Impact of Implementation of Accounting Information

Systems (AIS) to Small and Medium-Sized Enterprises (SMEs) in

Naga City

A Thesis Presented to

The Faculty of College of Business and Accountancy

University of Nueva Caceres

City of Naga

In Partial Fulfillment

Of the Requirements for the Degree

BACHELOR OF SCIENCE IN ACCOUNTANCY

Submitted By:

Abogado, Donna H.

Badiola, Olivia C.

Dasallas, Janedee P.

Dato, Zharina Faith B.

de Vera, Emir Kharlo

November 2019
 Chapter I

INTRODUCTION

Over the past few years, the world has witnessed wide

economic and technological changes that affected the world

economy. Accounting was not excluded from these

developments. The broad use of Accounting Information

Systems in the profession of accounting has placed it before

a challenge to search for sufficient means, to effectively

cope with the new changes and to find new methods to improve

the quality of accounting services.

As stated by Andreas I. Nicolaou of the International

Journal of Accounting Information Systems: "Accounting

Information System is a computer-based system that increases

the control and enhances the corporation in an organization.

In managing an organization and implementing an internal

control system, the role of the accounting information

system is very crucial." Across the globe, the

implementation and design of Accounting Information Systems

is now a major service offered by public accounting firms.

The reason is evident; demand for the use of Accounting

Information Systems is already so high that almost all large

companies nowadays have implemented Accounting Information

Systems in their operations. Even the government has geared

towards the use of Accounting Information Systems. Besides,

the number of different Accounting Information Systems has

risen through time among the vast number of systems are the

following: QuickBooks, SAP Business One, and Electronic New

Government Accounting System for government agencies.

In the Philippines, many organizations automate and

integrate their business through Accounting Information

Systems, but that is not the case for most enterprises.

This is because they find it costly, the implementation and

maintenance costs. Moreover, there becomes a need for

continuous training of the staff that will be using the

system. Thus, the researchers want to examine the growth

and productivity that the implementation of Accounting

Information Systems gives. The researchers will focus on

the Small & Medium Enterprises, for most of the studies

found were mainly on banks, large firms, and public

entities.

Naga City has the same case as of the country. In this

light, the research study will show how beneficial

Accounting Information Systems is to the development and

growth of small and medium-sized enterprises. This study

aims to look deeper on how Accounting Information System

affects different factors of business development such as

reduction of employees, diminishment of technical errors

and processing time and significant cost reduction in the

long run. The study will also show the impact of the

Accounting Information System on business growth in terms

of expansion and employee competency. The researchers also

want to pave the way to make those businesses using Manual

Accounting Systems realize the benefits of implementing an

Accounting Information System.

Definition of Terms

Small and medium-sized enterprises – refers to business

entities located in Naga City having the previous

implementation of a manual accounting system shifted to the

use of the automated system having a business total asset

between PHP 3,000,000 and PHP 350,000,000.

Accounting Information System – refers to an automated

process of recording, classifying, summarizing, and storing

data involving the different kinds of business transactions

of the small and medium-sized enterprises.

Productivity – refers to the ability of the business entity

and the employees therein to complete activities in

producing more quantity of outputs for a minimum length of

time.
Business Growth – refers to the process of improving the

measurement of the enterprise's success.

Technical Errors – refers to a non-fraudulent discrepancy in

recording transactions.

Cost – refers to expenses related to the operation of the

enterprise, or the operation of a device, component, and

piece of equipment or facility. The cost of resources used

by an enterprise to maintain its existence.

Significance of the Study

The importance of this study will emphasize the impact

of the implementation of the Accounting Information System

compared to the application of a manual accounting system.

This study will also provide direct and indirect favorable

effects on the following:

AIS Providers

This study will give way for them to find ways in

improving and adjusting to the problems encountered by the

Small and Medium enterprises concerning the implementation

of the Accounting Information System. Furthermore, it will

give the AIS providers business opportunities to offer their

services to a wider range of markets.

Owners of SMEs
 This research will help the present owners of Small and

Medium enterprises to be more knowledgeable about the

impacts of implementing Accounting Information Systems. This

will also help them to improve their business in terms of

finances, operations, and management.

Employees

Conducting this research study will help the existing

employees of the business to be more effective and efficient

after the implementation of the Accounting Information

System. Additionally, it will enhance the skills of the

employees that are necessary for coping with the fast-

changing needs of every organization.

Potential Proprietors

This research will serve as their guide on how they

will perform their operations well with the aid of

Accounting Information Systems. In addition, the output of

this research will serve as a basis for making decisions as

to what systems their organization will adopt.

Professors

This will serve the educators, mentors, and learning

facilitators to motivate the students to be acquainted and

excel in their Accounting Information System related

subjects. They would aid the development of more competent

professionals that are inclined in the development of

Accounting Information Systems.

Students

This research study will enlighten the students about

the significance of having literacy of what Accounting

Information System is and how it will serve as their

competitive edge in their future endeavors in this emerging

world.

Future Researchers

The outcome of the study can be a source material that

they can use for future references and for those who wish to

conduct studies related to this field or area of business.

Statement of the Problem

This research aimed to answer the major problem with the

impact of the implementation of the Accounting Information

System to small and medium-sized enterprises in Naga city.

Specifically, it is expected to answer the following

questions:

1. What is the impact of the implementation of Accounting

Information Systems (AIS) to business growth and

productivity of small and medium-sized enterprises in

Naga City in terms of:

 a. Reduction of employee, technical error, and

processing time.

b. Growth in terms of expansion and employee

competency.

c. Operational cost reduction

2. What are the challenges encountered in using Accounting

Information System?

Scope and Delimitation

The study focused on the factors affecting business

growth and productivity mainly the (1) reduction of

employees, technical errors and processing time, (2)

expansion and employee competency, and (3) cost reduction

after the implementation of the Accounting Information

System on small and medium-sized enterprises. The

respondents of this study were limited only to 30 small and

medium-sized enterprises that are registered in the

Department of Trade and Industry in the year 2016 and which

are in Naga City. The present study is made in the period

from July to November 2019.

Theoretical Framework

This part of the study presents the theoretical

background that supports the main context of this research.

