Effect of Accounting Information System on Firms Performance. Using the Banking Sector as a Case Study
OBJECTIVE OF THE STUDY
- Examine the relationship between accounting information system and profitability in the banking sector in Nigeria.
- Determine the relationship between accounting information system and Earning per share.
- To examine the impact of accounting information system application on improving employee’s satisfaction in banks according to banks
- To examine the impact of accounting information system application on improving what customer saying about banks services according to banks managers’ perspective.
REVIEW OF RELATED LITERATURE
Many researchers such as (Abdallah, 2013: Adrian-Cosmin, 2015) test the impact of the accounting information systems on the quality of financial statements. They found there is a strong effect of using the accounting information systems on the quality of financial statements. Zakaria et al. (2017) assess the impact of accounting information system (AIS) on the users’ tasks efficiency. The findings ascertain a significant impact of (AIS) on their tasks efficiency related to budgeting, financial reporting, auditing and financial controlling in the companies. While Shuhidan et al. (2015) detect a significant impact of (AIS) on the organizational performance; they also discovered a strong relationship between AIS success and organizational performance. whereas Onaolapo and Odetayo (2012) found that Accounting Information System (AIS) enhance organizational effectiveness especially in global technology advancement, agree with Patel (2015), who detect the importance of accounting information systems, that helps in facilitating decision making and amend organization’s environment, structure and requirements of task, furthermore, emphasizes accounting information plays an necessary role in decision making process related to the financial and economic issues such as cost accounting system, management accounting system, price and profitability which provide the useful information to the manager to make the financial and economic decisions, also they a certain that (AIS) played a significant role in survival of organization. In addition Rapina (2014) discovered a strong relation between the organizational factors (management commitment, organizational culture and organizational structure) on the quality of accounting information system and how (AIS) effect on the quality of accounting information. Furthermore he detects a significant influence of AIS application on the quality of financial reports. While Srivastava and Lognathan (2016) detected any firms try to increase its profitability so, the Accounting information system will be important elements to reaching this goal. Also they define the role of good accounting information system in increasing the company profitability target. From other hand, they found a significant role of AIS on in decision making. But Nwinee et al. (2016), examined how applying AIS enhances the management efficiency and decreased the cost of control to achieving firms goals. Although Tan (2016), test the impact of AIS on internal auditors in Turkey, he revealed the importance role of accounting information systems in companies through enable all levels of management to access comprehensive information that goes into the planning and controlling of activities within business organizations. In addition, AIS provide high quality of information to internal and external users and typically cover six main aspects: people, procedures, data, software, information technology infrastructure, and internal controls. Alnajjar (2016), investigate the impact of accounting information systems on the management performance and organizational performance. The result detect that the accounting information systems significantly impact the management performance and organizational performance. Through applying accounting information systems, the obtain information will be more useful, for decision making in order to achieving the company’s goals and objectives, which increase the company performance. Samuel (2011), indicate that Accounting Information Systems are essential means for organizations’ effective management, for decision-making and controlling activities, also AIS is very effective tool for controlling and coordinating the activities of an organization. Moreover AIS consider a serious factor to produce high quality of accounting information. The same result achieved by Hafij Ullah et al. (2014), who confirm there is significant relationship between accounting information and strategic decisions, whilst Awosejo et al. (2014), recognize the using of AIS improved the firms productivity, from other hand Qatanani and Hezabr (2015), discover the main factors that managers need to improve the accounting systems which in turn improve the quality of accounting information required to progress the value chain of business organizations (clearly defined responsibilities and authorities, specific work procedures, internal controls, recruit employees who have the competent qualifications, training and high quality of accounting systems). Furthermore Almbaidin (2014) achieved to important fact about the role of accounting information system in improving the effectiveness in Jordanian banks. From other hand Jawabreh and Alrabei (2012), detect there is no relationship between accounting information system and planning, controlling, and decision-making in Hotels. The same result achieved by Jose Antonio Perez-Mendez and Angel Machado-Cabezas (2015), they find applying AIS does not assurance improve the performance in companies, also Soudani, (2012), find there is no any relationship between using AIS in improving the company’s performance, Ismail and King (2005) revealed a positive relationship between AIS and performance measures. Also Powell and Dent-Micallef, (1997), notice that using IT didn’t provide competitive advantage for achieving results. Saeidi (2014), revealed Accounting information systems (AIS) which is part of information systems (IS) are make easy the decision making process within organizations and should be modified to an company’s environment, requirements, and structure. Grande et al. (2011), measuring the relationship between the use of the Accounting Information Systems (AIS) and how improved performance indicators and productivity, also they find appositive relation between variable. (Grande et al. 2011; Ofori and Lu (2016), they discovered a strong relation between the accounting information systems, in a way that will be contributed in rising the company efficiency. According to literature survey, some results obtain a positive relationship between investment in AIS and financial profitability, (Menachemi et al., 2006; Huang and Liu, 2005; Ravichandran and Lertuangsatien, 2005; Verhees and Meulenberg ,2004; Brynjolfsson and Hitt, 2003; Santhanam and Hartono, 2003; Bharawadj, 2000; Li and Ye, 1999; Powell and Dent-Micallef ,1997; Barua et al., 1995; Dos Santos and Peffers, 1995; Abdallah, 2013: Adrian-Cosmin, 2015; Zakaria et al. 2017). While from other hand few researches shows that no clear relationship exists between applying AIS and improving performance indicators, such as (Jose Antonio PerezMendez and Angel Machado-Cabezas 2015; Soudani, 2012; Dibrell et al., 2008; Bharadwaj, et al. 1999; Rai et al., 1996; Jawabreh and Alrabei 2012). Depending on that, this study come to discover the nature relation between using AIS on banks success, and how actually AIS effect on banks positively or negatively, used different techniques for measuring the variables, in order to obtain more precise results.
