1.1. BACKGROUND TO THE STUDY
The emerging global economic scenario characterized by advancement
in information technology, rapid changes in production processes,
increased sophistry of the consumer, fierce market competition and
unethical skimming activities of producers in the drive to survive the
unpredictable and complex business dynamics, has brought to the fore the
crucial role of accounting information in economic and business
discourse especially in relation to administrative effectiveness
As we all know, accounting speaks the language of business as it
records all transactions of an individual firm or other bodies that can
be expressed in monetary terms. Predicated on the going concept,
accounting is the scheme and art of collecting, classifying, summarizing
and communicating data of financial nature required to make economic
Over several numbers of years the performance of accounting has
increased right from the single entry system to double entry system. The
main aim of the accounting system is to provide financial data like
purchase, sales, expenses and income of the organization but in today’s
modern world accounts maintenance is helpful in many ways. Previously
accounts are maintain to know profit or loss of the organization but now
a days it is also useful for increasing profitability of the
organization by way of accounting information system. Businesses include
transactions which produce information for better analysis of business
performance and accounting information system is a delivery system for
Accounting Information Systems (AIS) are a tool which, when
incorporated into the field of Information and Technology systems (IT),
were designed to help in the management and control of topics related to
firms’ economic-financial area. But the stunning advance in technology
has opened up the possibility of generating and using accounting
information from a strategic viewpoint.
Accounting information systems (AIS) as a part of company’s
information systems (IS) are seen as facilitating decision making within
organizations and should be tailored to an organization’s environment,
requirements of task, and structure. An accounting information system is
a structure that a business uses to collect, store, manage, process,
retrieve and report its financial data so that it can be used by
accountants, consultants, business analysts, managers, chief financial
officers(CFOs), auditors and regulatory and tax agencies.
In addition, specially trained accountants work with AIS to ensure
the highest level of accuracy in a company's financial transactions and
recordkeeping and to make financial data easily available to those who
legitimately need access to it, all while keeping data intact and
secure, this indirectly boost the productivity and performance of the
Furthermore, Management of various organizations in Nigeria relies
heavily on information generated from the AIS employed by the company.
Moreover, quality reports are keys to arrive at an ideal investment, and
a traditional way of recording, summarizing and reporting company
financial reports led to less optimal decisions. Investment in good and
reliable accounting systems has become a major concern for all managers
as it leads to better management and analysis of firm’s performance.
Accounting information system is an ingredient in most, if not all,
financial managerial decisions for various organisation. In developed
economies, these decisions are worth billions of dollars each year. In
some cases, the decisions are lacking in quality. Consequently, if
researches can improve decision making through improved information,
society will benefit.
The Accounting Information System is considered to be one of the
most important systems of any organization. Its objective is to provide
necessary information to the managers at different levels. This
information helps them in discharging their responsibilities in an
effective and efficient manner in the areas of planning, resource
control, performance evaluation and decision making. Accounting
Information Systems (AIS) are a tool which, when incorporated into the
field of Information and Technology systems (IT), are designed to help
in the management and control of topics related to organization’
economic-financial area. But the stunning advance in technology has
opened up the possibility of generating and using accounting information
from a strategic viewpoint.
Finally, the main purpose of accounting information system in any
organisation is to give information about profit or loss and financial
position of the business to its owner. This information is also useful
to investors, auditors, suppliers, buyers, bankers and other financial
institutions etc. But more importance of accounting information is
concern to the person within the organization. Since every decision
involves a number of alternatives. Accounting information must help the
user to decide his course of action.
1.2. STATEMENT OF PROBLEM
Currently, most organizations continue to increase spending on
information system and their budgets continue to rise. Moreover,
economic conditions and competition create pressures about costs of
information. Generally, information system is developed using
information technology to aid an individual in performing their job.
Therefore, most organizations focus on developing information system in
order to support decision system, communication, knowledge management,
as well as many others. The key part of information system needed for
decision making in organization is accounting information system.
Moreso, the world and human life has been transformed from
information age to a knowledge age (Curtis, 1995), and knowledge has
been recognised as the most valuable asset. In fact, knowledge is not
impersonal like money and does not reside in a book, a data bank or a
software program (Choe, 1996). Choe believed that knowledge is always
embodied in a person, taught and learned by a person, used or misused by
a person. Accounting information system is an unbiased tool for an
effective administration and management. Poor accounting information
system jeopardizes administrative effectiveness, which makes managers
malnourished administratively especially in Nigerian construction
industry. The consequence of this has been the current distressed
syndrome that most Nigerian companies are facing. Huber (1999) stressed
that companies must learn to manage their intellectual assets (i.e.
knowledge) in order to survive and compete in the ‘knowledge society’.
Indeed, knowledge management is concerned with the exploitation and
development of the knowledge assets.
However, there is uncertainty in predicting how growing need for
accounting information system will change the productivity and
performance of the organization since the Accounting information system
provides a base to an organization, to deal with its vendors, customers
and employees. The fact that the most Businesses has not incorporated
the use of better accounting information systems in their day to day
transactions, a number of issues need to be addressed. As accounting
gives business information in terms of transactions and in monetary
Based on the fact that the financial accounting is one of the social
sciences which aim to serve various needs of the private and public
business facilities, it is affected by the changes of the general
economic, social, legal and political and political conditions
prevailing in each country or certain environment at each period. The
accounting information system is resulted by certain requirements which
change due to various environmental factors within the economic, social,
legal and political environments in which the accountancy works.
