How the Effectiveness of Accounting Information Systems Affects the Performance of Business - Research Proposal Example

WORKING TITLE: HOW THE EFFECTIVENESS OF ACCOUNTING INFORMATION SYSTEMS (AIS) AFFECTS THE PERFORMANCE OF BUSINESS FIRMS Table of Contents 1.0 INTRODUCTION 2 2.0 STATEMENT OF THE PROBLEM 4 3.0 LITERATURE REVIEW 4 4.0 KEY RESEARCH QUESTIONS 7 5.0 METHODOLOGY 9 5.1 Sample and Data Collection 9 5.2 Variable Measurement 10 5.2.1 Independent Variable 10 5.2.2 Mediator Variable 10 5.2.3 Dependent Variable 11 5.3 Research Method 11 6.0 LIMITATIONS 11 7.0 CONCLUSION 12 8.0 REFERENCES 13 1.0 INTRODUCTION An accounting information system usually abbreviated as (AIS) is usually defined as the system of collecting financial and accounting data which is then stored and processed to be used by an individual in accounting tasks for an organization (Fischer, M.M., and Getis, A. eds., 2009). An Accounting Information system usually has accounting software packages which facilitate its functions. The current technological advances have played a greater role in accounting commerce. The application of the software tools is very essential in cash, debt, risk and financial management as posited by Jackson, M., and Cossitt, B., (2015). With the use of accounting soft wares , the general accounting processes such as planning, budgeting and even reporting have been streamlined (Boulianne, E., 2014). The real challenge of expanding the accounting portfolio lies in the maximization of the various accounting software tools (Solaimani, S., and Bouwman, H., 2012). This will ensure that vital information which essential for accounting is constantly and easily available. The main two categories of accounting support tools are the functional and the core analytics. Osuala, E.C., and Adukwu, E.A., (2014) notes that Functional analytics intends to analyze the derivatives and risk management portfolios. On the other hand, core analytics tools intend for optimization, mathematics and also statistically analyzing accounting data. With the increasing globalization, companies are being faced with the challenge of effective accounting according to Romney, M, et al. (2012). The accounting process for individuals is often tedious and daunting. The accounting software tools ease the task (Jackson, M., and Cossitt, B., 2015). There are different accounting software tools available in the market which companies can purchase at the different process. The major ones are the technical analysis software, the straight thought processing and financially the Microsoft office accounting software tools (Solaimani, S. and Bouwman, H., 2012). The technical analysis software tools help in the automation of accounting functions of charting, analysis and then reporting (Solaimani, S., and Bouwman, H., 2012). These functions are very essential in the in the accounting process for the organizations. The features of these software tools include charting, optimization, scanning and alerting. This software is available in the form of source commercial software. The second accounting software tools are the Straight Thought Processing. They enable the conduction of an analysis on the operations of a company. These soft wares are very essential for managers and accountants for the accounting processes. The STP software tools are also important for the minimization of settlement risk (Osuala, E.C., and Adukwu, E.A., 2014). Finally, there are the Microsoft Accounting software tools for accounting. It offers a solution for companies in saving time which is required for managing tasks according to Boulianne, E. (2014). It also enables companies to get organized and thus providing good opportunities for growing the business in the online platform as explained by Fischer, M.M. and Getis, A. eds., (2009). The software is equipped with business templates. The Microsoft Office Accounting is essential in the provision of real-time insight to the organization such as bank account balances, accounts receivable and also accounts payable as posited by Ismail, N.A. and King, M., (2014). 2.0 STATEMENT OF THE PROBLEM The objective of this research will be to determine the extent of effectiveness of these Accounting Information System in the determination of the performance of a business. . The study will also determine how these software tools can add value to the Accounting Information System. The research will seek to determine the effectiveness of the Accounting Information System (AIS) which include relevance, timeliness, and reliability. The following question will be answered in the research proposal: How the effectiveness of the AIS can affect the performance of a business entity. 