ACCOUNTING INFORMATION SYSTEM
Evaluation of AIS has been a popular research topic over the years in terms of success and effectiveness, which are used interchangeably. An accounting information system is a set of interdependent activities, documents, and technology designed to collect, process, and report information for decision-making purposes (Hurt, 2013). The efficient integration of accounting applications enhances the flexibility of information generation, improves the quality of the financial report produced, and provides timely and reliable information to support planning and decision making within the organization (Roberts & Strikes, 2011; Shagari et al., 2015). Successful implementations of AIS in organizations have impacted positively the methods of data collection, processing, and dissemination of the information to the intended user(s) (Damera et al., 2013). Damera et al. further explained that there are three levels of AIS integration in organizations: 1) information integration, which states that the data collected or the information produced are managed under a unified database; 2) operational integrations, which involves the linkage of business activities of various unit of the organization; and 3) time integration, which allows different units to carryout operations concurrently, in this way the process of data entry into the system allow user(s) to enter data once, so as to minimize the possibility of errors and inconsistency. Such methods enable organizations to have a clear picture of happenings in their chain process. Moreover, AIS are believed not just to improve the effectiveness and efficiency of business processes and reduce cost but also to provide reliable real-time data on demand, facilitating global knowledge and new reporting tools, as well as the integration and collaboration between areas of risk and business operations (Bruno et al., 2015). Considering the nature of IS today, rarely is AIS distinguished separately from IS (Gelinas, Dull, & Wheeler, 2012).
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought the impact of accounting information system on the performance of banking sector in Nigeria
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information the impact of accounting information system on the performance of banking sector in Nigeria. 200 staff of first bank, Rivers state was selected randomly by the researcher as the population of the study.
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
SUMMARY, CONCLUSION AND RECOMMENDATION
It is important to ascertain that the objective of this study was to ascertain the impact of accounting information system on the performance of banking sector in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the impact of accounting information system on the performance of banking sector in Nigeria
This study was on the impact of accounting information system on the performance of banking sector in Nigeria. Four objectives were raised which included: Examine the relationship between accounting information system and profitability in the banking sector in Nigeria, determine the relationship between accounting information system and Earning per share, to examine the impact of accounting information system application on improving employee’s satisfaction in banks according to banks, to examine the impact of accounting information system application on improving what customer saying about banks services according to banks managers’ perspective. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of first bank Rivers state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, accountants, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
The major conclusion of this study is that quality accounting information in terms of relevance to users contributes significantly to the performance of bank both financially and in terms of service delivery. This we conclude is as a result of the fact that the use of such information for decision making is bound to yield the desired results.
On the basis of the above conclusions, we make the following recommendations:
- More effort should be directed towards the production of good quality accountingvinformation in all the commercial banks in Nigeria in order to improve financial performance. Such information should be free from systematic or deliberate bias, material or significant error, complete and not fraudulent with high levels of predictive and confirmatory value. Accounting practices that tend to over or understate, or even delay the reporting process should also be avoided.
- Commercial banks in Nigeria are advised to employ highly skilled competent professional accountants to generate the financial information.
- Training workshops and seminars aimed at sensitizing commercial bank‟s accounting and record keeping staff and other key decision makers should be organized. This would enhance awareness of stakeholders of the need for good, quality, reliable and timely information to enhance proper financial management practices.
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