Discuss about the Impact of Accounting Information Systems Organizational Performance.
An accounting information system refers to a system for gathering, storing, and processing accounting and financial data are that used by firms and decision making agents. Over the past few years, the system has become an essential part of the accounting process. Many organizations across the world have adopted and integrated the accounting information system into the accounting functions. Generally, it is a computer-based way for tracking the accounting activities of a firm in conjunction with information technology resources. Today, the system is designed to support all the accounting functions such as managerial accounting, taxation, financial accounting and reporting and even auditing. As a result, the system plays a critical role in organizations. It is worth pointing out that a well-designed AIS system can help an organization to run smoothly on the routine processes. Mainly, this is because the system not only allows for the collection, storage, retrieval, management, processing and reporting of financial data but also helps in uncovering accounting problems and mistakes within a company. Therefore, it is important for a firm to have strong and maintained AIS that is accurate and efficient to help in improving all areas of the accounting process.
This research seeks to address the problem of lack of a proper methods and systems of accounting within organizations. Many organizations fail and become unproductive in their processes due to lack of proper accounting operations within its structure. Therefore, this study seeks to determine and uncover the importance and impact of integrating a well-designed AIS into the operations of an organization with the aim of improving company performance in the hospitality industry. Ordinarily, the accounting processes within a healthcare facility are intense and large in number. Thus, it is difficult for the accountant to maintain proper records of all accounting information manually. For this reason, they utilize the services of accounting information system to enhance and improve the accounting process while improving the performance of the firm. By and large, an AIS plays three major functions, which in turn play a fundamental role in enhancing the performance of organization. The first function of the system is to effectively and efficiently collect and store data concerning the healthcare facility’s financial activities. Often, this comprises of getting the data from source documents across departments, recording them in journals and posting them to ledgers. The second role of the system is to supply information that is essential for making decisions. Mainly, this function is made possible though the production of financial statements and managerial reports by the system. The last function of the program is to ensure that all accounting functions are in place to correctly record and process data.
Primarily, this research proposal is structured into various sections. The first section is the statement of the research problem and the objective of this research. This section will state the overall research problems and objectives of the study. The section that follows is the theoretical background and literature review. This will provide a background of the studies and research already done on the research topic. Afterward, the last section is the research design and methodology. This section provides a detailed plan of the research design and methodology used to conduct the study. It will provide and justify the type of research approach and the type of data used in the study. In addition, it will describe the type of data used in the study, the data collection process, and the sample used to inform the study.
The purpose of this study is to examine the impact of the AIS on the performance of organizations within the healthcare industry. For a while now, the system has been used by firms and businesses across industries such as hotel, manufacturing and financial services industries to improve their operations and enhance productivity. Studies have shown that there is a positive correlation between the adoption and integration of the AIS system and the overall performance of the firm. In this regard, the study aims at determining the impact of the system on improving the degree of performance of the health industry in Australia, using Sydney as a case study.
The following research questions shall be used to guide this research’
- What is the impact of accounting information system in the healthcare industry of Australia?
- Does an accounting information system improve the performance of organizations that integrate it into their operations?
- How has the accounting information system been used to improve the performance of the healthcare industry in Australia?
The main objective of the study is to determine the impact of accounting information system in organizational performance.
- To find out the relationship between accounting information system and the performance of organizations.
- To identify the impact of Accounting Information System on the outcomes of the healthcare industry in Australia
- To find out how the Accounting Information System can be used to improve the performance of the healthcare industry in the country.
- Theoretical Background and Literature Review
Over the past few decades, the business environment has become very competitive. As a result, various studies have been conducted on the topic and theories have been developed on the impact of the system in improving the operations of an organization. Today, organizations are forced to improve their level of efficiency in operations in order to improve their competitiveness and achieve growth. Thus, they are forced to examine and develop strategies that aim at improving their overall operations effectively. As a result, many organizations have adopted the Accounting Information System (AIS) to help improve and smoothen the accounting process within their firms.
