AN EMPIRICAL ANALYSIS OF THE VALUE OF ACCOUNTING INFORMATION SYSTEM IN AN ORGANIZATION

CHAPTER ONE
INTRODUCTION
1.1     BACKGROUND TO THE STUDY

The accounting information system has become an important component of successful businesses and organizations. Borthick and Clara, (1990) supporting the above, stated that the accounting information system is vital to all organizations either profit or non-profit oriented. They further opined that there is a need for every organization to maintain an accounting information system. In the opinion of Wathana, (2004), accounting information system produces more information to ease operations such as planning and control information and performance evaluation. An understanding of the Accounting Information System will, therefore, foster a better understanding of how businesses and organizations are assisted to operate more efficiently and effectively. The accounting information system has to do with any combination of information technology and peoples’ activities that support accounting operations, management and decision making, though in a narrow sense. In a broader sense, however, the term accounting information system is used to refer to the interaction between people, processes, data, and technology that are used for accounting duties. It is equally in this wise that O’Brien, (2003) asserted that, the term does not only refer to information and communication technology that an organization uses but also to the way in which people interact with this technology in support of business activities and processes. Furthermore, the accounting information systems may be understood from the three words that constitute it (Accounting, Information, and System). Wilkinson, (1993) identified three components that relate to accounting as; Information System, Language of Business and Source of Financial Information. Secondly, O’Brien identified information as a valuable data processing that provides a basis for making decisions, taking actions and fulfilling legal obligations. Finally, he stressed that a system is an integrated framework within an entity where the framework is focused on set objectives. Combining the three, Accounting Information System indicates an integrated framework within an entity (such as business entity) that employs physical resources (material, supplies, personnel, equipment, funds) to transform economic data into financial information for conducting the firms’ operations and activities, and providing information concerning the entity to a variety of interested users (O’Brien, 1993). Thomas and Kleiner, (1995) concluded that the combination or interaction between humans, technology and techniques knowledge effectively. This research seeks to conduct an empirical analysis of the accounting information system in organizations and examine its values in organizational activities and processes.

1.2   STATEMENT OF THE PROBLEM

Existing literature has shown that accounting information system when successfully implemented brings about better decision making by managers, more effective internal control systems, enhances the quality of financial reports and facilitates financial transaction processes (Wathana, 2010). However, the studies have not shown whether the successful implementation of an accounting information system can improve performance measures thereby creating a research gap. Moreover, the studies have shown a situation or situation rather in Spanish Enterprises, Chinese Enterprises, Indian Firms, etc where economies are well developed. The researchers, therefore, seeks to bridge the gap so created in the field of accounting information system and also determine whether the values of accounting information system identified in earlier studies are applicable to the Nigerian situation, a less developed economy.

1.3     OBJECTIVES OF THE STUDY

The following are the objectives of this study:
1. To examine the effect of accounting information systems on the financial transaction process.
2. To examine the effect of accounting information systems on the quality of financial reports.
3. To determine whether the accounting information system leads to effective internal control systems.

1.4   RESEARCH QUESTIONS

1. What is the effect of the accounting information system on the financial transaction process?
2. What is the effect of the accounting information system on the quality of financial reports?
3. Does the accounting information system lead to effective internal control systems?

1.5     HYPOTHESIS

HO: Accounting Information System does not facilitate the financial transaction process
HA: Accounting Information System does facilitate the financial transaction process

1.6     SIGNIFICANCE OF THE STUDY

This study shall be of immense importance to users of accounting information system such as financial analysis, Financial Accountants, Management Accountants, Finance Managers, the Finance General Managers, Chief Operating Officer, Managing Director and Board of Directors within an organization and the Government Agency, External Auditors and Creditors from outside the organization. This will enable them to have an effective combination of people, hardware, software, communication network and data resources that collects, transform and disseminate information in an organization hence the emphasis on computer-based accounting information system. More so, the study shall be of great importance to students of Accounting and Management as well as other researchers who may be acquainted with the basis of Accounting Information System, its operations and its support for business activities and processes and hence a guide for further investigations.

1.7     SCOPE/LIMITATIONS OF THE STUDY

This research work is however limited to the accounting information system (AIS) as a specialized area in business and non-business applications. Emphasis is more placed on the empirical evidence that exists in the field.

Related Project Topics :