EVALUATION OF THE IMPACT OF COMPUTERIZED ACCOUNTING AND AUDITING SYSTEM IN PUBLIC SECTOR

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study

The public sector in Nigeria encompasses all government entities at federal, state, and local government levels, including ministries, departments, agencies (MDAs), parastatals, and government-owned enterprises. The public sector is responsible for delivering essential services to citizens, including education, healthcare, infrastructure, security, and social welfare. Effective financial management in the public sector is critical for ensuring that public funds are collected, allocated, and spent efficiently, effectively, and transparently. The primary objectives of public sector financial management include: (a) ensuring compliance with budgets and appropriations, (b) safeguarding public assets, (c) producing accurate and timely financial reports, (d) preventing and detecting fraud and corruption, (e) facilitating external audit and legislative oversight, and (f) promoting accountability to citizens (Premchand, 2019; Mellett, 2019).

Traditional manual accounting and auditing systems in the public sector have been characterized by several limitations: (a) slow and labor-intensive processes, (b) high risk of human error (transposition mistakes, arithmetic errors), (c) delayed financial reporting (often months or years after the end of the fiscal year), (d) poor record-keeping (missing vouchers, incomplete ledgers), (e) weak internal controls (inadequate segregation of duties, lack of audit trails), (f) susceptibility to fraud and corruption (ghost workers, inflated invoices, phantom contracts), (g) difficulty in consolidating financial data across multiple MDAs, and (h) limited analytical capabilities for decision-making. These limitations have contributed to persistent problems in public financial management in Nigeria, including budget overruns, unauthorized expenditures, misappropriation of funds, and poor service delivery (Ogbeifun, 2019; Oyo-Ita, 2019).

Computerized accounting and auditing systems refer to the use of information technology (IT) to automate financial recording, processing, reporting, and audit functions. A computerized accounting system (CAS) includes software applications, databases, networks, and hardware that capture, process, store, and report financial transactions electronically. Computerized auditing systems include audit software (e.g., Computer-Assisted Audit Tools – CAATs), data analytics tools, continuous auditing systems, and audit management software. The key features of computerized accounting systems include: (a) automated posting of transactions to ledgers, (b) real-time updating of account balances, (c) integrated financial reporting (instant generation of financial statements), (d) built-in internal controls (access controls, approval workflows, audit trails), (e) data validation and error checking, (f) electronic document management (invoices, receipts, vouchers), (g) bank reconciliation automation, and (h) budget vs. actual variance analysis (Romney and Steinbart, 2018; Hall, 2019).

The adoption of computerized accounting and auditing systems in the Nigerian public sector has been a key component of public financial management (PFM) reforms. Major initiatives include:

Government Integrated Financial Management Information System (GIFMIS) : GIFMIS is an integrated computerised system for budgeting, accounting, financial reporting, and cash management for the federal government. GIFMIS was introduced in 2011 to replace fragmented, manual systems. The system integrates budget preparation, budget execution, procurement, accounting, and reporting. GIFMIS is designed to: (a) improve the timeliness and accuracy of financial information, (b) strengthen internal controls (budget limits, approval workflows, audit trails), (c) facilitate compliance with financial regulations, (d) enable real-time monitoring of budget execution, (e) support IPSAS-compliant financial reporting, and (f) reduce opportunities for fraud and corruption. GIFMIS is operational at the federal level and has been extended to some state governments (OAGF, 2018; Adebayo and Oyedokun, 2019).

Treasury Single Account (TSA) : The TSA is a unified bank account (or set of linked accounts) maintained at the Central Bank of Nigeria (CBN) that consolidates all government revenues and enables centralized control over government cash. TSA eliminates multiple bank accounts held by MDAs, reducing opportunities for unauthorized spending and improving cash management. TSA is integrated with GIFMIS to provide real-time visibility of government cash balances (CBN, 2020; Okafor and Udeh, 2020).

Integrated Payroll and Personnel Information System (IPPIS) : IPPIS is a computerised system for personnel and payroll management. IPPIS eliminates ghost workers (fictitious employees) by verifying employee identities through biometric data (fingerprint and photograph). IPPIS also automates salary payments, deductions, and remittances (taxes, pensions). The system has reduced payroll fraud and improved the accuracy of personnel expenditure reporting (OAGF, 2018; Adebayo and Oyedokun, 2020).

International Public Sector Accounting Standards (IPSAS) : Nigeria adopted IPSAS (accrual basis) in 2012. Computerised accounting systems (GIFMIS) are essential for IPSAS compliance because accrual accounting requires more complex processing than cash accounting (e.g., recording of assets, liabilities, depreciation, provisions). GIFMIS has been configured to support IPSAS-compliant financial reporting (IPSASB, 2021).

Computer-Assisted Audit Tools (CAATs) : The Office of the Auditor-General of the Federation (OAuGF) and state Auditor-Generals have adopted CAATs to improve the efficiency and effectiveness of public sector audits. CAATs enable auditors to: (a) analyse 100% of transactions (rather than sampling), (b) detect anomalies and patterns indicative of fraud, (c) test controls and identify weaknesses, (d) generate exception reports, (e) extract and analyse data from client systems (e.g., GIFMIS), and (f) automate audit documentation and reporting (Oyo-Ita, 2019; INTOSAI, 2020).

