ACCRA TECHNICAL UNIVERSITY

EVALUATING ACCOUNTING INFORMATION SYSTEM AS A TOOL FOR

MANAGEMENT
DECISION MAKING: A CASE STUDY OF ASF FINANCIAL SERVICES

By

DESMOND LARTEY BOTCWAY

(01210752B)
ERIC NHYIRABA KWAKYE
(01210931B)

RESEARCH PROJECT REPORT/ THESIS Submitted to the

DEPARTMENT OF ACCOUNTING

FACULTY OF ACCOUNTING AND FINANCE,

in Partial Fulfillment of the Requirements for the

AWARD OF BACHELOR OF TECHNOLOGY (BTECH)

In

ACCOUNTING

SEPTEMBER, 2023

i
 DECLARATION BY STUDENTS

This project is submitted as part of fulfillment for the award of a BTech in Accounting: The
work is a result of our investigation. All sections of the text and results which have been
obtained from other works/ sources are fully referenced. We understand that cheating and
plagiarism constitute a breach of Accra Technical University and will be dealt with accordingly.

NAME SIGNATURE DATE

DESMOND LARTEY BOTCHWAY ……………… ………………

(01210752B)

ERIC NHYIRABA KWARKYE ……………… ………………

(01210931B)

ii
 DECLARATION BY SUPERVISOR

I hereby confirm that the above students are BTech Students in the Department of Accounting
under my academic and research supervision in accordance with the project work requirement in
Accra Technical University.

NAME SIGNATURE DATE

MR. BENJAMIN AMANQUAH ……………… ……………

i
 DEDICATION

We dedicate this book to the Almighty God, our lovely parents, our siblings, our friends, and all
our lecturers for their support assistance throughout our training.

ii
 ACKNOWLEDGEMENTS

We will take this opportunity to show my gratitude to everyone who made this project work a
success. However, it will not have been possible without the kind support and help of my
colleagues. I would like to extend my sincere thanks to all of them. We are highly indebted to
our supervisor, HOD, Lecturers etc. for their guidance and constant supervision providing
necessary information regarding the project and also their support in completion.

iii
 ABSTRACT

In order to determine how accounting information systems assisted the company in achieving its
objectives, this study looked at how these systems can be used as a tool for management
decision-making. The study ascertained if accounting information systems have improved
accuracy in controlling mismanagement and fraud. Real-time database monitoring allows
management to quickly identify who or what is responsible for transactions and changes AIS
data. The study examined the effect of an accounting information system on management
decision-making, it reviles how internal users and external users uses the information to access
the credibility of the organization. The study made suggestions as to the usefulness of
accounting information to the users in general. A variety of theoretical topics and literature will
be examined in order to fulfill the study's aims. Primary and secondary sources will be the
source of the instrument employed in this study. Questionnaires serve as the main source. The
vast amount of data that the questionnaire will produce will be compiled into a table and
subjected to descriptive statistics for analysis. study revealed that there is a significant effect of
accounting information on the management decision of the companies which implies that
accounting information adopted by companies affect the management of a company to reduce
fraud in an organizations the findings in the table 4.3 shows the result.
The investigation yielded results that led to the conclusion that the accounting information
system had a substantial impact on management decision-making. This objective can be
accomplished by implementing accounting systems that are tailored to align with the specific
activities of the organization..

iv
 TABLE OF CONTENTS
DECLARATION BY STUDENTS ................................................................................................ ii

DECLARATION BY SUPERVISOR ............................................................................................. i

ACKNOWLEDGEMENTS ........................................................................................................... iii

ABSTRACT ................................................................................................................................... iv

CHAPTER ONE ............................................................................................................................. 1

INTRODUCTION ...................................................................................................................... 3

1.1 BACKGROUND TO THE STUDY ................................................................................. 3

1.2 STATEMENT OF THE PROBLEM ................................................................................ 5

1.3 OBJECTIVE OF THE STUDY ........................................................................................ 6

1.4 RESEARCH QUESTIONS............................................................................................... 4

1.5 SIGNIFICANCE OF THE STUDY .................................................................................. 6

1.6 SCOPE OF THE STUDY ................................................................................................. 7

1.7 LIMITATIONS OF THE STUDY .................................................................................... 7

1.8 ORGANIZATION OF THE STUDY ............................................................................... 8

CHAPTER TWO ............................................................................................................................ 9

LITERATURE REVIEW ........................................................................................................... 9

2.0 INTRODUCTION ............................................................................................................ 9

2.1 ACCOUNTING INFORMATION SYSTEM .................................................................. 9

2.2 BOOKKEEPING AS AN ACCOUNTING PROCESS.................................................. 18

2.3 COMPUTER AS AN ACCOUNTING TOOL ............................................................... 18

2.4 ACCOUNTING AND MANAGEMENT INFORMATION SYSTEM (MIS) .............. 19

v
 2.5 RELIABILITY OF ACCOUNTING INFORMATION ................................................. 20

2.6 RECORDING AND REPORTING ACCOUNTING INFORMATION ........................ 20

2.7 USERS OF ACCOUNTING INFORMATION .............................................................. 21

2.8 TYPES OF INFORMATION NEEDED IN DECISION MAKING .............................. 25

2.9 RELATIONSHIP BETWEEN ACCOUNTING INFORMATION AND DECISION

MAKING .............................................................................................................................. 26

Management Accounting Best Practice Framework ................................................................. 28

CHAPTER THREE....................................................................................................................... 33

RESEARCH METHODOLOGY .............................................................................................. 33

3.0 INTRODUCTION .......................................................................................................... 33

3.2 POPULATION OF THE STUDY .................................................................................. 33

3.3 SAMPLING AND SAMPLING TECHNIQUES ........................................................... 34

3.4 TYPES AND METHODS OF DATA COLLECTION .................................................. 35

3.5 INSTRUMENT FOR DATA COLLECTION ................................................................ 36

3.6 METHOD OF DATA ANALYSIS................................................................................. 36

CHAPTER FOUR ......................................................................................................................... 37

DATA PRESENTATION AND ANALYSIS .......................................................................... 37

4.0 INTRODUCTION .......................................................................................................... 37

4.1 ANALYSIS OF DATA COLLECTED .......................................................................... 37

Table 4.5Chi-Square results for effect of AIS on Management Decision Making ................... 43

CHAPTER FIVE........................................................................................................................... 28

SUMMARY OF FINDINGS, CONCLUTIONS AND RECOMMENDATIONS ............... 28

5.0 INTRODUCTION .......................................................................................................... 28

5.1 SUMMARY OF FINDINGS .......................................................................................... 28

Chapter one ........................................................................................................................... 28

vi
 Chapter .................................................................................................................................. 28

5.2 CONCLUSION ............................................................................................................... 28

5.3 RECOMMENDATIONS ................................................................................................ 29

REFERENCES .............................................................................................................................. 30

APPENDIX ..................................................................................................................................... 1

QUESTIONNAIRES .................................................................................................................. 1

PART A (PERSONAL INFORMATION) ........................................................................... 1

vii
 LIST OF FIGURES

Figure 2.1: First Figure in Chapter 2……………………………………………………………...

Figure 2.2: Second Figure in Chapter2……………………………………………………………

1
 LIST OF TABLES

Table 2.1: First Table in Chapter 2………………………………………………………………

Table 2.2 Second Table in Chapter 2…………………………………………………………….
Table 4.1 First Table in Chapter 4……………………………………………………………….
Table 4.2 Second Table in Chapter 4…………………………………………………………….
Table 4.3 Third Table in Chapter 4………………………………………………………………
Table 4.4 Fourth Table in Chapter 4……………………………………………………………..
Table 4.5 Fifth Table in Chapter 4……………………………………………………………….

2
 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The act of making decisions is an inherent aspect of our daily existence, and it frequently
constitutes a fundamental responsibility of managerial roles. Management and decision-making
are commonly regarded as interconnected responsibilities, with management typically assuming
the primary role in making significant organizational decisions (Young, 1982). The decision-
making process encompasses the identification and evaluation of several alternatives in order to
choose the optimal course of action (Emmanuel et al., 1990). In order to make an informed
decision, management must evaluate the efficacy of different alternatives by analyzing relevant
data. Stanković, Mitrić, and Knežević (2012) assert that accounting information plays a
significant role in informing and guiding the crucial decision-making processes pertaining to the
daily operations of a company. According to the individual in question, this information carries
significance not only for the management, but also for the stakeholders involved, such as
customers and shareholders. According to Tóth's (2012) research findings, it has been
determined that the utilization of financial information derived from account statements greatly
aids management in making informed decisions regarding investments, finances, and dividends.
According to Socea (2012), the decision was made with consideration not just for the present
circumstances but also for future implications. The value of accounting information lies in its
ability to facilitate the prediction of financial outcomes associated with several alternative
courses of action. In order for an organization to effectively operate or make informed decisions,
it need access to quantitative data. Management utilizes the most optimal information system at
its disposal to furnish management information, principally serving three overarching objectives;

o To provide a financial statement to the interest of external users.

o To schedule the organization's short- and long-term operations and activities and.
o To manage the outcome of its actions.
According to Priya and Longnathan (2016), accounting information refers to the methodical
representation, examination, and assessment of data pertaining to an organization's financial

3
status or statement of account, with the purpose of facilitating future planning. The process
encompasses the consolidation of financial information, which necessitates the inclusion of stock
inventory management, financial statements analysis, transactional records spanning a specific
timeframe, financial reporting, appraisal of the financial robustness of the organization, future
prospects, and recommendations.
The accounting information is compiled and disclosed in the format of a financial statement,
adhering to the accounting standard established by the International Accounting Standards Board
(IASB). This serves as a method of succinctly communicating the profitability and financial
standing of the business to both management and external stakeholders. The process of preparing
and presenting accounting information encompasses various components, such as the profit and
loss account, balance sheet, and income statement, among others.

