EVALUATION OF THE EFFECTIVENESS OF ACCOUNTING INFORMATION SYSTEMS

Topics: Internal control, Information systems, Decision theory Pages: 9 (2183 words) Published: October 16, 2014
EVALUATION OF THE EFFECTIVENESS OF ACCOUNTING INFORMATION SYSTEMS

Hossien Sajady Ph.D.
Shahid Chamran University
Ahvaz, I.R of IRAN

Mohsen Dastgir Ph.D.
Shahid Chamran University
Ahvaz, I.R of IRAN

Hossien Hashem Nejad
Post graduate candidate

Abstract- In this study the effectiveness of accounting information systems from finance managers of listed companies at Tehran Stock Exchange is evaluated. The results indicate that implementation of the accounting information systems at the companies under study caused the improvement of managers decision-making process, improving internal controls, improving the quality of the financial reports and facilitated the process of the company's transactions. The results did not show any indication that performance evaluation process had been improved.

Key words: Accounting Information Systems, Quality of Financial Reports, Internal Controls, Decision Making, Performance Evaluation.

INTRODUCTION

In managing an organization and implementing an internal control system the role of accounting information system (AIS) is crucial. An important question in the field of accounting and management decision-making concerns the fit of AIS with organizational requirements for information communication and control, Nicolaou (2000).

Although the information generated from an accounting information system can be effective in decision-making process, but purchase, installation and usage of such system is beneficial when its benefits exceeds its costs. Benefits of accounting information system can be evaluated by its impacts on improvement of decision-making process, quality of accounting information, performance evaluation, internal controls and facilitating company's transactions. Regarding the above five characteristics, the effectiveness of AIS is highly important for all the firms.

An AIS is defined as computer-based system that processes financial information and supports decision tasks in the context of coordination and control of organizational activities, Nicolaou (2000).

LITERATURE REVIEW

Accounting information system is considered as a sub system of management information system (MIS). Regarding accounting as information system perhaps is the latest definition of accounting. For the first time in 1966 the Statement of Basic Accounting Theory, published by the American Institute of Certified Accountants (AICPA), stated that:

"Accounting actually is information system and if we be more precise accounting is the practice of general theories of information in the field of effective economic activities and consists of a major part of the information which is presented in the quantitative for".

In the above definition, accounting is part of general information system of an economic entity. Boochhold (1999) defines accounting information systems as systems that have function of data gathering, processing, categorizing and reporting financial events with the aim of providing relevant information for the purpose of score keeping, attention directing and decision-making.

Accounting information systems are considered important organizational mechanisms that are critical for effectiveness decision management and control in organizations, (Galbraith, 1983; Zimmerman, 1995). Systems will be useful when information provided by them is used effectively in decision-making process by the users. Otley (1980, 325) argues that Accounting System are an important part of the fabric of organizational life and need to be evaluated in their wider managerial, organizational and environmental context. Therefore, the effectiveness of accounting information systems not only depends on the purposes of such systems but also depends on contingency factors of each organization. Accounting information systems are said to be effective when the information provided by them serves widely the requirements of the system users. Effective systems should systematically...
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