The expected benefits of computerised accounting and auditing systems in the public sector are substantial. For financial management, computerised systems are expected to: (a) improve the accuracy of financial records (reducing errors), (b) accelerate financial reporting (monthly, quarterly, annual reports available promptly), (c) strengthen internal controls (access controls, approval workflows, audit trails), (d) reduce opportunities for fraud and corruption (automated checks, segregation of duties enforced by system), (e) improve budget control (real-time monitoring of actual vs. budget), (f) facilitate IPSAS compliance, and (g) provide better information for decision-making (management dashboards, analytics). For auditing, computerised systems are expected to: (a) increase audit coverage (analysis of 100% of transactions), (b) improve audit efficiency (reducing manual testing time), (c) enhance fraud detection (data analytics, anomaly detection), (d) improve audit quality (standardised audit procedures, documentation), and (e) enable continuous auditing (real-time or near-real-time audit) (INTOSAI, 2020; Chan, 2018).

Despite these expected benefits, the implementation of computerised accounting and auditing systems in the Nigerian public sector has faced significant challenges. These include: (a) inadequate infrastructure – unreliable electricity, poor internet connectivity, insufficient hardware (servers, computers, printers), (b) inadequate funding – insufficient budget for system acquisition, maintenance, upgrades, and training, (c) staff capacity gaps – lack of IT skills among public sector accountants and auditors, resistance to change, (d) data migration issues – difficulties in converting historical financial data from manual/legacy systems to computerised systems, (e) system downtime – GIFMIS has experienced periods of unavailability, disrupting financial operations, (f) user acceptance – some staff resist using the new systems, preferring familiar manual processes, (g) integration challenges – GIFMIS, TSA, IPPIS, and other systems are not fully integrated, requiring manual reconciliations, (h) security risks – cyberattacks, data breaches, unauthorised access, (i) vendor dependence – reliance on external vendors for system development, maintenance, and support, and (j) weak change management – inadequate communication, training, and support for users during transition (Adebayo and Oyedokun, 2019; Eze and Nwafor, 2020).

The evaluation of the impact of computerised accounting and auditing systems on public sector financial management is essential for several reasons. First, substantial public funds have been invested in these systems (GIFMIS, TSA, IPPIS, CAATs). It is important to assess whether these investments have achieved their intended objectives (value for money). Second, computerised systems have been implemented for over a decade; sufficient time has elapsed to evaluate their impact. Third, understanding the successes and failures of computerised systems can inform future PFM reforms, system upgrades, and capacity-building initiatives. Fourth, the Nigerian experience can provide lessons for other developing countries implementing similar reforms. Fifth, donors and international partners (World Bank, IMF, DFID/UKAID) have supported these reforms; evaluation results inform future technical assistance (World Bank, 2018; IMF, 2020).

This study focuses on the public sector in Nigeria, including federal, state, and local government levels. The evaluation will assess the impact of computerised accounting and auditing systems on: (a) financial reporting timeliness and accuracy, (b) internal control effectiveness, (c) fraud detection and prevention, (d) budget control and variance analysis, (e) audit efficiency and effectiveness, (f) staff productivity and satisfaction, and (g) overall public financial management performance.

1.2 Statement of the Problem

The Nigerian public sector has invested significantly in computerised accounting and auditing systems, including GIFMIS, TSA, IPPIS, and CAATs, to improve financial management and accountability. Despite these investments, significant challenges persist: (a) delayed financial reporting (many MDAs still submit financial reports months or years late), (b) audit queries and irregularities (Auditor-General’s reports continue to highlight unauthorized expenditures, missing documentation, and weak controls), (c) fraud and corruption (ghost workers, procurement fraud, misappropriation of funds), (d) poor budget control (overspending, virement without authorization), (e) inadequate IPSAS compliance (some MDAs still use cash basis), (f) system downtime and technical problems (GIFMIS unavailability), (g) staff resistance and low utilisation of computerised systems, and (h) lack of integration between systems (GIFMIS, TSA, IPPIS). It is unclear whether computerised accounting and auditing systems have had the intended positive impact on public sector financial management, or whether the persistent challenges indicate that the systems are not being effectively implemented or utilised. There is a lack of recent, systematic, empirical research that evaluates the impact of computerised accounting and auditing systems on the Nigerian public sector. Therefore, this study is motivated to evaluate the impact of computerised accounting and auditing systems in the public sector in Nigeria.

1.3 Research Questions

The following research questions guide this study:

1. What is the impact of computerised accounting systems (GIFMIS, TSA, IPPIS) on the timeliness and accuracy of financial reporting in the Nigerian public sector?
2. How has the adoption of computerised accounting systems affected internal controls and the prevention of fraud and corruption in the Nigerian public sector?
3. What is the impact of computerised auditing systems (CAATs, data analytics) on the efficiency and effectiveness of public sector auditing in Nigeria?
4. What are the major challenges affecting the implementation and utilisation of computerised accounting and auditing systems in the Nigerian public sector?
5. What recommendations can be made to enhance the impact of computerised accounting and auditing systems on public sector financial management in Nigeria?

