The effect of computerized accounting systems on the quality of financial reports of non governmental organizations in Nairobi county, Kenya

Abstract

The recent development of information technology has had a dramatic influence on accounting information system; computers become smaller, faster, easier to use and less expensive leading to the computerization of accounting system. This study aimed at investigating the effects of computerized accounting systems on financial reports of Non-Governmental Organizations (NGOs) in Nairobi County. The main instrument of data collection was the questionnaires. Quantitative data was analyzed using both descriptive and inferential analysis. Data collected through the open ended questions and analysis of documents was analyzed qualitatively through content analysis. The sample for the study consisted of 100 NGOs operating in Nairobi County; selected through non-proportional quota sampling.The variable factored in the multivariate regression model, Analysis of Variance and Percentages. Data collected was analyzed using descriptive statistics and regression analysis in particular using the Statistical Package for Social Sciences (SPSS) software. The study found out that taking all other independent variables at zero, a unit increase in transparency lead to 0.478 increase in quality of financial reports whereas a unit increase in leadership leads to 0.143 increase in quality of financial reports and a unit increase in computerized accounting systems leads to 0.0915 increase in quality of financial reports of NGOs. This infers that transparency contributes most to quality of financial reports of NGOs followed by leadership then computerized accounting systems. The study recommends that in order to ensure that the NGOs have quality financial reports; they should invest on computerized accounting systems to improve the speed, timeliness, accuracy and relevance of the financial reports of their organizations. The finance management should also follow the legal frameworks that balance the right to disclose against the right of confidentiality. The management should ensure that they have an open recruitment policy for staff based on merit in order to recruit qualified staff to enhance the quality of work in the organizations.