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Proposal 2024 GC Project One
Proposal 2024 GC Project One
BANK PERFORMANCES
Name ID
7) ROZA-ELIAS 2009067
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ABSTRACT
The main purpose of this study was accounting information system and its impact on the bank
performances the case of Commercial Bank of Ethiopia at Sechduna branch. In order to make the
research effectively the qualitative and quantitative method was employed and both primary and
secondary data were collected using interview questioner. There are peoples selected by judgmental
sampling technique. This function was performed for the various groups within the organization that
were concerned about the respective decision associated with financial accounting, managerial
accounting and tax compliance issues. This need to integrate this often diverse system led to the
accountant’s appreciation of shared data base that provide a cohesive picture of the organization
data by eliminating duplication and reducing data conflicts.
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ACKNOWLEGMENT
First and most I would like to give my humble and grateful thanks to Almighty God for everything he
has done for me in each and every step of throughout my life.
It was the almighty power of Christ Jesus that make this paper possible. It was because of his Grace,
that it becomes possible for me to exert my best effort on my work and accomplishing it would with
great.
Next, I would like to extend my deep heartfelt thanks to my mother and everybody who assist me
starting from the lower grates up to the highest university level in their uncountable resources and
moral.
Finally, I would like to thank Atomic Technology And Business college members and Commercial
Bank of Ethiopia at Sechduna branch.
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ACRONYM
AIS: Accounting Information System.
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LIST OF TABLE
Table 1. Back-ground information of the respondents
Table 3. Respondent’s attitude toward standard services by AIS and its contribution and add value to
the organization
Table 5. Respondents’ attitude forward management of CBE awareness of AIS and strategic plan of
the organization follows
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Table of Contents
ABSTRACT..............................................................................................................................................ii
ACKNOWLEGMENT...........................................................................................................................6
ACRONYM............................................................................................................................................6
LIST OF TABLE....................................................................................................................................6
CHAPTER ONE..................................................................................................................................... 8
INTRODUCTION.................................................................................................................................. 8
1.1 BACKGROUND OF THE STUDY..............................................................................................8
1.2 STATEMENT OF THE PROBLEM............................................................................................ 8
1.3 RESEARCH QUESTION........................................................................................................... 10
1.4OBJECTIVE OF THE STUDY....................................................................................................10
1.4.1 GENERAL OBJECTIV E OFTHESTUDY....................................................................... 10
1.4.2SPECIFIC OBJECTIVE OF THE STUDY.........................................................................10
1.5 SIGNIFICANCE OF THE STUDY............................................................................................ 11
1.6 SCOPE AND LIMITATION OF THE STUDY......................................................................... 11
1.6.1 SCOPE OF THE STUDY.....................................................................................................11
1.6.2 LIMITATION OF THE STUDY..........................................................................................11
1.7 ORGANIZATION OF THE PAPER.......................................................................................12
CHAPTER TWO.................................................................................................................................. 13
LITERATURE REVIEW......................................................................................................................14
2.1 ACCOUNTING INFORMATION SYSTEM (AIS)...................................................................14
2.2 INFORMATION SYSTEM IN ACCOUNTING AND FINANCE............................................15
2.3 IMPORTANCE OF FINANCIAL INFORMATION SYSTEM.................................................15
2.4 AIS AND SUBSYSTEM............................................................................................................ 16
2.5 IMPORTANCE OF AIS..............................................................................................................16
2.6 FEATURES OF AIS................................................................................................................... 17
2.7 ROLE OF AIS AND DECISION MAKING IN ORGANIZATION..........................................17
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2.8 ROLE OF AIS IN MANAGEMENT /Administration................................................................18
2.9 TOOLS TO IMPLEMENT ACCOUNTING SYSTEM............................................................. 18
2.9.1 CHART OF ACCOUNTS.................................................................................................... 19
2.9.2 ACCOUNT CODE...............................................................................................................19
2.9.3 PERFORMANCE REPORT.................................................................................................19
2.10 INFORMATION SYSTEM FOR OPERATION AND MANAGEMENT.............................. 19
2.11 COMPUTERIZED AND ACCOUNTING SYSTEM.............................................................. 20
2.12 ACCOUNTING AND INTERNET.......................................................................................... 20