3.0 LITERATURE REVIEW Simkin et al. (2013) noted that the first phase of developing Accounting Information System in business firms began with attempts to automate the operations of organizations which were performed through mechanization. It was simply a mere process of employing simple electro-mechanical gadgets such as an accounting calculator so as to speed up basic transactions occurring in most organizations such as counting of money and even computations, according to Deshmukh, A. and Romine, J., (2002). The other phase was to process data for storage and quick retrieval. In the late 1970s, business data was mostly processed with the help of punched card equipment with the assist of the mainframe computers which had low capabilities. In the 1980s, there was the emergence of telecommunications and networking technologies which was deployed for business purposes. Data could be processed, and this saw the emergence of Accounting Information Systems (AIS) as found out by Jackson, M., and Cossitt, B., (2015). This transformed the way firms would do business. With the introduction of the Accounting Information System (AIS), business firms enhanced their performance and competitiveness. AIS was effective in carrying out transactions for the business firms, provision of accounting information which was essential for making decisions (Jackson, M., and Cossitt, B.,(2015). AIS did not only affect the operations of the business firms but also how accounting information was flowing into the organizations. However, there are various challenges which are affecting Accounting Information System (AIS) such as poor telecommunication system and shortages of power generation especially in Africa as noted by Deshmukh, A. and Romine, J., (2002). Collis et al (2012) described accounting software as a type of software which is essential in recording and processing accounting transactions. It also helps in providing information for the accounting systems. Ismail, N.A. and King, M., (2014) noted that accounting software packages may be developed in-house by the company or may be even purchased from the third party. Weygandt, J.J., et al (2014) claims that accounting software packages are focused on recording, summary and the validations of business information. Seethamraju, R., (2012) notes that the current system of accounting is performed with the help of accounting soft wares compared to the traditional manual way which was ineffective. Bach, V. et al (2013) claims that the key to a company’s survival is the continuous growth of its performance. Bach, V. et al.(2013) also posited that the integration of new accounting soft wares in the existing accountancy provide a more diverse information regarding the company’s data and also preventing duplications and data conflicts which could occur. Desai, V.S., (2015) claims that the efficacy of accounting software tools improves the effectiveness of the existing accounting information system thus improving the performance of the business. An effective information system is very vital in the provision of reliable accounting information so as to assist in any concerned decisions as explained by Desai, V.S., (2015). The effectiveness of the accounting system can be assessed as an added value of benefits. Jones N., (2015) claims that the effectiveness of an accounting system for an entity determines the ability of the firm to meet the set targets. According to Jones, N., (2015), an Accounting Information System with good accounting software packages can be termed effective if it can easily satisfy the user therefore improving the quality of the user’s performance. According to Fischer, M.M. and Getis, A. eds., (2009), an effective accounting system has good accounting soft wares for collection, entering, management, controlling, reporting, procession and storing of data making an organization attain its set goals. From the definition of an Accounting Information System it is very clear that an information system has various important components. First, is that it uses effective accounting software packages (Du, K., et al 2015). The soft wares enable it to function as required. Secondly, the Accounting Information System is designed in a way that it can accomplish targets set. A good example is where by the information system is designed in collection and procession of data regarding financial activities so as to assist an accountant in preparation of financial statements. The accounting soft wares enable the input, output and data storage. They also enable the processing and control of activities which influence the performance of a business entity (Deshmukh, A. and Romine, J., 2002). Taif, N.F.M et al. (2014) claims that data ought to be entered which is essential for accounting in the AIS to be processed. According to Taif, N.F.M, et al. (2014), accounting data are the facts which are usually collected and processed with the help of the AIS. Ismail, N.A. and King, M., (2014) explained that accounting data are meaningless and useless thus raising the need to be processed and transformed into meaningful information with the help of the AIS. According to Ismail, N.A. and King, M., (2014), AIS consist of reliability, relevance and finally the timeliness. Lipi, I. et al. (2015) defined Reliability in the AIS as the accuracy and stability of the accounting information. They