By and large, the system is very useful in performing essential accounting functions such as collecting, storing, retrieving and processing data concerning a firm’s financial activities. In addition, the system helps in supplying useful information for decision making by generating financial statements and managerial reports for an organization. Further, the system has been proven useful in making sure that all the accounting controls are put in place to accurately record and process the organization’s data. Therefore, overall, the AIS plays an essential role in improving the performance of organizations that adopt it.
Generally, the fact that the AIS guarantees and assures the use of availability of sufficient information to the organization at all times is what makes the program superior. As such, the continued availability of updated information is an essential factor within organization for the purposes of tax administration, statistical analysis, and decision making. Thus, the AIS helps the management of organizations at all levels to make well-informed decisions within the organization, and therefore improve the outcomes of the decision by improving performance of the organization.
Al-Dalabih (2018) in the article “The Impact of the Use of Accounting Information Systems on the Quality of Financial Data” examines effects of using AIS. Specifically, the study identifies the effects of using AIS in the quality of financial data and information that is used among companies in the Amman Stock Market. Using a sample of 70 people working across different service sectors, the results of the study reveal that there is a statistically noteworthy relationship between the use of AIS and the quality of financial data (Al-Dalabih, 2018). In addition, the study shows that the nature and security of AIS has a positive effect on the quality of financial data. As a result, the study recommends that firms should be keen to update their AIS used in accordance with the technological developments. This way, it will ensure high quality financial data for the decision-making process and hence improve the performance of the company.
In their study, Jawabreh, Mahmoud, Alshatnawi, and Momani (2017) reveal the importance of using financial analysis methods in planning and monitoring the operations of the business. According to Jawabreh at al. (2017), accounting has an indirect and direct effect on the decision making process. As such, it is an essential tool for measuring business results and making decisions based on the results. They show how the accounting financial analysis has played a critical role in the credit and investment field as well as in management and planning. The study shows how the hotel industry uses financial analysis to improve its operations. Specifically, it reveals that the system has had a considerable positive influence on the performance and overall profitability of hotels. Therefore, the financial analysis tool offered by an Accounting Information System of great importance in helping to rationalize the decisions made within an organization. Rational and informed decisions in turn lead to better results, and hence improve the performance of an organization. Overall, the study concluded that there are no major differences in the hotel businesses in Turkey because most of them utilized the AIS which significantly improves their degree of productivity.
Research Design and Methodology
Lutfi, Idris and Mohamad (2017) report that SMEs are struggling to survive in the current competitive business environment. However, they believe that AIS presents great potential for these firms to attain sustainable competitiveness and survive in the ever changing business world. Notably, the study discovered three major findings. First, it was discovered that organizational readiness, competitive pressure, manager commitment, and competitive pressure have a significant impact on the usage of AIS among firms and corporations. Additionally, the study found that there is a significant correlation between the usage of AIS and its effectiveness on the organization’s performance. Thirdly, the researchers noted that environmental uncertainty does not moderate the relationship between the use of AIS and its effectiveness. Notably, this observation was contrary to expectations. Generally, the study by Lutfi et al. (2017) provides useful and important insights about how organizations can improve their use of Accounting Information Systems to improve their performance.
Furthermore, the study by Al-domour, Al-Fawaz, Al-domour, and Allozi (2017) also affirms that there is direct relationship between AIS and business performance. The study strongly argues that a proper and well-developed AIS is an enabler to the competitive advantage of a firm. In addition, it determined that there were substantial causal links between the accounting system and the performance of a firm. In turn, this study plays a vital role in informing the impact caused by the AIS in enhancing the performance of an organization.
Also Akmese, Ekeren,, Aras and Kaya (2017) conducted a study to examine the role of AIS in the hotel management process, using the case of Turkey. In this study, AIS is regarded as one of the most powerful and essential tools required for the operation of a business. The study showed that the AIS consists of four main factors which have significant influences on the performance of the businesses in the hotel industry. Specifically, these factors include planning, control, decision making and difficulties. The results of the study show that the control element of the AIS system had the highest degree of participation followed by the planning factor. The difficulty level had the least participation level of respondents.
