Impact Of Accounting Information System On Organizational Performance: Essay.

Advantages of Accounting Information System

Discuss about the Impact of Accounting Information System in Organizational performance.

Accounting information system is the technological procedure of tracking accounting activities in conjunction with the resources of information technology. This technological process primarily collect, store and process financial data used by the internal users. With the gradual economic swing of market and competitive market threat business organizations focus on developing their internal resources in order to make the entire operation of business more systematic and dynamic. The emergence of accounting information system has rendered a radical change on the overall performances of business organization (Laudon & Laudon, 2016). Accounting information system not only provides an effective overview about the financial statement. This very specific method plays the role of an analysis tools. For an example, the database that is created though AIS is able to give vast vista about the profit, loss, or balance of the business organization.

In quest of maintaining the chronological data of finance the business experts initially intended to hire large number of human resources within finance department. The implementation of accounting information system has made the entire business method more systematic. The data gathered from AIS is not human created. Therefore, the business experts can get accurate and intact data from AIS. This accuracy of data and information leaves a major positive impact on the overall success of the organization (Speklé & Verbeeten, 2014). The organizations do not have to invest large amount of money behind labor force. In addition, the entire service process of AIS is fast and accurate which resulted a positive impact on organizational performance. This very specific study has focused to make detailed overview about the impact of accounting information system in organizational performance. At the same time, it is undeniable that some of the business organizations are there, which are still unable to implement AIS, due to some constraints.

The primary objectives of this specific project are as follows:

• To evaluate the impact of accounting information system in overall organizational performance
• To identify the factors that create barriers in implementing accounting software system within organization
• To provide some of the major recommendations on how to overcome those barriers by implementing effective strategies

The primary goal of this project is to evaluate the impact of accounting information system in overall organizational performance. In order to accomplish this very specific project the researcher would have to face several constraints in collecting appropriate data and information from the respondents due to their lack of knowledge in this specific research area. Still the project is expected to be successful due to its synchronized execution. The budget of the research would have to be high in terms of data collections and resources. The entire project timeline should be vaster in order to gather sufficient information from various responses. If the researcher can maintain an appropriate ethical consideration, while collecting necessary data and information from the respondents the entire project has enough scope to be successful. Ethical consideration implies following data security act, data protection act, keeping up the freedom of participants and so on.  

Evaluation of the Impact of Accounting Information System on Organizational Performance

Overall concept of accounting information system     

Accounting information system incorporated within information technology is the tool that helps the management in controlling the financial areas. Collecting financial data and storing these data for making the decision of financial executives and auditors are primary function of accounting information system. Accounting as opined by Franco-Santos et al., (2012), could be identified among three components including information system, language of business and source of financial information. Source of financial information is the primary concern for every single business experts of different organizations. Financial information is transformed to data and this data is presented in front of the finance heads for making effective decision regarding the profitability of business. AIS (accounting information system) is the combination of methodology, accounting technique and technology for IT industry.

Libby (2017) stated that the primary function of this specific method is to track transactions, provide internal reporting data, external reporting data, financial statements, and trend analysis capabilities to affect on organizational performance. At the initial stage of business scenario, the organizations had to face immense challenges in maintaining their financial statement within accurate data. Based on the financial statement the decision making process of business experts are highly dependent. As the business experts are not very much focused in maintaining the advancement of technology they failed to deliver accurate financial data. However, implementation of accounting information system has rendered immense accuracy in financial data, balance sheet and keeping a transaction tracks.    

Christensen and Feltham (2012) emphasized in this context that accounting information system is endowed with numerous advantages based on which the organization can keep a constant data about their financial record. Accounting information system has made the entire business process more systematic. The business experts are easily able to keep a chronological data record by using this information system. As a result, business managers do not have to face challenges in getting an overview about the financial database.  However, most significant advantages of advantages of accounting information system are as follows:

This particular method is reliable enough for business organizations in maintaining financial data record. Worrell, Wasko and Johnston (2013) opined that if the business managers have any doubt about the figure mentioned in the data record the person can verify the data with proper documentation. This specific method can give a detailed overview on how the data is calculated. In most of the recognizable accounting department reconciliations within the accounting system are made in order to assure reliability and accuracy of information.   