2.13 ANNUAL DATA PROCESSING; JOURNAL PROCEDURES........................................... 20
2.14 ACCOUNTING INFORMATION IN BANK ACTIVITY...................................................... 20
2.15 THE ROLE AND IMPORTANCE OF ACCOUNTING INFORMATION IN THE BANK
ACTIVITY........................................................................................................................................21
2.16 EMPIRICAL REVIEW LITERATURE................................................................................... 22
2.17 KNOWLEDGE GAP.................................................................................................................23
CHAPTER THREE...............................................................................................................................24
RESEARCH METHODOLOGY..........................................................................................................24
3.1 RESEARCH DESIGN................................................................................................................24
3.2 SOURCE OF DATA AND METHOD OF DATA COLLECTIONS........................................24
3.3 METHOD OF DATA COLLECTION........................................................................................24
3.3.1 PRIMARY DATA................................................................................................................24
3.3.2 SECONDARY DATA..........................................................................................................25
3.4 TARGET POULATION.............................................................................................................25
3.5 METHOD OF DATA COLLECTIONS..................................................................................... 25
3.6 SAMPLING TECHNIQUES.......................................................................................................25
3.7 SAMPLING SIZE DETERMINATION..................................................................................... 25
3.8 METHOD OF DATA ANALYSIS AND INTERPRETATION TECHNIQUES...................... 26
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CHAPTER ONE
INTRODUCTION
An effective accounting information system was essential to any organization long success. Without
a means or monitoring the event that occur, there would be no way to determine how well the
organization performing. Every organization also needs to track the effect of various events on
resources that were under its control. Information about agent who participates in those events
necessary to assign responsibility for action taken (Marshal, 2005)
Accounting information system as a group of interrelate component that work collective to carry out
input, processing output, storage and control action in order in to convert data to information products
that could be use to support forecasting, planning, control, coordination, decision making and
operational activates in an organization. (Elizabeth, 2008)
Accounting information system was a specialize sub system of information system whose purpose
was to collect; process and report information the financial aspect of business event in an integrate
information system could not be distinguishing as separate subsystem. Accounting information
system was an important of an organization that was vital for effective management decision making
in controlling organizations (Zimmerman, 1995).
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There were data redundancy and inconsistency problems ,the organization should overcome
the problems of data redundancy that associate with the repetitive the same data by using
data base to make decision .Data were centralized into data base that users share with the
institutions’ data in central location user have access to the data ,they need to achieve their
respective objective. Arranging the data in appropriate system through control day-to-day
operation process in order to reduce the cost of audit time consume during auditing period.
Data report or transferring of data to needed party inconsistency, so the manager should be
enabling accounting information system with providing financial operational information
about their performance report consistency on timely basis.
The productive improvement is poor as shown on the above table so, the organization should
be improve productivity and reduce cost of products and data analysis process costs through
facilitating the accuracy and timeline information at needed place and time.
Stretch the accessibility of accounting information in all branches, the management should be
control data access and dissemination of information in order to have meet the need of data at
all level in organization and other branches as well as satisfy the customers need. An
organization should be stretch electronic technology in order to meet need by using
computerized system and implement more perfect BPR in order to serve customer eaily.Itwas
better to the bank if it well –designs AIS in investment areas for earning higher income.
Accounting information system (AIS) consists of the records and method use to initiate, identify,
analyze, classify and record the organizations transaction and to account for the relating asset and
liabilities. The quality of information the AIS generate impact management’s ability to take action
and make decisions in connection with the organization’s operation and to prepare reliable financial
statements. An effective accounting information system would.
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The manager uses the consistent and reliable information that record showing the result of past plan
and operation, so that they could be evaluating and perpetuating. Even though, AIS plays a critical
role in the performance of bank activities in various division of business. Most of the researcher dose
not conduct the role of AIS as tools for the institution performance purposes those regardless on
this much of AIS.rather than, they focuses only impacts and importance of AIS ,to fill this gap the
current researcher initiating to study on AIS and its role institution performance . Furthermore, This
research deal with role AIS in managerial decision making in case of Commercial bank of Ethiopia
at Sechduna branch understood the major reason that force to use AIS in a Bank’s performance ,the
capability of management awareness of AIS and impact of AIS in the institution , determineAIS
accessibility with other branches ,how the AIS affecting institution income and the strategy
planwaspersuading.
