Study: Computerized Accounting and Financial Reporting at Bank Sohar
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This report investigates the impact of computerized accounting systems on financial reporting and fraud prevention within Bank Sohar, a rapidly growing bank in Oman. The study assesses how computerized accounting affects financial reporting, fraud prevention, and risk minimization within the bank, focusing on two branches and utilizing performance data from 2012-2017. It explores the benefits of adopting computerized accounting, including improved financial reporting, enhanced fraud detection, and better risk management, while also addressing potential challenges. The research questions include how computerized accounting aids financial reporting, minimizes fraud and risk, and identifies associated challenges. The rationale highlights the evolution from manual to computerized systems in response to increased fraud and technological advancements. The study provides insights into the advantages of implementing computerized accounting, aiming to help firms understand the benefits and integrate such systems to improve their corporate financial reporting, and also aims to contribute in filling the gap identified through the study of existing literature.

Title: A study on the impact of computerized
Accounting on Financial Reporting and Fraud
Prevention in Bank Sohar
1
Accounting on Financial Reporting and Fraud
Prevention in Bank Sohar
1
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Section 1: Introduction
1.1 Introduction
In the current world, technology plays a significant role in meeting accounting operations of an
entity. First and foremost aim of accounting is to process financial information by preparing
financial statements at the end of the financial year. Keeping track of the financial information
enclosed in a financial statement is considered as an integral business practice of an entity.
Previously, manual accounting system followed by the firm where transactions are recorded with
the help of journals, ledgers. Manual recoding of transactions is complex task for an individual
as this requires more time and energy which makes financial reporting very tedious and
complicated process. Due to the modern touch in a business, the growth of the firm is reflecting
in its sales and in attracting clients towards its firm. Emergence of the business is observed due
by watching growth of the business when their customers get increases with the passage of time.
Technological advancements in the existing market increases the potential of the business entity
as motive of an entity is change according to the technological changes to provide latest output to
its customers. With the technical change in the banking industry the increasing number of
banking companies is using the technology in the form of data base management system and
Enterprise resource planning for maintaining and managing their accounting, inventory and
additional records.
The entire volume of transactions takes places in a bank increases along with the risks associated
with the banking due to sudden transformation of the overall banking sector. The manual process
of accounting used by banking industry will, in turn,, increases all the risks attached with the
system as checking of the transactions in manual require higher attention otherwise it leads to
fraud in the banking industry as data can be manipulated easily by its employees.
All these can be resolved by adopting an appropriate system of accounting in the form of
Enterprise resource planning to get rid of all the confidentiality issues currently facing by an
entity nowadays due to the manual system of transactions recorded in the business. The
inventories available in a firm can be tracked with the help of ERP system to know the position
of the business through tracking reports of the inventories. All these issues incurred in an entity
indicates that there is need for adopting the computerized accounting system in the form of ERP
2
1.1 Introduction
In the current world, technology plays a significant role in meeting accounting operations of an
entity. First and foremost aim of accounting is to process financial information by preparing
financial statements at the end of the financial year. Keeping track of the financial information
enclosed in a financial statement is considered as an integral business practice of an entity.
Previously, manual accounting system followed by the firm where transactions are recorded with
the help of journals, ledgers. Manual recoding of transactions is complex task for an individual
as this requires more time and energy which makes financial reporting very tedious and
complicated process. Due to the modern touch in a business, the growth of the firm is reflecting
in its sales and in attracting clients towards its firm. Emergence of the business is observed due
by watching growth of the business when their customers get increases with the passage of time.
Technological advancements in the existing market increases the potential of the business entity
as motive of an entity is change according to the technological changes to provide latest output to
its customers. With the technical change in the banking industry the increasing number of
banking companies is using the technology in the form of data base management system and
Enterprise resource planning for maintaining and managing their accounting, inventory and
additional records.
The entire volume of transactions takes places in a bank increases along with the risks associated
with the banking due to sudden transformation of the overall banking sector. The manual process
of accounting used by banking industry will, in turn,, increases all the risks attached with the
system as checking of the transactions in manual require higher attention otherwise it leads to
fraud in the banking industry as data can be manipulated easily by its employees.
All these can be resolved by adopting an appropriate system of accounting in the form of
Enterprise resource planning to get rid of all the confidentiality issues currently facing by an
entity nowadays due to the manual system of transactions recorded in the business. The
inventories available in a firm can be tracked with the help of ERP system to know the position
of the business through tracking reports of the inventories. All these issues incurred in an entity
indicates that there is need for adopting the computerized accounting system in the form of ERP
2

to store and process the monetary data in providing speed and higher efficiency. The
development of accounting software packages is due to the increasing risks in a banking sector
and complexity in the managing all the financial records through the manual accounting systems.
Enterprise resource planning is a customized accounting software application that records and
processes all the transactions related to different financial aspects such as accounts payable,
accounts receivable, payroll and trail balance.