1.4 Objective of the Study

The specific objectives of this study are to:

1. Examine the adoption and implementation of computerised accounting systems (GIFMIS, TSA, IPPIS) in the Nigerian public sector.
2. Assess the impact of computerised accounting systems on financial reporting timeliness, accuracy, internal controls, fraud prevention, and budget control in the Nigerian public sector.
3. Examine the adoption and implementation of computerised auditing systems (CAATs, data analytics) in the Nigerian public sector.
4. Assess the impact of computerised auditing systems on audit efficiency, audit coverage, fraud detection, and audit quality in the Nigerian public sector.
5. Identify the challenges (infrastructure, funding, staff capacity, system downtime, user acceptance, integration, security) affecting the implementation and utilisation of computerised accounting and auditing systems in the Nigerian public sector.
6. Propose recommendations for improving the effectiveness of computerised accounting and auditing systems in the Nigerian public sector.

1.5 Hypothesis of the Study

The following hypotheses are formulated in null (H₀) and alternative (H₁) forms:

Hypothesis One

• H₀: Computerised accounting systems have no significant impact on the timeliness of financial reporting in the Nigerian public sector.
• H₁: Computerised accounting systems have a significant impact on the timeliness of financial reporting in the Nigerian public sector.

Hypothesis Two

• H₀: The adoption of computerised accounting systems has no significant effect on the prevention of fraud and corruption in the Nigerian public sector.
• H₁: The adoption of computerised accounting systems has a significant effect on the prevention of fraud and corruption in the Nigerian public sector.

Hypothesis Three

• H₀: Computerised auditing systems have no significant effect on the audit coverage (percentage of transactions audited) of public sector audits in Nigeria.
• H₁: Computerised auditing systems have a significant effect on the audit coverage (percentage of transactions audited) of public sector audits in Nigeria.

Hypothesis Four

• H₀: Challenges such as inadequate infrastructure, staff capacity gaps, and system downtime do not significantly affect the implementation and utilisation of computerised accounting and auditing systems in the Nigerian public sector.
• H₁: Challenges such as inadequate infrastructure, staff capacity gaps, and system downtime significantly affect the implementation and utilisation of computerised accounting and auditing systems in the Nigerian public sector.

1.6 Significance of the Study

This study is significant for several stakeholders. First, public sector financial managers (Accountant-General, Directors of Finance, Treasury officials) will benefit from understanding the impact (positive and negative) of computerised accounting systems on financial management, enabling them to address weaknesses and maximise benefits. Second, the Office of the Auditor-General (Federal and State) will benefit from understanding the impact of computerised auditing systems on audit efficiency and effectiveness, informing technology adoption and audit methodology. Third, the Federal Ministry of Finance, Budget and National Planning (and state ministries of finance) will gain insights into the effectiveness of PFM reforms (GIFMIS, TSA, IPPIS), informing policy and budget allocation for system maintenance and upgrades. Fourth, the National Assembly (and state Houses of Assembly) will benefit from understanding the impact of computerised systems on accountability and transparency, supporting legislative oversight. Fifth, the Bureau of Public Procurement (BPP) and other oversight agencies will gain insights into procurement and financial management controls, informing monitoring and enforcement. Sixth, international development partners (World Bank, IMF, DFID/UKAID, African Development Bank) will gain insights into the effectiveness of PFM reforms in Nigeria, informing technical assistance and funding decisions. Seventh, academics and researchers in public financial management, accounting information systems, and e-governance will benefit from the study’s contribution to the literature on computerised systems in developing country public sectors. Eighth, professional bodies (ICAN, ANAN, CITN, IIA Nigeria) will find value in the study’s findings for training and CPD programs. Ninth, civil society organisations focused on governance and anti-corruption will gain insights into the effectiveness of computerised systems in preventing fraud and corruption, supporting advocacy. Finally, Nigerian citizens will benefit indirectly as improved financial management and accountability lead to better public services and more efficient use of tax revenues.

1.7 Scope and Limitation of the Study

Scope of the Study

This study focuses on the evaluation of the impact of computerised accounting and auditing systems in the public sector in Nigeria. Geographically, the research covers federal government MDAs (including those in the Federal Capital Territory, Abuja) and selected state government MDAs (selected states representing different geopolitical zones). The study covers the major computerised accounting systems: Government Integrated Financial Management Information System (GIFMIS), Treasury Single Account (TSA), and Integrated Payroll and Personnel Information System (IPPIS). The study also covers computerised auditing systems: Computer-Assisted Audit Tools (CAATs), data analytics, and continuous auditing systems used by the Office of the Auditor-General of the Federation and state Auditor-Generals. Content-wise, the study examines: adoption and implementation status; impact on financial reporting timeliness, accuracy, internal controls, fraud prevention, budget control; impact on audit efficiency, coverage, fraud detection, audit quality; and challenges (infrastructure, funding, staff capacity, system downtime, user acceptance, integration, security). The study targets Accountant-General’s office staff, Treasury officials, internal auditors, external auditors (Auditor-General’s office), and public sector financial managers. The time frame for data collection is the cross-sectional period of 2023–2024, with historical data (e.g., 5-10 years) used to assess pre- and post-implementation impact. The study does not cover state-level systems in all 36 states (selected states only), nor does it cover private sector systems, nor does it cover non-financial management systems (e.g., procurement systems, asset management systems) except as they relate to accounting and auditing.

