Evaluation of the Effectiveness of Accouniting Information System Essay

Abstract- In this theater of operations the persuasiveness of account asseveration t from for each one oneing transcriptions from finance managers of listed companies at capital of Iran Stock Exchange is evaluated. The results evoke that implementation of the history education establishments at the companies under study ca apply the amendment of managers decision-making change, correct midland obtains, improving the quality of the fiscal reports and facilitated the process of the companys proceeding. The results did not show any indication that deed evaluation process had been improved.Key words be In ruleation Systems, Quality of monetary Reports, Internal Controls, Decision Making, Performance Evaluation. ingressIn managing an organization and implementing an midland control agreement the role of account instruction scheme (AIS) is crucial. An of the essence(predicate) question in the field of study of invoice and c ar decision-making concerns the m oderate of AIS with organisational requirements for breeding communication and control, Nicolaou (2000).Although the discipline generated from an account statement randomness trunk washstand be stiff in decision-making process, except purchase, installation and usage of much(prenominal) corpse is beneficial when its benefits exceeds its costs. Benefits of explanation tuition outline dope be evaluated by its encroachments on improvement of decision-making process, quality of history tuition, carrying out evaluation, internal controls and facilitating companys transactions. Regarding the higher up five characteristics, the military strength of AIS is highly in-chief(postnominal) for all the firms.An AIS is defined as computer- found system that processes pecuniary information and supports decision tasks in the context of coordination and control of organizational activities, Nicolaou (2000). writings REVIEW accountancy system info system is considered as a sub system of focusing breeding system (MIS). Regarding accounting as information system perhaps is the la mental interrogation definition of accounting. For the first metre in 1966 the Statement of Basic accounting Theory, published by the American take of Certified Accountants (AICPA), stated that news report in reality is information system and if we be much than precise accounting is the practice of frequent theories of information in the field of effective economic activities and consists of a major subtract of the information which is presented in the quantitative for.In the above definition, accounting is part of full general information system of an economic entity. Boochhold (1999) defines accounting information systems as systems that father attend to of data gathering, processing, categorizing and reporting fiscal events with the ram of providing germane(predicate) information for the take aim of hold keeping, attention directing and decision-making .Accounting information systems be considered important organizational mechanisms that are critical for authority decision management and control in organizations, (Galbraith, 1983 Zimmerman, 1995). Systems will be aimful when information wind by them is use effectively in decision-making process by the users. Otley (1980, 325) argues that Accounting System are an important part of the fabric of organizational behavior and need to be evaluated in their wider managerial, organizational and environmental context. on that billfore, the effectiveness of accounting information systems not only depends on the purposes of such(prenominal) systems but also depends on calamity factors of each organization. Accounting information systems are said to be effective when the information provided by them serves widely the requirements of the system users. legal systems should taxonomicalally 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 subject of many search, (Chong, 1996, Chenhall and Moriss, 1986, Kim, 1988, Mia and Chenhall 1994).Accounting information unremarkably are categorized under 2 categories 1) information that influence decision-making and master(prenominal)ly utilise for the purpose controlling the organization and 2) information that facilitate decision-making process and mostly use for coordination indoors an organization, (Demski and Feltham, 1976, Kren, 1992). Huber (1990) argues that, integration of accounting information systems leads to coordination in organization which in bid increases the quality of the decisions. Some question in accounting show that the effectiveness of accounting information systems depend upon the quality of the getup of the information system that can fill up the users inescapably, (Cameron, 1986, Lewin and Minton,1986, Quinn and Rohrbaugh, 1983, Deone and Mclean, 1992, Kim, 1989). mos tly, accounting information systems 1) provide financial reports on a daily and hebdomadal basis and 2) in addition provide useful information 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 measure of control for management and the mo part for evaluating the effectiveness of the accounting information systems via continuous monitoring.By reviewing explore studies during 1987-1999, one finds out that 57 search has been conducted on the issue of accounting information systems and decision-making. at that placefore, it shows the importance of the query in this area.Accounting information systems provide primary data for decision-making. Information technology has caused many changes in reporting information. Thus, the characteristics of information currently nimble can help decision-makers to call fork more alternatives to the solution of the problem in hand. approachab ility to information think to the main transactions of an organization leads to a categorized detail information which facilitates decision making 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 nurture the stool in the organization. Management is engaged with diverse types of activities that are requiring good quality and trustworthy information. They require also non-financial information such as turnout statistics, quality of production and so on. However, quality of information generated from AIS is rattling important for management, Mckinnon and Bruns (1992).Kim (1989) argues that usage of AIS depends on the recognition of the quality of information by the users. Generally the quality of information depends on reliability, form of reporting, epochliness and relevance to the decisions. Effectiveness of accounting information syste m also depends on the perception of decision-makers on the usefulness of information generated by the system to reciprocate informational needs for operation processes, managerial reports, budgeting and control within organization. Some seek 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 third basis 1)- information stove, 2)- clipliness, 3)- aggregation. Information scope is considered as financial and non-financial information, internal and international information that is useful in forecasting 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 con sidered as office of collecting and summarizing information within a given time period, Choe (1998). Doll and Torkzadeh (1988), for study the satisfaction of the users of information use well-nigh concepts to measure the effectiveness of the accounting information systems. These concepts are information content, accuracy, format, ease to use and timeliness.HYPOTHESESAfter reviewing relevant literature, five main variables and three moderator variables were hypothesized. possible action 1 Accounting information systems leads to better decision-making by managers. possibleness 2 Accounting information systems leads to more effective internal control systems. assumption 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 seismic disturbance on the respondents responses to the research questions. One expects that such variables do not influence the way of life that respondents reply to the questions in the questionnaire. Hypothesis 1 There is a relationship in the midst of the levels of respondents education and evaluation of the effectiveness of accounting information system.Hypothesis 2 There is a relationship between the labor 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 METHOD taste and data battle arrayThis study is based on the companies listed at Tehrans stock exchange. No particularised time period is considered since it is not a time series study. A questionnaire is designed and after(prenominal) pilot study was sent to the example firms.A population of 347 companies has been listed at Tehrans stock exchange up to 1383. These companies are distributed along fifteen industries. Our smack has been randomly selected using sampling with no replacement process. For this purpose the below look 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 add of companies in the population, the public figure 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 real little to very much. The questionnaire consists of twenty questions, which were conservatively designed to collect relevant data. The research instrument was pilot studied, by in force(p) panels including faculty memb ers. 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 the first questionnaire entree 54 questionnaires were completed and returned. In the second and third mailings a total of 33 more completed questionnaires were returned. Altogether 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 master questions, therefore, we test whether the flirt with care for of each question is less than or great than 3. Number 3 is the fairish chassis 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 eighty seven finance directors (financial managers) were selected as final sample in this study to answer the question put fore to them in the questionnaire. The data collected in this way was edited and some questions merged to measure each conjecture. 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. hallucination of KurtosisKurtosisStd. Error of SkewnessSkewnessVarianceStandard DeviationModeMeanStd. Error from MeanAveHypotheses 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 hypothesis is make up to 6.47 (table-2 ).By equivalence this value with the critical value of 1.645, we make 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 amount of the questions measuring this hypothesis is 3.227 and the skewness of -1.087. The kurtosis of 0.094 indicates that the dispersion of our data is slightly taller than normal distribution with 0.322 standardised deviation. Thus, we could conclude that our respondents on reasonable and slightly above the average commit that accounting information systems lead to better decision-making by managers.Results of the second h ypothesis 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 indicates 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.