According to (Bhasin, 2015), suggest that the reason behind using the customized accounting
software is to stream line the lengthy business processes by automating all the business functions
by applying this software. The computerized Accounting System helps in recording all the
information related to the accounting field as this system is programmed according to the needs
and the expectations of all its users whether internal as well as its external users. ERP system
uses by an entity has a backup feature which will at the same time store the confidential
information feeds into the system in backup as it includes a database-oriented application where
the transaction data is stored well in an organized database (Oliver, 2014). Financial Reporting Is
a system which is a procedure of presenting the financial data judging the performance of an
entity by stating its financial position, operating performance and cash flow of funds (Gupta and
Gill, 2012). This shows the combination of accounting through computer results in the positive
results for the firm reflects in the higher performance of the company aids in preparation of
better financial reporting so that users can make those decisions effectively.
One of the features of Enterprise resource planning is that an entity can keep track on the
existing performance of the company in the terms of inventories, receivables and payables report
of the company depicts the exact picture about the company’s performance. ERP helps in
generating growth reports of the company whose benefits gained by an entity by using this
system. The success of this system inspired various companies as nowadays many companies
replaced the manual-based accounting by providing quick access of information to all the
internal stakeholders of the firm such as accountants, mangers, employees through the
computerized system.
This system helps in producing authentic and reliable financial reports for the management and
its external users. In the international market, it is essential for the existing accounting firm to
deal with severe issues as negligence of an individual will directly affects the overall share of the
3
development of accounting software packages is due to the increasing risks in a banking sector
and complexity in the managing all the financial records through the manual accounting systems.
Enterprise resource planning is a customized accounting software application that records and
processes all the transactions related to different financial aspects such as accounts payable,
accounts receivable, payroll and trail balance.
According to (Bhasin, 2015), suggest that the reason behind using the customized accounting
software is to stream line the lengthy business processes by automating all the business functions
by applying this software. The computerized Accounting System helps in recording all the
information related to the accounting field as this system is programmed according to the needs
and the expectations of all its users whether internal as well as its external users. ERP system
uses by an entity has a backup feature which will at the same time store the confidential
information feeds into the system in backup as it includes a database-oriented application where
the transaction data is stored well in an organized database (Oliver, 2014). Financial Reporting Is
a system which is a procedure of presenting the financial data judging the performance of an
entity by stating its financial position, operating performance and cash flow of funds (Gupta and
Gill, 2012). This shows the combination of accounting through computer results in the positive
results for the firm reflects in the higher performance of the company aids in preparation of
better financial reporting so that users can make those decisions effectively.
One of the features of Enterprise resource planning is that an entity can keep track on the
existing performance of the company in the terms of inventories, receivables and payables report
of the company depicts the exact picture about the company’s performance. ERP helps in
generating growth reports of the company whose benefits gained by an entity by using this
system. The success of this system inspired various companies as nowadays many companies
replaced the manual-based accounting by providing quick access of information to all the
internal stakeholders of the firm such as accountants, mangers, employees through the
computerized system.
This system helps in producing authentic and reliable financial reports for the management and
its external users. In the international market, it is essential for the existing accounting firm to
deal with severe issues as negligence of an individual will directly affects the overall share of the
3
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company. This will emphasizes in ensuring efficiency, accuracy, speed of daily entry of
transactions and better financial reporting.
Background of the Bank Sohar: Bank Sohar is the one of the fastest growing banks in
Sultanate of Oman. Bank Sohar provides commercial, investment and Islamic banking services
within Oman. It operates through whole sale banking, retail banking, government and project
finance as well as investment and treasury finance segments. Bank Sohar also recently launched
their net banking services along with SMS Banking, mobile banking services and remittance and
fund transfer’s services. Their aim is to help small and medium enterprises by providing the loan
facilities for raising capital and being financial advisor to these enterprises. They have
implemented new technologies to create a sustainable organization. By investing in people and
training staff regularly Bank Sohar aims to spread knowledge with advanced technology and add
value to their business.
1.2 Objectives
ï‚· To assess the impact of Computerized Accounting System on Financial Reporting system
of Bank Sohar.
ï‚· To evaluate the effect of Computerized Accounting System on fraud prevention within
Bank Sohar.
ï‚· To evaluate the impact of Computerized Accounting system on the risk minimization
within Bank Sohar
ï‚· To address any possible challenges associated with computerized Accounting System in
Bank Sohar.
1.3 Research Question
 How does Computerized Accounting System aid in financial reporting within Bank
Sohar?
 Does the Computerized Accounting System help in fraud minimization or prevention in
Bank Sohar?
 How the does Computerized Accounting System aid in risk minimization within Bank
Sohar?
 What are the challenges associated with the computerized Accounting system?
4
transactions and better financial reporting.