Limitation of the Study

This study acknowledges several limitations. First, the study may not cover all states in Nigeria due to resource and time constraints; findings may not be fully generalizable to all states. Second, access to sensitive financial data and audit reports may be restricted due to confidentiality or security concerns. Third, the study relies on information from public sector officials and auditors; responses may be subject to social desirability bias (overstating compliance or effectiveness). Fourth, the study is cross-sectional (a snapshot in time); the long-term impact of computerised systems is not fully captured. Fifth, the study does not include a controlled experiment (randomised assignment of computerised systems to some MDAs and not others), so causality cannot be definitively established. Sixth, the study does not include a comparative analysis with other countries (though the literature review includes international evidence). Seventh, the study may not capture all the challenges (e.g., political interference, corruption) that affect system effectiveness. Despite these limitations, the study aims to provide robust, meaningful insights into the impact of computerised accounting and auditing systems in the Nigerian public sector.

1.8 Definition of Key Terms

Computerized Accounting System (CAS): An information technology system that automates the recording, processing, storage, and reporting of financial transactions. In the Nigerian public sector, CAS includes GIFMIS, TSA, and IPPIS.

Computerized Auditing System: Information technology tools and software used by auditors to automate audit procedures, including Computer-Assisted Audit Tools (CAATs), data analytics software, continuous auditing systems, and audit management software.

Government Integrated Financial Management Information System (GIFMIS): An integrated computerised system for budgeting, accounting, financial reporting, and cash management used by the Nigerian federal government (and some states).

Treasury Single Account (TSA): A unified bank account (or set of linked accounts) maintained at the Central Bank of Nigeria that consolidates all government revenues and enables centralized control over government cash.

Integrated Payroll and Personnel Information System (IPPIS): A computerised system for personnel and payroll management that uses biometric data to verify employee identities and eliminate ghost workers.

Computer-Assisted Audit Tools (CAATs): Software tools that enable auditors to analyse data from client systems, test controls, detect anomalies, and automate audit procedures.

Public Sector: The part of the economy owned, controlled, and operated by the government, including ministries, departments, agencies (MDAs), parastatals, and government-owned enterprises at federal, state, and local levels.

Financial Reporting: The process of preparing and presenting financial statements (balance sheet, income statement, cash flow statement, budget execution report) to stakeholders.

Internal Control: Policies, procedures, and mechanisms designed to provide reasonable assurance that the organisation achieves its objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws and regulations.

Audit Trail: A chronological record of transactions that allows auditors to trace transactions from source documents to financial statements and vice versa.

Continuous Auditing: An automated audit approach that provides real-time or near-real-time assurance on financial transactions and controls.

Data Analytics: The process of examining data sets to draw conclusions, identify patterns, detect anomalies, and support decision-making.

IPSAS (International Public Sector Accounting Standards): Accounting standards issued by the International Public Sector Accounting Standards Board (IPSASB) for use by governments and other public sector entities.

Accrual Accounting: An accounting method where transactions are recorded when they occur (when economic value is created, transferred, or extinguished), regardless of when cash is received or paid.

Cash Accounting: An accounting method where transactions are recorded when cash is received or paid.

Office of the Auditor-General (OAuGF): The supreme audit institution of Nigeria (federal) responsible for auditing the financial statements and operations of federal government entities.

Public Accounts Committee (PAC): A committee of the National Assembly (and state Houses of Assembly) responsible for reviewing audit reports, summoning accounting officers, and recommending sanctions.

Ghost Worker: A fictitious employee on a government payroll whose salary is fraudulently collected by corrupt officials.

Value for Money (VFM): The optimal use of resources to achieve intended outcomes, considering economy (cost minimisation), efficiency (output maximisation), and effectiveness (outcome achievement).

Change Management: The process of preparing, supporting, and helping individuals, teams, and organisations to adopt new systems, processes, and behaviours.

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter reviews the literature relevant to the evaluation of the impact of computerized accounting and auditing systems in the public sector. The review covers the historical development of computers, the concept of accounting, the origin of auditing, program organization, the concept of computers, computer versus fraud, auditors and changing technology, selecting accounting software, approaches to selecting computer software, critique of relevant theories, the historical background of NARICT, and a summary. The chapter provides the theoretical and empirical foundation for understanding how computerized accounting and auditing systems affect public sector financial management.

2.2 Historical Development of Computer

The history of computers dates back to ancient times when humans used counting tools such as the abacus (circa 2500 BC). The first mechanical computing devices emerged in the 17th century, including Blaise Pascal’s Pascaline (1642) and Gottfried Wilhelm Leibniz’s Stepped Reckoner (1673). In the 19th century, Charles Babbage designed the Analytical Engine (1837), which is considered the first general-purpose computer concept. Ada Lovelace, who worked with Babbage, is credited as the first computer programmer (Ceruzzi, 2012; O’Regan, 2018).

The first electronic computers emerged in the mid-20th century. The Electronic Numerical Integrator and Computer (ENIAC), completed in 1945, was the first general-purpose electronic digital computer. ENIAC was used for military calculations (ballistic trajectories). The Universal Automatic Computer (UNIVAC I), delivered in 1951, was the first commercial computer. The 1950s and 1960s saw the development of mainframe computers (IBM System/360) used by large organizations, including governments and banks. The 1970s saw the emergence of minicomputers (Digital Equipment Corporation PDP series) and the first microprocessors, leading to the development of personal computers (PCs) in the 1980s (Altair 8800, Apple II, IBM PC) (Ceruzzi, 2012).

