Accounting Project Topics

Internal Control System in a Computerized Accounting Environment

Internal Control System in a Computerized Accounting Environment

Internal Control System in a Computerized Accounting Environment

Chapter One


The objectives of this study are as follows;

  1. To examine the internal control system in a computerized environment and see whether it provides records that will form a reliable base for the preparation of accounts safeguard the assets and make recommendations for further improvement.
  2. To identify the strengths and weaknesses of the internal control system and corrective recommendations where necessary.
  3. To find out the role of computers in the accounting system of an enterprise.




Internal Control assessment now has so much to do with Electronic Data Processing (EDP), Computer Information Systems (CIS) auditing, and Information Systems (IS) auditing which are all now considered an extension of traditional auditing (Lovaas and Wagner, 2012). Internal control is a systems put in place to ‘keep an organisation on course’ towards achieving their set profitable objectives by minimising sudden surprises from errors, fraud, and theft, which may result in risks of assets loss, unreliable accounting information, non-compliance with rules and regulation and similar risks to an acceptably low level, thus, enabling management to deal rapidly and effectively with their associated risk to stay abreast with the more robust economic and business environment in which an entity operates and the shifting competitive advantage (Ratcliffe and Landes, 2009). International Federation of Accountants (IFAC), (2012), also emphasises that ‘one of the best defences against business failure, as well as an important driver of business performance, is having an effective internal control system, which manages risk and enables the creation and preservation of value’. (Ref: Para. 3) of ISA 610 ‘Using the work of internal auditors’ enumerates the objectives of internal audit functions and explains that they vary widely depending on the size and structure of the entity and the requirements of management. According to Ratcliffe et al (2009), internal controls are fundamental value creation activity that leads to the achievement of an organization’s mission by creating value, enhancing, and protecting stakeholder interest and minimising the chances of organizational failures which eventually can and will actually save time and money, and promote the creation and preservation of value. Internal controls, therefore, involve procedures of putting in place the right kind of internal measures that will enable an organization to take advantage of opportunities while observing risks and reducing the threats. Thus, internal controls involve procedural and technical programmes that the auditor must obtain assurance of their efficiency in order to come to appropriate opinion. The technical procedures involved in the audit of financial statements in the private sector and the public sector are very similar. Both adhere to similar auditing standards and undertake similar processes to gain assurance about the adequacy of the underlying controls and systems that support the transactions (ACCA, 2010). (Ref: Para. 11) of ISA 610 states that‘in order for the external auditor to use specific work of the internal auditors, the external auditor shall evaluate and perform audit procedures on that work to determine its adequacy for the external auditor’s purposes’. Byrne (2009) categorises adequate internal controls in a computerised work environment into two broad categories. These are: General Controls and Application Controls.


According to Weber (2011), “Computerized accounting system (CAS) involves the use of computers in processing accounting data into information to facilitate quick decision making through timely preparation of financial reports and financial reporting in this case refers to the way in which financial information is recorded, processed and conveyed to the end users of this information in particular”. Accounting system use to be manual process using paper, books and documents for business information, however accounting in the recent past has been computerised i.e. it involves the use of computers to process the financial transactions. Advances in information communication technology (ICT) have generated substantial changes in the field of business operations in conjunction to software in accounting. It has been proved that a computerized accounting system has several advantages such as speed, accuracy and reliability of financial information compared to a manual accounting system Osmond (2011). Before the advent of ICT in accounting practice, these bookkeeping practices were being executed manually. Nevertheless, nowadays several certified public accountant and data capturing clerks choose to use accounting software to record, report and analyse their organisation’s financial information. This information is collected from transactions and is compiled into financial reports (Weber, 2011).




Research design

The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to internal control system in a computerized accounting environment

Sources of data collection

Data were collected from two main sources namely:

(i)Primary source and

(ii)Secondary source

Primary source:

These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.

Secondary source:

These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.

Population of the study

Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on internal control system in a computerized accounting environment. 200 staff of ministry of finance, Uyo, Akwa Ibom state selected randomly by the researcher as the population of the study.




Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey.  This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.





It is important to ascertain that the objective of this study was on internal control system in a computerized accounting environment. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of internal control system in a computerized accounting environment 


This study was on internal control system in a computerized accounting environment. Three objectives were raised which included: To examine the internal control system in a computerized environment and see whether it provides records that will form reliable base for the preparation of account and safeguard the assets and make recommendations for further improvement, to identify the strength and weakness of internal control system and corrective recommendations where necessary, to find out the role of computer in the accounting system of an enterprise. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of ministry of finance, Uyo, Akwa Ibom state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made chief risk officers, financial officers, statisticians and senior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Based on literature reviews and empirical studies, this paper proposed an adaption model for the computerization of internal controls, as a reference for the establishment of internal controls in an IT system along with the evolution of the IT environment. The adaptation capability of computerized internal controls and the efficacy of internal controls were defined as the dependent variables of internal control efficacy and operating performance in the regression analysis. The results showed that the adaptation capability of computerized internal controls had a significant influence on internal control efficacy and operating performance


It therefore highly recommended now than before that practitioners in the fields of accountancy who have been educated in the key aspects of information technology can bring their experiences to bear in reshaping the design of curricula of accountancy syllabi. Thus, practicing accountants should be made to contribute effectively and efficiently in satisfaction of the increasing ICT requirements of accounting information systems and auditing financial reporting systems in modern organizations.


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