Accounting Information System in Companies in Australia - Research Paper Example

Table of Contents Introduction 2 Literature Review 3 Purpose of Study 5 Research Objectives 6 Research Questions 6 Methodology and Research Design 7 Strengths and Limitations 9 Bibliography 10 THE ROLE OF ACCOUNTING INFORMATION SYSTEM IN COMPANIES IN AUSTRALIA Introduction Accounting information system (AIS) is commonly used by businesses to maintain the records of financial data such as sales, expenses etc. The basic aim of using accounting information system is the accumulation of data so that key stakeholders including managers, creditors and investors may access the information. Actually organisations are becoming more and more dependent on accounting information systems to maintain their records and this system appears to be a critical system in an organisation. Since AIS has changed the way the organisations collect, process, record, analyse and present their data, therefore, discussing the role of these systems has become extremely important for the organisations planning to adopt these systems. The aim of this research paper will be to evaluate the extent to which different organisations are dependent on AIS. This paper will discuss the role played by accounting information systems in improving the processes of companies including both public and private companies. Furthermore, it will also highlight the areas where the AIS need improvement such as poor quality information because it directly affects the decisions of organisations. Therefore, by collecting the data from different organisations and in consideration to the previous literature findings, this report will evaluate the role of accounting information systems in organisations. Literature Review The increasing role of AIS in strategic decisions of companies has drawn the attention of management and researchers towards the role of AIS in companies. Toluyemi (1999) argues that accounting information is important for the management of an organisation just like any large stock holdings therefore, to make informed decisions through this information, it should be distinctively stored, updated, retrieved and disseminated. Shareia (2006) adopted a different approach and he studies the present and potential role of AIS in improving the developments in developing economies especially in Libya and he argues that to achieve the goal of developments in the countries like Libya, development and use of accounting information systems and assessment of the factors affecting them is important. Hall (2001 cited in Valdez, 2008) argues that accounting information system which is well organised will make everyday business relatively easier and more effective. Carlson and Parker (1998) emphasises on the importance of computerised accounting information systems in success of businesses and argues that average number of companies facing computer outage for ten years will never fully recover and fifty percent of them are out of business within five years. Sajady, Dastgir & Nejad (2008) studied the role of accounting information systems in companies listed on Tehran Stock Exchange and found that AIS improved internal controls, decision making, companies’ transactions and quality of financial reporting. The use of accounting information systems brings a lot of opportunities for the companies such as effective ways to complete accounting functions and time and cost savings (Dalci, n.d.). On the other hand, few researchers argue that accounting information systems cannot be used in all nature of businesses. In a research study on use of AIS by operations manager in project companies, Veeken and Wouters (2002) found that in project companies, direct observation of processes is more effective than representation of these processes in AIS. In his research study, Xu (n.d.) found that data quality issues of accounting information can impact the organisations negatively therefore, to avoid such concerns, attention should be paid both towards AIS and organisational factors such as key stakeholders because both these factors together impact the data quality in AIS. Ezzamel and Bourn (2002) analysed the role of accounting information systems in companies facing financial crisis and through normative model and case study approach they found that during the crisis period, AIS did not offer necessary characteristics for responsive crisis management and effective proactive management. Moreover, they stressed on the need of conducting an empirical study on the topic because they found normative model as providing partial explanations of topic. Therefore, through empirical research method and in consideration to the findings of early researchers, this study aims to evaluate the role of AIS in companies. Purpose of Study The increasing complexity of businesses and accounting information and increasing demand of sharing accounting information within departments of company and with key stakeholders have enhanced the need of well organised accounting information systems. Still, there are many companies which are not relying on such systems because of data quality and security issues. The purpose of this research study is to find whether the companies using AIS are relatively better managing their accounting information or not. Secondly, another purpose of this research is to determine whether companies not using such systems are satisfied with their current method of accounting information management or not. Research Objectives To evaluate the benefits of accounting information systems in the companies using them To evaluate the dependability of companies on accounting information systems To determine the effectiveness of accounting information management by companies not using AIS To analyse the drawbacks of AIS faced by