The 1990s saw the widespread adoption of personal computers in businesses and homes, the emergence of the Internet and World Wide Web, and the development of graphical user interfaces (Windows). The 2000s saw the rise of mobile computing (laptops, smartphones, tablets), cloud computing, and social media. The 2010s and 2020s have seen advances in artificial intelligence (AI), machine learning, big data analytics, blockchain, and the Internet of Things (IoT). Computers have transformed virtually every aspect of modern life, including accounting and auditing (O’Regan, 2018).

In the Nigerian public sector, computerization began in the 1980s and 1990s with the introduction of personal computers in federal and state MDAs. However, widespread adoption was limited due to cost, infrastructure (electricity), and skills gaps. Major computerization reforms began in the 2000s and 2010s, including the Government Integrated Financial Management Information System (GIFMIS), the Treasury Single Account (TSA), and the Integrated Payroll and Personnel Information System (IPPIS). These systems represent the most significant computerization initiatives in the history of Nigerian public financial management (OAGF, 2018; Adebayo and Oyedokun, 2019).

2.3 Concept of Accounting

Accounting is the systematic process of identifying, recording, classifying, summarizing, and communicating financial information about an entity to users for decision-making. It is often called the “language of business” because it communicates financial information about the entity to stakeholders. The accounting process involves several steps: (a) identifying transactions and events that affect the entity, (b) measuring those transactions in monetary terms, (c) recording them in journals and ledgers, (d) classifying them into accounts (assets, liabilities, equity, revenue, expenses), (e) summarizing them into financial statements, and (f) communicating the financial statements to users (Horngren, Sundem, and Stratton, 2018; Kieso, Weygandt, and Warfield, 2019).

In the public sector, government accounting is the process of recording, analyzing, classifying, summarizing, and reporting financial transactions of government entities. Government accounting differs from private sector accounting in several respects: (a) the primary objective is to demonstrate accountability for public funds (not profit), (b) emphasis on budgetary control (expenditures must not exceed appropriations), (c) use of fund accounting (segregation of resources by purpose), (d) compliance with legal and regulatory requirements (Financial Regulations, Treasury Circulars, Appropriation Laws), (e) focus on stewardship and transparency, and (f) external audit by the Office of the Auditor-General (Premchand, 2019; Mellett, 2019).

Computerized accounting refers to the use of computer hardware and software to perform accounting functions. Computerized accounting systems (CAS) automate the recording, processing, storage, and reporting of financial transactions. Benefits include: (a) faster processing, (b) reduced errors, (c) real-time access to financial information, (d) improved internal controls (access controls, audit trails), (e) easier report generation, (f) reduced storage space, and (g) enhanced analytical capabilities. In the Nigerian public sector, GIFMIS, TSA, and IPPIS are examples of computerized accounting systems (Romney and Steinbart, 2018; OAGF, 2018).

2.4 The Origin of Auditing

Auditing has ancient origins. In ancient civilizations (Mesopotamia, Egypt, Greece, Rome), scribes and officials conducted checks on financial records to detect errors and fraud. The word “audit” derives from the Latin word “audire” (to hear), as in ancient times, officials would “hear” accounts read aloud by stewards. Auditing as a formal profession emerged in the 19th century during the Industrial Revolution, as corporations grew and shareholders demanded independent verification of financial statements (Hayes, Dassen, Schilder, and Wallage, 2019).

Modern auditing is the systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria, and communicating the results to interested users. Auditing is divided into external audit (independent audit of financial statements by external auditors) and internal audit (independent assurance and consulting activity within an organization) (Arens, Elder, and Beasley, 2017; Louwers, Ramsay, Sinason, and Strawser, 2018).

In the public sector, government auditing includes regularity audit (compliance with laws, regulations, and budget approvals) and performance audit (economy, efficiency, and effectiveness of operations). The Office of the Auditor-General of the Federation (OAuGF) and state Auditor-Generals are the supreme audit institutions (SAIs) responsible for public sector auditing in Nigeria. The International Organization of Supreme Audit Institutions (INTOSAI) issues auditing standards (ISSAI) for public sector auditors (INTOSAI, 2020; Oyo-Ita, 2019).

Computerized auditing (also called IT auditing, e-auditing) refers to the use of computer technology to perform audit procedures. Computer-assisted audit tools (CAATs) enable auditors to: (a) analyze large volumes of data, (b) test 100% of transactions (rather than sampling), (c) detect anomalies and patterns indicative of fraud, (d) test controls (system access, user permissions, segregation of duties), (e) generate exception reports, (f) extract and analyse data from client systems (e.g., GIFMIS), and (g) automate audit documentation and reporting (CAATs). Continuous auditing (real-time or near-real-time auditing) is an advanced form of computerized auditing (Braun and Davis, 2003; INTOSAI, 2020).

2.5 Program Organization

Program organization refers to the structure and design of computer software programs, including accounting and auditing software. Computer programs consist of instructions (code) written in programming languages (e.g., COBOL, FORTRAN, C++, Java, Python). Programs are organized into modules or subroutines to improve readability, maintainability, and reusability. Programs interact with databases (where data are stored) and user interfaces (where users input data and view output) (Pressman, 2015; Sommerville, 2016).

