EFFECTIVENESS OF ACCOUNTING INFORMATION SYSTEM (AIS) TO

THE MANAGEMENT DECISION MAKING

DON HONORIO VENTURA STATE UNIVERSITY

College of Business Studies

Effectiveness of Accounting Information System (AIS) to the

Management Decision Making in San Fernando, Pampanga

A Research Proposal submitted to the

College of Business Studies
Don Honorio Ventura State University

In Partial Fulfillement of the requirements for

Accounting 103

By
Baking, Kyla L.
Deinla, Enna Q.
Espina, Rachie L.
Quijano, Sharmaine Paula B.
Yumul, Cristy Martin C.

To
GIENAHLYN M. MALLARI
Research Adviser

JULY 2022

TITLEPAGE……………………………………………………………….1

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EFFECTIVENESS OF ACCOUNTING INFORMATION SYSTEM (AIS) TO
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TABLE OF CONTENTS…………………………………………………...2

CHAPTER I: INTRODUCTION…………………………………………...3
BACKGROUND OF THE STUDY
RELATED LITERATURE AND STUDIES
STATEMENT OF THE PROBLEM
HYPOTHESIS OF THE STUDY
SIGNIFICANCE OF THE STUDY
SCOPE OF THE STUDY
CONCEPTUAL FRAMEWORK

CHAPTER II: METHODOLOGY OF THE STUDY…………………

RESEARCH DESIGN
RESPONDENTS AND SAMPLING METHOD
INSTRUMENTATION AND DATA COLLECTION PROCEDURE
ETHICAL CONSIDERATIONS
DATA GATHERING PROCEDURE
STATISTICAL TREATMENT

CHAPTER III: ……………………………....

CHAPTER IV: ………………………………...

REFERENCES………………………………………………………

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CHAPTER I: INTRODUCTION

BACKGROUND OF THE STUDY

Information systems now play a significant role in all fields as a result

of technological, economic, and globalization advancements. Information

systems have developed quickly, with many applications found at all

administrative levels and in operational, technical, and strategic activities.

Accounting information systems have benefited greatly from this by providing

crucial data to all users of accounting information.

Companies constantly try to achieve reasonable profits, a substantial

market share, a positive reputation in society, and a high return on investment

and assets by using the available resources and making the best decisions

possible based on the information they have access to. As a result, the

importance of accounting information systems has increased (AIS).

All businesses gain a lot from accounting information systems, which

facilitate, organize, and assist them achieve their goals with a high degree of

control. Because there are many factors that affect the success of these

systems, it is crucial to understand the workflow process in order to ensure

that the system is successful by applying multiple methods, techniques, and

principles that are characterized as comprehensive, precise, right, and quality.

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AIS for any company cannot exist by itself; rather, the most crucial concerns

are how to build, organize, and maintain it.

According to Hertati (2016), information can be deemed to be relevant.

if the data inside can affect users' choices by assisting users in assessing past

or present occurrences, making predictions about the future, and verifying or

correcting the outcomes of their assessments made in the past. According to

Laudon and Laudon (2008: 13), good knowledge is crucial while making

decisions. If decision-making is based on accurate information, it will result in

improved resource allocation and quicker response times, which will benefit

consumers and lower costs.

Companies that invest more in their information systems are more

likely to achieve six strategic business objectives, according to Laudon and

Laudon (2008: 9), including operational excellence, new products, services,

and business models, improved relationships with customers and suppliers,

competitive advantage, and business continuity. Because decision-makers

need information on both financial and non-financial factors, such as product

quality, customer happiness, and service response times, management

accounting information systems offer managers and staff with both financial

and non-financial information (Atkinson et al. , 2009: 3).

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Since the ability to make decisions depends on having accurate

information available at the right time, accounting information systems (AIS)

also aims to solve common problems related to company operations. As AIS is

responsible for providing financial and quantitative information for all

departments and sections of the business, this research tries to find the most

efficient AIS solutions.(financial and non-financial), which is then

categorized, evaluated, processed, and transformed into information that could

be beneficial for various parties inside and outside the firm, to aid them in

decision-making.