Background of the Bank Sohar: Bank Sohar is the one of the fastest growing banks in
Sultanate of Oman. Bank Sohar provides commercial, investment and Islamic banking services
within Oman. It operates through whole sale banking, retail banking, government and project
finance as well as investment and treasury finance segments. Bank Sohar also recently launched
their net banking services along with SMS Banking, mobile banking services and remittance and
fund transfer’s services. Their aim is to help small and medium enterprises by providing the loan
facilities for raising capital and being financial advisor to these enterprises. They have
implemented new technologies to create a sustainable organization. By investing in people and
training staff regularly Bank Sohar aims to spread knowledge with advanced technology and add
value to their business.
1.2 Objectives
ï‚· To assess the impact of Computerized Accounting System on Financial Reporting system
of Bank Sohar.
ï‚· To evaluate the effect of Computerized Accounting System on fraud prevention within
Bank Sohar.
ï‚· To evaluate the impact of Computerized Accounting system on the risk minimization
within Bank Sohar
ï‚· To address any possible challenges associated with computerized Accounting System in
Bank Sohar.
1.3 Research Question
 How does Computerized Accounting System aid in financial reporting within Bank
Sohar?
 Does the Computerized Accounting System help in fraud minimization or prevention in
Bank Sohar?
 How the does Computerized Accounting System aid in risk minimization within Bank
Sohar?
 What are the challenges associated with the computerized Accounting system?
4
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1.4 Rationale:
Fraud is one of the most serious economic crises impacting the banking industry from a long
time. To combat the increasing fraud and the increasing role of information technology in
enhancing the banking operations, the manual banking process have evolved into the
computerized accounting systems. This is the reason why the researcher intends to conduct this
study to highlight the impact of computerized accounting system in Bank Sohar and thereby
contribute in filling in the gap as identified through the study of the existing literature. The
researcher further intends to illustrate the benefits of adopting the computerized accounting
within Bank Sohar and its contribution in enhancing the financial reporting, fraud and risk
minimization and improving the bank’s performance. Additionally, the factors which prevent
management to adapt to the new computerized accounting system will always be looked upon.
With increasing complexity of transactions and emergence of new technology, the researcher
intends to determine how well Bank Sohar is using information technology to improve its
financial reporting.
1.5: Significance of study
The significance of this study is to provide necessary information on the effect of Computerized
Accounting System in financial reporting and fraud prevention within Bank Sohar. The study
will also explore the greater influence and effects of Computerized Accounting System to
employees and users of Bank Sohar. Accordingly, also the factors will be considered which force
a company to adopt Computerized Accounting System in better their Corporate Financial
Reporting. This Research will be useful for those firms who have not yet adopted Computerized
Accounting System to understand the benefits and adopt it within their organization and use it to
their own advantage.
1.6: Scope of study
The Research focuses on evaluating the effect of Computerized Accounting System in 2
branches of Bank Sohar. Ruwi and Qurum branch will be considered for the Research. The study
will be based on last 5 years performance (2012-2017) in determining the changes takes places in
the financial performance of Sohar Bank to make changes in the Computerized accounting
system to overcome the financial issues.
5
Fraud is one of the most serious economic crises impacting the banking industry from a long
time. To combat the increasing fraud and the increasing role of information technology in
enhancing the banking operations, the manual banking process have evolved into the
computerized accounting systems. This is the reason why the researcher intends to conduct this
study to highlight the impact of computerized accounting system in Bank Sohar and thereby
contribute in filling in the gap as identified through the study of the existing literature. The
researcher further intends to illustrate the benefits of adopting the computerized accounting
within Bank Sohar and its contribution in enhancing the financial reporting, fraud and risk
minimization and improving the bank’s performance. Additionally, the factors which prevent
management to adapt to the new computerized accounting system will always be looked upon.
With increasing complexity of transactions and emergence of new technology, the researcher
intends to determine how well Bank Sohar is using information technology to improve its
financial reporting.
1.5: Significance of study
The significance of this study is to provide necessary information on the effect of Computerized
Accounting System in financial reporting and fraud prevention within Bank Sohar. The study
will also explore the greater influence and effects of Computerized Accounting System to
employees and users of Bank Sohar. Accordingly, also the factors will be considered which force
a company to adopt Computerized Accounting System in better their Corporate Financial
Reporting. This Research will be useful for those firms who have not yet adopted Computerized
Accounting System to understand the benefits and adopt it within their organization and use it to
their own advantage.
1.6: Scope of study
The Research focuses on evaluating the effect of Computerized Accounting System in 2
branches of Bank Sohar. Ruwi and Qurum branch will be considered for the Research. The study
will be based on last 5 years performance (2012-2017) in determining the changes takes places in
the financial performance of Sohar Bank to make changes in the Computerized accounting
system to overcome the financial issues.