Hence, accounting is divided into three (3), namely;

o Financial accounting
o Cost accounting, and
o Management accounting

Leopold (1982) posited that financial accounting is primarily focused on furnishing information
pertaining to the financial operations of an organization, with the intention of benefiting both
internal and external stakeholders. The process of classifying, recording, and presenting
monetary transactions of a business in accordance with established ideas, principles, accounting
standards, and legal requirements is referred to as accounting. This process aims to provide a
comprehensive view of these transactions throughout an accounting period.
In contrast, cost accounting generates data pertaining to the expenses incurred by an organization
in its operations aimed at fulfilling its established objectives.

According to Calvin (1982), management accounting is primarily focused on the provision of

information to aid management in planning and decision-making across all organizational levels.
These reports are utilized internally by management and creditors.

The test that will be carried out for this research will make it evident to what extent accounting
information is a "tool for management decision making," even if the usefulness of accounting

4
information to efficient management decision making is still underappreciated in many
businesses.

1.2 STATEMENT OF THE PROBLEM

The difficulties faced by accountants in obtaining precise data for accurate and trustworthy
computation, analysis, appraisal, and presentation of information necessary for management to
make wise decisions are significant. This is because red tape and corruption make it hard to
obtain information from the organization's budget and audit unit, especially when it is not
arranged in an authoritative manner. However, management has the challenge of how accounting
information may be used to handle contemporary difficulties like employee motivation,
productivity, fraud checking, and shady compromise during the transaction, which lessens the
obstacles to effective information utilization. The best possible course of action that is ecnomical
in achieving objectives, even in the face of expanding challenges, can be adopted as follows: by
requiring management to confront the challenges with up-to-date and correct accounting
information. Therefore, using ASF Financial Services as a case study, the study will demonstrate
how accounting information systems support management decision-making in order to discover
answers to the issues that have been highlighted.

1.2.1 RESEARCH QUESTIONS

• How will accounting information help management detect fraud?

• How does an accounting information system assist management?
• Does accounting information satisfy management as a tool for decision-making?
• To what degree has the management of ASF financial services used accounting
information?

5
1.3 OBJECTIVE OF THE STUDY

The general objective of the study is to evaluate the role of accounting information systems in
management decision-making in ASF Financial services. The specific objectives of the study
are;

• To ascertain if accounting information systems have improved accuracy in controlling

mismanagement and fraud.
• To examine the effect of an accounting information system on management decision-
making.
• To make suggestions as to the usefulness of accounting information to the users in
general.

1.4 SIGNIFICANCE OF THE STUDY

The objective of this study is to investigate the potential association between the accounting
information presented by accountants and the subsequent decision-making by information users,
particularly the management of ASF Financial Services.

The research will provide benefits to specific groups, including the management of ASF
financial service. They will utilize the research as a means to formulate policies for the
organization and establish a standard for evaluating accounting information in the decision-
making process.

This effort will significantly contribute to the education of managers regarding the need of
reliable accounting information in the decision-making process of an organization, thereby
impacting its growth.

The research conducted will provide a valuable resource of secondary data for future scholars
interested in conducting more investigations on the topic of "accounting information as a tool for

6
management decision making" or any related subject matter. In-depth understanding of the
practical use of accounting information would also be beneficial for students enrolled in the
accounting department.

The research will facilitate the acquisition of comprehensive understanding regarding the
individuals who utilize accounting information as a means to inform managerial decision-
making. Additionally, it will provide insight into the potential usefulness of accounting
information in the management of ASF services.

1.6 SCOPE OF THE STUDY

The relationship that exists between accounting information and management decision-making
will be examined.

Additionally, the study will only cover the following topics: the significance of each accounting
branch and the kinds of information they produce; the utility of each information produced by
each branch segment; for instance, the financial, management, and cost accounting sections of
the accounting branch.

1.7 LIMITATIONS OF THE STUDY

The study is limited to

• Financial constraints: First and foremost, a limitation of the study is finance. That is, we
students lack the wherewithal to come into contact with some valuables

• Time constraint: Furthermore, a limitation of the study is time constraints. Due to

limitedness in time, we are unable to accurately seek some details. Thereby being limited
to our study

• Inadequate information: In the nutshell, a limitation of the study is inadequate

information. Due to secrecy oath among the rest. Some institution feels somewhat
reluctant to provide some information we need. Some also are not willing to let

7
 information out due to the concept of competitive advantage…. (i.e. other companies
might get wind of what they provide.

1.8 ORGANIZATION OF THE STUDY

This study will consist of five (5) chapters, chapter one of this study will consist of the
introduction, that is, the background of the study, statement of the problem, objective of the
study, research questions, the significance of the study, the scope of the study, limitations, and
organization of the study. The chapter will also entail the literature review which consists of a lot
of sub-topics such as the introduction, accounting information system, bookkeeping as an
accounting process, computer as an accounting tool, accounting, and management information
system, users of accounting information, and many more.

Chapter three of this study will talk about the research methodology which also consists of the
introduction, research design, population under study, sampling and sampling techniques, types
and methods of data collection, and the instrument for data collection. Chapter four will entail
data presentation and analysis of the data. And lastly, chapter five of this study will entail the
summary, recommendation, and conclusion of the study.

8
 CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

The present chapter is dedicated to the comprehensive examination of pertinent scholarly works
pertaining to accounting information and other fundamental facets of the subject matter. The
American Institute of Certified Public Accountants (1970) provided a definition of accounting as
the process of systematically recording, categorizing, and summarizing transactions and events
of a financial nature in a meaningful manner using monetary terms, and interpreting the
outcomes. The purpose of this literature review is to provide an overview of the recent evolution
of Accounting Information Systems (AIS) and their controls for combatting fraud and
misconduct. Many completed and ongoing studies have demonstrated the beneficial impacts of
AIS on organizations. These studies also summarize potential threats to AIS from employee
and/or management ethical misconduct or attempts to commit fraud. Such threats can result in
misrepresentation in Financial Accounting reporting for both external and internal and can have
undesirable impacts on the integrity and exactitude of the organization’s financial reporting and
its overall corporate image.
2.1 ACCOUNTING INFORMATION SYSTEM

The accounting information system is seen as a component of the broader Management

Information System (MIS). Nevertheless, taking a more expansive perspective, the American
Institute of Certified Public Accountants (1970) delineated the purpose of accounting as the
provision of quantitative information, predominantly of a financial nature, pertaining to
autonomous economic entities, which is indispensable for facilitating economic decision-
making. In this context, an economic entity refers to a distinct unit, such as a business, that
possesses an independent existence. According to Etuk-Udo (2003), contemporary accountants
are not solely focused on maintaining records, but are also involved in other activities
encompassing planning, problem-solving, control, attention, direction, assessment, review, and
9
auditing. Accounting information systems can be defined as the systems utilized to document the
financial transactions of an organization. According to Grande et al. (2010), these systems
integrate methodologies, controls, and accounting techniques with information technology (IT)
to monitor transactions, generate internal and external reporting data, produce financial
statements, and enable trend analysis. The purpose of these systems is to impact organizational
performance. Current accounting data regarding the demands of users of accounting data,
regardless of whether they are employees of the company. According to Boocholdt (1999), AIS
can be described as systems that operate functions of data gathering, processing, categorizing,
and reporting financial events to provide relevant information for scorekeeping, attention
directing, and decision-making.
Ethics and AIS: The evolution of Information Technology and Accounting Information Systems
has brought new opportunities for ethical misconduct and fraud. A cornerstone of ethical
behavior is an understanding of how one’s personal behaviors and actions impact the welfare of
the other individuals. Ethical guidelines can help individuals avoid harming others and to act in
ways that have the potential to help or aid others. Some government regulations are designed to
minimize some forms of unethical behavior and also enact laws to deter illegal behavior. In
society, social norms are often implied ethical guidelines that tend to change in response to
different environments, communities, and the passage of time.
Accounting and Ethics: In the accounting discipline, professional standards have been created to
inhibit accounts from engaging in unethical behavior. Such standards play an important role in
accounting because accounting processes aid management in decision-making processes that
impact a wide range of other individuals and the organization as a whole. It is important for
accountants to understand Accounting Information Systems from an ethical perspective because
they have the professional responsibility to protect and safeguard assets and financial
information. In accounting, standards of ethics are defined as implied or expected norms of
accountant conduct (Chunhui, Lee, Nan). Ethical guidelines are viewed as equally applicable to
each individual within the profession. (Mastracchio Jr, Jimenez-Angueira, Toth 2015) The
International Federation of Accountants (IFAC) is a worldwide organization that serves as an
umbrella organization for many national accounting organizations including the 6 American
Institute of Certified Public Accountants (AICPA) and the National Association of State Boards
of Accountancy. The mission of the IFAC is “the worldwide development and enhancement of

