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

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

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

 The emerging global economic scenario characterized by advancement in information technology, rapid changes in production processes, increased sophistry of the consumer, fierce market competition and unethical skimming activities of producers in the drive to survive the unpredictable and complex business dynamics, has brought to the fore the crucial role of accounting information in economic and business discourse especially in relation to enhancing effectiveness (Curtis, 2005). Gone were the days when business organisations were simply required to make profit, survive and provide a fair return to investors’ on their interest (Benstone, 2007). The modern business organisations find itself in the atmosphere of global uncertainties, cut throat competition locally and internationally and unprecedented change in the economy (Okoli, 2012). Hence, a great demand is often placed on the managers of these organisations to make pragmatic and informed decisions if the organisation is to move forward as the success or otherwise of any organisation is often a function of the sum of the decisions taken in the past. However, the quality of decisions taken by managers rests upon the substance and accuracy of information provided by systems available to them (Shillilain & Meyer, 2003).

Accounting information which is sometimes referred to as a means to an end, with the ending being the decision that is helped by the availability of accounting information as described by Arneld and Hope (2000), helps managers understand their tasks more clearly and reduces uncertainty before making decisions. Financial reporting by companies is effected via the preparation and publication of financial statements. These financial statements are required to exhibit certain degree of quality in terms of their information contents. When the financial reports disclose quality accounting information, according to Benston (2007), the decision of the users (investors, management, government, employees, creditors, analysts) of the reports could as well be qualitative and informed. The users of the financial reports use the reports frequently in passing judgments on the viability of a company. According to Ghofar and Saraswati (2008) investors in many cases are too dependent on the quality of accounting disclosure. However, the quality of information disclosure in the financial reports is also an area of great relevance which can be attained through effective accounting information system (VanBeest, Braam & Boelens, 2009).

Accounting Information System (AIS) of the past focused on the recording, summarizing and validating of data about business financials, the organization that were concerned about the respective decisions associated with financial accounting, managerial accounting, and tax compliance issues Hollander et al. (2006). The need to integrate these often diverse systems led to the accountant’s appreciation of shared databases that provide a cohesive picture of the organization’s data, eliminating duplications and reducing data conflicts (Okezie, 2004). This had led to the establishment of the Accounting Information System.

Accounting information system has to do with any combination of information technology and peoples’ activities that support operations, management and decision making, though in a narrow sense (Okezie, 2004). In a broader sense however, the term accounting information system is used to refer to the interaction between people, processes, data and technology, Grande, Estébanez and Colomina (2011). Accounting system, in recent times, has tended to be a system of information that does not stop at limits of data and financial information, but also it includes data and descriptive and quantitative information which is useful in decision making for users distinct with plurality and diversity Okoli (2012). Information provided by the system must be capable of achieving the goal that it has been prepared for (Sajady, Dastgir & Hashem, 2011). Hence the role of Accounting Information System for effective decision making cannot be over emphasized (Borthick, 2000).

It is noteworthy to say here that Accounting Information System derives its source from accounting data. Accounting Information Systems produce results which enhances decision making. Hence, it can safely be concluded that Accounting Information System is not an end in itself but a means to an end i.e. decision making to improve corporate performance. Accounting Information System produces detailed and comprehensible accounting information which are invaluable basis for decision making Okoli (2012).

1.2 Statement of the Problem

Existing literature have 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 (Khanagha, 2011; Borthick, 2000; Copeland et al, 2008). However none of these studies have empirically analysed the value of the successful implementation of Accounting Information System in manufacturing organizations thereby creating a research gap.

Moreover the studies have shown a situation or situations rather in Spanish enterprises, Chinese Enterprises, American Firms 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 developing economies, specifically Nigeria using Ashaka Cement Plc as a case study.

1.3 Objectives of the Study

The main objective of this study is to present an analysis of the value of Accounting Information System (AIS) in Nigeria manufacturing firms with Ashaka Cement Plc as case study. However, this broad objective is broken down into the following specific objectives;

1.    To determine the relationship between Accounting Information System and effective decision making.

2.    To ascertain the extent to which Accounting Information System has enhanced the profitability and shareholders’ value in manufacturing firms.

3.    To determine whether installed Accounting Information System has improved the basic roles of costs minimization and the proper allocation of scarce resources in manufacturing firms.

4.    To examine the extent to which information technology can influence the effective operation of the Accounting Information System in the organization.

1.4 Research Questions

Based on the above stated objectives, the following research questions have been developed to guide our study.

1.    What is the relationship between Accounting Information System and effective decision making?

2.    To what extent has Accounting Information System enhance the profitability and shareholders’ value in manufacturing firms?

3.    Has the installed Accounting Information System improved the basic roles of costs minimization and the allocation of scarce resources in manufacturing firms?

4.    To what extent can information technology influence the effective operation of the Accounting Information System of the organization?

1.5 Research Hypotheses

From the stated study objectives and research questions developed, the following null hypotheses have been formulated;

H₀₁: There are no relationship between Accounting Information System and effective decision making.

H₀₂: Accounting Information System does not significantly enhance the profitability and shareholders’ value in manufacturing firms

H₀₃: The installed Accounting Information System has not improved the basic roles of costs minimization and allocation of scarce resources in manufacturing firms

H₀₄: Information Technology has no significant influence on the effective operation of the Accounting Information System in the organization.

1.6 Significance of the Study

This research work lays much emphasis on the value of good Accounting Information System to organizations and as such will help business organizations, the government and the general public in so many ways among which are;

Firstly, the study is important to the management of business organizations in showing them how to improve their Accounting Information system and its effect on efficient decision making and enhanced performance in order to achieve organizational objectives.

Furthermore, the study is also vital to the management of the studied organization on what policies to adopt that will definitely improve the Accounting Information system in order to enhance performance in line with the code of ethics of the system. This is because effective and efficient Accounting Information system is an essential tool for strengthening the internal control system of the financial reporting for management.

Finally, this work will be of immense help to students, researchers and scholars as it will open a new area of study and form bedrock for further research.

1.7 Scope of the Study

This study seeks to analyze the value of Accounting Information System in the Nigerian manufacturing industry. However, for the purpose of this study, the scope shall be limited to the analysis of the value of Accounting Information System in Ashaka Cement Plc for the period of 2014, using the entire workforce as the population of the study.

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

Chapters: 1 - 5
Delivery: Email

Number of Pages: 65

Price: 3000 NGN

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