Two major variables that are found on the statement of the

problems are productivity and growth and the theories that

support those variables plus the main variable are

presented down below.

Socio-Technical Systems Theory

According to Eric Trist (1969), technology has become

influential in the analysis of the organizational impact of

information technology. This theory emphasizes

the strategic consideration of both the social and

technical aspects of the organization, thinking that this

two features are intertwined. This means that rather than

simply inputting people into existing technical systems,

work places should be designed is such way that both people

and technology coexist in harmony.

This theory is used in this current study since it

promotes joint optimization, wherein the harmonious

combination of human and technology is essential in

transforming inputs to desired outputs of every

organization who implements the use of technology.

Additionally, gainful employment of technology enhances the

user’s ability and willingness to employ worthwhile tasks

for the reason that it guides them in performing their

tasks in a more sophisticated way.

Activity Theory
 According to Martin and Leben (1989) Activity theory

is a method used to understand the relationship between

human and technology and emphasizes the long term well-

being of workers or users.

This theoretical framework will be used in this current

study for the reason that it lays emphasis on the importance

of technology, specifically the systems used by every

organization. Using new systems results a great benefit and

leads to development of the organizations since it will

enhance the skills of the workers or users which is

necessary in coping with the fast changing needs of every

organization. According to this theory, organization who

implements technology, specifically systems, results to have

a long term relationship with their workers or users for the

reason that, workers or users became more dedicated towards

their work since they believe that this system will assist

them in achieving their anticipated results for every

activity assigned to them. Furthermore, this will help them

to improve their business in terms of finances, operations

and management in a more efficient and effective way

Socio-Technical Activity Theory
Systems Theory
Martin and
Erick Trist Leben

(1969) (1989)

Impact of
Implementation of
Accounting
Information
Systems to Small
and Medium-Sized
Enterprises in
Naga City

Modern
Diffusion Management
Innovation Theory
Theory
F. Winslow
E.M Rogers Taylor

(1962) (1915)

Figure 1: Theoretical Paradigm

Diffusion of Innovation

Theory

According to E.M. Rogers (1962), Diffusion Innovation

Theory originated in communication to explain

how, overtime, an idea or product gains momentum and

diffuses through a specific population or social system.

The major result of this diffusion is that people, as part

of a social system, adopt new ideas, behavior, or product.

Adoption means that a person does something differently

than what they had previously. The key adoption is that the

person or organization must perceive the idea, behavior or

product as new or innovative. It is through this the

diffusion is possible.

Adopting different system is a form of innovation which

will enable every organization to create more and do more.

The researcher adopted this theory in order to explicate

the importance of innovation in every organization. This

theory explains that organization who adopts an innovation

at an early stage have different characteristics than

organization who adopt innovation later.

Modern Management Theory

According to F. Winslow Taylor (1915) businesses who

incorporates Modern Management Theory in to their operation

seeks to meld technology, and some extent, mathematical

analysis with the human and traditional element of their

organization. The mixture of these essential elements leads

every organization to development.

This theory supports the growth variable of this

study. Modern day businesses are faced with navigating

rapid changes and complexities of transactions, and

technology plays a vital role for this changes and

complexities. Organization who tends to use the combination

of two major variables, such as human and technology

creates a dual prolonged approach to businesses. A perfect

combination of this variables also leads every organization

to have a more centralized management and assist them in

making business decisions.

Conceptual Framework

In order to analyze and study the main problem, the

following tool will be used. Small and medium-sized

enterprises will be examined to see the impact of the

implementation of Accounting Information Systems in the

following factors: Productivity, Growth and Cost Reduction.

This will be made through comparison of the entity’s

performance when using manual accounting system and the

change made after implementation.

Additionally, the study will examine the different

challenges faced by the small and medium-sized enterprises

when implementing Accounting Information Systems. These are

subdivided to cost, information technology and human

resource related challenges.

 Accounting
Manual
Challenges Information
Accounting
System

Information
Production Production
Technology

Human
Growth Growth
Resource

Cost Cost Cost

Figure 2: Conceptual Paradigm

 CHAPTER II

REVIEW OF RELATED LITERATURES AND STUDIES

This chapter presents the related literature and

studies after the thorough and in-depth search done by the

researchers. The review of related literature stresses the

importance of Accounting Information System in the different

aspects of many businesses. The review is utilized to retain

a direct relevancy to the study in hand.

Related Literature

In the study of Reuters (2016), the author presented

two main points. First is the present impact of information

technology on modern accounting systems. The other point is

the cons of using Information Technology on the modern

accounting systems. The author found out that information

technology on modern accounting systems has a variety of

benefits. Some of these are it improves the business

performance, transactions were simplified thus creating

efficient operations, information technology advancements

make effective and efficient information flow that enhances

the managerial decisions and it helps the companies to

develop and use computerized systems to track and record

financial transactions. On the other hand, it also has

drawbacks concerning the use of information technology. It

includes heavy cost of installations, cost of training, fear

of unemployment, disruption in work, system failure, time-

consuming, anticipated errors not known, breaches of

security, and health dangers.

Esmeray (2016) in his study revealed that there is a

positive and statistically significant relationship between

the use of Accounting Information systems and the

educational status of the managers. The study also proved

that there is a positive relationship between the use of

Accounting Information systems and the growth of the

business in terms of sales, customer, and revenue. Among the

positive effects of the implementation of the Accounting

Information System, customers' growth can be seen as the

strongest. Furthermore, the author concluded that as the

number of employees increases, the use of the Accounting

Information System also increases.

Arcega, et. al (2015) mentioned in their study that

most of the small and medium enterprises in Lipa City,

Philippines have been using a computerized accounting system

for six to ten years in performing their business

operations. Moreover, the authors want to determine the

level of performance of the businesses in using a

computerized accounting system as compared with the non-

computerized ones. The study also presented shreds of

evidence for the benefits as well as the drawbacks of using

a computerized accounting system.

The study of Adjei (2015) showed that a computerized

accounting system enhances higher turnover and profitability

and it is also an effective means of keeping accounting

records. The author also proves that the application of a

computerized accounting system supersedes that of a manual

accounting system. After a thorough research and study, the

author concluded that the advantages of a computerized

accounting system far outweigh its associated challenges as

it has impacted positively the financial reporting of the

banks, thus, the author concluded that businesses

particularly rural banks should adopt computerized

accounting system. The author further recommends that the Ga

rural bank should channel most of its resources in the

training and development of bankers and accountants in a

computerized accounting system.

