial reports by avoiding different tendency towards
manipulating their financial records.
2. Managers of Banks should invest in their accounting
information system. This will enhance good service delivery
and further increase the returns of the banks.
3. Shareholders and investors should have a forum apart from the
annual general meeting where they can discuss their stake and
investment in their organizations.
4. Government regulatory agencies should be strengthened to
carry out their functions properly towards these banks and any
104
bank found wanting should have their management staff
sanctioned.
5.5 RECOMMENDATION FOR FURTHER STUDIES
We want to recommend that further research be carried out in this
subject area with larger sample size or longer period of time to either
validate the findings of this research or provide a platform for further
research.
105
BIBLIOGRAPHY
A.H Millichamp and J.R Taylor(2008) “Auditing’’ NINTH

EDITION.

Barry, G Blundell with Nawaz khan, Aboubarker Lasebae and

Muthana Jabbar (2007) “Computer System and
Networks.
Berin A.O (1983) “Computer and Information Processing in

business’’. Richard O.Irwin incorporation.
Bidemi Osunbiyi and Shola H.Adeosun ( 2005) “Communication

Research Methods.

USA.
Donwa (1991) “Computerization of Customer Services in Nigeria

Banks’’ A note journal of institute of Chartered
Accountants of Nigeria Vol xxiv.
106
Dovison R.B (1988) “A Guide to the computer’’ Longman University
of West Indies – USA
First Bank of Nigeria Plc (2001- 2007) “WINNING” Newsletter of

the First bank Century II project.
First Bank of Nigeria Plc (2001-2010) “Financial Statement’’.
Foluso O (1995) “Introduction to Banking”. Evans Brothers

Publishers, Lagos, Nigeria.
Froomkin J.N (1972) “ Automation’’ International Encycloped of

Social Science Macmillian and Tee Press Vol 1 480-482.
H.L Capron (1995) “Essentials of Computing’’.
J. Mack Adams, Philippe J. Gabrini, Barry L. Kurtz (1988) ‘’An

introduction to Computer Science with Modula -2.
Nnamdi Asika (1991) “Research Methodology in the behavioural

science.
Oluabuchie G (1984- 1985) “Towards Modern Computerized Banking

in Nigeria’’. Banking Manual Alfer Communication Ltd
Lagos No 67 pg 106.
107
Romney, Marshall Band Paul John Steinbart (2009) “Accounting
Information System’’. Upper Saddle River N, Pearson
Prentice Hall.
S.U Egarievwe, S.C Chiemeke (Mrs) (2005) “General Introduction to

Computer Science.
Tom I. Odiai, Ben C. Orhionkpaiyo, Evelyn B.D Oduntan (2005)

“Introduction to Computer Science and Information
Technology.
108
APPENDIX I
COMPUTATION OF VARIABLES FROM FIRST BANK PLC
YEAR ACCRUALS ROCE NPM (%) EPS (K) DPS (K)

(#’M) (%)
2001 43,222 293.3 21.3 288 221
2002 4,680 367.6 36.5 235 130
2003 5,668 132.1 28.5 430 150
2004 5,479 127.7 28.9 399 155
2005 2,826 128.8 29.4 335 160
2006 3,787 104.3 25.5 333 100
2007 58,773 134.9 27.9 156 100
2008 58,773 124.8 29.1 233 0
2009 4,482 603.1 4.4 0 4
2010 4,014 124.5 16.2 83 0
Source: Computed from First Bank plc Financial Statements 2001 –
2010
109
APPENDIX II
E – VIEW REGRESSION RESULT
Method: Least Squares
Date: 05/22/12 Time: 23:21
Sample: 1 10
C 23273.25 13496.77 1.724357 0.1283
ROCE -3476.551 5169.688 -0.672488 0.5228
NPM 1417.874 1260.115 1.125194 0.2976
110
Date: 05/22/12 Time: 23:33
Sample: 1 10
C 25299.77 18452.98 1.371040 0.2127
EPS -36.17568 94.54212 -0.382641 0.7133
DPS 28.29033 167.9387 0.168456 0.8710
111
APPENDIX 1I1
COCHRANE-ORCUTT ITERATIVE METHOD OUTPUT