5

Section 2: Literature Review
2.1 Introduction
A changes takes place in the technology has captured the interest of business towards this as this
has transformed the accounting systems. In the past people used to store their data physically
with the help of paper back files where lots of risk is there for the confidentiality as the data
stored in files can be manipulated by anyone. But this problem has overcome with the
introduction of ERP system of accounting which additionally included the cloud computing
system. The system of cloud computing is useful in storing large volumes of data and
transactions easier to process and manage and thus produce timely and accurate reports. Users of
the business who takes decisions in an entity such as users, owners, managers, investors can
access accounting information through this system which saves their time and energy which will
utilized in other important matters. Amveko (2011) stated that the field of Accounting is
segregated into aspects such as manual accounting and computerized accounting.
It is a computer based system which collaborate all the accounting principles and practical
accounting concepts to keeping all the information for the purpose of recording, processing,
analyzing. The generated information will further help in making important financial decisions in
assessing the overall performance of the company. (Fleming and Hermanson 2016). (Soudani,
2013), observed that accounting system that accomplishes the needs of business user whether an
entity or a sole proprietor who intends to record all the expenses and income to know the amount
of profit generated by them in a particular period. This will justify the purpose of operating its
business which is fully surrounded by competition. It is a system in which users can input
information and process that raw information to generate financial reports. The difficulties of
keeping manual records will get resolved by adopting automated system which saves the time of
an individual in creating manual paper files which is fully unsecured method of recording of the
transactions. The opinions of both authors is different but they discuss on a similar topic of
explaining the importance of Computerized accounting system in meeting the earlier difficulties
faces b an entity using the manual recording system. ERP is used for the purpose of recording,
analyzing and producing better financial reports and discussing the usefulness of maintaining
6
2.1 Introduction
A changes takes place in the technology has captured the interest of business towards this as this
has transformed the accounting systems. In the past people used to store their data physically
with the help of paper back files where lots of risk is there for the confidentiality as the data
stored in files can be manipulated by anyone. But this problem has overcome with the
introduction of ERP system of accounting which additionally included the cloud computing
system. The system of cloud computing is useful in storing large volumes of data and
transactions easier to process and manage and thus produce timely and accurate reports. Users of
the business who takes decisions in an entity such as users, owners, managers, investors can
access accounting information through this system which saves their time and energy which will
utilized in other important matters. Amveko (2011) stated that the field of Accounting is
segregated into aspects such as manual accounting and computerized accounting.
It is a computer based system which collaborate all the accounting principles and practical
accounting concepts to keeping all the information for the purpose of recording, processing,
analyzing. The generated information will further help in making important financial decisions in
assessing the overall performance of the company. (Fleming and Hermanson 2016). (Soudani,
2013), observed that accounting system that accomplishes the needs of business user whether an
entity or a sole proprietor who intends to record all the expenses and income to know the amount
of profit generated by them in a particular period. This will justify the purpose of operating its
business which is fully surrounded by competition. It is a system in which users can input
information and process that raw information to generate financial reports. The difficulties of
keeping manual records will get resolved by adopting automated system which saves the time of
an individual in creating manual paper files which is fully unsecured method of recording of the
transactions. The opinions of both authors is different but they discuss on a similar topic of
explaining the importance of Computerized accounting system in meeting the earlier difficulties
faces b an entity using the manual recording system. ERP is used for the purpose of recording,
analyzing and producing better financial reports and discussing the usefulness of maintaining
6
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digital transactions stored and input all data on computers instead of relying on manual book
keeping ways.
Acher and Ryan (2016) highlights the unique feature of the modernized accounting system in the
form of ERP is that it quickly generate different kinds of accounting reports used by a business
management for their budget and variance analysis. In preparing budgets and the variance
analysis an entity uses standard costing approach for the data processing which produces
accurate and faster data to accomplish the managers needs to submit the same within a stipulated
time for taking strong business decisions.
Similarly, Mohapatra, & Popova, (2013) stated that with the help of custom built system of
accounting the speed of the same has increases in generating the final output in a shorter span of
time which helps in retrieving the relevant balance sheets, income statements and passing
automatic accounting entries. The mechanism of this system will in turn, helps in preparing
financial reports by considering the existing financial position of the company to present its
image in front of all its buyers appropriately. Due to increasing competitions in the market, an
entity need to keep stress on its current business polices by upgrading its business functions
according to the expectations of an enterprise to provide quality of services to satisfy all their
users. In creating its place in the market, the increasing speed of the accounting system it allows
senior managers in searching problematic areas in the corporate environment and also act as a
arbitrator in resolving all the issues of the workplace. The managers can thus make better
investment decisions to improve its liquidity position by knowing the reason behind the decline
in its current position as by knowing the reason they can take decisions appropriately (Cheng
2012).
Villiani and Rosa, (2016), investigated that improvement of the business performance has
noticed by implementing the accounting system in an entity. Performance of the organization
was improved due to highly integrated application which transformed the business processes due
to the features like inventory control, reporting process. It helps the employees in providing
information on managing the same in a better manner to pay off all it’s their debtors on time and
ensure timely payment to their suppliers and customers. This is effective approach in building
effective communication in making decisions for the betterment of the business.