In the research of Muhindo, Kapute, and Zhou (2014) it

presented the impacts of the Accounting Information System

in small scale businesses in Kampala City in terms of their

profitability and performance levels. The research findings

revealed that accounting information plays an important role

in our economy and social systems especially in its

management and the great works it does in facilitating the

management decision-making process. The authors also found

out that most small-scale businesses do not apply Accounting

Information Systems, which results in low profit. Moreover,

the study concluded that implementation of the Accounting

Information System even in small-scale business can be

beneficial especially when it comes to profitability.

Saeidi and Prasad (2014) provided that a data quality

management is a significant factor for Accounting

Information System in organizations. Besides, financial

managers are highly complacent as they are not taking any

initiatives on their own to reach out and meet the

organizational goals. Moreover, the role of the Accounting

Information System is crucial in managing the organization

and in implementing an internal control. The results

revealed that there is a positive relationship between the

Accounting Information System and influence factors on the

performance of the organization.

Related Studies

In the research study of Chouhan, et. al (2018) it

showed that if the attributes configuring impact of

Accounting Information Systems on various dimensions

significantly influence the organizational effectiveness of

a business. Furthermore, the research findings revealed that

the investment in Accounting Information System has given

the improvement in the strategy and long-term productivity

of the companies.

In the study of Rodriguez (2017), it showed that there

were significant differences in the extent of Accounting

Information System utilization among comprada businesses in

the different areas of Partido, Camarines Sur. Also, the

majority of the comprada businesses utilized general ledger

or financial accounting rather than management accounting.

The study recommended the comprada owners embrace and invest

the aspect of business processes in computerized accounting

platforms. Moreover, comprada businesses need to have an

effective Accounting Information System to handle their

various needs for effective business decisions, timely and

accurate financial reporting to efficiently gauge business

status, and meet government regulatory requirements.

Pan and Seow (2016) gave accounting students an idea

about the importance and usefulness of understanding and the

benefit of being well versed in using the Accounting

Information System. The research provides that Accounting

Information System is heavily used in Accounting and

Auditing functions. Therefore, it is important for

accounting students, the future Accountants, and Auditors,

to receive proper training in their tertiary education

covering the topics in connection with the Accounting

Information System for the reason that this knowledge will

help in their long-term careers.

The research study of Chakraborty (2015) focused on how

poor accounting practices hamper the growth and

sustainability of small and medium-sized enterprises. The

study also showed how stakeholders were affected due to a

lack of quality accounting information. Moreover, the

research revealed that poor accounting practices create a

threat to the growth and sustainability for small and medium

enterprises such as inefficient business operation and

control, poor strategic decisions and poor management in all

aspects of the business. The author concluded that effective

and systematic accounting practice is necessary to increase

the operational efficiency, profitability, and growth of

small and medium enterprises.

Patel (2015) in his study gave an idea that an

Accounting Information System can help businesses in

gathering, storing, directing, processing, recovering, and

reporting its financial data. This study has evaluated the

effectiveness of Accounting Information Systems in decision

making from various aspects such as a better decision-making

by managers, more effective internal control systems, and

improvement of the quality of financial reports, enhancement

of performance measures, facilitating financial transaction

processes and helps in the expansion of profitability of the

organization.

Budiarto (2014) studied the effects of Accounting

Information System alignments on non-financial performance

in small and medium enterprises. Moreover, part of the study

is the factors that influence the Accounting Information

System alignments. The result of this research showed that

Accounting Information System sophistication, owner

commitment, and external Information Technology expertise

have significant effects on Accounting Information System

alignment. The development of small and medium enterprises

necessitates the government's role in spearheading small and

medium enterprises owners the training on the proper

procedures of adopting Information Technology for the growth

of the business.

The research study of Mahmoud and Alrabei (2014)

presented that the Accounting Information System is most

common in the Jordanian Islamic banks and it helps in

providing appropriate information about available substances

at the right time. The research found out that banks rely on

accounting systems, by connecting all the banking services

of banks each department separately and linking between all

departments at the same time, dependence on accounting

information systems to satisfy the clients through the

implementation of banking clients as quickly and with

minimal effort. Thus, Accounting Information System helps in

providing information at the right time.

Tarute and Gatautis (2014) presented the direct and

indirect impact of ICT on the performance of the small and

medium enterprises. The results showed that ICT improves the

overall, financial, and operational performance of small and

medium-sized enterprises if only used appropriately.

Moreover, ICT has an impact on the improvement of external

and internal communication. Thus, ICT played a major role in

the innovation performance of small and medium enterprises.

Findings highlighted that to attain the best performance, it

is important to align the ICT investments with internal

capabilities and organizational processes.

State of the Art

Accounting Information Systems is an essential part of the

operations in businesses all over the world. May it be in

banks, non – financial institutions, e-commerce, large

firms, etc. This is because of the effect it gives in the

timeliness of the issuance of reports and records that are

needed in making decisions. The main goals of the Accounting

Information System are to reduce transactional errors and

the speed of the reporting phase making the financial

information readily available. Additionally, the use of

automated systems ensures task and operational efficiency in

reporting and decision making phase.

The studies showed the importance of Accounting

Information Systems in the business world and the

development of the accounting systems and control of the

company or industry. It contributes to the enhancement of

the performance of the companies, in productivity,

financial, and even non - financial performance.

Additionally, automated systems would only be effective and

could improve performance if the users of which have the

required technical skills for its use. Essential skills

would only be acquired through training and education

acquired by the employees in their bachelor's degree. The

most required skill is computer/ IT expertise.

With the information above available, it shows that the

implementation of Accounting Information Systems is

essential. Yet, some enterprises or businesses find it hard

to consider the implementation of the system. The

researchers aim to give light on the cost-benefit analysis

of the implementation of AIS. This research shall provide a

structured view of the study where the main sources of

problems in deciding whether to implement an Accounting

Information System or not shall be identified.

CHAPTER III

RESEARCH METHODOLOGY

This chapter presents the information of the research

method used in the study to answer the research problems of

the study of which includes the research design, research

setting, population, data gathering instrument, and data

analysis techniques.