10
an accountancy profession with harmonized standards, able to provide services of consistently
high quality in the public interest.” (Clements, Neill, Stovall). IFAC seeks to synchronize the
quality of accountants’ works with the intent and the ethical standards on which it is based. IFAC
stresses to member and potential member organizations that they don’t have to develop standards
that follow IFAC codes exactly, but they “may not apply less stringent standards than those
stated in this code.” (Clements, Neill, Stovall). This stipulation encourages member
organizations to develop codes of conduct that exceed those set by the “parent organization”.
(Clements, Neill, Stovall.

AIS and the Protection of Confidential Information and Integrity: Because Accounting
Information Systems are integral components of business computing platforms organization,
controlling the risk of unauthorized access to sensitive information is important. Failure to
control access to important information can result in the information being altered or being seen
by employees or outsiders who have no business seeing the information. (Zhensheng, 2014)
Accountants and AIS auditors could use the AIS to violate other individuals’ privacy and rights
by collecting, selling, and using their data or information for personal gain. In some cases,
employees have gained access to other workers’ confidential information, which could be used
for blackmail or identity theft. In other cases, workers have obtained financial information from
an AIS to tip off outsiders whom may or may not have a stake in the company. Such behavior is
not just unethical; it is also a form of fraudulent behavior.
• Purpose of Accounting Information Systems
Reporting in the Accounting Information Systems: A primary purpose of AIS is to serve as a
systematic and comprehensive system that records and reports financial transaction, which are
integral to business operations. (Trigo, Belfo, Estebanez). Reporting can be defined as the
process of analyzing and summarizing the organization’s transactions in order to provide
information that is utilized in decision making (Trigo, Belfo, Estebanez). Reporting has
traditionally been conducted on a periodic basis, whether it daily, weekly, monthly, quarterly or
annually. In the reporting process financial information is summarized and given to stakeholders
of the company, be it government officials, suppliers, investors, manager, auditors, etc. Reports
illustrate the organization’s financial position. Reports are used by auditors to assess the integrity
of the company’s accounting processes.

11
Accounting Information Systems Security and Access Controls: In many organizations,
Accounting Information Systems have a multitude of users who can simultaneously access a
database that contains a vast amount of data. This is especially true in organizations that have
Enterprise Resources Planning (ERP) systems as their primary transactional computing systems.
One of the attractions of ERP systems as a business-computing platform is its single,
comprehensive data that holds both transactional data and master data about suppliers,
customers, materials, products, etc. In order to minimize concerns about the security of data and
information in an AIS database, it is important to ensure that appropriate user access controls are
in place (Zhensheng, 8 2014). In a business environment, it is vital to have a database that
ensures adequate security for both internal and external stakeholders. When the AIS database is
vast in size and depth, there is increased risk of data and information being inaccurate or
misappropriated. Access controls are a first line of defense in protecting the integrity of AIS
systems and their databases. There are numerous types of access controls for AIS databases,
which include Discretionary Access Control, Role Based Access Control, and Mandatory Access
Control. Role Based Access Control has been successfully implemented and integrated into AIS
due to its flexibility and logical reasoning. With RBAC, users are delegated and assigned specific
roles within the system that will only grant them access to things relevant to their assignments.
With this method, it eases the transition of employee turnovers, in regards to security
configurations, due to its central managerial control. Management does not have to reconfigure
the system because it is assigned by position (Uzun).

Accounting Information Systems and Fraudulent Behavior: Fraudulent behavior among AIS
users is a perpetual accounting and auditing concern. Financial fraud is an activity that can affect
more than one person or company and it may have indirect effects on external entities.
Employees that are authorized users of an AIS may have the opportunity to misappropriate AIS
data and information. When authorized users are members of the organization’s accounting
department the misappropriation of AIS data and information may be a form of occupational
fraud, the illegal action of converting or concealing information for personal gain. The
Association of Certified Fraud Examiners defines occupational fraud as the misappropriation of
assets (Glodstein). For example, an accounting employee with authorized 9 access to the AIS

12
database may be able to alter payroll, billing, or reimbursement data for personal gain.
Fraudulent behavior by accounting employees can also involve the intentional manipulation of
the content or the structure of financial reports. (Bressler 2011) In the absence of appropriate
controls, accountants can also utilize AIS systems to access private or sensitive information
about fellow employees and other organizational stakeholders including, suppliers, customers, or
other business partners. This may involve the acts of obtaining, hoarding, private or sensitive
information for personal gain.
• Preventative Measures for Addressing the Potential for Fraudulent Behavior
Ethics Education: Instilling the importance of ethical behavior should not begin when an
organization hires an employee. Organizations that are truly concerned with ethical behavior on
the part of employees and fraud deterrence should begin by hiring graduates from colleges and
universities with a track record of producing ethically inclined students. Such schools typically
go beyond highlighting ethics and professional codes of conduct in textbooks used in their
courses; they often have stand-alone courses that focus on ethics. Unfortunately, such schools are
rare rather than plentiful and there is ample evidence that universities often come up short of the
mark for ethical education. In 2014, 64 students at Dartmouth College were charged with
cheating on an exam of ethics. The involvement of 64 students is troubling, but the fact that the
content of the exam was ethics, makes this truly disturbing. A study conducted by Donald
McCabe found that business majors are more likely to engage in cheating, plagiarism, and
unethical behavior than majors in 10 other colleges or disciplines (Mastracchio Jr., Jimenez-
Angueira, Toth). If the results of this study are generalizable to business programs at other
institutions, the future of ethics among accountants and AIS auditors may be dim because they
typically graduate from a college of business or business program. These findings suggest that
much work remains to be done to ensure that ethics education appropriately infiltrates academia.
They also suggest that business schools and accounting programs should become more vigilant
about instilling their students with a sense of professional ethics, both in thought and action. To
be better positioned to combat unethical behavior and fraud and to thereby gain the trust of
society, it is important for accounting professionals and auditors to follow professional ethics
guidelines (Meymandi, Rajabdoory, Asoodeh).

13
Ethics Focused Onboarding and Training: Ethics policies and guidelines should be in place in
organizations to provide guidance to newly hired workers and accounting employees. These
serves as guides for employee behavioral and professional action. The existence of ethics
policies demonstrate to new hires that the organization takes ethics seriously. During the
onboarding and training process, there should be a separate module or program that emphasizes
the ethics policies and how they should be applied to daily operations.
Information and Data Controls: Encryption is a process that converts data from its original to an
indecipherable (scramble) form. Prior to transmission over a network, encryption can be used to
scramble it so that if it is intercepted in transit it will be difficult or impossible to understand.
Data in an AIS database can be stored in encrypted form to deter its unethical or fraudulent use.
Government regulations, including HIPPA, require some forms of private or sensitive data to be
transmitted in 11 encrypted form. However, HIPPA does not require organizations to store data
in encrypted form in its databases (database encryption is recommended but not required by
HIPPA). The 2015 Anthem hack was enabled by data being stored in unencrypted form. There
are four main objectives for using encryption to transmit or store data, there are confidentiality,
integrity, authentication, and nonrepudiation. In an AIS database, there is personal information,
which can be compromised in malicious ways (Marcella 2014). Encryption helps to prevent the
malicious used of AIS data by presenting it to unauthorized users in an indecipherable form.
Encryption also helps to maintain data integrity by making it difficult to modify. Because only
authorized users or recipients who hold the decryption key are able convert the indecipherable
data back into its original form, encryption provides a mechanism for confirming and
authenticating their identity (Busta 2002). Data management is paramount in organization’s
quest to protect data assets and information from unethical and fraudulent behavior. Companies
should employ data management controls to ensure that users are accountable for their use of the
database. An example of a data management control is segregation of duties. Companies should
implement appropriate accounting data controls for its financial transactions. For example, a
“three way match” should be used in the Procure to Pay process that checks for discrepancies
between purchase orders, goods receipt, and vendor invoice documents. In accord with role-
based access controls and segregation of duties, three separate individuals or groups within the
organization should process these three documents. This system allows for each entity to be held