7
keeping ways.
Acher and Ryan (2016) highlights the unique feature of the modernized accounting system in the
form of ERP is that it quickly generate different kinds of accounting reports used by a business
management for their budget and variance analysis. In preparing budgets and the variance
analysis an entity uses standard costing approach for the data processing which produces
accurate and faster data to accomplish the managers needs to submit the same within a stipulated
time for taking strong business decisions.
Similarly, Mohapatra, & Popova, (2013) stated that with the help of custom built system of
accounting the speed of the same has increases in generating the final output in a shorter span of
time which helps in retrieving the relevant balance sheets, income statements and passing
automatic accounting entries. The mechanism of this system will in turn, helps in preparing
financial reports by considering the existing financial position of the company to present its
image in front of all its buyers appropriately. Due to increasing competitions in the market, an
entity need to keep stress on its current business polices by upgrading its business functions
according to the expectations of an enterprise to provide quality of services to satisfy all their
users. In creating its place in the market, the increasing speed of the accounting system it allows
senior managers in searching problematic areas in the corporate environment and also act as a
arbitrator in resolving all the issues of the workplace. The managers can thus make better
investment decisions to improve its liquidity position by knowing the reason behind the decline
in its current position as by knowing the reason they can take decisions appropriately (Cheng
2012).
Villiani and Rosa, (2016), investigated that improvement of the business performance has
noticed by implementing the accounting system in an entity. Performance of the organization
was improved due to highly integrated application which transformed the business processes due
to the features like inventory control, reporting process. It helps the employees in providing
information on managing the same in a better manner to pay off all it’s their debtors on time and
ensure timely payment to their suppliers and customers. This is effective approach in building
effective communication in making decisions for the betterment of the business.
7
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(Gunawardana,2015) notices the dissatisfaction of managers as they are able to meet the
international financial reporting standards such as profit and loss statements, income statements
and balance sheets without using Computerized Accounting System. This aids in auditing
examination of the company in getting full access of the required information such as codes of
cheque, transactions and payments which helps to provided on time in improving the
documentation procedure for better auditing.
(Jing, 2013) stated the disadvantages of using the modernized version of computerized
accounting system as it is essential to know both the pros and cons of the system to improve the
overall company’s performance. Loopholes of the accounting software will, in turn, affect the
performance of an entity as a computer virus spreads through the accounting software will spoils
the stored information on the desktop of a user. This is the risks involved in using this system
requires skepticism of an individual before any confidential information on the server without
taking the back of the same. The adverse affect of such risk can be loss of valuable information
such as previous accounting reports, information pertaining loans etc.
The model of accounting system shows a different component which is required in developing
efficient system of financial reporting in a business. It starts with the input process, where the
data is collected and processed by information system such as the relevant sales order or
purchase order. Collected data in the initial stage is further processed using reliable information
and organized in a systematic manner. Then the data is stored in the central repository server
where the permanent data can be maintained over extended time ( Akesinro, Abayomi 2016).In
the final stage, the output is produced with the help of system for generating accounting reports.
After execution of the system, the feedback of all the users who uses this system on the output
and the quality on the reports generated. This feedback tends to serve as a source of control
measure in the information system.
Indeed, Kranacher and Riley (2016) have argued collected information from different sources are
prioritized according to the different groups created by an entity to present the same in front of
its clients. Manual accounting system reduces the final report by taking lots of time which
decreases its reliability as this will not provide real time benefit to its external users by providing
the final solutions within a week as this takes a long span of 3 months by making use of
computerized accounting ensures the reports are generated efficiently and effectively with better
8
international financial reporting standards such as profit and loss statements, income statements
and balance sheets without using Computerized Accounting System. This aids in auditing
examination of the company in getting full access of the required information such as codes of
cheque, transactions and payments which helps to provided on time in improving the
documentation procedure for better auditing.
(Jing, 2013) stated the disadvantages of using the modernized version of computerized
accounting system as it is essential to know both the pros and cons of the system to improve the
overall company’s performance. Loopholes of the accounting software will, in turn, affect the
performance of an entity as a computer virus spreads through the accounting software will spoils
the stored information on the desktop of a user. This is the risks involved in using this system
requires skepticism of an individual before any confidential information on the server without
taking the back of the same. The adverse affect of such risk can be loss of valuable information
such as previous accounting reports, information pertaining loans etc.
The model of accounting system shows a different component which is required in developing
efficient system of financial reporting in a business. It starts with the input process, where the
data is collected and processed by information system such as the relevant sales order or
purchase order. Collected data in the initial stage is further processed using reliable information
and organized in a systematic manner. Then the data is stored in the central repository server
where the permanent data can be maintained over extended time ( Akesinro, Abayomi 2016).In
the final stage, the output is produced with the help of system for generating accounting reports.
After execution of the system, the feedback of all the users who uses this system on the output
and the quality on the reports generated. This feedback tends to serve as a source of control
measure in the information system.