It is on these premises that the study wishes to examine the effect
of quality of accounting information on the organization performance.
1.3. OBJECTIVES OF THE STUDY
The main objective of this study is to examine the effect of
accounting information system on organization performance in Nigeria.
Other specific objectives aimed to be achieved are:
- 1). Determine the effect of accounting information system on organizational productivity.
- 2). Examine how Accounting information system lead to better decision-making by Managers.
- Ascertain the role of accounting information systems and its potential contribution in Tax computations.
- Identify the challenges confronting the implementation of the accounting information system.
- Determine the extent of awareness and perception of managers regarding accounting information system.
- To determine the effectiveness of accounting information system in decision making of managers on organizational effectiveness.
1.4. RESEARCH QUESTION
The research question provides a framework and guidelines through
which substantial knowledge of the research study can be understood.
The research question asked includes:
- What are the effects of accounting information system on organizational productivity?
- How does Accounting information system lead to better decision-making by Managers in the organisation?
- The role of accounting information systems and its potential contribution in Tax computations?
- What are the challenges affecting implementation of the accounting information system?
- The extent of awareness and perception of managers regarding accounting information system?
- How effective is the accounting information system in decision making of managers towards organizational effectiveness?
1.5. STATEMENT OF HYPOTHESIS
The hypotheses are stated in the null form for testing:
Ho: There are no significant relationship between accounting information systems and the organizational performance.
Ho: There is no positive relationship between financial performance of the organization and tools of accounting information system.
1.6. SIGNIFICANCE OF THE STUDY
An accounting Information system is an orderly, efficient scheme for
providing accurate financial information and controls. Regulatory
requirements and internal administration policies are key considerations
in the design of an effective accounting system. Thus accounting
systems show the books, records, voucher, and files and related
supporting data resulting from the application of the accounting
process. It involves the design of documents and transactions flow
through an organization.
The study is of key importance to the construction companies as well
as other firms in the same sector in terms of determining the benefits
accruing due to the integration of accounting information systems in
their operations. This enabled constrcution industry in gauging the
model in terms of enhancing organizational effectiveness. The study is
useful to other researchers interested in the problem under
investigation as the study has laid a platform on which further studies
related to the subject can be undertaken.
This study will be of great significant to management of various
organisations, companies, accountants, auditors, economist, financial
analyst and other users of financial or accounting information, It will
give them positive insight about the relevance of a Accounting
Information System, it key features, advantages, types, it effect on
organizational performance, productivity, and profitability, as well as
enlightened the general public on the benefits of it application on the
organization financial reporting.
The study would provide a theoretical basis about accounting
information system successful adoption dimension to firms. It would
provide practical guidance for accounting information systems
implementation in small and medium business and it would also provide
empirical and practical contributions for organization in effectively
applying accounting information system in their operations.
Finally this study will be of great significance to schools and
students, it will serve as a reference point for future researchers who
will want to research more on the topic.
1.7. SCOPE OF THE STUDY
Conceptually the study hovers around the implicit effect of
accounting information System on organizational performance in the
In the light of broad coverage, the researcher focuses on it effects
of organizational productivity in the construction industries in Oyo
Metropolis, using staff members of construction company case study.
1.8. LIMITATIONS OF THE STUDY
As with all studies, limitations exist and must be acknowledged.
The limitations of the study are as given below:
- Inadequacy of required research Material: due to it complex structure, we were posed with problem of generating enough research material to fast track the completion.
- Because the sample is chosen from the one state Of Nigeria. That’s
why the findings and analysis is varying slightly in organization to
- Transportation constraints: this is also a limiting
factor, as there are little or not enough money to transport to the
case study location and this might not be enough to give us desired
1.9. DEFINITION OF TERMS
1. Accountant: An accountant is any person who
possesses a professional license to practice accountancy from a
recognized professional body and has legal capacity and authority to
carryout the duties of accountants in taxation and audit practice.
- Financial statement
A financial statement (or financial report) is a formal record of the
financial activities of a business, person, or other entity. It also provide
information regarding the position and performance of a business, such
as its assets, liabilities, equity, income, expenses and cash flow.
3. Accounting Information Systems
Accounting Information Systems (AIS) are a tool which, when
incorporated into the field of Information and Technology systems, are
designed to help in the management and control of topics related to
organization’ economic-financial area. But the stunning advance in
technology has opened up the possibility of generating and using
accounting information from a strategic viewpoint (El Louadi, 1998).
4. Accounting Software
Accounting software is an application that records and processes
accounting transactions within functional modules such as accounts
payable, accounts receivable, payroll, and trial balance. It is a part
of the accounting information system.
5. Internal Controls
Internal controls encompass a set of rules, policies, and procedures
an organization implements to provide reasonable assurance that; its
financial reports are reliable, its operations are effective and
efficient, and its activities comply with applicable laws and
Accounting is defined as the process of identifying, measuring and
communicating economic information to permit informed judgments and
decisions by the users of the information.
Profitability is referred to as the ability to make profits
progressively over a long period of time. Profits itself has different
meaning to the different people.. Profit is also sometimes taken as
return accruing to shareholders.
- Organizational effectiveness
Organizational effectiveness was succinctly defined by Daft (1983) as
“the degree to which an organization realized its goals”. However,
Mondy, (1990) defined it aptly as “the degree to which an organization
produce the intended output”.