Research Design

The researchers conducted the research with the use of a

descriptive survey method by using a survey questionnaire to

gather the necessary data needed and interview the

respondents to suffice the additional relevant information

needed to meet the goal of having a conclusion with enough

evidences.

Research Setting

This study was conducted at Naga City. The respondents

were the chosen small and medium-sized enterprises that gave

their permission to cooperate with the researchers, during

the first semester of the school year 2019-2020.

Data Gathering Instruments

 Selected registered small and medium-sized enterprises

applying either an automated accounting system through the

implementation of Accounting Information System (AIS) or

manual accounting system were selected. It involved 30 small

and medium-sized enterprises coming from different business

industries. A documentation and survey methods were used

with an interview and the questionnaire as the main

instrument to gather the desired data and information needed

in the study.

The Questionnaire

The questionnaire was divided into three parts. Part one is

directly connected in answering the profile of the business

and the owner's information. The second part is focused on

the comparison of the manual vis-à-vis automated systems

according to the factors that are affecting the

productivity, growth, and operational cost of the business.

Part three consists of questions about the challenges faced

by the respondents in implementing the Accounting

Information System. Copies of the questionnaire were only

given to those persons in control of whether to implement

the Accounting Information System or not, such as the

owners, managers, and supervisors.

Population of the Study

 The target population of this research study includes

the registered Small-Medium Enterprises implementing either

manual or automated accounting systems employing the use of

the Accounting Information System registered in year January

2017- December 2017 located in the City of Naga.

In this study, the accessible population comprised

almost all of the small and medium sized enterprises listed

in the Business Application with Line of Business Listing

gathered from the City Treasurer's Office. Table 1 shows the

listing of the number of the small and medium-sized

enterprises duly registered and located in Naga City based

on the number of accessible SMEs per Barangay.

Table 1: The Population of the Small and Medium Sized

Enterprises based on what Barangay it is located in the city

Name of Barangay No. of Accessible SMEs

Abella 64
Bagumbayan Sur 25
Balatas 7
Calauag 8
Cararayan 5
Concepcion Grande 18
Concepcion Pequena 54
Dayangdang 11
Del Rosario 6
Dinaga 31
Igualdad interior 10
Lerma 16
Mabolo 4
Pacol 4
Penafrancia 29
 Sabang 14
San Felipe 14
San Francisco 46
Santa Cruz 49
Tabuco 14
Tinago 17
Triangulo 118
Total 564

In relation to this, the chosen respondents of the

study as the researchers faced difficulties in the conduct

of the survey, the researchers have limited to only thirty

(30) respondents.

Statistical Treatment

In analyzing the data gathered, the researchers used

two methods namely Frequency and Percentage Method and

Weighted Mean and Rank Method.

Frequency and Percentage Method was used in determining

the relationship of each of the areas in employee reduction,

technical errors, processing time, employee competency,

growth and expansion, and operational cost reduction.

Weighted Mean and Rank Method was used in determining

the challenges that the Small and Medium Enterprises faced

and are still facing in the implementation of Accounting

Information Systems.
 CHAPTER IV

PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA

This chapter presents the data gathered, the results of

the statistical analysis done, and interpretations of

findings. These are presented in tables following the

sequence of the specific research problem regarding the

impact of implementing Accounting Information Systems on

small and medium-sized enterprises in Naga City.

 Table 2Aa
Impact of Accounting Information Systems on the Number of
Employees

Average no.
Increase/
Employee %
of employees
Decrease
MAS AIS
a. Accountant 1.07 1.87 0.80 75%
b. Bookkeeper 2.17 3.30 1.13 52%
c. Budget Officer 0.81 1.12 0.31 38%
d. Accounting Staff 0.93 1.93 1.00 107%
Legend:
+/- 101 % and above : Highly significant
+/- 76 - +/- 100% : Moderately significant
+/- 51 - +/- 75% : Somewhat significant
+/- 26 - +/- 50% : Slightly significant
0 - +/- 25% : Least significant
Table 2Aa shows that when the respondents started

implementing Accounting Information System they experience

an increase of 107% in the number of their employees

interpreted as highly significant. On the other hand, there

is an increase of 38% in the position of budget officer

interpreted as an slightly significant.

The increase in the position of accounting staff could

be for the reason that they are the ones who have access to

the Accounting Information System. Moreover, they also

possess the necessary skills and knowledge in using such a

system as compared with the other positions mentioned above.

The increase in the position of a budget officer could be

for the reason that this position is the least significant

when it comes to the use of the Accounting Information

System because their main function is about budgeting only.

This idea is supported by the research made by Esmeray

(2016) wherein it states that there is an increase in the

number of employees when a business opted to implement the

Accounting Information System. Hence, there is a direct

relationship between the use of the Accounting Information

System and the number of employees needed.

 Table 2Ab

Impact of Accounting Information Systems on Technical

Errors

Average no of
Increase/
Technical Errors %
occurrence
Decrease
MAS AIS
a. Wrong recognition of 5.83 2.60 -3.23 -55%

transaction
b. Omission of transaction 5.47 2.50 -2.97 -54%
c. Loss of information 3.13 1.23 -1.90 -61%
d. Overstatement / 4.77 1.97 -2.80 -59%

Understatement of

transactional amounts
e. Erroneous account used 5.63 1.90 -3.73 -66%

Legend:
+/- 101 % and above : Highly significant
+/- 76 - +/- 100% : Moderately significant
+/- 51 - +/- 75% : Somewhat significant
+/- 26 - +/- 50% : Slightly significant
0 - +/- 25% : Least significant

Table 2Ab reveals that there is a decrease in the

technical errors encountered by the business in recording

transactions from using Manual Accounting Systems to the

implementation of Accounting Information. According to the

survey, the highest percentage decrease of 66% is on the

erroneous accounts used. This decrease is interpreted as

somewhat significant. Whereas, the lowest percentage

decrease of 54% is on the omission of transactions and it is

interpreted as somewhat significant.

The reason why there is a decrease of 66% on the

erroneous accounts used could be because there are Pro-forma

journal entries and forms in Accounting Information Systems

that results in a more accurate recording of transactions.

