University of Luzon

COLLEGE OF ACCOUNTANCY
Dagupan City

Chapter II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter renders the review of materials that materially gauged

the conceptualization of this study which is deemed relevant for this

paper to provide an understanding of the discussions and consideration

of findings. Since this study deals with the SAP Accounting Software

Utilization of Yokohama Dagupan City Branch, literatures were derived

from varying books, journals, newspapers and other related studies and

educational links on the internet available for relating into the topic at

hand.

Conceptual Literature

This section of the study presents related literature pertaining to

articles or books written by authorities giving their opinions, experience

and ideas.

Status of implementation of the automated accounting information

system of Yokohama Dagupan City Branch in terms of the following

sector:
 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

The use of a computerized accounting system can help small and

medium-sized businesses improve their financial reporting. When

compared to other industrialized and emerging countries in Asia, it

appears that small and medium entrepreneurship has difficulties

providing financial reports utilizing a computerized accounting system.

Furthermore, this research is based on a survey of small and medium-

sized businesses to determine the extent to which computerized

accounting systems have been developed and implemented, as well as an

analysis of how much this introduction may impact improvement in

outcome indicators and productivity.

It emphasizes the usage and benefits of accounting software by

accountants in various SMEs. Further, it would be useful to suggest that

SMEs and such other types of organizations adopt customized or

generalized accounting software that will enhance the practice among

accounting professionals. The literature aims to determine the influence

of knowledge and use of accounting software among small and medium

entrepreneurs or in other companies, ICT has been considered as major

aspect of effective and efficient accounting system and which can lead to

increase organizational performance. The source is somehow useful for

the researchers in knowing more how knowledge and use of accounting

software affects a certain entity (Thotolli M, 2020).

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

Convenience

Information system is a set of interrelated subsystems that work

together to collect, process, store, transform, and distribute information

for planning, decisions making and controlling (Pol & Lim, 2013). The

use of computer in information systems can improve the efficiency of

information collection, process, store, transform and distribute.

According to Norther Ireland (2019) using accounting software can

help you save time and money, and offer you valuable insight into your

business. If you choose the package carefully, investing in a

computerized accounting system can be one of the best decisions you

can make for your business.

Accessibility

Accounting software has transformed how financial records are

stored and accessible. It is far faster and more accurate than traditional

ledgers and journals. You can define who has access to what information

using automated accounting software. It also keeps track of who

accessed the data and when. The organization can specify exactly what
 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

they can and cannot see and allow them to make changes to specific

fields while merely seeing others.

According to iNECTA (2018) allowing customers to access their

accounts online, through your accounting software, you will save a huge

amount of time in dealing with account queries and issues while

improving the customer experience at the same time. Allowing suppliers

access to information relevant to their business with the company will

also streamline the process, reduce queries and save time.

Reliability and Data Quality

Most of the major software programs make using the program

simple. The math is accurate and reliable, so a business owner can

accurately determine available funds at any time.

According to infoworld (2019) The power of connectivity in

businesses can be well established with enhanced features provisioning

greater flexibility in businesses to unleash power of accounting. The

complete business software management has capabilities to enable

management of various aspects of business. This encompasses the

inventory, taxation, payroll and advanced accounting. The focus for

business can be associated with growth. Tally has been a preferred

business solution which has been offering capabilities to manage

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

businesses. Capabilities of Tally ERP have enabled businesses to aspire

for accelerated growth. While unique features and capabilities of Tally

ERP have been well commended amongst users, reliability tends to be a

constraint.

Data quality is important in today's business processes since it

refers to the set of data that is fit for use by data consumers, or those

who access, understand, and use data as part of their job. Data quality,

on the other hand, is critical to the performance of Accounting

Information Systems (AIS), which is a computer-based system that

processes financial data and supports internal decision-making

processes.

Ali, Bakar and Omar (2016) investigate the effect of accounting

information system (AIS) success factors on organizational performance.

Four types of AIS success factors namely service quality, information

quality, data quality and system quality have been used in this study as

the determinants performance. Data were collected with a structured

questionnaire survey from 273 respondents in Jordanian banking sector.

The collected data were analyzed with PLSSEM technique. The findings

revealed that service quality, information quality and system quality are

the significant AIS success factors for increasing organizational

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

performance. The study concluded that organizations involved in

banking sectors can increase their performance by adopting and

implementing AIS success factors.