In another study, Altawalbeh, Hashem, and Aldumeibat (2017) examine the role of AIS in activating the role of the responsibility. Thus, it uses a study population comprising of accounting managers working in industries across Jordan. The sample consisted of 50 managers who filled in questionnaires. The results reveal that the attitude of the respondents towards the role of AIS was positive, and therefore influenced the role of AIS in activating the role of responsibility accounting among firms. Notably, the overall influence does not vary depending on the educational qualification of employees. However, it varies substantially depending on the experience of the employees.
Likewise, Esmerey (2016) examines the impact of the Accounting Information System on firm performance. In this study, the researcher uses the case study of small and medium enterprises in Turkey. According to this study, there is a positive relationship between the use of an AIS system within a firm and the level of performance and growth experienced within the same organization. Additionally, the study reveals that the use of the accounting system within organizations increases as the number of employees and business operations increase. That is to say, the implementation of the AIS increases as the size of the firm increases. Mainly, this is attributed to the fact that as the company grows, it becomes more difficult to follow the input-output-sales-inventory accounts and, hence, the importance of the Accounting Information System is growing. All in all, this study shows that there is a positive correlation between the use of AIS and the performance of the firm.
Tarigan and Putri (2015) also examine the use of Accounting Information System and its effect on the overall performance of hotels and restaurants. In their report, the researchers reveal that there is a significant relationship between the use of the system and the competitiveness of the firm within the industry. As such, firms that integrate and implement the accounting system into their operations experience greater performance and, are therefore more competitive than those that do not have the system in place. The study also indicates that there is a correlation between the usage of AIS within a firm and the firm size. The study also highlights the fact that for businesses to survive the high level of competition in the modern business environment, they must be able to make the appropriate decisions. These decisions can be made through the use of Accounting Information System. In turn, they will be able to make informed decisions based on the financial analysis results from the system and hence improve the overall performance of the business.
In the same way, Harash, Al-Tamimi and Radhi (2014) examine the influence of AIS on the performance of SMEs in Iraq. Predominantly, the study aimed at examining the effects of using AIS in small businesses on their performance. The study found that the use of the accounting program is often influenced by certain characteristics that exist within the firm, among them reliability, timeliness and relevance. Notably, these features have major influences on the use of AIS and their effects on the performance of medium and small businesses. Further, the study affirms that it is very important for businesses to use the Accounting Information System to ensure continuity, growth and survival in the ever-changing and competitive business environment by enhancing their efficiency and capability.
Saiedi (2014) also examines the impact of accounting information on the financial performance of an institution using the case study of India. The study notes that specially trained accountants work with AIS to ensure the highest level of accuracy in a company’s recordkeeping and financial transactions in order to make financial data easily available to those who need to access it, while at the same time keeping the data intact and secure. The findings of the study indicate there is a significant relationship between the use of AIS and the financial performance of an institution.
Furthermore, Mzuzu (2014) examines the impact of the AIS on the profitability of small scale businesses in Kampala, Uganda. The results of the study revealed that most small scale businesses do not use AIS in their operations. As a result, they receive significantly low profits. However, for those businesses that used the system in their operations, they indicated that there is a positive relationship between the use of Accounting Information System and the profitability of the small businesses.
In the article “The Impact of Accounting Information System in Planning, Controlling and Decision-Making Processes in Jodhpur Hotels,” Jawabreh and Alrabei (2012), show how globalization technology has forced firms to adapt to the fast changing business environment. As a result, they have adopted the Accounting Information System to ensure the successful collection of high quality data to help them in making the right decisions. As such, accounting information can be used within an organization to by managers to reduce uncertainties in decision making. Mainly, this is due to the fact that the system allows the decision maker to predict the outcome of their actions through the analysis of important financial data by the system. As a result, this leads to improvement in the level of performance of the business.