14
responsible for any problems that may arise in the amount of goods received and the invoice
amount before any payment is made.
Real-time Reporting Impacts on ASF finance: Real-time Reporting Impacts on Company Real-
time reporting capabilities for AIS offer organizations many benefits in comparison to the
traditional, “periodic reporting”. As the technology wave continues to spread vastly, society is
continuously turning into an immediate gratification society. Traditionally in accounting,
financial and non-financial reports are done periodically, annually and [or] quarterly, which
limits the accuracy of the measurements that help to improve the company (Trigo, Belfo,
Estebanez). Real-time reporting holds the potential for organizations to make improvements,
respond to change, and better understand issues that affect their operations. It also has the
potential to give them confidence in the structure and performance of the company and its
employees. This type of reporting can serve as a preventative measure or AIS control and can
allow for certain information reporting to be automated thereby lessening the risk of human error
and interference. For example, in the past few years SAP has developed AIS controls that run on
its HANA system and enable AIS real time reporting. Analytics are produced as AIS transactions
are performed which in instant feedback on AIS transactions and data in real time (SAP HANA).
Real-time Database Monitoring: Automatic or Real-time database monitoring allows
management to quickly identify who or what is responsible for transactions and changes AIS
data. It automatically detects and reports issues that pose real or potential risks to the system or
company. Such monitoring can include monitoring of transaction executions, resource
utilization, and process exceptions. When an issue is detected, it is analyzed and managed in
real-time via mitigation or preventative tactics. (Oracle)
Continuous Auditing: Continuous auditing is a technology-driven process that seeks to provide
organizations with risk assurance in real time. This offers organizations continuous compliance
monitoring and the ability to detect attempted fraud and AIS user misconduct in real time.
Continuous accounting uses algorithms and other models to evaluate both high impact and less
serious risks. Compliance monitoring processes update regulatory changes when they occur and
help ensure compliance with these regulations.

15
 • Empirical Review
In the financial management of the small enterprise investigated by Ismail [17] emphasized the
positive correlation of the common belief that better financial information means better control
and higher chance of success. This information is generated from the system (i.e. accounting
system) by accountants in charge, is incorporated in the financial statements. Ratios (financial)
analyzed from the financial statements constitute an element of this information. Therefore, there
is need for proper incorporation of this system into manufacturing companies operation as it
tends to make company operation difficult especially in areas like; performance evaluation,
customer classification, possible future performance forecast, etc. A study conducted
theoretically by Woodruff coupled with some statistical inferences, titled: The Systematic Access
for Analyzing the Market Opportunities purports to demonstrate essentials of Product Demand
Analysis-PDA. PDA is fundamental in the economic activity involving the definition and
identification of feasible opportunities (investment) towards emerging the users (especially
investors) in making realistic estimation of the profits. One of the vital recommendations for the
study based on result obtained was to refrain users (especially investors) from investment in
unproductive and unprofitable market. Financial statements are well-structured and easily
understood statements of a business enterprise, which helps to faithfully represent the overall
condition (mostly financial) and state of operation of a business, necessary for possible
estimation by its users for various strategic or short term based decision. Some of the basic
statements as required by relevant standards includes balance sheet, trading profit and loss
account, cash flow statement.

Generally speaking, accounting information can be classified into two categories namely;

Financial accounting and Managerial accounting.

2.1.1 Financial accounting

Though the information is also useful to the company's officers and managers, financial
accounting includes information shared with parties outside the enterprise's boundaries, such as
shareholders, creditors, customers, suppliers, regulatory commissioners, financial analysts, and

16
trade associates. This type of data pertains to an organization's profitability, liquidity, or its
capacity to be converted into cash.

2.1.2 Managerial accounting

Cost profits volume linkages, efficiency and productivity, planning control, prize decisions,
capital budgeting, and other topics are covered in managerial accounting. This information is
rarely shared outside the firm. Financial accounting serves most external users with general-
purpose financial statements, but managerial accounting provides specialized reports for division
managers, department heads, project directors, section supervisors, and other managers.
The accountant of an organization provides financial position statements and other reports that
demonstrate the genuine and fair financial condition of its economic activity. AIS contains the
balance sheet, P&L, and cash flow statements.

2.1.3 Balance Sheet

This statement of financial status gives an indication of the amount of capital owners have put in
a corporation or firm and lists the accounting period. Additionally, it consists of the following
four primary sections: obligation, capital, current asset, and fixed asset. The financial analysis of
the company is made easier by this classification.

2.1.4 Trading Profit and Loss Account

It displays the profitability of the company as well as the quantity of economic activity and profit
from those activities that occurred in the previous accounting period. It displays the
organization's net profit for the accounting period in addition to its gross profit.

2.1.5 A Cash Flow Statement

is a statement that displays the cash movement in the transactions the company made during a
specific time frame, usually a year. In 1998, the fund flow statement was replaced with the cash
flow statement to facilitate the relationship between cash availability and profit over a specified

17
period for financial statement users. is a statement that displays the cash movement in the
transactions the company made during a specific time frame, usually a year. In 1998, the fund
flow statement was replaced with the cash flow statement to facilitate the relationship between
cash availability and profit over a specified period for financial statement users.
An organization's financial statement is made up of the cash flow statement, profit and loss
account, and balance sheet.
2.2 BOOKKEEPING AS AN ACCOUNTING PROCESS

As an accounting procedure, bookkeeping records the amounts, dates, and sources of all firm
income, gains, expenses, and losses. Accounting begins with bookkeeping. Accurate financial
records assist managers and business owners answer issues like: Is the business profitable? How
much? Is the business financially stable, or are cash flow trends concerning? Many more. To
answer these questions, you need a good bookkeeping system.
As mentioned, accounting involves designing a user-friendly information system. The main
objectives of accounting are data analysis, interpretation, and utilization. According to Chris
(1990), “Accountants look for important relationships in the figure they produce and are
interested in finding trends and studying the effects of different alternatives.” Budgeting, cost
analysis, system design, and income tax planning are accounting functions.
2.3 COMPUTER AS AN ACCOUNTING TOOL

A computer is an electronic device that has the capacity to quickly gather, arrange, store, and
transmit large amounts of data. One of the first and most ardent groups of computer users was
accounting.
These days, computers are utilized in almost every aspect of human endeavor. Computers are
helpful tools in almost every field, including finance, manufacturing, medicine, retail, and
clerical, technical, business, and professional jobs.
Information can be measured, evaluated, stored, retrieved, controlled, and monitored using
computers. Any area of human endeavor is characterized by one or more of these processes.
Prior to the invention of computers, the data of millions of big and small businesses had to be
manually entered. Financial reports that now take days or hours to prepare frequently took
months. The user of accounting information and the new accountant must comprehend the
procedures that underpin accounting, even though they may be given instructions to complete the

18
standard bookkeeping tasks. Thus, it is evident that the majority of sizable accounting operations
are now computerized.
2.4 ACCOUNTING AND MANAGEMENT INFORMATION SYSTEM (MIS)

A significant proportion of organizations rely heavily on non-financial information. The

marketing departments, as an illustration, express a keen interest in the packaging aesthetics of
rival items. Human resources departments are responsible for maintaining the health and
employment records of employees. The proliferation of computers and computer applications in
contemporary society has led to the development of Management Information Systems (MIS),
which serve to organize diverse information demands. Management information systems (MIS)
are comprised of interconnected subsystems that provide the provision of necessary information
for effective company operations. The accounting information system holds significant
importance as a subsystem due to its pivotal function in effectively managing the dissemination
of economic data to both internal stakeholders inside the organization and external interested
parties. Accounting serves as the fundamental component inside the management information
system, encompassing financial aspects. The comprehensive perspective of the business
organization is provided to both management and external stakeholders.

Certain organizations engage in numerous operational activities, necessitating a means to

articulate the success of these operations. This entails the qualifying of operational activities and
the use of accounting services as a tool for quantifying management activities. Consequently, the
outcome of this process is the generation of accounting information. The significance of
accounting information lies in its crucial role within the realm of business operations. Graham
(1990) posited that investors must make decisions relying on accounting information, while
firms and their management must base operational and other decisions on accounting
information. Similarly, banks are required to make lending decisions based on accounting
information. This is due to the inherent connection between accounting information and society
and the economy. The necessity for precision and dependability of accounting information is the
underlying rationale.