Efficiency

There are many factors that affects the efficiency and effectiveness

of accounting information systems such as qualified human resources,

software and hardware and data bases. Thus, the accounting

information systems combined from these three factors, if any system

has to be effective it should include a combination of well qualified

human resources, the best software, and hardware and databases

(Ramly, 2011).

Hla and Teru (2015) examine the efficiency of accounting

information system on performance measures. The study employed an

exploratory approach solely relying on secondary data. Findings revealed

that the biggest impact Information technology has made on accounting

is the ability of companies to develop and use computerized systems to

track and record financial transactions in facilitating management

decision making, internal controls, and quality of the financial report.

Services
 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

According to Boonmak (2019), AIS features have been developed to

differentiate products and services. Its features can reduce the

differentiation and 14 advantages of competitors and can focus on

product s and services in selected market niches. AIS can help to develop

unique new markets or market niches. It can manage regional and global

business expansion. It can diversify and be integrated into other

products and services. Finally, AIS can create virtual organizations of

business partners. Thus, it can be summarized that the more successful

the business strategies, the more AIS is provided to the organization

Data Security

Accounting information systems have the task of preparing and

processing information, as well as the security of the system to be

established. Information security of accounting systems includes

processes and procedures to protect accounting systems against internal

and external threats.

Vadiee,M et al. (2010) averred that security in accounting

information systems will cause to promote qualitative features of

accounting information and the security of financial reports when leads

to desirable results that be based on accurate and reliable information.

One of the requirements of a vibrant and healthy community for financial

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

and economic activities, is the existence of a safe and secure

environment. Accountants must have the knowledge and experience to

create such an environment. Also, for providing updated and useful

informing for users, auditors should ensure the security, accuracy and

reliability of financial information.

Accounting Records

Bragg (2022) stated that a multitude of reports can be generated by

an accounting information system. Among the more common reports

are the accounts receivable aging report, accounts payable aging

report, fixed asset depreciation schedule, current inventory report,

fixed asset depreciation report, trial balance, and financial

statements. However, the system does not contain any supporting

information, such as the notes regarding the formulation of journal

entries; this information is maintained manually.

Research Literature

The study of existing data and trends, incidences, or phenomena is

known as research literature. Its aim is to expose vulnerabilities,

developments, and ideas for the future benefit.

Convenience
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COLLEGE OF ACCOUNTANCY
Dagupan City

Accounting software has evolved over time to serve a number of

purposes. These systems have since supplanted spreadsheets as the

preferred method of storing financial data. Every sort of financial

statement has been simulated, and visual reports highlighting financial

trends have been provided. They also interact with common tools,

allowing data to be transferred seamlessly from one platform to another.

It has evolved to become one of the most useful platforms in the

COVID-19 era. Because many employees work from home, the platform

has evolved into their digital workplace, where they conduct the majority

of their principal responsibilities. If they use an HR software suite that

incorporates accounting features, they can also manage payroll, cash

flow, and other tasks in one location (Epstein D, 2022).

Accessibility

According to Fairbanks (2022) most of the best accounting systems

are cloud-based, allowing you to view your account from any computer

with internet access at any time. This accessibility allows you to run your

business from anywhere, whether at home or on vacation. Many

companies also provide mobile apps to help you keep track of important

data and do fundamental duties while on the go, which is especially

useful for teams working from home or in the field. Some packages
 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

include separate apps for employees that include basic functionality like

time tracking and expenditure receipt submission. Mobile app

capabilities vary, so if you need mobile access, be sure the accounting

system's app provides the features you require. You'll also want to make

sure it's compatible with your preferred platform; some are only

compatible with iOS, while others can be used with smartwatches as well

as phones and tablets.

Reliability and Data Quality

An integrated conceptual framework was constructed to guide this

investigation based on the literature review and contingency theory. The

study's conceptual framework is made up of three major constructs: the

SysTrust framework (principles and criteria) was used to conceptualize

and measure the reliability of AIS, the financial and non-financial

indicators were used to measure business performance, and the IASB's

framework fundamental qualitative characteristics were used to

conceptualize and measure the quality of financial reporting. (Ahmad

Demour, 2018)

In accordance to Brein (2015) organizations are confronting a

growing number of issues in managing their enterprise systems as new

technologies add both complications and possibilities to the way they do

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

business. The need of having excellent data to deliver information to

make those key enterprise-wide choices underpins this ever-increasing

instability. Numerous studies imply that many businesses aren't paying

enough attention to their data, and that one of the main reasons for this

is a failure to assess the data's quality and usefulness, as well as the

expenses associated with having bad data. This research presents an

integrated framework that businesses may use to quantify data

problems, estimate viable solutions, and track ongoing costs and benefits

as part of their financial and management control processes.