Another study was conducted by Grande, Estebanez and Colomina (2011) to determine the impact of AIS on performance measures. Like other studies, this research used the case study of small and medium enterprises in Spain. By and large, it was based on a survey carried out among SMEs to ascertain the extent to which development and implementation of AIS within firms influences their productivity. Noteworthy, the results of the study affirm that there is a positive relationship between SMEs that utilize AIS and better performance measures. By and large, this study was an important contribution to the field of study as little research had been done on the subject matter.
Primarily, this research will utilize a case study methodology to determine the impact of Accounting Information Systems on the performance of organizations. The case study will be on the health industry in Sydney, Australia.
By and large, the study will be predominantly causal. Mainly, this is because the study intends to determine the effect of the use of Accounting Information System on the performance of organizations. As such, it seeks to determine the impact of one variable on the other. Therefore, a causal research type is the best research type to be used for this study.
The study will utilize both qualitative and quantitative data. Therefore, it will use a mixed approach to collect and analyze data on the impacts of using Accounting Information System within an organization. It is believed that a mixed approach is the best approach in this case because it will allow .the researcher to gain more insight and information about the subject matter through the combination of various data sources. As such, qualitative data will help understand the attitudes of people towards the AIS and whether they feel that the program brings about significant effects on an organization in terms of improved performance, efficiency and productivity. On the other hand, quantitative data will show the precise degree of improvement caused by the use of Accounting Information System within a firm through comparing actual performance records between the periods when AIS was used and before it was implemented in a firm. In this respect, a mixed research approach will go a long way in improving the accuracy of the data as well improving the understanding of the degree of impact on performance caused by the use of Accounting Information System within an institution.
The study will utilize a representative sample comprising of 20 hospitals within the Sydney region. The sample population will be chosen through a random sample of the hospitals within the city to take part in the study. Therefore, each hospital within the city has an equal chance of being selected to take part in the research as respondents and participants. The sample will therefore include both large and small health facilities within Sydney.
Type of Data and data collection
The study will utilize primary data to inform the research. Predominantly, primary data will be collected through primary data collection techniques such as questionnaires, interviews, financial records of the hospital and documents in healthcare facilities within the Sydney region. Therefore, the researcher will distribute questionnaires to the accounting managers at the selected hospitals across Sydney to be filled. Afterwards, the researcher will also conduct interviews with the management to determine whether or not they use the Accounting Information Systems in their operations at the health facility. Furthermore, the study will request for the accounting records and data from the hospitals for the periods before and after the Accounting Information System was implemented in the operations of the business.
After the data has been collected, it will be recorded and analyzed to determine the impact of Accounting Information System on the performance of hospitals within the city of Sydney. For qualitative data, the information gathered in the questionnaires will first be transcribed and then coded. Afterwards, it will be analyzed through Qualitative Data Analysis methods and software such as ANOVA and then presented in the form of charts. On the other hand, the quantitative data gathered from the financial reports and records provided by the hospitals will be analyzed using statistical methods. Specifically, this study will utilize regression analysis to determine the relationship between the dependent and explanatory variables of the study. In this case, the dependent variable is the performance of firms whereas the explanatory variable is the use of AIS. The results from regression analysis will indicate whether or not the relationship between the two variables is weak or strong.
Addressing Ethical Concerns
In every research, there are ethical concerns that may arise. Therefore, a researcher must be prepared to address these ethical concerns before, during, and after the research study has been conducted. Thus, before conducting the research, the researcher will seek the consent of the samples institutions and the accounting managers who will be the respondents of the study. It is worth noting that all respondents who take part in the study will be made aware of the fact that taking part in the study is voluntary and no institution will be forced to take part in the research without their full consent. The other ethical issue pertains to the respect of anonymity and confidentiality of the information gathered through the study. In this regard, the researcher will ensure that the data collected from the respondents remain entirely anonymous and confidential, and will not be used in any other purpose apart from informing the study. As such, the researcher will strive to uphold the privacy of the participants. By so doing, the research will have addressed the main ethical concerns surrounding the research.
All factors taken into consideration, Accounting Information Systems play a critical in the operations of business. As such, it has a significant impact on the performance of organizations. Therefore, this study seeks to determine the exact relationship between the two variables.
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