ACCOUNTING INFORMATION SYSTEM AND IT EFFECT ON COMPANY PERFORMANCE

ACCOUNTING INFORMATION SYSTEM AND IT EFFECT ON COMPANY PERFORMANCE

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

In the past and even up till now accounting processes are done manually through the use of separate ledgers to record financial transactions, it involves the use of books, supporting documents and papers to prepare financial statement. In a sole proprietorship that is probably developing, there might be minimal errors but for a large organisation, these errors are likely not to be easily detected or can be unknown for a long period of time which could affect the company on the long run. Over the years, through gradual changes, Accounting information system has been introduced which impacts the ways in which accounts are been prepared now. Information system has changed the way accounting tasks are processed; the green paper days are gone and businesses now have a centralized place where all accounting transactions are entered and saved as there is no need for cumulating large and long columns and searching for paper journals where an accounting computer software can perform all of these tasks.

Most organisations spend a huge amount of money on information system. As a result, this has cause budget to increase overtime. The essence of information system on organisation is for them to perform their work effectively. A major role that it plays is that it aids decision making in an organisation.

Decision making focuses on the evaluation of two or more alternatives which leads eventually to a final choice. Accounting information on the other hand deals with the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information.“Onaolapo and Odetayo (2012) identify accounting as the language of business as it records all transactions of an individual firms or bodies that can be expressed in monetary terms”. Professional accountants occupy very key and important position in the business world today.

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This makes accountants involved in the decision making process of a corporate organisation; the decision is based on relevant financial information and non-financial information. The American Accounting association defines accounting information system as a subset of information system that produces many amounts of data that can be used by the decision makers within and outside the organisation. Reliable, timely and correct accounting information plays a vital role in the management decision making and information technology is important for accounting information system for proving quality information.

According to Huber (1990), it was emphased that automated accounting information system aids decision making for management of organisation. This simply implies that accounting information also deals with accuracy and speed so as to make needed information available at an appropriate time and manner.

This study is focused on the financial health performance of selected organisations and how the adoption of accounting information system has affected company‟s performance.

1.2 STATEMENT OF THE PROBLEM

The implementation of accounting information system is to produce timely, relevant and accurate information in order to aid organizational performance and to give an upper hand in the market environment. Many companies are beginning to consider and adopt accounting information system for their financial accounting and their reporting. However, as important and as useful as accounting information system is, some companies are not even aware about this information system and some organisations are not even ready to shift from the old accounting system to the new one. Also, improved organizational performance of the company is not still achieved and their business activity decisions are still unprofitable. This generate question which the research work seek to address such as; how has AIS

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help to improve the profitability? Does accounting information system even have any effect on company‟s performance? To those organisations that have adopted accounting information system, Is there any relationship between accounting information system and organizational performance?

1.3 OBJECTIVES OF THE STUDY

This research work aims at examining the effect accounting information has on company performance.

The specific objectives are to:

i.            To identify the relationship between accounting information system and the profit level of the organization if any.

ii.            To identify whether there is any relationship between Accounting Information system and organizational performance

iii.            To examine if accounting information system delivers accurate and timely information so as to enhance the organizational performance.

1.4 RESEARCH QUESTIONS

The research questions which this study seeks to provide answers to are presented below:

·         Is there any relationship between accounting information system and the profit level of the organisation?

·         Is there any relationship between accounting information system and organizational performance?

·         Does accounting information system deliver accurate and timely information to enhance organizational performance?

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1.5 RESEARCH HYPOTHESES

Hypothesis one:

Ho: There is no relationship between accounting information system and the profit level of an organisation

H1: There is a relationship between accounting information system and the profit level of an organisation

Hypothesis two:

Ho: There is no relationship between accounting information system and organizational performance.

H1: There is a relationship between accounting information system and organizational performance.

Hypothesis three:

Ho: Accounting information does not deliver accurate and timely information that enhance organizational performance.

H1: Accounting information delivers accurate and timely information that enhance organizational performance.





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