Efficiency

According to Iproject (2022), the digitalization of accounting is the

need of the hour in today's world of digitalization. Many benefits and

positive characteristics such as speed and accuracy of operation,

simplicity and dependability of operation, and so on have changed the

fate of the accounting world globally since the introduction of

computerized accounting systems with the latest accounting software.

Accounting software is a type of computer program that allows you to

keep track of your company's finances. Accounting software allows

businesses to more efficiently and effectively use the resources in their

accounting departments, as well as avoid costly bookkeeping and

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

accounting errors. In the field of accounting and finance, the use of

computer software to facilitate quick reporting and easy processing and

storage of financial information has replaced the use of manual financial

statement reporting. As a result of accounting software's convenience,

financial statement preparation and access, as well as the use of

accounting procedures, has become easier.

Services

In comparison to a product-based business, service-based

businesses have specific accounting requirements. In terms of service

line work, the software should be thorough, but less so in areas like

inventory. There are a variety of accounting software platforms available

for service-based businesses. Professional service providers, such as

accountants, engineers, architects, lawyers, and management

consultants, have their own set of system requirements. White collar

professional service firms, for example, have a time-and-billing

requirement. Their time is being charged rather than a product. The

software must be set up to track time so that the client can be billed

appropriately (Micahel Owen, 2017).

Data Security
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COLLEGE OF ACCOUNTANCY
Dagupan City

Shanker (2017) attest that accounting systems hold sensitive data

that must be kept safe and secure at all times. Unauthorized access can

have disastrous effects, ranging from identity theft issues to the loss of

critical data. When accounting data is modified or deleted, whether on

purpose or by accident, it causes mayhem in the accounting department,

casting doubt on the data's accuracy and dependability. A small

business should protect its computer systems from theft and loss. Keep

systems and servers out of the elements and in a secure location.

Accounting equipment is usually maintained in offices with secured

doors to prevent illegal access. Ensure that the cables connecting

accounting equipment are secure and not tripped over or destroyed by

mice.

Accounting Records

The history of accounting records is thousands of years old and can be

traced to ancient civilizations. Accounting records is a system of

bookkeeping so named because every entry to an account requires a

corresponding and opposite entry to a different account. A good

accounting record keeping enables the business association to arrange

appropriately and furthermore check for misappropriation of asset of the

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

firm. Keeping appropriate books of records is a fundamental to the

development and survival of business (Ademola, 2012).

Good record management helps in controlling the creation and growth of

records to reduce operating costs, assimilation of new records

management technologies and in ensuring regulatory compliance also

good accounting record enables the business organization to plan

properly and also check for misappropriations of recourses of the

organization. Keeping proper book of accounts is essential to the growth

and survival of the business. In order to ensure efficiency, effectiveness

and continuing survival of business organization, management must

seek for reliable, relevant, accurate and timely financial information for

planning and decision making (Edun, 2013).

Synthesis

The researchers found out that studies and literatures stated from

above has a relation and is significant in the conduct of this present

research study. Each literature and study contributed on expanding the

current knowledge of the researchers. Upon evaluating the content of

the foregoing related literatures, the sources can be use in properly

understanding the ideas essential to the understanding of SAP

 University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City

accounting software utilization. In comparison, the literatures cited are

more focused and is limited on foreign-based small and medium sized

entities while this present study focused on local based entity

particularly the Yokohama Dagupan City Branch. The literatures and

studies are similar to this study for they have tackled and provided

valuable information based from their findings regarding the status of

utilization of automated accounting information system in terms of

convenience, accessibility, reliability and data quality, efficiency,

services, data security, and accounting records. Moreover, the literature

and studies obtained is relevant and will guide in recommending

appropriate measures in improving the utilization of accounting software

relative to the enhancement of the over-all operation and business

performance of Yokohama Dagupan City Branch. The results from the

source gathered helped in gaining deeper insights for this research

study.
University of Luzon
COLLEGE OF ACCOUNTANCY
Dagupan City