Primary Functions of Accounting Information System

Accounting information system not only provides an effective overview about the financial statement. This very specific method plays the role of an analysis tools. For an example, the database that is created though AIS is able to give vast vista about the profit, loss, or balance of the business organization. Laudon and Laudon (2016) stated that the managers do not have to be dependent on the exact figure. They event do not have to analyze the data from their own mind. The entire financial gaps, gross profit, scope of improvement are categorically mentioned within the method of accounting information system. As a result, it is very much beneficial for the organization in maintaining detailed evaluation about the business profitability.

As pointed out by Collier (2015), technological devise cannot be the substitute of human mind. Despite having several benefits of using accounting information system human resource is the most effective path of evaluating financial data. The decision making process of the business experts also become very strong and logical. However, Speklé and Verbeeten (2014) has strongly differed the opinion of previous scholar. Human resource would never be able to process the entire database within this limited time that an information technology system is able to do. As a result, business experts are able to make their entire process of business more dynamic and systematic. Based on the financial data record the organizational managers have to make their own strategic decision. Caniëls and Bakens (2012) opined that the retail business industry in the global market is very much dependent on accounting information system in order to maintain their chronological data record effectively. However, this very specific study has focused to provided detailed analysis about the impact of accounting software on the overall performance of business. Woolworths being one of the most prestigious retail brands of Australia tends to publish their financial statement by using this method of AIS.

Impact of accounting information system on organizational performances

Numerous eminent scholars have provided their own point of view while evaluating Impact of accounting information system on organizational performances. Popovi? et al., (2012) opined that AIS has left immense positive impact on organizational performances. The primary impacts that accounting information system leaves on the overall performances of business are as follows:

Controls the internal operation procedure:

The primary functions that are controlled with the help of AIS process include budget preparation for expanding the entire business process. Based on the internal resource, cash, rate of organizational debt and procurement the budget of the organization is prepared. Flamholtz (2012) opined that AIS primarily collect the raw data on how much debt the organization is currently dealing with. Based on that very specific data and information the organization would like to focus on monitoring and auditing their entire database. AIS primarily helps to make the entire internal audit within stipulated time by maintaining the accuracy of data. As a result, the business experts do not have to face challenges in getting overview about the ways of their improvement.

Budget and Timeline for Accounting Information System Implementation

Figure 1: Primary function of accounting information system

(Source: Zadek, Evans & Pruzan, 2013)

Accounting assets are appropriately stored:

Kleis (2012) stated that AIS helps to store the entire financial database chronologically which gives a detailed overview to the organizational about their way of success. This particular technological method can present the data and information from every year. If the business experts need to go though the audit report three years before, AIS can easily store that data and information. As a result, organizational managers can evaluate their performance record. Based on the previous year performances, the managers aim to give better performance in comparison to the last year. As a result, it ultimately enhances the performance level of the organization.

One time investment:

Implementing accounting information system within the organization is a matter of big expense that the organization may not have. On the other hand, it is also undeniable that accounting software is one time investment. Galliers and Leidner (2014) opined that if the business experts tend to invest money behind this resource for once the organization would be able to reduce the labor cost. As a result, the budget saved from the cost of labor can be utilized in business expansion. Ultimately, the organization faces positive impact after implementing AIS within the operation system.

Maintaining accuracy of data and information:

Accounting information system is effective enough in maintaining data accuracy as well as chronology. The data gathered from AIS is not human created. Therefore, the business experts can get accurate and intact data from AIS. Chae, Koh and Prybutok (2014) opined that this accuracy of data and information leaves a major positive impact on the overall success of the organization. Business managers get proper and accurate data about the financial and business profitability. Based on that data the managers tend to estimate their budget for business expansion and promotional activities. In this kind of situation, the organization would not have to face immense challenges in reaching the organizational goal. Lunardi et al. (2012) opined that if the estimated budget would be high in comparison to the financial profit, the organization may have to face immense challenges in rendering success. However, implementation of AIS has made the financial database chronological and systematic. As a result, the organization can easily maintain their business sustainability.

Literature gap:

The study has focused to provide detailed overview about the impact of accounting information system on the overall business enhancement. It is observed that with the gradual economic growth of market and competitive market threat business organizations focus on developing their internal resources in order to make the entire operation of business more systematic and dynamic. The study has analyzed some of the most effective advantages of AIS. Accounting information system has made the entire business process more systematic. The business experts are easily able to keep a chronological data record by using this information system. As a result, business managers do not have to face challenges in getting an overview about the financial database.  Still, this very specific literature review is not devoid of some of its major limitations. The study has evaluated some of the most effective barriers for implementing AIS within the business process. The article after identifying the barriers has not provided some of the major recommendations on how the organizations would be able to overcome those barriers.