companies using them To compare the effectiveness of accounting information management of companies using AIS and companies not using AIS Research Questions The research question that will be investigated in this research study is as follows: “Does accounting information system play a significant role in increasing the accounting information handling in organisations, if yes, then what are the benefits of AIS in these companies, if not, then what are possible drawbacks”? Methodology and Research Design This research study will study the role of AIS in organisations through qualitative and quantitative methods. The qualitative analysis will be done by analysing the findings of previous researchers. In quantitative analysis, a survey will be conducted. Data Collection: To collect the data, ten companies operating in Australia will be selected. Before selecting the company, it will be ensured that five of the selected companies are using accounting information system and five companies are not using any accounting information system. The idea is to compare the accounting information handling systems in two groups of organisations and then to reach on conclusions regarding the role of AIS. The data will be collected through survey and a questionnaire will be developed which will be mailed to selected companies. Total 500 questionnaires will be sent to all companies (50 to each company). Survey Design: The survey questionnaire will be divided into four parts. In the first part, demographics of the selected sample will be collected including company’s name, business type, designation and gender. The second part of questionnaire will be designed to collect data on nature of processes of accounting information, kind of accounting software used and nature of accounting applications. The third part of questionnaire will be designed to collect information on benefits of AIS and fourth part will have questions related to drawbacks of AIS if any such as security concerns, data quality issues etc. Data Analysis: The collected data will be arranged by organisations in Excel and data analysis will be done in SPSS Software. In SPSS analysis, cross tabulation method will be used to analyse the responses of respondents to different questions. Frequency analysis will be done to analyse the frequency of respondents for each question asked. Internal consistency analysis will be also done to determine the reliability of questionnaire in collecting relevant data. The findings will be presented in tabular forms and graphical forms (if required). Strengths and Limitations The major strength of the proposed research study is its methodology as it will help us to compare whether companies using AIS are better managing their accounting information or not. Since most of the researchers have previously evaluated the role of AIS in organisations through case study method, therefore, this empirical research will have a broader scope to investigate the role of AIS. The only limitation of this research study is its geographical limitation because companies will be only selected from Australia, which limits the scope of the study. Bibliography Carlson, J. S., & Parker, J. D., 1998. Disaster Recovery Planning and Accounting Information Systems. Review of Business, [Online] Volume 19 Available at: http://www.questia.com/googleScholar.qst;jsessionid=MT9P0rzCXnV0pP8F31pKwMVjZSc8dZQpV3tly1fnpWVprvJpY1Ld!-933692497!-1933696167?docId=5001370062. [Accessed 29 July 2010]. Dalci, I., n.d. Benefits of Computerised Accounting Information Systems on the JIT Production Systems. Review of Social, Economic & Business Studies, [Online] Vol. 2, pp. 45-64. Available at: http://fbe.emu.edu.tr/journal/doc/2/2Article02.pdf. [Accessed 29 July 2010]. Ezzamel, M., & Bourn, M., 1990. The roles of accounting information systems in an organization experiencing financial crisis. Accounting, Organizations and Society, [Online] 21 Jul., 15 (5), pp. 399-424. Available at: http://www.sciencedirect.com/science/article/B6VCK-45W6N5N-JX/2/27504e9cbda05c30b99edb9d32789465. [Accessed 30 July 2010]. Sajady, H., Dastgir, M., & Nejad, H. H., 2008. Evaluation of the Effective of Accounting Information Systems. International Journal of Information Science and Technology, [Online] 6 (2), pp. 49-59. Available at: http://www.srlst.com/ijist/ijism-Vol6No2/ijism62-49-59.pdf. [Accessed 29 July 2010]. Shareia, B., 2006. The role of accounting systems in decision making, planning and control in a developing country: the case of Libya. PhD thesis, School of Accounting and Finance, University of Wollongong, [Online] Available at: http://portal.acm.org/citation.cfm?id=339229. [Accessed 29 July 2010]. Toluyemi, T., 1999. The role of accounting information system in the sustainability of agricultural development projects in Nigeria. Information Technology for Development, [Online] 8 (4), pp. 209-220. Available at: http://portal.acm.org/citation.cfm?id=339229. [Accessed 29 July 2010]. Valdez, D., 2008. The Role of Accounting Information Systems in Achieving Organisational Objectives. [Online] (Updated 21 Nov 2008) Available at: http://www.mightystudents.com/essay/Role.Accounting.Information.7064 [Accessed 30 July 2010]. Veeken, J. M. H., & Wouters, J. F. M., 2002. Using Accounting Information Systems by Operations Managers in a Project Company. Accounting, Organizations and Society, [Online] 21 Jul., 15 (5), pp. 399-424. Available at: http://www.sciencedirect.com/science/article/B6VCK-45W6N5N-JX/2/27504e9cbda05c30b99edb9d32789465. [Accessed 30 July 2010]. Xu, H., n.d. Data quality issues for accounting information systems’ implementation: Systems, stakeholders, and organizational factors. Journal of Technology Research, [Online] Available at: http:// www.aabri.com/manuscripts/09189.pdf. [Accessed 30 July 2010]. Read More