Indeed, Kranacher and Riley (2016) have argued collected information from different sources are
prioritized according to the different groups created by an entity to present the same in front of
its clients. Manual accounting system reduces the final report by taking lots of time which
decreases its reliability as this will not provide real time benefit to its external users by providing
the final solutions within a week as this takes a long span of 3 months by making use of
computerized accounting ensures the reports are generated efficiently and effectively with better
8

information to be able to manage the resources. Companies that adopt computerized accounting
are able to obtain a competitive edge as they are able to better manage their resources.
2.2 Components of Computerized Accounting System
For ensuring the effectiveness of the system it requires to implement proper Accounting software
in an entity which fulfills all the requirements of the business in a lesser period of time. This is
based on the database management approach that allows the firm to prepare, record and store the
transactions related to accounts payable, accounts receivables, Payroll, inventory. Budgeting cost
volume profit analysis and general ledger (Mahesh (2015).
The following are the components of computerized accounting system which are mention as
given below:
1) Preparation of accounting documents- This aids in the preparation of Accounting documents
like cash memos, bills, invoices and accounting vouchers to beautifully present the financial
report for the sake of an enterprise (Ahmad 2013). Computerized accounting system in the form
of ERP have in built featuring of providing templates which ensures the accuracy of the
documents are generated through this system.
2) Recording of Transactions- Daily routine transactions of business are recorded with the help
of accounting system which ensures a uniqueness of the same as it generates unique transaction
ID and account number for all the recorded input into the system. This is act as a way of
controlling the transactions by keeping watch ion the reliability of the information feeds in the
system where unique code for different groups of accounts transactions in general, accounts
payable and accounts receivable ensures everything is recorded and simplified with greater ease.
(Jing, 2013) argued that computerized packages helps in minimizing the arithmetical errors of
feeding wrong transactions in wrong account, wrong figure human recording different
transactions in reports and lead to better financial reporting. Thus, recording of transactions is
made simple with the help of computerized accounting system.
3) Preparation of trail balance and financial statements- After the preparation of journal entries,
the data is transferred into the ledger accounts automatically by the computer which leads to
spontaneous generation of results. The convenient preparations of trial balances are prepared by
9
are able to obtain a competitive edge as they are able to better manage their resources.
2.2 Components of Computerized Accounting System
For ensuring the effectiveness of the system it requires to implement proper Accounting software
in an entity which fulfills all the requirements of the business in a lesser period of time. This is
based on the database management approach that allows the firm to prepare, record and store the
transactions related to accounts payable, accounts receivables, Payroll, inventory. Budgeting cost
volume profit analysis and general ledger (Mahesh (2015).
The following are the components of computerized accounting system which are mention as
given below:
1) Preparation of accounting documents- This aids in the preparation of Accounting documents
like cash memos, bills, invoices and accounting vouchers to beautifully present the financial
report for the sake of an enterprise (Ahmad 2013). Computerized accounting system in the form
of ERP have in built featuring of providing templates which ensures the accuracy of the
documents are generated through this system.
2) Recording of Transactions- Daily routine transactions of business are recorded with the help
of accounting system which ensures a uniqueness of the same as it generates unique transaction
ID and account number for all the recorded input into the system. This is act as a way of
controlling the transactions by keeping watch ion the reliability of the information feeds in the
system where unique code for different groups of accounts transactions in general, accounts
payable and accounts receivable ensures everything is recorded and simplified with greater ease.
(Jing, 2013) argued that computerized packages helps in minimizing the arithmetical errors of
feeding wrong transactions in wrong account, wrong figure human recording different
transactions in reports and lead to better financial reporting. Thus, recording of transactions is
made simple with the help of computerized accounting system.
3) Preparation of trail balance and financial statements- After the preparation of journal entries,
the data is transferred into the ledger accounts automatically by the computer which leads to
spontaneous generation of results. The convenient preparations of trial balances are prepared by
9
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the computer with the appropriate debit and credit entries leads to greater accuracy of records
(Unnikrishnan, 2012). The computer also is programmed to prepare the financial statements and
statement of income statements and ensure better financial reporting to management and users.
2.3 Importance of computerized Accounting
Use of computers reflects the modernized version of the accounting system in which the mode
has changed from manual recording of the business transactions to the automating feeding of the
overall information of an entity. It is a process which consists of recording, classifying and
summarizing the monetary data has become more accurate and quicker with the computerized
accounting system. It focuses on the four basic principles of accounting helpful recording
transactions such as historical cost principle, revenue recognition principle, matching and full
disclosure embedded within the computerized system. This principle helps in ensuring the
conceptual accounting guidelines for system followed by Sohar Bank. Feature of double entry of
accounting is that where every transaction has dual effect in the financial statements as the
transactions posted in the ledger is based on this particular system of accounting.