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1.5 SIGNIFICANCE OF THE STUDY
The primary and major significance of this study try to show as the different problems, opportunity,
weakness and strength of AIS in CBE at Sechduna branch and point out the solution and
recommendation bases on finding observe question and interviews.
After completion of the study, it was significance to the entity where the research was conducted by
providing valuable concluding remarks and forwardingof recommendation. Beside, the study was
vital to the researcher a slinks theoretical knowledge obtains in classroom with the practice of the real
world. It also important to others researchers as it could serve as secondary source of information as
student use as extra reference material for those who wouldundertake similarly study. And also it
would create awareness to financial users about the role of accounting information to their decision
making and it would serves as requirement for the researcher to would be graduated.
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1.7 ORGANIZATION OF THE PAPER
The study was organized in five chapters. Chapter one deals about the introductions which include
background of the study, statement of the problem, research question, and objective of the study,
significance of the study, limitation of the study and scope of the study. Chapter two discusses about
the literature review follows by chapter three which emphasize the methodology of the study. Chapter
four describes about the data presentation and analysis and chapter five deals with conclusion and
recommendation part of the study.
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CHAPTER TWO
LITERATURE REVIEW
2.1ACCOUNTING INFORMATION SYSTEM (AIS)
Accounting information system was considering as a subsystem of management information system
which as system that operate function of data gathering processing categorize delivering financial
events with the aim providing relevant information for purpose of score keeping, attention direction
and decision making. Accounting information system was considered as important organizational
mechanisms that were critical for effectiveness of decision management and control in organization.
Introduction of AIS have shown that successful implementation of accounting system require a fit
between three factors (Markus and Pfeiffer 1983). A fit must be achieving with dominant view the
organization of situation. Second the accounting system must fit when problems were normally
solved i.e. the technology of the organization. Finally, the accounting system must fit with the culture
i.e. the norm and value system that characterized the organization system would be useful when
information provided by them was used effectively in decision making process by users. The on
going revolution in information technology has had a significant influence on accounting information
system improvement in the information have brought improvement in computers.
Today, almost all organization and using computer in their daily business. Accounting system
computer become smaller, faster, easier to use and less expensive the computerization of accounting
work wouldcontinue. That was accountants are now able to perform their activities more effectively
and efficiently. Along with the improvement in information technology system have been come
proposing improvement in this have replacing annual book keeping with computerized ones. This
revolution of information which effectiveness of AIS could be analyzed on: information scope which
considerof financial and non-financial internal and external information that was useful in prediction
of future events, aggregation of information that considered as means of collecting and summarizing
information within a given time period and time line (Choe 1998).
This study has been designed on few segments: first of all introductions and over view of AIS and
second, the objective and methodology of the study. Then the authors have analyzed the result of the
finding and at the end some conclusive remarks.
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2.2 INFORMATION SYSTEM IN ACCOUNTING AND FINANCE
Accounting information systems were the most widely used information systems in a business. The
records were report business transactions and others economic events. Operational accounting
systems emphasize legal and historical record keeping and the production of accurate financial
statements. General ledger system consolidates data received from account receivable, account
payable, payroll and other accounting information system. (James.A.obrien p.433-39).
Management accounting system focus on the planning and control of business operation .They
emphasize cost account reports, the development of financial budget and projects financial statement
and analytical report comparing actual to forecasting performance.
In many ,firms also keep track of the status of customers order until goods were delivered ,computer
based sales order processing system provide a fast, accurate and efficient method of recording and
screening customer order and sales transaction. Computer based financial information system
support financial manager in decision concerning; 1the financing of a business and 2, the allocation
and categories include cash and security management, capital budgeting, financial forecasting and
financial planning. The financial manager of a business relies on variety of financial planning,
reporting and transaction process information system to make financial investment and accounting
decision (James A. Obrien p.433-39).
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2.4 AIS AND SUBSYSTEM
AIS have a subsystem which process financial and non-financial transaction that directly affects the
process of financial transaction. The major subsystems were transaction process system, general
ledger/financial statement and management reporting system.