19
2.5 RELIABILITY OF ACCOUNTING INFORMATION

What constitutes trustworthy accounting information should be the first thing one asks. "The fact
that accounting information mirrors the operational achievements and financial situation of an
enterprise truthfully and accurately enough to be true and accurate" is what Walter (1979)
defined as "reliable." They are also unable to make wise investment selections since, despite the
fact that the accounting information is factual and accurate; they are unable to obtain much
insight from it. As such, Robert (1979) states that the accounting data "has to be complete,
mirroring the operational condition of the enterprise in a round manner".
2.6 RECORDING AND REPORTING ACCOUNTING INFORMATION

Accounting is sometimes perceived as being constrained to the process of recording. There is a

lack of differentiation observed between the act of recording and the act of reporting accounting
data. The process of recording entails the measurement of commercial transactions. According to
Stamford (1978), this process can manifest in several formats, such as handwritten records,
mechanically produced records, or records stored on cards or magnetic tape within a
computerized system.
According to Stamford (1978), the reporting function encompasses a wider scope as it involves
the classification and summarization of accounting data into financial statements, along with the
preparation of any additional interpretive disclosures required to enhance the comprehensibility
of the data. The procedure is of a highly technical nature and necessitates the involvement of an
accountant possessing substantial training, experience, and professional discernment. In addition
to the functions of recording and reporting, accounting information include activities such as the
development of account systems, the examination of financial statements, the analysis of costs,
and the formulation of tax returns.

20
2.7 USERS OF ACCOUNTING INFORMATION

Figure 2.1

External users:
Government
Creditors
Investors Internal users:
Company owners
Managers
employees

Accounting information is widely used in the world today than we know. In our part of the world
today, accounting information is very important to everybody including students. Users of
accounting information are divided into three (3) folds. They include the internal users, the
external users, and the government.

2.7.1 INTERNAL USERS OF ACCOUNTING INFORMATION.

Internal users of accounting information refer to individuals or groups within an organization

who utilize financial data for decision-making purposes. Individuals who fall under this category
encompass many roles such as owners, managers, and employees who utilize accounting
information within the context of management.

21
The examination and evaluation of management decisions, financial condition, and operational
outcomes primarily center around the comprehensive financial statements, rather than solely
relying on the summary of operations. This analysis necessitates a discussion of three key aspects
of the organization: liquidity, capital resources, and results of operations. The topic of discussion
pertains to needles. According to Anderson Caldwell (1976), it is important to highlight both
favorable and unfavorable trends, as well as identify key events or uncertainties, within each area
of discussion.

This discourse should additionally encompass a narrative analysis of the impact of inflation and
potential fluctuations in pricing on an organization's net sales, revenue, and income from ongoing
operations, as posited by Needles (1976).

It is important to acknowledge that the collective body of individuals inside an organization

bears the overarching accountability for attaining the objectives of the enterprise. Business
enterprises possess a multitude of objectives. Richard (1982) posited that the objectives
encompassed in this context involve the provision of high-quality goods and services at a
reduced cost, the development of novel and enhanced products, the augmentation of employment
opportunities, the enhancement of the environment, and the achievement of various other
societal responsibilities. In order to attain the objectives of profitability and liquidity.
Liquidity refers to the state of possessing sufficient financial resources to meet obligations
promptly when they become due. The successful functioning of a corporation is the
responsibility of management at all levels. Within the context of a small firm, the primary onus
typically falls upon the proprietor, who concurrently assumes the role of managing the
organization's day-to-day activities. Within the context of a sizable corporate entity, the
overarching objective of the organization is typically disseminated among several individuals,
ranging from the board of directors and officers of the company through the management team,
departmental heads, and supervisors.
Managers are required to consistently make decisions regarding the course of action, the
methodology employed, and the extent to which the outcomes align with the initial objectives.
Effective managers regularly make informed decisions based on timely and reliable information.
A significant factor influencing these decisions is the manner in which accounting data is
managed, as accounting information serves as a crucial resource for organizations. Moreover, a

22
primary objective of accounting is to furnish management with pertinent and valuable
information.
The management of a corporation may inquire about the products that yield the highest
profitability.
What was the net income of the company during the previous quarter or fiscal year?
Furthermore, there are other further examples that might be included. The resolution of these
inquiries can be facilitated through the utilization of accounting data.

2.7.2 EXTERNAL USERS OF ACCOUNTING INFORMATION.

External users of accounting information are those people that are outside the organization who
uses accounting information for many things. These people include creditors, investors, and
many more.

• INVESTORS

Those who are thinking of investing in a company are interested in the past success of the
business and it's potential earning in the future. A thorough study of the company’s financial
statements will help potential investors judge the prospects for a profitable investment. After
investing in a company, investors must continually review their commitment.
o Is the company performing as expected?

o Are earnings satisfactory?

o Are interest payments and other distributions protected by an adequate supply of cash
flow?
o Is the company investing in projects that can be expected to be profitable?

All these methods of financing questions and many more can be answered by a study of the
periodic financial statement.

23
 • CREDITORS

Most businesses have to take out loans to cover their short- and long-term operating expenses.
The primary concern of the lenders is whether there will be enough money to cover interest and
make the loan repayment on schedule. They research the profitability of the business in addition
to its liquidity and cash flow. Before lending money to a company, banks, finance companies,
mortgage companies, security companies, insurance companies, people, and other lenders will
not accept it until they have examined the financial standing of the company.

2.7.3 THE GOVERNMENT AS A USER OF ACCOUNTING INFORMATION

Accounting information has shown to be highly advantageous for society, particularly through its
utilization by the government. The government utilizes accounting information from enterprises
within the nation for the purpose of taxation. The government uses these levies to fund
developmental initiatives that aim to benefit the entire society. The implementation of an
effective accounting information system by the government facilitates the assessment of
financial performance and profitability of individual enterprises inside the nation. This
information is subsequently utilized to determine the appropriate taxation obligations for these
entities.

In addition, governmental entities utilize accounting information to design policies aimed at

fostering future national development. This information further aids the government in
formulating legislation that might support the diverse enterprises within the nation.

Historically, governmental entities have actively engaged in the process of economic planning
and forecasting, resulting in increased reliance on accounting and accounting information. The
economy saw the development of a system of accounting known as National Income Accounting
(NIA). This pertains to the comprehensive analysis of the aggregate production, inventories,
income, dividends, and taxes inside our economy. The individuals known as planners, who hold
membership within the Council of Economic Advisers within the president's administration,
utilize the aforementioned information in order to establish economic policies and evaluate the
efficacy of economic programmes.

24
The government also monitors critical elements of accounting information, including revenue
and net profit, in order to assess the capacity of each company to adhere to regulations pertaining
to consumer and safety, employee wages and salaries, and pricing.

2.8 TYPES OF INFORMATION NEEDED IN DECISION MAKING

As previously mentioned, the goal of accounting information is to give users the knowledge they
need to make wiser financial decisions. "The users of accounting information are interested in
three (3) types of information," according to Graham (1990); these are as follows;
Past performance.
Present performance.
Future performance.

• Past performance

To evaluate the performance of the company and the management's efficacy, this kind of data
focuses on things like revenue, sales volume, unusual expenses, cash flows, and return on
investment. Decision-making is further aided by historical data, which enables users to contrast
one entity with another.

• Present performance

o When evaluating the business's potential for cash and profit, the current performance is
also helpful. According to Graham (1990), "by evaluating the information about the
present condition of a business, it also helps decision-makers to answer the following
questions" What types of assets are owned?

o What are the retained earnings of the business?

o What is the earning per share (EPS)?

o What is the return on investment and debt to equity ratio?

The answers to these related questions will help the users (shareholders) or the decision-makers

25
(management) to assess the success or failure of the past.

• Future performance

Reliable measurement of recent events is important for practicing the decision's likely future
influence. An organization's future is, as we all know, fraught with danger and uncertainty. The
management requires pertinent and trustworthy accounting data in order to research these
tendencies and carry out additional pertinent assessments going forward. This kind of data results
from the fact that all decisions are made with the future in mind, predicting success in the distant
future rather than influencing the present.
Therefore, in order to make wise financial and managerial decisions, accounting information is a
crucial tool.