also found out that relevance could best be explained as the adequacy and the significance of the accounting information which is available. Moghadam, H.M. et al. (2013) defined timeliness as the currency of the accounting information. Data is processed by many businesses firms with the help of the AIS, which has the Accounting software packages. According to Moghadam, H.M. et al. (2013), the data processed by the AIS is directed by instructions and procedures which are done with the help of the various software tools. Hall, J., 2012 found out with the changing technological advances, accounting soft wares could be used to generate procedures and instructions which will give directions to the AIS to process the data. Romney, M, et al (2012) defined users like the people who use the AIS system to acquire accounting information which will enable them to do the accounting tasks. They gave an example of accounting managers who use financial statements which have been generated from the AIS. Kimmel P.D. et al (2010) claims that AIS has great importance in the accountancy profession. 4.0 KEY RESEARCH QUESTIONS This research will determine how the effectiveness of Accounting Information System (AIS) affects the performance of business companies. The thrust of the literature has analyzed how accounting software packages affects the effectiveness of the Accounting Information System. The effectiveness of AIS is measured by its reliability, relevance, and timeliness. However, the expected effectiveness of the AIS which lies in the accountancy management may include the type of accounting software used in the determination of the efficacy of the AIS. The three main questions which arise in the research proposal are: 1. How the effectiveness of the AIS affect the general performance of a business? 2. How the learning organization affects the effectiveness of the AIS? 3. How the organizational support offered by the organization impact the effectiveness of the AIS? The study will seek to examine the impacts of the effectiveness of the AIS on performance. The factors which will determine the effectiveness of the AIS are reliability, relevance and the timeliness of the performance. The research will answer how learning organization affect the effectiveness of the AIS. Weygandt, J.J, et al. (2009) defined learning organizational as the term given to a business organization which gives the members the opportunity to learn thus improving the performance. Finally, this research will seek to answer how the organizational support affects the effectiveness of the Accounting Information Systems. Heinrichs, J.H. ( 2003 ), defined organizational support as the ability of employees to believe that their business organization realizes and values their contributions towards to the organization thus taking care of their well-being and meeting their social needs. There is a high likelihood of employs accepting and contributing to the new Accounting Information System if the organization gives full organizational support to the organization. The following are three hypotheses which can derive from these research questions:- 1. There are positive effects of relevance, timeliness, and reliable on the performance. 2. The learning organization positively affects the reliability, relevance and timeliness. 3. The organizational support affects positively the reliability, relevance and timeliness of the Accounting Information System. 5.0METHODOLOGY This section will give the various philosophical assumptions which will underpin the research. There will be introduction of the research strategy and the empirical technique which will be employed. There will be definition of the scope, method and limitations of the research design employed. The philosophical assumption for this research will be positivity paradigm for the research. Positivistic approaches are on the basis is of belief that the behaviour of the human will be influenced by the natural sciences (Dumay, J. and CAI, L., 2015). There will be links to explain the relationship between the variables of the research relating to a particular theory. 5.1 sample and Data collection The potential respondents in the research will be accountants in the company. The research will use a total of almost 600 accountants from different companies which are identified from the Stock Exchange of the UK database. Questionnaires will be distributed to almost 500 accountants in the various organizations chosen. According to Tarone, E.E. et al (2013), the responses will need to be above 30% so as to be considered sufficient. There will also be application of random sampling in the research. The survey instrument package will be given out to each respondent through the mail and then be returned by the various respondents directly .this will ensure confidentiality. Each package distributed to the respondent will comprise of a questionnaire and a cover letter. On the cover letter, the researcher will be explaining the instructions to the respondents so as to complete the survey well. There will also be the inclusion of a well self-addressed envelope to each respondent. The questionnaires will be reviewed and revised by a team of experts. This will be a way of improving the validity of the questionnaires before they have been sending to the various respondents. The response rate ought to be above 30% so as to be regarded sufficient and acceptable (Lushey, C.J., and Munro, E.R., 2014). The research will also be concerned by the possible problems which may occur during the research process. Problems such as response errors, response biases by respondents will be assessed and investigated using the first and second wave data as it was recommended by Hair Jr, J.F. et al. (2015). 