Background of the Study
The rapid advancement of technology has pushed each industry to the era of fast and easy processes of tasks. The financial industry is of no exception. Accounting computations are made less difficult with the development of software applications. One example is the fixed asset register software developed to make fixed asset computations and monitoring easier and more time and cost efficient. Traditional fixed asset register is a complex system which has some drawbacks. The spreadsheet is tasked to model a complex real-life situation. The organisation may consist of a number of companies and/or may be located across several sites (Moriarty, 1998). Individual assets can be grouped into asset categories, and belong to one of a number of departments, which are part of one of several cost and/or profit centres (Moriarty, 1998). Such a complex structure is virtually impossible to model on any spreadsheet system, no matter how carefully designed and linked (Moriarty, 1998). Other problems are being pointed on traditional spreadsheet system such as complex calculations of depreciations and may depend also on the company's depreciation system (Moriarty, 1998). Because these problems are said to be lessen in fixed asset software application, there is an implication for research – basically to determine if some companies, specifically SME service companies, still favour the traditional from modern for some reason. The perception of the SMEs and accounting firms may help draw a consensus on which approach may be best used by SME service industries. SMEs are different in terms of characteristics as compared to corporations, and service industries are different from manufacturing or industrial businesses. Being an SME in a service industry creates a unique characteristic for that company in all aspect of business. SMEs in the service industry can best define what they want and need in fixed asset control and computation, thus their views are essential data for this study.
The purpose of the study is to help small service companies choose which fixed asset register approach is most beneficial to them in capital projects. This is done by analysing data acquired from them and accounting firms through survey questionnaires that contain questions related with the topic. Another purpose of the paper is to be able to determine the financial implications of fixed asset registry approaches to SMEs. The experiences of the accounting firms to be surveyed for this study and the perceptions of SME service companies pertaining to the two fixed asset registry approach may provide some enlightenment on several implications.
Statement of the Problem
This paper intends to compare the advantages and disadvantages between fixed asset software computations and fixed asset spreadsheet computations in fixed asset capital projects in the service business by surveying several randomly chosen accounting firms in the country and several randomly chosen small-to-medium sized companies.
Aims and Objectives
The aim of the paper is to determine the pros and cons differences between the two fixed asset approaches in a capital investment project. This is in lieu to promote which approach is more advantageous for the service industry organisations. The reason for aligning the issue of comparison between the two fixed asset approaches with the service industry, specifically SME service companies, is because of the possible implications that each may uniquely provide for service organisations. Because of the great difference between the values of manufacturing and service firms and the financial capability difference between corporations and SMEs, there may be an issue regarding which fixed asset approach is appropriate for those types of companies. By comparing the two fixed asset approaches, the study might determine which approach is best for service industries - an approach that will fit well for its characteristics, especially in building capital projects.
This study generally identifies the differences between fixed asset register software and traditional methods of fixed asset register. This is done by interviewing accounting firms and SMEs. Both groups are asked which fixed asset register method they prefer for capital projects, and explain why they prefer that method. The problem here can be summed up with the differences that each of group of variables have. SMEs are different from corporations in terms of size and capability, while service industries are different from industrial industries in terms of assets and liabilities. A combination of these differences may have several implications on which fixed asset register approach is used. For instance, the combination of being an SME and being a service company at the same time may have more advantage when using fixed asset software than a traditional fixed asset register approach. On the contrary, it may also have more advantage when vice-versa. Through the survey, and knowing the perception of the SME service companies, the views of accounting firms and SME service companies are explored, providing data for analysis on which approach may be advantageous or disadvantageous for a SME service industry registered company.
The following research questions are the problems explored:
1. What are the differences between the fixed assets register software approach and traditional fixed asset register spreadsheet approach?
2. What are the views of SMEs regarding the two approaches – which approach they use and prefer and the reasons for their choice?
3. What are the views of accounting firms about the two approaches, which one do they prefer and the reason for their choice?
4. What is the significant relationship between fixed asset register and SME service companies?
5. What are the implications of the two approaches in the process capital project integrations?
Scope of the Study
The study will be conducted within the
Survey questionnaires are the measurement instrument to be used in the study (Creswell, J.W. 1994). This makes the study quick and the data quantifiable. The frequency percentage, weighted mean and ANOVA are the statistical formulae to be used and presented. The particular focus areas of the study would include Fixed Asset Register computed by spreadsheet and software which are both considered to be the traditional and modern method respectively.
Creswell, J.W. 1994, Research design. Qualitative and quantitative approaches.
Moriarty, S. 2000, Possessive Thinking. Financial Management. Gale Group,