Evaluation of the Effectiveness of Accouniting Information System Essay

Abstract- In this deliberate the persuasiveness of accounting t apieceing organizations from finance managers of listed companies at Tehran Stock Exchange is evaluated. The results indicate that carrying out of the accounting entropy governances at the companies under study ca exercised the improvement of managers finality-making knead, improving internal catchs, improving the feature of the pecuniary reports and facilitated the process of the comp some(prenominal)s transactions. The results did not show any indication that death penalty military rank process had been improved.Key words account In ashesation Systems, Quality of Financial Reports, Internal Controls, Decision Making, mental process Evaluation.INTRODUCTIONIn managing an organization and implementing an internal conquer arranging the role of accounting study system (AIS) is crucial. An alpha drumhead in the field of accounting and management decision-making concerns the fit of AIS with organizational r equirements for knowledge colloquy and incorporate, Nicolaou (2000).Although the info generated from an accounting learning system can be effective in decision-making process, but purchase, episode andusage of such system is beneficial when its benefits exceeds its costs. Benefits of accounting study system can be evaluated by its impacts on improvement of decision-making process, spirit of accounting information, doing evaluation, internal controls and facilitating companys transactions. Regarding the above fivesome characteristics, the effectiveness of AIS is highly important for all the firms.An AIS is defined as com determineer-establish system that processes financial information and supports decision tasks in the context of coordination and control of organizational activities, Nicolaou (2000).LITERATURE REVIEWAccounting information system is considered as a sub system of management information system (MIS). Regarding accounting as information system perhaps is the l atest definition of accounting. For the first time in 1966 the Statement of Basic Accounting Theory, create by the American Institute of Certified Accountants (AICPA), stated thatAccounting actually is information system and if we be more precise accounting is the practice of general theories of information in the field of effective frugal activities and consists of a major firearm of the information which is presented in the quantitative for.In the above definition, accounting is part of general information system of an economic entity. Boochhold (1999) defines accounting information systems as systems that have function of selective information gathering, processing, categorizing and coverage financial events with the aim of providing relevant information for the purpose of score keeping, attention directing and decision-making.Accounting information systems argon considered important organizational mechanisms that be comminuted for effectiveness decision management and cont rol in organizations, (Galbraith, 1983 Zimmerman, 1995). Systems will be useful when information provided by them is utilise effectively indecision-making process by the users. Otley (1980, 325) argues that Accounting System atomic number 18 an important part of the fabric of organizational life and subscribe to to be evaluated in their wider managerial, organizational and environmental context. thitherfore, the effectiveness of accounting information systems not only depends on the purposes of such systems but also depends on contingency factors of severally organization. Accounting information systems are verbalize to be effective when the information provided by them serves widely the requirements of the system users. Effective systems should systematically provide information which has a potential effects on decision-making process, Ivest et.al. (1983).The effectiveness of accounting information systems has long been a national of many look into, (Chong, 1996, Chenhall and Moriss, 1986, Kim, 1988, Mia and Chenhall 1994).Accounting information usually are categorized under two categories 1) information that influence decision-making and generally used for the purpose controlling the organization and 2) information that facilitate decision-making process and mostly used for coordination in spite of appearance an organization, (Demski and Feltham, 1976, Kren, 1992). Huber (1990) argues that, integration of accounting information systems winds to coordination in organization which in turn increases the quality of the decisions. Some research in accounting show that the effectiveness of accounting information systems depend upon the quality of the output of the information system that can satisfy the users needs, (Cameron, 1986, Lewin and Minton,1986, Quinn and Rohrbaugh, 1983, De whiz and Mclean, 1992, Kim, 1989).Generally, accounting information systems 1) provide financial reports on a casual and weekly basis and 2) in addition provide useful inform ation for monitoring decision-making process and performance of the organization. Simons (1987) in his study we used the first part of the above statement as quantity of control for management and the twinkling part for evaluating the effectiveness of the accounting information systems via continuous monitoring.By re heaping research studies during 1987-1999, one finds out that 57 research has been conducted on the issue of accounting information systems and decision-making. Therefore, it shows the importance of the research inthis area.Accounting information systems provide primary info for decision-making. Information technology has caused many changes in reporting information. Thus, the characteristics of information currently prepared can help decision-makers to seek more alternatives to the solution of the problem in hand. Accessibility to information related to the main transactions of an organization leads to a categorized detailed information which facilitates decision ma king in any difficult situation, Sutton and Arnold (1995).Accounting information system, is a computer based system that is defined by Nicoloau (2000) as a system that increases the control and enhance the corporation in the organization. Management is engaged with different types of activities that are requiring good quality and reliable information. They require also non-financial information such as production statistics, quality of production and so on. However, quality of information generated from AIS is very important for management, Mckinnon and Bruns (1992).Kim (1989) argues that usage of AIS depends on the wisdom of the quality of information by the users. Generally the quality of information depends on reliability, form of reporting, timeliness and relevance to the decisions. Effectiveness of accounting information system also depends on the perception of decision-makers on the usefulness of information generated by the system to satisfy informational needs for operation processes, managerial reports, budgeting and control within organization. Some research indicate that the effectiveness of accounting information systems depend on the quality of output