In accounting software, program organization typically includes modules for: (a) general ledger, (b) accounts payable, (c) accounts receivable, (d) payroll, (e) inventory, (f) fixed assets, (g) cash management, (h) budgeting, (i) financial reporting, and (j) security and access control. In public sector accounting software (e.g., GIFMIS), program organization also includes modules for: (a) budget preparation and execution, (b) procurement and contract management, (c) cash management (TSA), (d) personnel and payroll (IPPIS), (e) commitment accounting, and (f) audit trail and reporting (Romney and Steinbart, 2018; Hall, 2019).

The quality of program organization affects system reliability, maintainability, and security. Poorly organized programs (spaghetti code) are difficult to maintain, prone to errors (bugs), and may contain security vulnerabilities. Well-organized programs (structured, modular, object-oriented) are easier to maintain, have fewer bugs, and are more secure. For public sector accounting systems, reliable and secure program organization is essential (Pressman, 2015).

2.6 The Concept of Computer

A computer is an electronic device that accepts data (input), processes data according to programmed instructions (processing), produces output (results), and stores results (storage). A computer consists of hardware (physical components: central processing unit CPU, memory, storage drives, input devices, output devices) and software (programs and instructions). Computers are classified by size and capability: supercomputers (fastest, most powerful, used for scientific simulations), mainframe computers (used by large organizations for transaction processing), minicomputers (mid-range), microcomputers (personal computers, PCs), and mobile devices (laptops, tablets, smartphones) (O’Regan, 2018; Ceruzzi, 2012).

Computers have transformed accounting and auditing by automating manual processes, enabling real-time processing, and providing powerful analytical capabilities. Key computer technologies relevant to accounting and auditing include: (a) databases (relational databases, SQL), (b) spreadsheets (Excel, Google Sheets), (c) accounting software (QuickBooks, Sage, ERP systems like SAP, Oracle), (d) audit software (ACL, IDEA, CaseWare), (e) data analytics tools (Tableau, Power BI, Python, R), (f) artificial intelligence and machine learning, (g) blockchain, and (h) cloud computing (Romney and Steinbart, 2018).

In the Nigerian public sector, computers are used for GIFMIS, TSA, IPPIS, and other financial systems. However, challenges include inadequate hardware (insufficient computers, servers, printers), unreliable electricity, limited internet connectivity, and insufficient IT support staff (Adebayo and Oyedokun, 2019; Eze and Nwafor, 2020).

2.7 Computer versus Fraud

Computers can both facilitate and prevent fraud. On one hand, computers enable new forms of fraud (computer fraud, cybercrime), including: (a) unauthorized access (hacking) to steal data or transfer funds, (b) identity theft, (c) phishing (fraudulent emails to obtain sensitive information), (d) malware (viruses, ransomware) that disrupts systems or steals data, (e) denial of service attacks, (f) data tampering (altering financial records), (g) ghost employees (adding fictitious employees to payroll systems), (h) billing fraud (creating fictitious vendors, submitting false invoices), and (i) cheque fraud (forging or altering cheques). Computer fraud is often harder to detect than manual fraud because there are no paper records (Wells, 2017; KPMG, 2019).

On the other hand, computers enable fraud prevention and detection through: (a) access controls (passwords, biometrics, role-based permissions), (b) audit trails (logging of all transactions, who accessed what data when), (c) data validation (input checks, range checks, format checks), (d) segregation of duties enforced by system (one user cannot both create and approve a transaction), (e) exception reporting (automatic alerts for suspicious transactions), (f) data analytics (identifying anomalies, patterns, red flags), (g) continuous monitoring (real-time transaction monitoring), (h) encryption (protecting sensitive data), and (i) biometric authentication (fingerprint, facial recognition) (Romney and Steinbart, 2018; Hall, 2019).

In the Nigerian public sector, computerised systems (GIFMIS, TSA, IPPIS) have been implemented partly to reduce fraud. IPPIS has reduced payroll fraud (ghost workers) by requiring biometric verification. TSA has reduced the diversion of government revenues by consolidating accounts. GIFMIS has improved audit trails and internal controls. However, new forms of computer fraud have emerged, including hacking of government systems, phishing targeting government officials, and insider fraud (system access abuse). The battle between fraudsters and computerised controls is ongoing (OAGF, 2018; Adebayo and Oyedokun, 2020).

2.8 Auditors and Changing Technology

Auditors must adapt to changing technology because client systems are increasingly computerised. Traditional audit techniques (manual testing, sampling, vouching) are no longer sufficient when clients use computerised accounting systems. Auditors need to understand: (a) how computerised systems work (hardware, software, networks, databases), (b) how to assess computerised internal controls (access controls, segregation of duties, audit trails), (c) how to use computer-assisted audit tools (CAATs) to extract and analyze data, (d) how to test computerised systems (test data, parallel simulation, integrated test facility), (e) how to audit in a paperless environment (electronic evidence, digital signatures), (f) how to address cybersecurity risks, and (g) how to audit emerging technologies (blockchain, AI, cloud computing) (Braun and Davis, 2003; INTOSAI, 2020).