The transaction process system which support daily business operation with numerous document and
message for users throughout an organization that convert economic events into financial transaction,
recording financial transaction in accounting record (journal/ledger) and distributing essential
financial information to operation. General ledger/ financial statement such as income statement,
balance sheet and statement of cash flow, tax return and other reports required by law. The
management reporting system which provides internal management with especial purpose financial
report and information needed for decision making (James.A.Obrien.p.382).
The components of information systems were the resources of hardware, software (program and
procedure) and people (specialist and users) to perform input, output, storage and control activities
that convert data resource into information product and communicate its ultimate users.
The fundamental information system concepts were input (raw data collection) processing
(transformation of data into information) and out put (meaningful information for users and store the
data for decision making and future events. Systems was a group of interrelated component working
together toward a common goal by accepting input and producing output in organized transformation
process (James.A.Obrien.p.14).
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A big advantage of AIS was that the automate the recording and reporting. Reporting was an
important tool for companies when they want to see accurate summarized timely information which
was used for financial reporting. The AIS retrieved data from centralized data base, processes and
transforms and generate summary of that data as information that could easily use and analyzed by
business analysts, supervisor or other decision makers.
Modern business organizations depend on information system in order to stay competitive. The
purpose of AIS was provide accounting data and financial in formation a variety decision makers
according their need entitlement to information .Every business day vast quantities of information
flow to decision makers and others users to meet a variety of internal need and external users such
as customers, supplier and stock holders who have interest in firm. Managers deal with many day to
day business problems as well as plan and control their operation using source document, journal and
ledger to make decision in order to solve the problems that occurred in the organization (James. A.
Hall p.124).
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The role of accounting information system as well as other types of information could be to increase
global knowledge and enter communication with different business organization in various places.
Today`s accountant was focus on the ultimate needs of decision maker who used accounting
information whether the decision makers were inside or outside of the business.
Management accounting provides internal decision makers who were change with achieving the
goals of profitability and liquidity with information about financial, investing and operating activity,
while financial accounting generate report and communicate them to external decision makers, so
that they could evaluate how would the business have achieved its goals. The users of accounting
information and decision makers were manager of business, outside the business who have direct
financial interest in the business and indirect financial interest ( public issues, tax authorities,
regulatory agencies and others groups. (Beveled E.Needls).
Generally, AIS plays a critical role in recording financial and non-financial events, store document
and control or maintain that was important in decision making and evaluate performance and
forecasting a business plan. (James.A.Obrien.p36).
Financial statements were the primary means of communicating important accounting information to
users who used to communicate accounting information about business. Accounting link between
business activities and decision makers; first accounting measures business activity by recording data
about them for future use. Second, the data were stored until needed and then processed to become
useful information. Third, the information was communicated through report to decision
makersshould.
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Measurement
(sales invoice) Communication (annual
financial report)
Accounting
(processing)
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2.9.1 CHART OF ACCOUNTS
To implement the accounting procedures and maintain accounting systems, organization adopt a chart
of account, diagram or list showing the relationship of all accounts in the accounting system and
usually indicate the structure by which detailed accounts were summarized in the ledger or trial
balance by control account. (BerverdE.Needle).
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2.11 COMPUTERIZED AND ACCOUNTING SYSTEM
Most business use computerized accounting systems. The parts of such system may be put together in
many ways and companies use their computer for many different purposes. This system use very
powerful computer that were linked together to provide communication and data transfer around the
world. This would be more critical as the internet develops and companies the use of the internet to
communicates and transact business. Each transaction entering into the accounting system should be
supported by source document or written evidence that verify a transaction occurred and provide the
detail of transaction, for example, customers` invoice should support each sales on account and
vendors invoice should support each purchases.
Peachtree complete accounting for windows general ledger software was to computerized existing
accounting tasks to make them less time consuming and more accurate and developable. Finally, the
financial statement and other accounting reportswere printed.
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exercising the main function consecrated by law, banks generate extremely useful accounting
information for both customer and management users of bank accounting information were internal
users ( bank client and manager, employees in front office, bank office and bank auditor) and external
( client business partner, tax authority, insurance companies of other bank).