2.9 RELATIONSHIP BETWEEN ACCOUNTING INFORMATION AND DECISION

MAKING

The acquisition of information is a fundamental requirement across various domains of human

cognition and behavior. Moreover, it is vital for persons who utilize it to accomplish personal
objectives. Information is also required by managers in organizations. Consequently, it can be
inferred that in order for management to achieve success, it is imperative to possess pertinent and
current knowledge pertaining to both the internal and external factors impacting the organization.
This will allow management to adapt its objectives, assess its philosophies, and revise its policies
and plans that are essential for the sustainability and expansion of the enterprise. The
fundamental connection between the availability of information and the process of decision-
making forms a foundational aspect of economic theories pertaining to decision-making. In
nearly all conventional theories, it is presumed that possessing knowledge regarding costs,
prices, and rivals is a prerequisite. Accounting is widely recognized for its role in the
administration and communication of financial information.
Longley (1982) posited that the primary objective of accounting is to facilitate the periodic
alignment of costs (efforts) and revenue (accomplishment) pertaining to raw materials, services
(efforts), and the selling price of goods and services (accomplishment), which are considered as

26
potential input data by accountants. Calvin (1982) asserts that decision making and accounting
information are centered on distinct time frames and periods, with the exception being when the
decision-making process incorporates the utilization of accounting information. A crucial inquiry
is to the temporal relevance of accounting information in the context of decision making.
Accounting information plays a crucial role in the allocation of resources inside organizations,
since it enables them to effectively distribute the resources they possess among several
conflicting objectives.
Management utilizes accounting information to assess the impact of a certain course of action,
enabling them to develop contingency plans to mitigate potential adverse outcomes. Accounting
reports are frequently utilized by management. Account reports are utilized by management at
various levels to facilitate the construction of conclusions and the making of economic decisions.
The manager is tasked with the responsibility of rectifying previous errors, as well as
anticipating external factors that may impact the organization's business operations beyond its
control. Additionally, the manager is expected to set attainable objectives for the activities under
their purview. The role of the management accountant is crucial in providing information for
planning purposes, primarily through cost accounting. To fulfill this role effectively, it is
imperative for the management accountant to possess a comprehensive understanding of various
aspects. These include the nature of planning; the process of establishing plans, the ability to
compare self-plans with actual performance, the differentiation between long-term planning and
target setting, and the interrelationship between planning and control.
Nevertheless, the fundamental concept of control involves evaluating performance in relation to
predetermined plans or targets, monitoring progress, and identifying any deviations from the
initial plan. These variations can serve as a guide to realign activities with the original plan.
Management accounting information plays a crucial role in facilitating the comparison between
predetermined plans and actual performance. This enables management to conduct variance
analysis, which entails the examination of the overall discrepancy between planned and realized
outcomes. By delving into the causes of such variances, such as instances of paying prices that
deviate from the initially established benchmarks, management can gain valuable insights into
the underlying factors influencing performance.

27
Management Accounting Best Practice Framework

The practice of an effective management accounting system is generally left to the interpretation
and initiatives of individual organizations as there are no statutory requirements that governed it.
Some organizations continue to use traditional management accounting techniques while others
continuously attempt to practice innovative methods. Numerous research findings had provided
empirical research evidences on the positive relationship between effective management
accounting system and corporate performance (e.g. Hiromoto, 1988; Monden, 1989, Epstein,
2002; Mendoza and Saulpic, 2002 and Nishimura, 2004).
In line with the management accounting evolution described by IFAC (1998), the proposed
framework hopes to facilitate Malaysian organizations to use management accounting
information as strategic tool towards achieving the Value Creation goal. The development of this
framework resulted from a cohesive discussion and collaboration with academics, accounting
professional bodies, accounting practitioners, regulators and managers. Though the
framework is not intended to be prescriptive in nature, it could provide guideline and direction to
companies in using management accounting as competitive tool.
IFAC provides basic guidelines on elements of management accounting best practices. Best
practices should be premised on four interrelated characteristics as illustrated in Figure 2:
distinctive managerial function; utility of work outcomes; value of work processes and
technologies; and capabilities required for function effectiveness.

Distinctive managerial function: Describes a management accounting system that focuses on

value creation through four activities: efficient and effective use of resources in organizations;
optimization of value generation over the long run; continuous evaluation of organizational value
chain and the formation of strategic teams.

Utility of work outcome: Addresses the utility and assessment of the management accounting
function in terms of accountability, performance criteria and benchmarked performance. The
outcomes of the management accounting processes are assessed on the value they add to an
organisation.

28
Value of work processes and technologies: is where management accounting processes interface
or integrate with other management processes and is used to assess or guide the development of
the work technologies of more effective and innovative management accounting systems.

Function capability related concepts: Refer to the capabilities required for effective performance
by the management accounting function. They are basically centerd on the core competencies
seen as necessary, on a culture that embodies continuous improvement and opportunity creation
and on a capacity for critical self-consciousness.
The development of an effective management accounting best practice framework in
organizations requires deliberate actions and collaboration among the following core players:
managers; professional accountants in management; educators; and professional associations and
others. Managers should understand their work (marketing, production, human resources etc), be
able to evaluate and be concerned with the effective use of resources within their distinctive area
of work. Professional accountants are those who contribute to the management in focusing,
benchmarking and developing the company. Educators are essential to companies that are expose
to rapid changes.

29
Figure 2.2

Distinctive Utility of
managerial work
function outcomes

Management
Accounting
Conceptual
Framework

Capabilities Value of work

required for processes
function and
effectiveness technologies

Management Accounting Conceptual Frame Work

30
Table 2.2 Best Practice Framework

Criteria Explanation

Leadership Leadership describes the top management’s commitment and

responsibility in driving the organization towards its vision and strategic
goals. This section focuses on management support for the management
accounting applications in the organization.
Management MAI describes the strategic functions of management accounting in
Accounting the formulation and implementation of organizational objectives.
Information Effective management accounting information focuses on
(MAI) accessibility, reliability and timeliness of the information.
Resource Resource Management focuses on the overall career development
Management for the accounting personnel within the organization. Specially, it
addresses issues on career opportunity, training, recognition, incentives
and other continuous improvements
Customer/ This item highlights the steps taken by the organization in establishing
Market Focus its market niche and in fulfilling customers’ needs and satisfaction.
Strategically, it addresses techniques used to meet market demand.
Partnership Partnership Management refers to the organisation’s strategic
Management approaches in managing relationships with its various stakeholders (eg:
Government, suppliers, customers, employees, and the community at
large) in achieving a win-win situation.
Value Creation Being the core variable for this framework, value creation focuses on the
deliberate steps taken by top management as well as personnel in
promoting value added activities in management accounting applications.
The outcome is overall value enhancement for the company (financially
or otherwise). Though value creation is the ultimate aim of the fourth
stage of IFAC’s management accounting evolution, companies must
always focus on creating organizational value in each of the other three

31
 earlier stages.
Business This section summarises the application of the various management
Results/Performance accounting techniques and their implication on business results and
Measurement organizational performance.

32
 CHAPTER THREE

RESEARCH METHODOLOGY

3.0 INTRODUCTION

"Research is a systematic inquiry to describe, explain, predict, and control the observed
phenomenon," states American sociologist Earl Robert Babbie. Both deductive and inductive
approaches are used.
This chapter will go into the procedures followed in gathering the data and information needed
for this study. These include the population under investigation, sampling strategies, types and
methods of data collection, data collection device, and data processing method.

3.1 RESEARCH DESIGN

According to K.J. Sileyew (2019), a research design "is characterized as a framework of research
methodologies and methods that a researcher selects for their investigation. Because of the
design, researchers can focus on techniques that are appropriate for the field and set up their
studies for success. K.J. Sileyew distinguished three primary categories of study design:
measurement, analysis, and data collecting.
The research design approach was adopted to be used on ASF financial services as a case study
and information will be derived from different sources, but mostly from the internet due to
restrictions that have come about as a result of COVID 19. Techniques such as convenience and
stratified sampling were used to choose the study's samples. Both descriptive and inferential
analysis techniques were used to examine the primary data from the surveys.

3.2 POPULATION OF THE STUDY

Polit and Hugler (1999) define research population as the comprehensive collection or entirety of
all entities, individuals, or constituents that adhere to a predetermined set of criteria. A study
population, alternatively referred to as a well-defined assemblage of individuals or objects, is

33
recognized to possess comparable qualities. All members or entities within a specific population
typically exhibit a shared characteristic or set of traits.
The study will focus on analyzing accounting information as a tool for management decision-
making within the population of ASF financial service. The study's population encompasses the
employees of ASF financial services.
• Individuals who are not employed by the organization
The rationale behind selecting individuals affiliated with ASF financial services is rooted in the
fact that the research is centered around this specific group. Consequently, gathering data from
these individuals will prove highly advantageous for subsequent analysis.

3.3 SAMPLING AND SAMPLING TECHNIQUES

Sampling is the process of intentionally choosing a specific number of individuals, subjects, or

entities from a larger population to serve as a representative sample of that community.
According to Badejo (1999), the sampling approach refers to the researcher's freedom or
prerogative to randomly select specific data or elements for study in their research.
The utilization of every member or object within a population is not always feasible. Therefore,
it is necessary to choose samples from the population for the purpose of investigation.
Nevertheless, it is important to note that there exist four fundamental sampling strategies. These
techniques include:
Random sampling.
Stratified sampling.
Cluster sampling and.
Systematic sampling.

But the researcher used stratified sampling in the research in which all individuals have an equal
chance of being selected.

34
3.4 TYPES AND METHODS OF DATA COLLECTION

There are two types and methods of collection of data. They include the primary and secondary
types of data.