The auditing profession has responded by: (a) incorporating IT auditing into professional standards (ISACA’s CISA certification, IIA’s CIA certification includes IT), (b) developing computer-assisted audit tools (CAATs) such as ACL, IDEA, and CaseWare, (c) developing continuous auditing methodologies, (d) establishing IT audit departments within audit firms and government audit offices, and (e) requiring continuing professional education (CPE) in IT auditing for auditors (Hayes et al., 2019; Arens et al., 2017).

In the Nigerian public sector, the Office of the Auditor-General (OAuGF) has adopted CAATs and provided training for auditors. However, challenges remain: (a) insufficient number of IT auditors, (b) inadequate training in advanced IT auditing (data analytics, continuous auditing), (c) limited access to client systems (GIFMIS) for data extraction, (d) lack of standardized audit software across all states, and (e) resistance from auditors comfortable with traditional manual audit methods (Oyo-Ita, 2019; Eze and Nwafor, 2020).

2.9 Selecting Accounting Software

Selecting appropriate accounting software is a critical decision for any organization, including public sector entities. The selection process involves evaluating software packages against organizational requirements. Key factors to consider when selecting accounting software include:

Functional Requirements: Does the software support the required accounting functions (general ledger, accounts payable, accounts receivable, payroll, inventory, fixed assets, budgeting, financial reporting)? For public sector entities, additional functions include budget execution, commitment accounting, fund accounting, and IPSAS-compliant reporting (Romney and Steinbart, 2018).

Technical Requirements: Is the software compatible with existing hardware, operating systems, and networks? Does it support the required number of users? Is it scalable (able to handle growth)? Is it available as on-premise or cloud-based (SaaS)? Does it have adequate security features (access controls, encryption, audit trails)?

Vendor Characteristics: Is the vendor reputable? Does the vendor provide adequate training, documentation, and technical support? Is the vendor financially stable? Does the vendor have experience with public sector entities? (Hall, 2019).

Cost: What is the total cost of ownership (TCO), including license fees, implementation costs, customization costs, training costs, maintenance fees, and upgrade costs? Is the cost within budget?

Ease of Use: Is the software user-friendly? Will staff be able to learn it quickly? Does it have an intuitive interface?

Reporting and Analytics: Does the software provide standard financial reports (trial balance, income statement, balance sheet, cash flow statement)? Does it allow custom report generation? Does it support data analytics and dashboards?

Integration: Can the software integrate with other systems (e.g., procurement systems, payroll systems, banking systems)? For public sector, integration with GIFMIS, TSA, and IPPIS may be required (OAGF, 2018).

Compliance: Does the software support compliance with relevant accounting standards (IPSAS for public sector), tax laws, and regulatory requirements?

For the Nigerian public sector, the selection of GIFMIS was a major procurement decision involving international vendors (consulting firms, software developers). The selection process involved needs assessment, request for proposals (RFP), vendor evaluation, and contract negotiation (World Bank, 2018; Adebayo and Oyedokun, 2019).

2.10 Approach to Selecting Computer Software

There are several approaches to selecting computer software, each with advantages and disadvantages:

Request for Proposal (RFP) Approach: The organization issues a formal RFP to multiple vendors, specifying functional and technical requirements. Vendors submit proposals, which are evaluated based on criteria (functionality, cost, vendor reputation, support). The RFP approach is systematic and transparent but time-consuming and resource-intensive. This approach was used for GIFMIS procurement (OAGF, 2018).

Demonstration Approach: Vendors are invited to demonstrate their software to a selection committee. The committee evaluates the software based on the demonstration. This approach is faster than RFP but may be less thorough; vendors may emphasize strengths and hide weaknesses.

Reference Approach: The organization contacts existing users of the software (references) to ask about their experience. This approach provides real-world feedback but may be biased (vendors provide positive references).

Consultant Approach: The organization hires an external consultant to recommend software. Consultants have expertise and access to market information but may have conflicts of interest (commissions from vendors).

Pilot Approach: The organization installs a trial version of the software (or a pilot implementation) in a limited area (e.g., one department) to test functionality and usability before full rollout. The pilot approach reduces risk but takes time and resources (Pressman, 2015; Sommerville, 2016).

Best-of-Breed vs. Integrated Suite: Best-of-breed approach selects the best software for each function (e.g., separate GL, payroll, procurement software) and integrates them. Integrated suite approach selects a single vendor suite (e.g., Oracle, SAP) that covers all functions. Integrated suites offer better integration but may have weaker functionality in specific areas.

For the Nigerian public sector, a multi-step approach was used to select GIFMIS, including needs assessment, RFP, vendor demonstrations, reference checks, and pilot implementation in selected MDAs (OAGF, 2018).

2.11 Critique of the Relevant Theories

Several theories underpin the use of computerized accounting and auditing systems in the public sector. This section critiques these theories.

Technology Acceptance Model (TAM) : TAM (Davis, 1989) posits that perceived usefulness (PU) and perceived ease of use (PEOU) determine user acceptance of information technology. TAM has been widely used to predict IT adoption. However, TAM has been criticized for: (a) ignoring social and organizational factors that influence adoption, (b) assuming that intention leads to actual use (ignoring constraints like lack of resources), (c) focusing on individual users rather than organizational adoption, and (d) being less applicable to mandatory use (e.g., public sector employees required to use GIFMIS). For Nigerian public sector, TAM may explain why some staff accept GIFMIS (perceived as useful and easy) while others resist (perceived as difficult) (Davis, 1989; Venkatesh and Davis, 2000).

