Accounting Information System: Individual Paper

“Impact of Accounting Information System on Organizational Performance”

By :
Fildza Nabilla (1510534027)

Accounting Department
Faculty of Economic
Andalas University

2017
Introduction
In the era advance of technology, there is a change in the production processes and
fierce market competition. The development in information technology (IT) increased the
fallacy of cosumers and immoral activities of business. Accounting information system
(AIS) has an important thing in economic and business related to management business.
AIS as a tool that uses the IT component to help in controlling the economic activity of
an organization and also the component for recording financial data from raw data then
trannsform to data that useful financial information for decsion makers. Therefore, there
are some argumentations about the importance of AIS for an organization and need to
maintain it in organization, whether it is profit oriented or non-profit oriented. But, there
is an argument in accounting literature that AIS leads to the strategic success of an
organization and the impact of AIS on the organization for different designs and
strategies.

Organizational Effectiveness
According to Oguntimehin (2001), organizational effectiveness is the ability to
produce desire results. According to Daft (1983), the effectiveness of organizational
defined with the degree to which an organization realized its goals. The organizations
want to reach the goals, and it goals must be achieved in the face of limited resources,
and disagreement among interest groups. According to Chang (2001), to increase the
organization effectiveness in a global competitive environment, the organization can use
accounting information role. This statement reinforced by massive accounting fraud in
developed countries and can changing business environment rapidly and some researches
report that value relevance of accounting information has declined but some researches
claim that accounting information has not lost its value relevance. The organizational
effectiveness that every organization has the goals that they want to achieve and to
achieve the goals, the organization will face some problems such as disagreement, fraud,
etc but the organization has the ability and should realized its goals effectively.

Functions of Accounting Information System

According to Wilkinson (2000), the main function of AIS is to assign quantitative
value of the past, present and future economics events. AIS produces the financial
statements (income statements, balance sheets and cash flow statement) through
computerized accounting system. This system will process the data and transform into
accounting information or output stages that will be used for internal and external users.
There are several key functions for all stages of effective AIS such as collection data,
maintenance data, management data, data control and information generation
In the era advance of techology, the organization mainly use digital and online in their
activities such as for financial statements. The data will porcess and transform through
accounting system and the output will be used for internal and external users.

Relationship Between Accounting Information System and Organizational

Effectiveness
According to Ponemon and Nagida (1990), the main reason for accounting
information is to facilitate decision making. The financial report must elevant, complete
and reliable to be effective and accounting information should give the predict future
actions for decision maker. According to Hunton (2002), there is a strong relationship
between AIS and organizational effectiveness, which means access to accounting
information will lead to organizational effectiveness. According to Huber (1990), agrees
that AIS aids decision making for management of orgnizations. AIS has the benefits fo
organization that are 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.

AIS and Performance Managment

According to H. Sajady, M. Dastgir and H. Hashem Nejad (2008), AIS are considered
as important organizational mechanisms that are critical for effectiveness of decision
management and control in organizations. Nowadays, AIS more used in digital and
online information. AIS as one of the most critical systems in the organization has also
changed its way of capturing, processing, storing and distributing information (Huang,
Lee and Wang 1999, Clikeman 1999). Performance managmenet (PM) is the activities to
ensure the organization’s goals are consistently being met in an effective and efficient
manner.
AIS affect behavior and performance management and have affects to organizations.
There are so many activities in organization that require good quality and reliable
information. The quality information in organization is important because its one of
competitive advantages and in AIS the quality of the information provided is imperative
to the success of the systems. Organization uses AIS to provide management decisions
and it includes financial analysis that taken from AIS. Using business technology, this
system can process copious amounts of documents electronically for owners and
managers. After get the financial report, the management will compares the information
to current and previous perfomance of organization and also other benchmarks to
measure the extent to which goals and objectives are being achieved and to identify
unexpected results or unusual conditions.

Conclusion
In conclusion, based on the above discussion, the organization need AIS for its
financial reports. This report will be used for decison making process and will be used
for internal and external users. The quality of information in organization is important
because its one of competitive advantages and in AIS the quality of the information
provided is imperative to the success of the systems. The organization should aware for
the problems that will be occur such as data loss, stealing data, fraud and also for change
in technology may impact to AIS. The organization should keep update to that changes in
order toprocess the information. The organization should overcome these problems and
take the solution for every problem to make the organzation keep running well.

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