Thus, the erroneous journal entries are lessened. On the

other hand, the reason why the omission of transactions

garnered the lowest percentage decrease could be for the

reason that the use of automated systems does not guarantee

that all transactions will be recorded because human errors

are inevitable. This is in accordance with the study of

Adjei (2015) wherein it states that the Computerized

Accounting Information System is an effective means of

keeping accounting records. The study also revealed that the

application of a Computerized Accounting System supersedes

that of the Manual Accounting System.

Table 2Ac

Impact of Accounting Information Systems On Processing

Time

Frequency Increase

Processing time / %
MAS AIS
Decrease
Per day 30 7 -23.00 -77%
Per transaction 0 15
Weekly 0 8

Legend:
+/- 101 % and above : Highly significant
+/- 76 - +/- 100% : Moderately significant
+/- 51 - +/- 75% : Somewhat significant
+/- 26 - +/- 50% : Slightly significant
0 - +/- 25% : Least significant
 Table 2Ac shows that the respondents record business

transactions daily when using Manual Accounting System.

However, when the respondents employed Accounting

Information System in their business 15 respondents shifted

to per transaction basis and eight respondents changed to

weekly recording of transactions.

Based on the foregoing data, it is understood that the

decrease of 77% in the per-day basis of recording

transactions was distributed to per transaction basis with

65% making it available real-time information. Moreover, 35%

transferred to a weekly basis allowing them to process

voluminous transactions. Hence, the implementation of

Accounting Information Systems makes speedy execution of

transactions and renders accurate and timely information

that is necessary in the decision-making process of every

organization.

This idea coincides with the study of Arcega et. al

(2015) which presented both the benefits and drawbacks of

using computerized Accounting Information System. According

to the study, one of the main benefits of implementing

Accounting Information Systems in the operations of the

business is the speed of processing tasks.

 Table 2Ad

Impact of Accounting Information Systems on Processing

Time Per Transaction

Average time
Increase/
Transaction %
allotted
Decrease
MAS AIS
a. Purchasing 5.19 2.00 -3.19 -61%
b. Sales 6.48 2.11 -4.37 -67%
c. Collection of 3.44 1.13 -2.31 -67%

Receivables
d. Payment of purchases 2.33 2.45 0.12 5%
e. Payment of expenses 2.33 2.31 -0.02 -1%
f. Receipt of goods 1.85 0.63 -1.23 -66%

Legend:
+/- 101 % and above : Highly significant
+/- 76 - +/- 100% : Moderately significant
+/- 51 - +/- 75% : Somewhat significant
+/- 26 - +/- 50% : Slightly significant
0 - +/- 25% : Least significant
 Table 2Ad indicates that small and medium-sized

enterprises have a decrease in processing time by 67% both

in transactions relating to sales and collection of

receivables interpreted as somewhat significant. However,

there is an increase of 5% in the processing time of payment

of purchases interpreted as least significant.

The decrease in the processing time relating to sales

and accounts receivable transactions could be for the reason

that the automation of the systems within the organization

lessens the average time allotted in dealing with these

types of transactions. On the other hand, slowing down the

payment of purchases and expenses of the business may be a

strategy of the business to shorten its cash conversion

cycle. Slowing down of payments to creditors allow them to

make use of cash longer.

Above data concurs with the study of Patel (2015). The

study evaluated the effectiveness of Accounting Information

Systems in decision making from various aspects such as a

better decision-making by managers, more effective internal

control systems, and improvement of the quality of financial

reports, enhancement of performance measures, facilitating

financial transaction processes and helps in the expansion

of profitability of the organization.

 Table 2Ba

Impact of Accounting Information Systems on Expansion

Average Increase/
Area %
MAS AIS
Decrease
How many branches do you 1.70 1.73 0.03 2%

have?
What percentage is your 0.32 0.34 0.01 3%

market share?

Legend:
+/- 101 % and above : Highly significant
+/- 76 - +/- 100% : Moderately significant
+/- 51 - +/- 75% : Somewhat significant
+/- 26 - +/- 50% : Slightly significant
0 - +/- 25% : Least significant
 Table 2Ba depicts that small and medium-sized

enterprises experienced an increase of 2% in their branches

interpreted as least significant. The respondents also

experienced an increase of 3% in their market share when

they opted to use the Accounting Information System. This

change in the market share is interpreted as least

significant.

As per the results of the survey, it is understood that

there is no significant relationship between the

implementation of Accounting Information Systems and the

range of the business' market. The implementation of the

Accounting Information System in the operations of the

business does not give any significant difference as

compared when the business used Manual Accounting System.

The results obtained were not enough to say that the

implementation of the Accounting Information System

increases the number of branches and market share of a

business.

The above data negates the research study of Chouhan,

et. al (2018) wherein the research findings revealed that

the investment in Accounting Information System has given

the improvement in the strategy and long-term productivity

of the business. One of these long-term benefits is the

expansion of the business.

 Table 2Bb
Impact of Accounting Information Systems on Employee
Competency

Average Increase/
Area %
MAS AIS Decrease
How many skilled 5.03 7.90 2.87 57%

employees do you have?

How many employees 3.30 5.23 1.93 59%

participate in

decision making?
How many times do you 0.85 2.04 1.19 141%

send your employees to

attend seminars every

year?
How often do employees 1.63:9.12 2.25:8.28 0.00 0%

get promoted? mos. mos.

Employees 1.63 2.25 0.62 38%

Time (months) 0.76 0.69 -0.08 -10%

Legend:
+/- 101 % and above : Highly significant
+/- 76 - +/- 100% : Moderately significant
+/- 51 - +/- 75% : Somewhat significant
+/- 26 - +/- 50% : Slightly significant
0 - +/- 25% : Least significant
 Table 2Bb reveals that the respondents have increased

the frequency of sending the employees to seminars by 141%

after they implemented the Accounting Information System

interpreted as a highly significant. In addition, there is

an increase of 38% as to the number of employees being sent

to seminars interpreted as slightly significant. However,

there is a decrease in the promotion time by 10% interpreted

as an least significant.

The significant increase in the frequency of sending

the employees to seminars could be for the reason that when

an organization adopts Accounting Information System their

employees must be skilled and knowledgeable to carry out

their specific tasks well with the use of automated systems.