Acher and Ryan (2016) suggest that the out of the two system of accounting cash basis of
accounting is a system where revenue is recognized and recorded only as when the cash is
received. The cash basis of accounting methods is also used in the Computerized accounting
system where transactions is only consider at the time of the receipt of the same rather than
considering the transaction gets due in a business. As accrual basis of accounting is used in the
book keeping system where transaction is recorded when it gets due.
John (2010) says that in accrual cost accounting system; costs are compared against revenues to
ensure the timely recognition of the same. There are various advantages of the automatic
accounting systems are mention as below:
1) Time and Cost Efficient- Enterprise resource planning is a type of computerized accounting
system saves time and money for organizations by helping them prepare better financial reports
and keep the business organized. The use of such an accounting system will helps in feeding the
raw information into the system in a convenient manner to generate the final outcomes in shorter
span of time. Time plays an integral role in decreasing market competition as an entity will
provide services to its clients in lesser time than its rivals as this system helps in reducing staff
10
(Unnikrishnan, 2012). The computer also is programmed to prepare the financial statements and
statement of income statements and ensure better financial reporting to management and users.
2.3 Importance of computerized Accounting
Use of computers reflects the modernized version of the accounting system in which the mode
has changed from manual recording of the business transactions to the automating feeding of the
overall information of an entity. It is a process which consists of recording, classifying and
summarizing the monetary data has become more accurate and quicker with the computerized
accounting system. It focuses on the four basic principles of accounting helpful recording
transactions such as historical cost principle, revenue recognition principle, matching and full
disclosure embedded within the computerized system. This principle helps in ensuring the
conceptual accounting guidelines for system followed by Sohar Bank. Feature of double entry of
accounting is that where every transaction has dual effect in the financial statements as the
transactions posted in the ledger is based on this particular system of accounting.
Acher and Ryan (2016) suggest that the out of the two system of accounting cash basis of
accounting is a system where revenue is recognized and recorded only as when the cash is
received. The cash basis of accounting methods is also used in the Computerized accounting
system where transactions is only consider at the time of the receipt of the same rather than
considering the transaction gets due in a business. As accrual basis of accounting is used in the
book keeping system where transaction is recorded when it gets due.
John (2010) says that in accrual cost accounting system; costs are compared against revenues to
ensure the timely recognition of the same. There are various advantages of the automatic
accounting systems are mention as below:
1) Time and Cost Efficient- Enterprise resource planning is a type of computerized accounting
system saves time and money for organizations by helping them prepare better financial reports
and keep the business organized. The use of such an accounting system will helps in feeding the
raw information into the system in a convenient manner to generate the final outcomes in shorter
span of time. Time plays an integral role in decreasing market competition as an entity will
provide services to its clients in lesser time than its rivals as this system helps in reducing staff
10
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time and prepares accounting reports on time while also reducing audit expenses. It also helps in
maintaining the records up to data and accurate.
2) Accuracy and systematic organization-It enables the business to stay organized and be
accurate by meeting difficulties of the banking sector in order to curb the existing competition by
helping employees in inputting the information easily. Employees can look up the financial
information whenever needed and it make less room for errors as the accounting entries for each
transactions are needed each time rather than that of a manual system. Thus, better accuracy is
achieved as the accounting records are automatically updated so account balances are up to date.
3) Storage and Speed-Accounting system is vital for business as it helps the organizations to
store precious information as and when they are entered. Bank sohar can take backup of all its
banking information as they contain the sensitive information of all its accountholders f different
kinds of investment such as savings bank account, current accounting, fixed deposit, recurrent
deposit and most importantly details of the Central bank. The computerized accounting system
provides the ability to see the real time financial statements and positions which increases the
speed when compared to manual accounting systems used earlier.
4) Distribution- The system of computerized accounting allows banking firm to segmenting the
overall financial statements by creating groups to prioritize between the overall monetary data in
a spontaneous manner. Financial statements are generated directly from the system and
distributed to external users and internal staff to those needing such information (Villiani and
Rose 2016).It makes is very convenient as the reports are produced and can be monitored better
which can help in better performance for business. For example, if there are outstanding
liabilities or creditors due to be paid, the trail balance and profit and loss accounting will provide
information and help in better controlling such activities on time. Different kinds of frauds can
be identified with the help of this system which helps in minimizing due to effect of
computerized accounting system which enables better accuracy of financial reports to be
presented to meet the relevance and faithful representation of the financial statements.
2.4 Functions of Computerized Accounting System
Before implementing any accounting software package, firstly an entity will search for the
business function and its various set of contracts from various participants, employees,
11
maintaining the records up to data and accurate.
2) Accuracy and systematic organization-It enables the business to stay organized and be
accurate by meeting difficulties of the banking sector in order to curb the existing competition by
helping employees in inputting the information easily. Employees can look up the financial
information whenever needed and it make less room for errors as the accounting entries for each
transactions are needed each time rather than that of a manual system. Thus, better accuracy is
achieved as the accounting records are automatically updated so account balances are up to date.