Importance of Ethical Considerations in Data Collection

Primary Question

• What is the impact of accounting information system upon overall organizational performance?

Secondary Questions

What factors create barriers in implementing accounting software system within organization?

What are some of the major recommendations on how to overcome those barriers by implementing effective strategies?

Research Design and Methodology

This particular paper attempts to explore the impact of accounting information system in overall organizational performance. The research would involve collecting both primary as well as secondary data. The primary data would be collected by carrying out interviews among 20 individuals belonging to top management and survey among 50 individuals involving employees and managers. The candidates would be chosen randomly belonging to companies having in place accounting software systems.

Interviews among top management would take into consideration qualitative research approach. A sample of 20 individuals from top management would be interviewed. The candidates would be chosen randomly belonging to companies having in place accounting software systems.  The information collected from the candidates would be completely reliable and valid. These candidates would provide their actual viewpoints and situation of the company after implementing accounting software systems.   The interviews would be held online through Survey Monkey.

Surveys among employees and managers would take into consideration quantitative research approach. A sample of 50 individuals involving both employees and managers would be surveyed. The candidates would be chosen randomly belonging to companies having in place accounting software systems.  The information collected from the candidates would be completely reliable and valid. These candidates would provide their actual viewpoints and situation of the company after implementing accounting software systems.  The surveys would be held online through Survey Monkey.

Like every research study, this research also involves few limitations. First of all, the time duration of the research study was quite short i.e. just 3 months. The time duration of three months is quite less for such a wide research subject like this. Secondly, the research involved interviewing only the top management. Perhaps it should have also interviewed managers and employees who actually deal with day-to-day operations of the company. This could have helped in gaining better insight of the research area.

The research time plan assists the researcher to effectively deal with the issues, which might arise all across the research study with high effectiveness and administer research project in a sound manner. Blaxter et al., (1996) hold the view that after deciding the research topic and methodology for successfully carrying out the study, it becomes highly significant to develop a time plan for ensuring that the study is effectively completed within the provided timeframe and with provided resources.  Moreover, the foremost task is to create a Draft schedule by making use of a grid (Fig. A) considering the possibilities and priorities with respect to time usage. Additionally, the whole study is split into three different stages i.e. interviewing top management and carrying out surveys among managers and employees through surveys.  This is followed by close analysis along with comparison of primary information i.e. quantitative and qualitative with secondary information gathered from different sources such as texts, books, journals, past studies and others. The research would span over the period of 3 months i.e. 12 weeks that would be equally split into three stages of 4 weeks each. For ensuring the progress and throwing light upon the problems encountered, if any, monthly meetings would be arranged. Further, after successfully carrying out the above mentioned tasks, the completed research will be submitted at the end of 12^th week. 

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Interaction with manager

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Formulation of Interview questions

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Evaluation of Interview Data

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Formulation of survey questions

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Fig. A Time Plan (Put your name here, 2018)

Moving ahead, the above research time plan has been developed in the maximum flexible manner considering any delay that might arise due to several forces like resources unavailability, obstruction in arranging interviews and/or survey feedback or any other inevitable circumstances (Denscombe, 2003).

Conclusion

The entire study has given detailed overview about the impact of accounting information system in overall organizational performance. After conducting an in-depth literature review by involving the numerous eminent scholars it can be concluded that accounting information system has immense positive impacts in overall organizational performance. On one hand, the implementation of this process can help the business experts in reducing their cost behind human resources. On the other hand, the emergence of accounting information system has made the entire process of business more systematic and rhythmic. The organization does not have to face challenges in maintaining the database.

The primary issues that the business experts have to face after implementing this accounting information system is the way of proper execution. The business experts may not be efficient with the advancement of technology. In the kind of situation, appropriate executive of technology would be challenging for them. As a result, organization has to suffer in maintaining financial database. In this kind of situation, the study has focused to recommend some of the most effective ways of overcoming these challenges. Implementation of training and development session for the employees in order to enhance their technological competency is the most effective ways of resolving the issues.  However, for accomplishing this very specific project the researcher would have to face several constraints in collecting appropriate data and information from the respondents due to their lack of knowledge in this specific research area. However, appropriate training and development session may help the employees in getting in-depth knowledge in this very specific sector.

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