With this, employees can keep the business on par with other

competitors. Moreover, the decrease in the promotion time

could be for the reason that sending employees to seminars

is quite expensive for the employers. This reason hinders

the employers to send their employees to seminars.

This coincides with the study of Adjei (2015) which

states that businesses must channel most of their resources

in the training and development of their employees in the

field of Accounting Information systems.

 Table 2C

Impact of Accounting Information Systems on Operational

Cost

Average cost
Increase/
Area %
incurred
Decrease
MAS AIS
How much expenses        

do you incur for

the following

every month?
a. Salaries 49,592.59 64,129.63 14,537.04 29%
b. Utilities 7,351.85 8,962.96 1,611.11 22%
c. Supplies 5,111.11 3,333.33 - 1,777.78 -35%

Legend:
+/- 101 % and above : Highly significant
+/- 76 - +/- 100% : Moderately significant
+/- 51 - +/- 75% : Somewhat significant
+/- 26 - +/- 50% : Slightly significant
0 - +/- 25% : Least significant
 Table 2C reveals that there is a 35% reduction in the

cost incurred by the respondents in their supplies when they

opted to use the Accounting Information System. On the other

hand, there is a 29% increase in the number of salaries

being incurred by the business.

Since most of the transactions in the Accounting

Information System are paperless, entities procure fewer

office supplies as compared with the supplies they procure

when they use Manual Accounting System. However, the

increase in the peso amount of salaries of the employees

could be for the reason that the business employs a higher

number of employees upon implementation of the accounting

information system as compared to a manual accounting

system. Because of the increase in the number of employees

the total amount of salaries incurred by the business

increases as well. Thus, the increase in the percentage of

salaries is because of the increase in the number of

employees.

This concurs with the study of Reuters (2016) wherein it

states that there is a variety of benefits in using

Accounting Information Systems. Some of these are it

improves the business performance including the minimization

of the expenses being incurred by the business.

 Table 3A

Cost Related Challenges Faced by Accounting

Information Systems Users

Indicator Mean Rank Interpretation

High system installation and

2 Agree
maintenance cost 4.17

High investment cost 4.33 1 Strongly Agree

Overall 4.25 Strongly Agree

Legend:

4.21 - 5.00 = Strongly Agree

3.41 - 4.20 = Agree

2.61 - 3.40 = Neutral

1.81 - 2.60 = Disagree

1.00 - 1.80 = Strongly Disagree

 It is known that when technology is applied in a

certain process or transaction, it also requires a certain

cost needed to be expended. Two cost-related challenges

faced by Accounting Information users were shown in Table

3A.

As per the result of the survey, the small and medium-

sized enterprises implementing the said system agree and

strongly agree in the high system installation and

maintenance cost, and high investment cost, garnering 4.17

and 4.33 accordingly. It is understood that the majority of

the respondents approve that implementing the system

requires the user for a high cost of investment and

necessitates also a high installation and maintenance cost.

The result approves the related literature by Reuters

which states that one of the drawbacks concerning the use of

information technology is its heavy cost of installations,

training employees, and maintenance.

 Table 3B

Information Technology Related Challenges Faced by

Accounting Information Systems Users

Indicator Mean Rank Interpretation

Power failure/system breakdown 3.80 3 Agree

Resistance to technological
1 Agree
change 3.87
Possible data breakdown and data
4 Agree
leakage 3.47
Company workflow controlled by
2 Agree
system 3.83

Hackers may breach the

2.60 5 Disagree
information to steal information

Overall 3.51 Agree

Legend:

4.21 - 5.00 = Strongly Agree

3.41 - 4.20 = Agree

2.61 - 3.40 = Neutral

1.81 - 2.60 = Disagree

1.00 - 1.80 = Strongly Disagree

The use of technology in the normal operation of a

business has been a gradual evolution. Innovating the

technology from before to make it a better one, has been the

information technologists' task. Thus, arising challenges

must be solved. Information technology-related challenges

faced by Accounting Information System users are presented

in Table 3B.

It turns out that the respondents agree to the

challenge of resistance to technological changes of the

employees and disagree with the possibility that hackers may

breach the system to steal information, having 3.87 and 2.60

average responses, respectively. These show that most of the

employees encounter challenges in using the systems,

especially those who are not technologically inclined, like

the old ones. Also, they disagree that hackers may breach

their system, for they make sure that they are highly

secured through the support of their information

technologist.

The analysis agrees on Budiarto's studies which state

that external Information Technology expertise has

significant effects on Accounting Information System

alignment. The development of small and medium enterprises

necessitates its role in spearheading small and medium

enterprises owners the training on the proper procedures of

adopting Information Technology for the growth of the

business. Mahmoud and Alrabei's studies state that it helps

in providing appropriate information about available

substances at the right time. They found out that banks rely

on accounting systems, by connecting all the banking

services of banks each department separately and linking

between all departments at the same time. This supports the

factor that the company workflow is controlled by the

system.

Table 3C

Human Resource Related Challenges Faced by Accounting

 Information Systems Users

Indicator Mean Rank Interpretation

Need of employing IT staff 4.13 2 Agree

Possibility of unemployment,
3.37 3 Neutral
especially low skilled workers

Employees must learn new

1 Strongly Agree
technological skills 4.43

Overall 3.98 Agree

Legend:

4.21 - 5.00 = Strongly Agree

3.41 - 4.20 = Agree

2.61 - 3.40 = Neutral

1.81 - 2.60 = Disagree

The implementation of Accounting Information Systems

has also an adverse effect on the human-resource. It affects

those employees whose jobs are directly affected by the

implementation of the said system. There are three Human

Resource related challenges presented in Table 3C.

Based on the response, the respondents strongly agree

that employees must learn new technological skills, and is

neutral to the possibility of unemployment, especially low

skilled workers. Having a mean of 4.43 and 3.37 average

response, respectively. The employees must cope up with the

technological changes that their company adapts. For this

reason, the company provides seminars for their employees

which in return creates opportunities for them.