3) Storage and Speed-Accounting system is vital for business as it helps the organizations to
store precious information as and when they are entered. Bank sohar can take backup of all its
banking information as they contain the sensitive information of all its accountholders f different
kinds of investment such as savings bank account, current accounting, fixed deposit, recurrent
deposit and most importantly details of the Central bank. The computerized accounting system
provides the ability to see the real time financial statements and positions which increases the
speed when compared to manual accounting systems used earlier.
4) Distribution- The system of computerized accounting allows banking firm to segmenting the
overall financial statements by creating groups to prioritize between the overall monetary data in
a spontaneous manner. Financial statements are generated directly from the system and
distributed to external users and internal staff to those needing such information (Villiani and
Rose 2016).It makes is very convenient as the reports are produced and can be monitored better
which can help in better performance for business. For example, if there are outstanding
liabilities or creditors due to be paid, the trail balance and profit and loss accounting will provide
information and help in better controlling such activities on time. Different kinds of frauds can
be identified with the help of this system which helps in minimizing due to effect of
computerized accounting system which enables better accuracy of financial reports to be
presented to meet the relevance and faithful representation of the financial statements.
2.4 Functions of Computerized Accounting System
Before implementing any accounting software package, firstly an entity will search for the
business function and its various set of contracts from various participants, employees,
11

shareholders, customers, creditors, auditors. It is essential that each party in the contract agrees to
contribute resources. For example, employees and managers contribute skills, shareholders and
creditors contribute capital, suppliers provide raw materials, customers provide cash and auditors
check the financial statements and internal audit system. (Cheng, 2012) But for organization to
succeed, adopting technology such as advanced Computerized Accounting system ensures that
necessary information is assembled, implemented, enforced and modified.
First and foremost function of the customized accounting software is that it devises a system for
measuring the contributions made by each agent. Another function this computerized accounting
system is that is measures, records and controls the outflow of resources from the organization.
Payroll and other benefits for employees can be easily monitored using computerized accounting
system, accounts payable and tax accounts can also be monitored easily to know the outflow of
resources. The third function of the Computerized accounting system is that it compares the data
of resource inflow and outflow and aids the preparation of reports according to accounting
policies (Porter, 2012).
Comparison reports is generated through enterprise resource planning where comparative reports
to track the inflows and outflows of resources of very individual transactions and entries which
helps to evaluate the financial statements in a proper manner. Finally, the accounting system
helps assemble and maintain the financial statements for various users in labor market such as
labors managers, customers, investors etc. All the people participating within the firm get to
know their best interests and prepare budget plans, a business plan which helps to assess the
costs and benefits and reduces the chances of breakdown by providing minimal information with
primary disclosure (Norton, 2012).
2.5 Impact of Computerized Accounting System on Financial Reporting
This literature is focuses on showing the impact of the accounting system on the monetary as
well as non-monetary performance of an entity. Financial reporting is a process of presenting
financial information or data about company's financial position, operating performance and cash
flow of funds during the accounting period (Gill, 2012). Standard set of the financial statements
such as statement of financial position, statement of comprehensive income, statement of cash
flows and also to provide useful information to users for making decisions. The implication of
12
contribute resources. For example, employees and managers contribute skills, shareholders and
creditors contribute capital, suppliers provide raw materials, customers provide cash and auditors
check the financial statements and internal audit system. (Cheng, 2012) But for organization to
succeed, adopting technology such as advanced Computerized Accounting system ensures that
necessary information is assembled, implemented, enforced and modified.
First and foremost function of the customized accounting software is that it devises a system for
measuring the contributions made by each agent. Another function this computerized accounting
system is that is measures, records and controls the outflow of resources from the organization.
Payroll and other benefits for employees can be easily monitored using computerized accounting
system, accounts payable and tax accounts can also be monitored easily to know the outflow of
resources. The third function of the Computerized accounting system is that it compares the data
of resource inflow and outflow and aids the preparation of reports according to accounting
policies (Porter, 2012).
Comparison reports is generated through enterprise resource planning where comparative reports
to track the inflows and outflows of resources of very individual transactions and entries which
helps to evaluate the financial statements in a proper manner. Finally, the accounting system
helps assemble and maintain the financial statements for various users in labor market such as
labors managers, customers, investors etc. All the people participating within the firm get to
know their best interests and prepare budget plans, a business plan which helps to assess the
costs and benefits and reduces the chances of breakdown by providing minimal information with
primary disclosure (Norton, 2012).
2.5 Impact of Computerized Accounting System on Financial Reporting
This literature is focuses on showing the impact of the accounting system on the monetary as
well as non-monetary performance of an entity. Financial reporting is a process of presenting
financial information or data about company's financial position, operating performance and cash
flow of funds during the accounting period (Gill, 2012). Standard set of the financial statements
such as statement of financial position, statement of comprehensive income, statement of cash
flows and also to provide useful information to users for making decisions. The implication of
12
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