5.2 Variables Measurement 5.2.1 independent variables In the research, learning organization and the organizational support will be used as the independent variables in the analysis of the data. The learning organization will be tested on the selected organizations for the research. Learning organization will be measured with ten items throughout the research. There will be the measurement of how the organizations which are selected how well they have developed a culture of change and learning for their employees. The other independent variable which is organization support will seek to determine how the selected organizations are promoting the effectiveness of the AIS. Eight items will be used for measuring the organizational support of the selected companies. 5.2.2 Mediator variable The effectiveness of the AIS will be the mediator variable in this research. The effectiveness of the AIS in the research will be measured on its reliability, relevance, and timeliness. Eight items will be used to measure the reliability which will consist on the accuracy and consistency. Relevance will be measured by four items on adequacy and importance of the accounting information. Finally, timeliness will be measured by six items on the currency of the information. 5.2.3 Dependent Variable The performance of the organization will be the dependent variable. The performance will be determined by the assist of six items as profitability. Customer satisfaction level and the quality of service will be measured at this level. 5.3 research method The content validity of the research will be examined in the questionnaire. The data collected will be analyzed with the help of the factor analysis. Factor analysis will be employed to determine the link ensuing between the variables. Factor analysis will be essential in testing the construct validity and the scale reliability. Ordinary least squares (OLS) regression analysis will also be used in testing the relationship which has been hypothesized in the research. This analysis methodology will be practical in estimating the factors and the consequences which are affecting the effectiveness of the AIS. 6.0 LIMITATIONS According to Rubin, A. and Babbie, E., (2015), limitations can be referred to the weaknesses evident in the research. There are various limitations of this research proposal. First, is that the data which may be collected may be too general thus not giving good results. Secondly, there is the likelihood of the respondents being biased considering they will be accountants of the selected companies. The respondents may fail to indicate the challenges and opportunities they have had encountered in their line of duty. 7.0 CONCLUSION The main objective of this research will be to analyse the relationship existing between the various independent variables which are learning organization and the organizational support, the mediator variable which is the degree of effectiveness of the accounting information system (AIS) and the dependent variable which is the degree of performance of the business. Generally, the research will be looking to see whether the effectiveness of AIS affects the performance of business firms whether positively or negatively. The research will determine whether aspects of effectiveness of the AIS which are reliability, relevance and timeliness have an impact on the performance of business firms. The results also will be used to analyse the various accounting software tools used and analyse their efficacy. The results obtained will be used in improving some important aspects affecting the degree of effectiveness of the AIS such as the accounting software packages used, the organizational support offered by the organization and the learning organization in the business firm. The Conclusions will be drawn from the results obtained in the research. 