Reuters states that one of the drawbacks concerning the

use of information technology is that there is a fear of

unemployment for the existing employees and low skilled

workers of the company. Based on the analysis, it neither

negates nor approves the said statement. The employment of

the workers depends on the company if they would lay them

off or let them stay. Some companies have strict credentials

and qualifications that they follow for employment, while

other companies give the employees opportunities for

professional growth and development through trainings and

seminars related to the use of accounting information

systems.

Table 3D

Challenges faced by Users of

 Accounting Information Systems

Indicator Mean Rank Interpretation

Cost Related 4.25 1 Strongly Agree

IT Related 3.51 3 Agree

HR Related 3.98 2 Agree

Overall 3.91 Agree

Legend:

4.21 - 5.00 = Strongly Agree

3.41 - 4.20 = Agree

2.61 - 3.40 = Neutral

1.81 - 2.60 = Disagree

According to the survey results, the respondents

strongly agree to the cost related challenges and agree to

both the human resource and information technology-related

challenges. Having 4.25, 3.98, and 3.51, respectively.

 Based on the results, the cost related challenges are

the most agreeable by the small and medium-sized

enterprises. The investment in Accounting Information System

is quite costly and requires high maintenance costs.

Human resource-related challenges on the other hand are

agreeable for the respondents. The implementation of the

system requires the employees to learn new technological

skills necessary for the execution of the system.

Furthermore, there is a need for information technology

staff and does not connote unemployment for low skilled

employees.

Lastly, for the information technology challenges, the

respondents agree that most of their employees having a

direct association with the system are quite challenged with

changes. As for the factors relating to the leakage of

information and breach of the system, they disagree for they

make sure that it would be prevented with the aid of their

information technologist.
 CHAPTER V

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

All things considered, this chapter will show all the

findings, conclusions, and recommendations for all the

problems identified in this research. Findings will focus on

the summarization of the statistical figures of the results

extracted in the survey. Conclusions will briefly discuss

statements concerning the main reasons relating to the

findings dig out. It will show if these results have a

significant impact and relation in solving the related

problems in this study. For the recommendation, it will

focus on improving the performance of the small and medium-

sized enterprises by targeting the one with the lowest

weighted mean.

Problem 1A: What is the impact of the implementation of

Accounting Information Systems on business growth and

productivity of small and medium-sized enterprises in Naga

City in terms of reduction of employee, technical error, and

processing time?

Findings

1. The result has shown that the implementation of the

Accounting Information System has an impact in terms of

employee reduction. The highest percentage change shown

 in the results is the increase of Accounting Staff with

an average of 107%, while the lowest percentage change

in the Budget Officer that has an average of 38%.

Therefore, small and medium-sized enterprises need more

Accounting Staff under Accounting Information System.

2. As to technical errors, the result showed that there is

a highest decreased is in the erroneous account used of

3.73 with an equivalent average of 66% after the

implementation of Accounting Information System, while

the lowest percentage change is the omission of

transactions with a decrease of 2.97 having an

equivalent average of 54%. Therefore, the impact of the

Accounting Information System in terms of technical

errors is more on a decrease in the erroneous account

used by small and medium-sized enterprises.

3. In terms of processing time, the majority of small and

medium-sized enterprises records transaction per day,

both for Manual Accounting System and for Accounting

Information System. The results have shown that small

and medium-sized enterprises have the highest decrease

in the processing time of 67% both in transactions

relating to sales and collection of receivables.

Meanwhile, the results show that the lowest decreased

in processing time is underpayment of expenses having

 an average of 1%. Therefore, the implementation of the

Accounting Information System aids more in terms of

processing sales and the collection of receivables.

Conclusion

1. The majority of the small and medium-sized enterprises

hire additional employees, especially accounting staff

who plays a vital role in accounting for the

transaction of the Enterprise after implementing the

Accounting Information System, for the reason that the

company has the capability of holding more

transactions.

2. The researcher concluded that small and medium-sized

enterprises who implement Accounting Information System

diminish the errors that they come across in processing

transactions, especially in terms erroneous account

used. Since it was programmed, they can easily detect

incorrect data that are being entered from the system.

Furthermore, they can easily identify if there are data

or information that are being omitted with the help of

a duplicate copy of pre-numbered official receipts,

sales invoice, and purchase order receipts.

3. Accounting Information Systems play a vital role in

every small and medium-sized enterprises. The

 researcher concluded that it provides a positive effect

since they can be more productive compared when they

are using Manual Accounting System. It primarily aids

the Enterprise in them in processing transactions, such

as sales and collection of receivables. They are more

capable of producing desired results without wasting

materials, time, and energy.

Recommendation

1. As to the number of employees, the researchers

recommend that they must segregate the duties when it

comes to recording various transactions. They must

evaluate the capability of each employee so that they

can identify whether or not she/he can accept various

or complex transaction, therefore there is no need for

them to hire more employee since it is costly.

Moreover, they must hire only those who are needed by

the enterprise.

2. In terms of technical errors, the researcher recommends

that small and medium-sized enterprises must only use

one method of accounting and recording transactions,

which is by using Accounting Information System in all

areas of their operations. This is because based on

some respondents they simultaneously use manual and

automated, it might result to disarrangement of data

 and information, and it would be hard for them to trace

the incorrect transaction.

Problem 1B: What is the impact of the implementation of

Accounting Information Systems to business growth and

productivity of small and medium-sized enterprises in Naga

City in growth in terms of expansion and employee

competency?

Findings

1. Based on the foregoing data, the implementation of the

Accounting Information System has no substantial

relationship in the business' market since as per the

results of the survey; there is a minimal increase in

the branch and market share of the enterprises.

2. Based on the result, it was found out that small and

medium-sized enterprises who have increased the

frequency of sending employees to seminars by 141%

after the implementation of Accounting Information

System. Meanwhile, there is a decrease in the promotion

time of the employees by 10%. Therefore, small and

medium-sized owners focus more on enhancing their

employee competency after the implementation of the

Accounting Information System.

Conclusion
 1. The researchers concluded that expansion is one of the

major results of implementing the Accounting

Information System. Herewith, Small, and Medium-Sized

Enterprises' market share grow as their business

expands.