3.4.1 Primary data

According to the Public Health Research Guide, primary data refers to the information that is
gathered by various methods such as interviews, surveys, trials, and other similar techniques.
The collecting of this particular type of data typically occurs at the primary source, which is
considered the most reliable and valuable form of data for research purposes.

3.4.2 Secondary data

On the contrary, as stated in the Public Health Research Guide, secondary data refers to
information that has been previously gathered from primary sources and is easily accessible for
researchers to utilize in their studies. This particular dataset has been previously gathered. Data
can be gathered through several sources such as authors' blogs, libraries, and the internet, among
others.
This study will employ a combination of primary and secondary data sources to obtain
information and data.
There are three (3) ways used in collecting data for this study, these are

Observation.
Questionnaire.
Personal research from the internet.

• Observation
This involves watching the respondents and taking records of facts.

35
 • Questionnaires
These are techniques for gathering precise data regarding a predetermined issue. A questionnaire
is defined as "a written list of questions that are answered by several people (staff) so that
information can be collected from the answers" in Chambers' 20th-century dictionary.

3.5 INSTRUMENT FOR DATA COLLECTION

The core data for this study was collected through a combination of personal research conducted
on the internet, the administration of questionnaires, and direct personal observation. The
questionnaire has been partitioned into two distinct portions according to its design and
afterwards distributed to the sample population. Part A of the questionnaire was specifically
formulated to gather information pertaining to personal status, specifically regarding sex. On the
other hand, Part B was tailored to the case study personnel and consisted of 18 questions, both
open-ended and closed, aimed at eliciting relevant data.

3.6 METHOD OF DATA ANALYSIS

The study presented and analyzed both quantitative and qualitative data to gain a comprehensive
understanding of the specific extent to which accounting information systems exert control over
management decision-making in ASF financial services. The methodology employed for data
analysis will encompass both statistical and narrative approaches. The statistical methodology
will involve the utilization of tabular representations and the calculation of percentages and
ratios. The methods employed in this study are designed to be mutually reinforcing, so
facilitating a comprehensive examination of the research findings. The aim is to provide the
results in a lucid manner that can be readily comprehended by a wide audience. The Chi-square
test is appropriate for this research as it is a statistical test that examines the differences or
similarities between the observed set of values and the expected set of values using a
distribution-based approach.

36
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0 INTRODUCTION

Presenting and analyzing the data acquired on the subject of "Evaluating Accounting Information
System as a tool for Management Decision Making" in the context of ASF financial services is
the aim of this chapter. The primary method of data collection for this study is the use of
questionnaires. A methodical procedure of categorization, synthesis, analysis, and interpretation
was used to the data before a study conclusion was developed.
4.1 ANALYSIS OF DATA COLLECTED

20 questionnaires were administered to 20 different people in the company (ASF financial

services). Out of these 20 people, 18 of them were returned which shows 90% of the total with
positive responses, whilst 2 of them were not returned with shows 10% of the total.
The table below shows the questionnaires administered and returned in the course of the study.

Table 4.1 Table showing questionnaires returned and not returned in Percentage
RESPONSE PERCENTAGE

QUESTIONNAIRES 18 90%
RETURNED
QUESTIONNAIRES NOT 2 10%

RETURNED
TOTAL 20 100%

37
Table 4.2 table showing the sex of the respondents
RESPONDENTS PERCENTAGE

MALE 13 72%

FEMALE 5 28%

TOTAL 18 100%

The table above shows that 13 males responded to the research questionnaires which is also 72%
of the total sample size, whilst 5 of them were female which is also 28% of the total sample size.

Table 4.3: If Accounting information system has improved accuracy controlling

mismanagement and fraud
No. Question Strongly Agree Neutral Disagree Strongly Total

Agree Disagree
1 An accounting 15(83%) 3(17%) - - 18(100%)
information system is
available
2 Prevention of fraud is 9(50%) 4(22%) 3(18%) 1(5%) 1(5%) 18(100%)
assisted by an
accounting information
system
3 Accounting information 5(28%) 9(50%) 2(11%) 2(11%) - 18(100%)
system controls
mismanagement control

As indicated in Table 4.3 above, 83% of the respondents indicated strong agreement that an
accounting information system is available for management decisions. 23% of respondents

38
agreed that an accounting information system is available for management decisions. This
implies that there was a consensus that an accounting information system is available for
management decisions. 50% of respondents strongly agreed that accounting information system
helps prevent fraud. 22% of the respondent also agreed that an accounting information system
helps prevent fraud. The remaining respondents represented by 18%, 5%, and 5% indicated
neutral, disagreement, and strong disagreement that accounting information system helps prevent
fraud.
This implies that majority of respondents indicated that accounting information system helps
prevent fraud. Regarding Accounting information system regulates mismanagement control,
28% of respondents strongly agreed that accounting information system controls
mismanagement, 50% respondents indicated agreement that accounting information system
regulates mismanagement, whilst 11% and 11% showed neutral and disagreement that
accounting information system helps to regulate or control mismanagement

Based on this analysis, it can be drawn that an accounting information system helps management
a lot when it comes to detecting fraud, controlling mismanagement in the organization as well as
helping or assisting management in taking both operational and tactical decisions for the
organization.

Table 4.4 The Effect of Accounting Information System (AIS) on Management decision
making
No. EFFECTS STRONGLY AGREE NEUTRAL DISAGREE STRONGLY TOTAL
AGREE DISAGREE
1 AIS is effective 6 5 5 2 - 18
in management
decision-making
in ASF financial (33%) (28%) (28%) (11%) - (100%)
services.
2 AIS reports 5 9 2 1 1 18
relevant financial
information

39
 regarding the (28%) (50%) (11%) (5.5%) (5.5%) (100%)
economic
activities of the
organization or
unit
3 The quality of 10 4 3 1 - 18
AIS is relevant to
an organization’s
performance. (55.5%) (22%) (17%) (5.5%) - (100%)
4 The application 14 3 1 - - 18
of decision
making on
matters that (78%) (17%) (5%) - - (100%)
relates to an
organization is
made easy by its
AIS
5 Accounting 8 10 - - - 18
Information
System
(AIS) plays a (44%) (56%) - - - (100%)
vital role in
financial
institutions
6 Financial 8 8 1 1 - 18
institutions find
it difficult to
survive without (44%) (44%) (6%) (6%) - (100%)
the use of AIS

40
7 AIS is effective 2 9 2 3 2 18
in financial
institution’s
decision making (11%) (50%) (11%) (17%) (11%) (100%)
8 AIS aids 10 8 - - - 18
adequate
allocation of
scares resources (56%) (44%) - - - (100%)
in an
organization

The findings shown in Table 4.4 demonstrate that a significant proportion of respondents,
specifically 33%, expressed a strong agreement on the effectiveness of the Accounting
Information System in facilitating management decision making. A total of 28% of respondents
expressed agreement, while an equal percentage of 28% maintained a neutral stance. Conversely,
11% of participants disagreed with the notion that Accounting Information Systems are useful in
facilitating managerial decision making.
The findings also suggest that the participants exhibited a high consensus in their agreement that
Accounting Information System (AIS) effectively presents pertinent financial information
pertaining to the economic operations of an organization or entity. Specifically, 50% of the
participants expressed agreement, while 11% maintained a neutral stance. A total of 5.5% of the
participants expressed disagreement, while an additional 5.5% of the participants strongly
disagreed. This demonstrates that the Accounting Information System generates pertinent
financial data pertaining to the economic operations of entities or organizations.
Furthermore, it was found that a significant majority of respondents, specifically 55.5%,
strongly concurred with the notion that the quality of the Accounting Information System holds
relevance in relation to the overall success of an organization. A total of 22% of the participants
expressed agreement, while 17% maintained a neutral stance, and 5.5% expressed disagreement.
The findings indicate a significant correlation between the quality of the Accounting Information

41
System and organizational performance. This finding is consistent with the research conducted
by Clinton, Matuszewski, and Tidrick (2011).

The findings derived from the study indicate that a significant majority of respondents,
specifically 78%, expressed a strong level of agreement on the facilitation of decision-making
through the utilization of Accounting Information Systems. A total of 17% of the participants
expressed agreement; however 5% of the participants maintained a neutral stance. This
demonstrates that the utilization of an Accounting Information System facilitates the process of
decision-making.
Furthermore, it is noteworthy that a significant proportion of the participants, specifically 44%,
expressed a strong agreement on the crucial role played by AIS in financial institutions.
Additionally, an additional 56% of the respondents also expressed agreement on this matter. This
observation suggests that the use of AIS is of great significance within financial institutions,
which aligns with the conclusions stated by Elvisa and Erkan (2015).