The main generating source of accounting information in bank activity was client account, bank
account and computerized program (which deal with accounting data and statistical data, bank
management). The classification of bank operation into active and passive operation. Underline the
importance of accounting information in the whole bank activity. This bank operation generates
accounting information regarding the attention and placement of bank resources.
Summary
AIS was a subset of management information system, that responsible for providing timely and
accurate financial and statistical report for internal management decision making purpose and
external parties ( creditor, investors, regulator and taxation authorities ). All business organization
and government agencies have AIS that were designed and operated to produce massage that may
prompt their receipt to make or at least to consider differ choose. The primary objective of AIS was
to provide information useful to decision makers. The AIS`s data could help manager to design long
run strategy, plan and control activities in order to success with its goals. Modern business
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organizations depend on information system in order to stay competitive. The usefulness of AIS in
emerging economy was cooperation, to meet the need of multiple and to control afterward and
control in advance and in concurrent.
AIS were designed and implemented computerized information system that could help to meet the
needs of multiple and increase in intercommunication, although AIS was inefficient in integration
and lack of coordination could be provide unreliable information that result in poor management
decision. Also the transparency of bank accounting system allows for correct and complete,
evaluation of bank activity and establishing of respective bank priorities for the delineation of their
business horizon. The impact of AIS on management performance were improving accuracy,
efficiency, customer satisfaction, inter communication, but also data redundancy, not secure report
and notsafety secret.
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impact of accounting information system on financial performance and researcher would try to see
the impact of accounting information system on financial performance CBE Sechduna branch in
Hossana town.
AIS were designed and implemented computerized system that could help to meets the need of
multiples,good cooperation and increase intercommunion with global. However, AIS could be
provide unreliable information and report to management which result poor management
performance and distribute about company through the company web site without safety secret with
in internal control.it could also provide the information that businesses needs for efficiency
operation,effective management and competitive evaluation in business development.
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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
In this study the researcher was used descriptive method of research design , because the main
purpose of the research were to describe,the impact of accounting information system and it's impacts
of bank performance.Descriptive data analysis it address major objective and research question
proposed in the study adequately. In addition it help, to describe and summarize the data using index
or statistics and to describe the present status of research investigation descriptive type of research
design was suitable to assess, the impact of accounting information system on bank performance in
commercial bank of Ethiopia in Sechduna branch the study used both qualitative and quantitative
research approach(mixed research approach)in order to achieve the research objective qualitative
research approach were open ended questionnaire on the other hand quantitative research approach
makes use of tools such as questionnaire to collect numerical or measurable data and also most likely
appear in the discussions were tables containing data in the form of number and percentage. the
objectives of the study in to affect, descriptive methodology were conducted to observe on
accounting information system and its impact on bank performance.
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primary data would be used for in questionnaire and interview . Most of respondents were answered
the expected questionnaire and intended to beintervened; hence, the method that would be used in
this study employed Judgmental sampling techniqueapproaches which could be most convenient and
reliable to collect related information from the respondents.
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n = z2*P*QN
E2(N-1)+Z2*P*Q
n = sample size
P = Probability of success=0.5
E = error =0.1
n = (1.64)2(0.5)(0.5)*59
(0.1)2(59-1)+(1.64)2(0.5)(0.5)
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REFERENCE
[1] James A. O’brien (2004) introduction to information system 10th edition Von HOA
mannpressInc, northern artonal university USA
[3] Lucas, Henry C. (1997) management information system 5th edition new york
[4] L. Murphy smith and Katherine T. Smith (2002) accounting information system 3rd edition south
western college publishing
[5]Plunkett warren Rechard(1986) introduction to management 2nd edition Boston Mass Kent pub.co
[6] MengistuBogale(2008) principle of accounting 1st Ethiopian edition published accounting society
of Ethuopiaplukett warren pub.com
[7] Romaney (2003), accounting information system 9th edition, practice Hall business publishing.
[8] Romney (2007), Accounting information system 9th edition, practice hall businesspublishing.
[10] http://wwwfeb.emufr/journal/doc/2articl02.pdf
[11]http://www.orojournals.comernojournal.com/ajsr-4-04-pdf
[12]http://ijtef.or/papers/19-co17-pdf
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