2. The result showed that employees must possess the basic

skills and knowledge in using Accounting Information

System for them to be able to perform tasks

productively. Furthermore, the researcher also

concluded based on the foregoing data that owners small

and medium-sized enterprises engaged more in sending

their employees in work-related seminars that would

probably help their employees in enhancing their

knowledge in using the system especially those who

handle the majority of the entity's transactions. This

seminar and trainings are of great help for them to

cope up with the changing needs of the society.

Recommendation

1. In terms of business expansion, small and medium-sized

enterprises must assure to choose the appropriate place

with the appropriate target market for them to

continuously increase their market shares.

 2. In terms of employee competency, the researcher

recommends that small and medium-sized enterprises must

continuously require their employees to attend work-

related seminars that can help them in developing their

skills and knowledge about the system such as the

accountants. This will help them achieve reliable

results regarding their duties. Another reason is that,

it can help them do their duties more efficiently and

effectively especially to those employees who handle

the major transaction of the enterprise.

Problem 1C. What is the impact of the Implementation of

Accounting Information System to business growth and

productivity of small and medium-sized enterprises in Naga

City in terms of operational cost reduction?

Findings

1. Base on the results tallied from the survey conducted,

the researchers found out that there is an impact on

the operational cost concerning the implementation of

the Accounting Information System. The highest

percentage change shown in the results is the increase

in the salaries expense and as the lowest percentage

change is the decrease in the supplies expense. In

terms of utilities expense, it was found out that there

 is an increase of 1, 611.11 equivalent to 22% increase

in the average cost incurred and in terms of the

supplies expense results showed that there is a

reduction of cost amounting to 1,777.98 equivalent to a

negative percentage of 35%. Therefore, the reduction of

cost relating to its operations relates mainly to the

supplies expense incurred.

Conclusion

1. The implementation of the Accounting Information System

applied by small and medium-sized enterprises has a

direct effect as to the operational cost relating to

salaries of the employees and in the utilities expense

of the entity. As they implement the use of Accounting

Information System, there is a possibility that

employees' salaries will increase because the entity

can hold more transactions and as a result they need to

hire additional employees, especially if the entity's

business is expanded. On the other hand, the only

reduction relating to the entity's operational cost is

the supplies expense, there is no need for them to

purchase additional supplies used in recording

transactions similar to what they used to do in Manual

Accounting System.
Recommendation

1. Base on the findings it has shown that there is a high

value relating to the increase in the salaries expense.

Some entities at the first glance might say it has a

negative effect in the business but looking in a deep

view of it, the increase in the cost has also a

corresponding increase in the revenue of the business.

Since the business is holding an increasing number of

business transactions, the entity also needs to employ

an increasing number of employees to perform the

business activities. The researchers recommend that the

business should not consider this increase in cost as a

burden because this increase is a normal response in

the growth of the business. In connection with this, an

increase in the number of business transactions will

also increase the profitability rate. The cost of

additional employees will be counterbalanced by the

corresponding increase in revenue that will be earned

because of the increase in business transactions.

Problem 2: What are the challenges in using Accounting

Information System?

Findings
1. There are three major classifications of challenges

faced by Accounting Information System users namely;

cost-related challenges, information technology-related

challenges, and human resource-related challenges.

Among these three major challenges, cost-related are

the most faced challenges by the respondents having the

highest mean of 4.25. On the other hand, challenges

relating to information technology garnered the lowest

mean of 3.51.

2. Under the cost-related challenges, the main factor that

affects the Accounting Information System user pertains

to the high investment cost requirement having the

highest mean of 4.33. Conversely, high installation and

maintenance costs have the lowest mean of 4.17.

3. With the use of the Accounting Information System,

employees must learn new technical skills. This is the

main contributor to the human resource-related

challenges having a mean of 4.43. On one hand, the

possibility of unemployment especially to low skilled

workers resulted as the least faced challenge by the

respondents having the lowest mean of 3.37.

4. Another challenge relating to the implementation of the

Accounting Information System is the Information

Technology related challenges; the researchers found

 out that the main indicator contributing to the

challenge is the resistance to technological change

having the highest mean of 3.87. Conversely, the least

faced challenge relating to information technology that

was disagreed by the respondents is the factor that

hackers may breach the system to steal information

having the lowest mean of 2.60.

Conclusion

1. Challenges are normal for every business. Small and

medium-sized enterprises also face different challenges

such as cost-related challenges, information

technology-related challenges, and human resource-

related challenges.

2. Based on the findings above, the researchers end up

with a conclusion that implementation of Accounting

Information System may be costly, but this will benefit

the business in the long run and in effect, the cost

invested in the implementation would be returned

through the development and improvement it gives to the

performance of the entity.

3. As for the human resource-related challenges, the

researcher concluded that employees' technological

skills and knowledge are the primary qualifications

 that they must possess. It would serve as a foundation

for them to do their tasks properly. Furthermore, there

is also a need for small and medium-sized enterprises

to employ information technology staff since technical

errors are inevitable.

4. For the information technology-related challenges, the

researchers concluded that the most challenging part

that most respondents are experiencing is the

resistance to technological change. Struggles are not

common for every business however; they need to put

further effort to surpass the rapid changes in the

business environment.

Recommendation

1. Even though cost is one of the major challenges faced

by the Accounting Information System users it is very

important to put in mind that it is not considered as a

hindrance in implementing a computerized system.

Looking forward to its long term effect, implementation

of the Accounting Information System will help a lot in

terms of the overall growth and productivity of the

business. These costs can be considered as a long term

investment that will benefit the business in the long

run if properly manage. Therefore, it is highly

recommended for the business to implement an Accounting

 Information System regardless of its cost because above

all it is all about the benefit over the cost.

2. Another thing that challenges the business is the need

for new learnings of technological skills. To avoid

these human resource-related challenges, it is

recommended that the business must send their employees

to attend to trainings and seminars related to updated

and proper adoption Accounting Information System

practices to upgrade their knowledge and skills

involving the proper adoption of the Accounting

Information System. Through this kind of activity, the

business will not only be the one benefiting but also

the employees themselves because it will enhance their

skills leading to a higher level of competency.

3. The management must also explain to their employees

very well that the implementation of Accounting

Information System is very useful for them. That there

is no need to resist for the change because

implementing this computerized system will lead to

several benefits such as more convenient and easy

processing of transactions, more secure storing of

data, and timely preparation of financial statements.