information that satisfy the users, Cameron (1986), Lewin and Minton, (1986), Quinn and Rohrbaugh, (1983), Delone and Mclean, (1992) and Kim, (1989).Effectiveness of accounting information systems can be analyzed on three basis 1)- information scope, 2)- timeliness, 3)- aggregation. Information scope is considered as financial and non-financial information, internal and external information that is useful in prediction of future events. Timeliness quality is related to the ability of accounting information system to satisfy informational needs by providing systematic reports to the users of information. Aggregation of information is considered as means of appeal and summarizing information within a giventime period, Choe (1998). Doll and Torkzadeh (1988), for studying the satisfaction of the users of information use some concepts to measure the effectiveness of the accounting information systems. These concepts are information content, accuracy, format, ease to use and timeliness.HYPOTHESES aft(prenominal) reviewing relevant literature, five main variables and three moderator variables were hypothesized. Hypothesis 1 Accounting information systems leads to better decision-making by managers. Hypothesis 2 Accounting information systems leads to more effective internal control systems. Hypothesis 3 Accounting information systems enhance the quality of financial reports. Hypothesis 4 Accounting information systems improves performance measures. Hypothesis 5 Accounting information systems makes financial transaction process easy.MODERATOR VARIABLESHypotheses based on moderator variables are set up to see whether such variables have any impact on the respondents responses to the research questions. angiotensin-converting enzyme expects that such variables do not influence the way that respondents reply to the questions in the questionnaire. Hypothesis 1 There is a relationship between the levels of respondents education and evaluation of the effectiveness of accounting information system.Hypothesis 2 There is a relationship between the job experience of the respondents and evaluation of the effectiveness of accounting information system.Hypothesis 3 There is a relationship between the field of respondents education and evaluation of the effectiveness of accounting information system.RESEARCH METHODSample and data collectionThis study is based on the companies listed at Tehrans stock exchange. No specific time period is considered since it is not a time series study. Aquestionnaire is designed and after pilot study was sent to the sample firms.A population of 347 companies has been listed at Tehrans stock exchange up to 1383. These companies are distributed along 15 industries. Our sample has been randomly selected using sampling with no replacement process . For this purpose the below formula 2 2N Z/2 Xn = 2 2 2 (N-1) + Z/2 X22347 ( 1.96) (0.29)n = = 95(0.05)2 (347-1) + (1.96)2(0.29)2Based on the ratio of the companies in each industry to the total number of companies in the population, the number of companies in each industry for the sampled firms was determined.The main data collection instrument in this study is questionnaire. For this purpose a questionnaire was designed after reviewing the relevant literature. The questions are on the five point Likert type questions, with a choice of very little to very much. The questionnaire consists of cardinal questions, which were carefully designed to collect relevant data. The research instrument was pilot studied, by expert panels including might members. The revised instrument and a cover letter were mailed to the specific individual who was listed as financial managers of the sampled firms. A reminder was sent and non-respondents were followed up with two additional mailings. In t he first questionnaire launching 54 questionnaires were completed and returned. In the second and third mailings a total of 33 more completed questionnaires were returned. in all 87 questionnaires were available for data analysis in this study.STATISTICAL TESTSTo test the hypotheses of this research we have used z and 2 statistics at confidence level of 95%. The research hypotheses were put in the form of statistical hypotheses such as H0 and H1. With regards to the nature of five-point scale questions, therefore, we test whether the mean value of each question is less than or greater than 3. Number 3 is the average number of the five choices in each question1+2+3+4+5 = - = 35Thus, statistical hypotheses are set up as followsH0 3H1 3Testing moderator variables to test the moderator variables and see whether they have any impact on the main variables, in this research 2 tests were conducted.TESTING HYPOTHESES AND ANALYZING THE RESULTSTo study the research hypotheses fourscore se ven finance directors (financial managers) were selected as final sample in this study to answer the question put forward to them in the questionnaire. The data collected in this way was edited and some questions merged to measure each possible action. Average number of 3 was taken as the mean of the five-point questions in the questionnaire. Table -1 shows a descriptive statistics of five hypotheses.Table-1 Descriptive statisticsMinMaxStd.Error of KurtosisKurtosisStd. Error of SkewnessSkewnessVarianceStandard DeviationModeMeanStd. Error fromMeanAveHypotheses 2.53.50.5110.0940.258-1.0870.1040.3223.53.250.3453.227H1 2.540.5110.799-0.2580.5680.1780.422330.0453.244H2 2.5.7540.5110.252-0.2580.364-0.2630.51243.750.5493.75H3 2.53.50.5110. 890-0.2580.8250.1380.3722. 52.750.3992.80H4 2.754.50.5110.419-0.2580.175-0.1950.4423.53.50.4743.58H5Results of the first hypothesis Accounting information systems lead to better decision-making by managers. Z statistic concerning the test of first hypot hesis is equal to 6.47 (table-2 ).By comparing this value with the critical value of 1.645, we accept H1 and reject H0. Therefore, the first hypothesis is accepted indicating that implementation of an accounting information system in an organization could improve decision making by managers. The average of the questions measuring rod this hypothesis is 3.227 and the lopsidedness of -1.087. The kurtosis of 0.094 indicates that the distribution of our data is somewhat taller than normal distribution with 0.322 standard deviation. Thus, we could conclude that our respondents on average and slightly above the average believe that accounting information systems lead to better decision-making by managers.Results of the second hypothesis Accounting information systems leads to more effective internal control systems. Table-2 shows the Z value of testing the second hypothesis equal to 5.389. Again, comparing this value with the critical value of 1.645, we accept H1 and reject H0. This ind icates that from the respondents point of view accounting information systems would lead to better internal control systems. Descriptive statistics shown in table-1 gives the average of 3.224 to the questions measuring the second hypothesis, skewness of 0.568, kurtosis of -0.799 and standard deviation of 0.442. This information indicates that the distribution of our data is slightly shorter than normal distribution.