IMPACT OF ACCOUNTING INFORMATION SYSTEM IN THE BUDGETING BUSINESS ORGANIZATION
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IMPACT OF ACCOUNTING INFORMATION SYSTEM IN THE BUDGETING BUSINESS ORGANIZATION
Chapter one
INTRODUCTION
1.1 Background of the Study
Accounting and budgeting are the foundation of any business organisation in the twenty-first century via Uyo and its surroundings.
To that end, no corporate organisation can prosper in any place without a proper budgeting and accounting system. Before any business is established, some measures must be put in place for planning, controlling, organising, and coordinating.
Records are kept in all departments, such as cash records, inventory purchasing, sales records, and so on, and these cannot occur without proper budgeting because they are critical documents for any organisation.
The risk of transporting files around might result in document loss owing to termites, fire catastrophes, cockroaches, and company prior to the introduction of Accounting Information System (AIS) technology.
In recent years, the firms started changing faster and faster in front of globalisation technology. Part of this changing is an Accounting Information System in the budgeting of business organisations. Any change depends on data and information.
To improve an international Accounting Information System or to make it more successful, businesses should collect high quality data, which will lead to high quality of information about any organisation.
These information will be the way Indeed, Accounting Information Systems (AIS) are crucial to all organisations. Borthick and Dark 1990; Curties 1995. Rahinam et al. 1998; Wilkinson 1998, Wilkerson 2003. Accounting information can be utilised to combine these several aspects into a single financial dimension.
Accounting Information uses formalised categories to gather and report information, resulting in a standard language that individuals of the organisation can communicate.
Formulization allows for the conveyance of information using flower symbols and codes, which facilitates the coordination of finance, cost, sales, quality, plant maintenance, service management, and human resources into the decision-making process.
Accounting information, on the other hand, is an input representation of the underlying decision problem because not all aspects can be qualified correctly in financial numbers. Galbranth. 1973.
Accounting Information Systems can assist managers in understanding their jobs, such as transitioning from information gatherer or transaction-oriented to information analyst or business-oriented (Convanlund and Lukka 1998; Hunton 2002).
Before making a decision, they should think about it more clearly and with less uncertainty. We define uncertainty as a lack of information relative to what decision makers require to make a decision (Galbranth 1973), and the less managers can foresee the results of their actions, the more uncertainty there is.
The decision to centralise or outsource any or all of the accounting processes of a corporation involves both strategic and practical considerations. The primary reasons for organisations contemplating this are cost and the reporting procedure (Chin et al, 1995).
However, it also relates to strengthening the strategic accounting budgeting function, which is becoming increasingly important in commercial organisations (Collier and Gregory 1995).
This raises concerns for on-site management about the scope of and accountability for the control they exercise. If accounting operations are removed from the unit, there may be no need for an on-site financial controller, and operational managers may be required to take on some control responsibilities.
This raises concerns regarding managers’ perceived competence levels and the extent to which the controller is considered as both a business advisor and an accounting data processor.
George H. Bodnar and William S. Hopwood (2001) explored the many aspects involved in financial control over computer-based accounting information systems in the budgeting industry. And defined the nature of management decisions, elaborated on the types of decisions that managers make, and discussed numerous management planning and control reports.
Accounting information is used for decision making by a wide range of persons both inside and outside the organisation (Raliman and Halladay, 1998; Renam and Grabsici 1987).
Business organisations, like any other sector, must use Accounting Information Systems to improve the quality of services by planning, controlling, and making decisions by managers.
New technology plays an important role in covering and recording a wide range through the impact of Accounting Information Systems in the budgeting business in planning, controlling, and decision making processes in the case of organisations.
1.2 Statement of the Problem
Existing literature has shown that successfully implementing an accounting information system results in better planning by managers in the company organisation, a more effective internal control system, improved financial report quality, and easier financial transaction procedures.
However, studies have not proved if successful adoption of an accounting information system may improve an organization’s budgeting and performance measurements, resulting in a research gap.
Furthermore, the study demonstrated a scenario in which economy is highly developed. The researcher thus seeks to bridge the gap that has been created in the field of accounting information systems, as well as to determine whether the values of accounting information systems identified in this study are applicable to the Uyo City Polytechnic situation.
1.3 PURPOSE OF THE STUDY
The general goal of this research is to assess how an accounting information system is employed in effective budget preparation in an organisation. And to examine whether management uses the accounting information system to make good budgeting decisions. And some of the aims are:
Determine whether there is a relationship between an organization’s management and accounting information systems.
To understand how environmental variables affect the accounting information system and the organization’s decision-making success.
Determine whether accounting information systems and planning effect managerial success.
To determine whether the level of efficiency derived from using an accounting information system for budget preparation is advantageous.
To determine if management variables influence accounting information system success.
1.4 RESEARCH QUESTIONS.
The following questions were mapped out to be answered throughout this investigation. They were:
Is there a relationship between an organization’s management and accounting information systems?
Is it possible to determine how environmental variables affect the success of the organization’s accounting information system and decision-making?
Does the accounting information system and planning impact management success?
Does the effectiveness of an accounting information system depend on management variables?
1.5 Research Hypothesis
A hypothesis is a preliminary answer to research questions. To attain the aforementioned goal, the research developed the following hypothesis.
Hypothesis One.
H0: An organization’s management and accounting information systems are unrelated.
H1: An organization’s management and accounting information systems are inextricably linked.
Hypothesis Two
H0: It is impossible to determine how environmental variables affect the organization’s accounting information system and decision-making success.
H1: It is possible to determine how environmental variables affect the success of an organization’s accounting information system and decision-making processes.
1.6 Significance of the Study
This study will be extremely beneficial to users of accounting information systems (AIS) such as financial analysts, financial accountants, management accountants, financial managers, and managing directors within an organisation.
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