8.0 REFERENCES Alikhani, H., Ahmadi, N. and Mehravar, M., 2013. Accounting information system versus management information system. European Online Journal of Natural and Social Sciences, 2(3 (s)), pp.pp-359. Bach, V., Brecht, L., Hess, T. and Österle, H., 2013. Enabling systematic business change: integrated methods and software tools for business process redesign. Springer-Verlag. Boulianne, E., 2014. Impact of accounting software utilization on students' knowledge acquisition: An important change in accounting education. Journal of Accounting & Organizational Change, 10(1), pp.22-48. Budhiraja, N., Skeen, M.D., Wang, H., Rubin, E.J. and Banerjee, D., Vitria Technology, Inc., 2006. Integrated business process modeling . :U.S. Patent 7,120,896. Collis, J., Holt, A. and Hussey, R., 2012. Business accounting: an introduction to financial and management accounting. Palgrave Macmillan. Desai, V.S., 2015. Risk Analysis :. International Journal of Risk and Contingency Management (IJRCM), 4(1), pp.53-62. Deshmukh, A. and Romine, J., 2002. Accounting software and e-business. the CPA Journal, 72(11), p.52. Du, K., Huddart, S. and Xue, L., 2015. Accounting Information Systems and Asset Prices. Dumay, J. and Cai, L., 2015. research methodology : Journal of Capital, 16(1), pp.121-155. Fischer, M.M. and Getis, A. eds., 2009. Handbook of applied spatial analysis: software tools, methods and applications. Springer Science & Business Media. Gravetter, F. and Forzano, L.A., 2015. Research methods for the behavioral sciences. Cengage Learning. Hair Jr, J.F., Wolfinbarger,Samouel, P. and Page, M.J., 2015. Essentials of business research methods. Routledge. Hall, J., 2012. Accounting information systems. Cengage Learning. Ismail, N.A. and King, M., 2014. Factors influencing the alignment of accounting information systems in small and medium sized Malaysian manufacturing firms. Journal of Information Systems and Small Business, 1(1-2), pp.1-20. Ismail, N.A. and King, M., 2014. Factors influencing the alignment of accounting information systems: Journal of Information Systems and Small Business, 1(1-2), pp.1-20. Jackson, M. and Cossitt, B., 2015. Is Intelligent Online Tutoring Software Useful in Refreshing Financial Accounting Knowledge?. In Advances in Accounting Education: Teaching and Curriculum Innovations (pp. 1-19). Emerald Group Publishing Limited. Johnson, M.W., Christensen, C.M. and Kagermann, H., 2008. Reinventing your business model. Harvard business review, 86(12), pp.57-68. Jones, N., 2015. Acctg 729 Jones Spring 2015. Kimmel, P.D., Weygandt, J.J. and Kieso, D.E., 2010. Financial accounting: tools for business decision making. John Wiley & Sons. Lipi, I., Rama, R. and Agaraj, X., 2015. Implications of Accounting Information System Implementation in SMEs: A Study on Retail Business in Vlore Region. Mediterranean Journal of Social Sciences, 6(3), p.553. Lushey, C.J. and Munro, E.R., 2014. Participatory peer research methodology: An effective method for obtaining young people’s perspectives on transitions from care to adulthood?. Qualitative Social Work, p.1473325014559282. Malmmose, M., Lueg, R., Khusainova, S., Iversen, P.S. and Panti, S.B., 2015. Charging customers or making profit? Business model change in the software industry. Journal of Business Models (2014), 2(1), pp.19-32. Moghadam, H.M., Akhavansaffar, M., Bakhshaei, Z. and MirHosseini, S.Y., 2013.:accounting information system. Elixir International Journal A, 55, pp.13268-13273. Neely, P., Forsgren, N., Premuroso, R., Vician, C. and White, C.E., 2015. Accounting Information Systems (AIS) Course Design: Current Practices and Future Trajectories. Communications of the Association for Information Systems, 36(1), p.30. Osuala, E.C. and Adukwu, E.A., 2014. Utilization of Computer Software in Posting Transactions to Ledger Accounts in the Teaching of Financial Accounting in Tertiary Institutions in the North-East Nigeria. Journal of Education and Practice, 5(6), pp.1-6. Romney, M., Steinbart, P., Mula, J., McNamara, R. and Tonkin, T., 2012. Accounting Information Systems Australasian Edition. Pearson Higher Education AU. Rubin, A. and Babbie, E., 2015. Essential research methods for social work. Cengage Learning. Seethamraju, R., 2012. Business process management: a missing link in business education. Business Process Management Journal, 18(3), pp.532-547. Simkin, M.G., Norman, C.S. and Rose, J.M., 2013. Accounting information systems. Wiley. Solaimani, S. and Bouwman, H., 2012. A framework for the alignment of business model and business processes: a generic model for trans-sector innovation. Business Process Management Journal, 18(4), pp.655-679. Taif, N.F.M., Aman, A. and Aziz, K.A., 2014, November. Issues in Accounting Information System and its Impact on the Information Quality. In International Management Accounting Conference VII. Tarone, E.E.and Cohen, A.D., 2013. Research methodology in second-language acquisition. Routledge. Weygandt, J.J., Kieso, D.E., Kimmel, P.D. and Aly, I.M., 2014. Managerial Accounting: Tools for Business Decision-Making. Wiley Global Education. Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2009. Managerial accounting: Tools for business decision making. John Wiley & Sons. Williamson, L. and Petrova, M., 2015, March. Critical Analysis of an MBA Degree’s Instructional Assessment Practices. In Society for Information Technology & Teacher Education International Conference (Vol. 2015, No. 1, pp. 1895-1898). Read More