Diffusion of Innovation (DOI) Theory: DOI (Rogers, 2003) explains how innovations spread through organizations and societies. Key factors: relative advantage, compatibility, complexity, trialability, observability. DOI has been applied to accounting software adoption. Criticisms: (a) DOI assumes that adoption is voluntary, while public sector IT adoption is often mandatory, (b) DOI focuses on innovation characteristics, ignoring organizational readiness, (c) DOI does not adequately address post-adoption use (implementation effectiveness). For GIFMIS, DOI may explain why adoption has been uneven across MDAs (some adopted quickly, others slowly) (Rogers, 2003).

Institutional Theory: Institutional theory (DiMaggio and Powell, 1983) explains why organizations adopt similar practices (isomorphism) due to coercive (regulatory), mimetic (copying peers), and normative (professional norms) pressures. Institutional theory helps explain why public sector entities adopt computerized accounting systems (e.g., GIFMIS) because of pressure from the federal government (coercive), copying other states (mimetic), and professional accounting standards (normative). Criticisms: (a) institutional theory explains adoption but not effectiveness (implementation quality), (b) may overstate the role of external pressures, ignoring internal factors (resources, capacity). For Nigerian public sector, institutional theory explains the adoption of GIFMIS, TSA, and IPPIS but not the variation in implementation effectiveness across MDAs (DiMaggio and Powell, 1983; Scott, 2001).

Agency Theory: Agency theory (Jensen and Meckling, 1976) explains conflicts of interest between principals (citizens, government) and agents (public officials). Computerized accounting systems reduce information asymmetry by providing principals with better information about agent actions (financial transactions). Criticisms: (a) agency theory assumes rational, self-interested actors, ignoring public service motivation, (b) agency theory focuses on monitoring, ignoring the enabling role of IT. For Nigerian public sector, agency theory supports the use of computerised systems to monitor public officials and reduce corruption (Jensen and Meckling, 1976).

Public Financial Management (PFM) Theory: PFM theory (Premchand, 2019) explains the institutions, processes, and systems for managing public funds. Computerised accounting systems are key PFM reforms. Criticisms: (a) PFM theory is descriptive rather than predictive, (b) does not provide specific guidance on computerised system design or evaluation. For Nigerian public sector, PFM theory provides the context for understanding GIFMIS, TSA, and IPPIS as PFM reforms (Premchand, 2019).

Integration of Theories: This study integrates TAM (user acceptance), DOI (adoption), institutional theory (external pressures), agency theory (monitoring), and PFM theory (context) to evaluate the impact of computerised accounting and auditing systems in the Nigerian public sector. No single theory fully explains the complex relationship between technology and public sector performance; a multi-theoretic approach is needed.

2.12 Historical Background of NARICT

The National Research Institute for Chemical Technology (NARICT) is a parastatal under the Federal Ministry of Science and Technology. NARICT was established in 1988 (originally as the National Research Institute for Chemical Technology, Zaria). The institute is located in Zaria, Kaduna State, Nigeria. NARICT is mandated to: (a) conduct research and development in chemical technology, (b) develop chemical processes and products for industrial application, (c) provide technical support and training to chemical industries, (d) promote the commercialization of chemical research findings, (e) collaborate with industries, universities, and other research institutes, and (f) contribute to the development of the chemical sector in Nigeria (NARICT, 2020).

NARICT has research departments covering areas such as: petrochemicals, pharmaceuticals, agrochemicals, fine chemicals, materials science, polymer technology, and analytical chemistry. The institute has laboratories, pilot plants, and technical workshops. NARICT has contributed to the development of local content in the chemical sector, including the production of disinfectants, sanitizers, and other chemicals (NARICT, 2020).

As a public sector entity, NARICT is subject to public financial management regulations, including budget preparation and execution, financial reporting, internal controls, and external audit. NARICT uses computerised accounting systems (likely GIFMIS) for its financial operations. The institute’s financial statements are audited by the Office of the Auditor-General of the Federation. The adoption of computerised accounting and auditing systems at NARICT is part of the broader PFM reforms in the Nigerian public sector. NARICT serves as a case study for this research because it is a federal parastatal that uses computerised accounting systems and is subject to computerised auditing (OAGF, 2018; NARICT, 2020).

2.13 Summary

This chapter has reviewed the literature on the evaluation of the impact of computerised accounting and auditing systems in the public sector. The historical development of computers shows the progression from mechanical calculators to modern computers. The concept of accounting includes manual and computerised systems. The origin of auditing traces from ancient times to modern computerised auditing. Program organization affects system quality. Computers can both facilitate and prevent fraud. Auditors must adapt to changing technology. Selecting accounting software requires careful consideration of functional, technical, vendor, cost, usability, reporting, integration, and compliance factors. Several approaches to software selection exist (RFP, demonstration, reference, consultant, pilot). Relevant theories (TAM, DOI, institutional theory, agency theory, PFM theory) are critiqued. The historical background of NARICT is provided as context for the case study.

The literature review reveals that computerised accounting and auditing systems have the potential to significantly improve public sector financial management, but challenges (infrastructure, funding, staff capacity, system downtime, user acceptance, integration, security) can limit their impact. There is a need for empirical research evaluating the impact of these systems in the Nigerian public sector. This study aims to fill that gap.