Date: 05/29/12 Time: 04:20
Included observations: 5 after adjusting endpoints
C -72149.98 37864.34 -1.905487 0.3077
ROCE 77.19631 63.55581 1.214622 0.4385
NPM 3310.267 1210.084 2.735568 0.2231
AR(5) -0.474422 0.268201 -1.768905 0.3276
Inverted AR Roots .70 -.51i .70+.51i -.27+.82i -.27 -.82i
-.86
112
Date: 05/29/12 Time: 04:38
Included observations: 6 after adjusting endpoints
C -49591.29 14758.59 -3.360164 0.0783
EPS 164.6104 67.34294 2.444360 0.1344
DPS 135.1461 88.43787 1.528147 0.2661
AR(4) -2.076905 0.606370 -3.425146 0.0757
Inverted AR Roots .85+.85i .85+.85i -.85 -.85i -.85 -.85i
Estimated AR process is nonstationary
113
DEPARTMENT OF ACCOUNTING
UNIVERSITY OF BENIN,BENIN CITY
PROJECT EVALUATION SHEET
Name of Candidate…………………………………………………………
Matriculation Number………………………………………………………
Points Distribution Score
(1) subject Definition and justification: 10
(Problem, objective Relevance, Scope and limitation) 10
(2) Literature Review and methodology: 15
(Literature Review and procedure for data Collection) 15
(3) Proof of Hypothesis(if any) and Analysis:
(a) Data collection of field work 5
(b) Arrangement 5
(c) Analytical technique used 10
(d) Findings 5
25
(4) Style and Presentation:
(a) Language 5
(b) Arrangement 5
(c) Reference/Bibliography 5
114
15
(5) Conclusion and Recommendation:
(a) Relevance and Conclusion to findings 5
(b) Relevance of Deduction to policy 5
10
(6) Oral Defense 25
25
Total for report 100
……………………………………………..……………………
GRADE……………………………………..…………………..
Project Supervisor………………………. . Date…..……………
Head of Department……………………… Date………..………
External Examiner……………………….... Date……….………
115

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CHAPTER ONE

1.1 BACK GROUND OF THE STUDY

computer based technology. Banking System has moved away from a

are carried out manually; in modern day banking transactions are

carried out automatically with the support of ATM (Automated Teller

support the operation of banking. (Adekange1986:23-25). With

modern day computer technology, Banks now have the ability to

delights its customers with superior services and empower a

knowledgeable workforce to create and make decisions.

opportunities and respond to market changes. They (computerized

technology and bringing together the best of teams of talent. They

customers which can be done in an instant through the use of

computer technology. The advent of accounting information system

(AIS) in the Nigerian Banking Sector marked the beginning of a new

dispensation in banking and has revolutionized traditional banking

practices and redefined the entire frontiers of banking as well as the

entire work place (Adekange, 1986: 23-25).

Without computers, issues like linkage, universal banking

concepts, automated teller machine (ATM) and other innovations

would have been unthinkable. The application of computers has

improved banking performance; and computers and other information

technology have generally been identified as an important tool in

which is crucial to the sustainable growth and profitability of the bank

1.2 STATEMENT OF THE PROBLEMS

The banking sector plays a major role in any nation especially a

over the past decade, the more significant changes would be

attributable to the character rather than size.

It is also known that there is the existence of computer fraud in

the banking system; these problems need to be combated. Many

studies have been undertaken relating accounting information system

(AIS) to customer satisfaction and customer perception, relatively few

have turned the searchlight into the organization or attempted to

discover the perception of banking personnel of information

technology or the impact if any or the changes introduced by AIS on

will examine Accounting information system in the performance of

banking sector in Nigeria.

1.3 . RESEARCH QUESTIONS

With the previously stated problems, this research will attempt to

provide answers the following questions:

1. Is there any significant relationship between accounting

information and corporate profitability in the banking sector in

2. Is there a relationship between accounting information and

Earnings per share?

1.4 OBJECTIVES OF THE STUDY

The aim of this research is to explain how Accounting

Information System has improved the performance on First Bank of

objectives are to:

i. Examine the relationship between accounting information

system and profitability in The banking sector in Nigeria.

ii. Determine the relationship between accounting information

system and Earning per share.

1.5 RESEARCH HYPOTHESIS

This purpose is to put the research objectives into testable terms

since for a problem to exist there must be an uncertainty over

the best alternative for satisfactory attainment. The hypothesis

1) HO: There is no significant relationship between accounting

information and Profitability in the banking sector in Nigeria.

information and Earnings per share in the banking sector in

1.6 SIGNIFICANCE OF THE STUDY

performance in retail commercial banking. It also investigates how

frontline banking personnel has been affected by (Accounting

Information System) AIS such as that performance are now with

greater speed and efficiency.