Furthermore, the survey results indicate that a significant proportion of the participants (44%)
expressed a strong agreement about the indispensability of accounting information systems for
the survival of financial institutions. Similarly, another 44% of the respondents agreed with this
notion. A smaller percentage of the participants (6%) remained neutral on the matter, while an
equal proportion (6%) expressed disagreement. The findings indicate that financial institutions
face challenges in maintaining viability in the absence of an Accounting Information System
(AIS).
Furthermore, it was found that 11% of the participants expressed a strong agreement on the
effectiveness of accounting information systems in facilitating decision-making within financial
institutions. Additionally, 50% of the respondents indicated their agreement, while another 11%
maintained a neutral stance on the matter. Seventeen percent of the participants expressed
disagreement, while eleven percent of the participants strongly expressed disagreement. This
suggests that the utilization of an accounting information system is advantageous in facilitating
decision-making processes inside a financial organization.
In contrast, a majority of 56% of the participants expressed strong agreement about the role of
accounting information systems in facilitating the effective allocation of resources, while an

42
additional 44% of respondents indicated agreement. The evidence suggests that an accounting
information system facilitates the effective allocation of resources.

Table 4.5 Chi-Square results for effect of AIS on Management Decision Making

Value Df Asymp. Sig. (2-sided)

Pearson Chi-Square 49.40(9) 4 .00
Likelihood ratio 48.76 4 .00
Linear-by-Linear
Association 39.97 1 .00
No. of Valid Cases
56

As indicated in table 4 above, the critical p-value is 0.00. This is lower than the 0.05 level of
significance. Therefore the null hypothesis which stated that accounting information system does
not influence management decision making is rejected and alternative hypothesis accepted at
(P=0.00<0.05). it is therefore inferred that accounting information system influence management
decision making. The findings of the study corroborate the study of Bushman (2007) which
asserted that financial and non-financial information helps management in making informed
decision.

43
 CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUTIONS AND RECOMMENDATIONS

5.0 INTRODUCTION

This chapter of the work is to summarize, make recommendations, and also conclude everything
about the study.

5.1 SUMMARY OF FINDINGS

The results of analyses show that accounting information has significant impact on the
management decision of ASF financial service. This means that an effective use of accounting
information by the company will have positive impact on their decision and this align with
table 4.4 that also confirmed that efficient accounting information plays a central role in
management decision making.

Furthermore, the study revealed that there is a significant effect of accounting information on
the management decision of the companies which implies that accounting information adopted
by companies affect the management of a company to reduce fraud in an organizations the
findings in the table 4.3 shows the result.
Chapter four gave details of the presentation, evaluation, and analysis of the study. We also
made very good use of questionnaires which were used to obtain data to be analyzed.

5.2 CONCLUSION

The investigation yielded results that led to the conclusion that the accounting information
system had a substantial impact on management decision-making. This objective can be
accomplished by implementing accounting systems that are tailored to align with the specific
activities of the organization. The research findings also indicate that in order for an organization
to effectively employ an accounting information system, a combination of three factors is
necessary: the prevailing context in which the organization operates, the specific problem that

28
needs to be addressed, and the technological capabilities of the organization. Additionally, the
organizational culture plays a significant role in this process.

5.3 RECOMMENDATIONS

Management of ASF financial services should regularly organize training sessions for its
accounts staff to ensure greater efficiency and effectiveness in the discharge of their duties.
Managers should also develop skills that will enable them to understand basic accounting
information for quick use.
Managers of ASF financial services should resort to the accounting information system to
ensure greater accuracy in decision making. Management should also provide support for the
accounting information system used in the organization.

29
 REFERENCES

American Institute of Certified Public Accountants (AICPA) (2000), Accounting

Terminology No. 2 New York.

American Institute of Public Accountants (1997), Statement of the Accounting Principles

bound

No. 4, “Basic Concept and Accounting Principles underlying financial statement of

Business Enterprise”, New York.

Badejo, F. (1999), Research Methodology in Nigeria, Rahama Printing and Publishers,

Maiduguri.

Calvin, E (2005), Advanced Accounting, Mark Inc Publishers, Homewood New York.

Clinton, B.D., Matuszewski, L. and Tidrick, D. (2011). Escaping Professional Dominance?

Cost Management. New York: Thomas Reuters RIA Group

Elvisa, L. and Erkan, O. (2015). Impact of accounting information system on decision

making; European Researcher, 96 (7), 460 -469

Goaham, J. and Chris, H. (1990), Accounting for Business Organization (A Practical

Approach), Macmillan Education Ltd, London.

Hafij, F., Jamil, D. and Syeda, O. (2014). Role of accounting information in strategic decision
making in manufacturing industries. Global Journal of Management and Business
Research; online ISSN; 2249-4588

30
Maidoki, P.B. (2013). Financial Reports and Managerial Effectiveness in Planning and
Decision- making. Journal of Economics 4(1) 69–73.

Morenikeji, W. (1998), Essential of Research methods for Planners and Environmental

Researchers, Gabasfrer Educational Printer, Box4437, Ibadan.

Needless, M., Anderson, B. and Caldwell, S. (1996), Principles of Accounting, 2nd Edition
Muffin Publishing Company Houston, USA.

Priya, R. and Longnathan, G. (2016). Impact of Accounting Information for Management

Decision Making. International Journal of Applied Research, 2 (5), 171-174

Roberts, N.A. and James, S.R. (2000). Accounting Principles, 4th Edition, Dorsey Ltd,
Homewood, USA.

Socea, A.D. (2012). Managerial Decision-Making and Financial Accounting Information. In

8th International Strategic Management Conference 47–55 ELSEVIER

Stanković, A., Mitrić, M. and Knežević, S. (2012). Business and Financial Decisions Based
on Information Provided by Accounting Information Systems. In Proceedings in
ARSAAdvanced Research in Scientific Areas 660–663.

Stanković, A, Mitrić, M. and Knežević, S. (2012). Business and Financial Decisions Based on
Information Provided by Accounting Information Systems. In Proceedings in
ARSAAdvanced Research in Scientific Areas 660–663.

Stamford, S. (2006), “Statement of Financial Accounting concepts” No. 9 objective of

financial reporting by business enterprises, New York.

31
Tóth Z (2012). The Current Role of Accounting Information Systems. Club of Economics in
Miskolc 8(1) 91–95.

Walter, B.M and Robert F.M. (1979), Financial Accounting, 3rd Edition New McGraw Hill
book company, New York.

32
 APPENDIX

QUESTIONNAIRES

Dear respondent,

The researcher is an Accounting and finance student at Accra Technical University (ATU). This
questionnaire seeks to collect data on the topic: “Evaluating accounting information system as a
tool for management decision making”
Your candid opinion on the subject matter will be most welcome. Be assured of the
confidentiality and anonymity for all the response you will provide. I count on your cooperation.
Thank you!

PLEASE TICK THE APPROPRIATE BOX OR WRITE IN THE SPACE DEEM

NECESSARY.

PART A (PERSONAL INFORMATION)

1. Name ……………………………………………………………..

2. Age range

[ ] 25-35 years
[ ] 36-45 years
[ ] 46 years and above

3. Sex [ ]male [ ]female

4. Current position in the company

[ ]Manager

[ ]Supervisor
1
 [ ]Normal worker

5. Years of work experience

[ ] 1-5 years
[ ] 6-10 years
[ ]11 years and above
PART B

6. Has accounting information system helped ASF financial service detect fraud in the
company? [ ] Yes [ ] No

7. If Yes, kindly state how ……………………………………………………………………

………..…………………………………………………………………………………

8. If No, kindly state why …………………………………………………………………….

……………………………………………………………………………………………
…

9. Has accounting information system played a vital role in assisting management in

making tactical decisions? [ ] Yes [ ] No

10. In what percentage range do you think it has assisted management in making these
decisions? [ ] 1% to 50% [ ] 51% to 100%

11. To what degree in percentage range has the management of ASF financial services used
accounting information? [ ] 1% to 50% [ ] 51% to 100%

2
12. Accounting information system has helped the company report relevant financial
information regarding the economic activities
[ ] strongly agree [ ] Agree [ ] Neutral [ ] Disagree [ ] strongly disagree

13. The presence of accounting information system has aided in the allocation of scares
resources of the company.
[ ] Strongly agree [ ] Agree [ ] Neutral [ ] Disagree [ ] Strongly disagree

14. Financial institutions including ASF financial services really finds it difficult to survive
without the use of accounting information system
[ ] strongly agree [ ] Agree [ ] Neutral [ ] Disagree [ ] strongly disagree

15. Accounting information system has made it very easy for management to make decisions
on important matters relating to organizational growth.
[ ] strongly agree [ ] Agree [ ] Neutral [ ] Disagree [ ] strongly disagree

16. Does Accounting information system play a vital role in financial institutions
[ ] Yes [ ] No

17. If Yes, kindly explain to what extent it has helped ………………………………………...

………………………………………………………………………………………………
………………………………………………………………………………………………

18. Has the computer as a tool made it easy for Accounting information system to be used by
the company? [ ] Yes [ ] No