According to Faride Noori et al. (2014), poor information quality may

possibly have negative effects on the decision-making process. For example, if

the system gives managers inaccurate information about the inventory

database, that may lead to them making mistakes that have a negative impact

on the company's profitability and performance. The issue of the quality of

accounting information has gained significant attention in the accounting

literature.Through this study, we seek to understand the effectiveness of

accounting information systems and how accounting information systems

affect various factors affecting managers' decision-making in San Fernando,

Pampanga. There have been numerous studies that have addressed various

aspects of it, and many of those studies have attempted to identify the most

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crucial characteristics that must be provided in the accounting information

system to be of high quality, and then work to achieve them.

RELATED LITERATURE AND STUDIES

Nowadays, a significant number of companies utilize information

technology to provide information and services to their clients. Systems serve

individuals in their day-to-day activities by granting access to a wide range of

information that interests them. Individuals can also access significant information

in systems (Del Rosario, Del Rosario, Nieva, Tan, & Tangkeko, 2016). The

progressing transformation in information technology has had a significant impact

on the accounting information system (AIS).

Accounting information systems stand at the intersection of two disciplines

to be specific accounting and information systems. Hence, the study of AIS is

often seen as the study of computerized accounting system (Weygandt, Kieso, &

Kimmel, 2012). They are conceptualized as a set of components that collect

accounting information, store it for future uses, and prepare it for end-users users.

Moreover, AIS is considered as the computer-based frameworks that processes

financial data. The systems support decision tasks within the setting of the

organization and control budgetary activities (Diavastis et al., 2016).

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The essential objective of an AIS is to gather and record information

concerning events that have an economic effect on organizations. Moreover, it

involves the maintenance, processing, and communication of data to internal and

external partners. It is a pre-eminently user-oriented framework. It is additionally a

collection of information and processing methods that produce required data for its

users (Salehi, Rostami, & Mogadam, 2010). Subsequently, the utilization of AIS

empowers ABC company to record a wide range of financial transactions to help

in decision-making and planning preparation within the company.

AIS is important in decision-making since the quality of the information

given by financial reports will affect the decision-making of the company. Partners

of the company require high-quality information for the success of the company.

The four main qualitative features of high-quality accounting information are

comprehensibility, relevance, reliability, and compatibility (Spătărelu & Petec,

2015). AIS helps the partners in the decision-making process with internal

controls, enhances the quality of the financial reports, and facilitates the budgetary

transactions of the company (Mndzebele, 2013). Hence, AIS ought to create

reliable and relevant output for the company. Moreover, AIS adoption is

prescribed since it can improve the firm-level performance of a business (Tang,

2015). Increased competition within the market created the need for companies to

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invest in several accounting information systems. This is heavily attributed to

globalization and technology.

However, users ought to not intensely depend on AIS. AIS can still be

insufficient and has various flaws that the company must be able to overcome.

(Akkermans, Bogerd, Yücesan, & Van Wassenhove, 2003). The nature of the

company would influence the usage of the computerized accounting information

system (Wang & Huynh, 2013). This shows that the implementation of AIS isn't

an end in itself but rather, possible important support to achieve commercial

targets.

Information and related systems are closely connected to the decision-

making process of a company. It is important to know what data managers need in

decision-making and how managers develop systems that allow them to get

relevant information. Increasing complexity in companies causes managers

increasingly depend on different internal and external sources of data (Dimovski,

Penger, & Škerlavaj, 2007, p. 64). Thus, company information systems,

particularly accounting information systems, are gaining importance. In any case,

we should not disregard the information systems dealing with the collection and

administration of data coming from a company’s environment.

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Accounting systems shape the main part of an information system in a

company since it gives the only worthwhile data. This enables external users to

learn about the success of a company’s business, whereas internal information

gives a good data basis for administrative decision-making. The better the

knowledge of users of accounting information about their plan, their weaknesses

and limitations, and the appropriateness of decision-making, the better their

efficiency in administrative decision-making (Hočevar, Zaman, & Petrovič, 2008,

p. 37–38).

The objective of accounting information is to provide an understanding of a

financial position of a company so that it is useful to users of data in their

decision-making. For this reason, the data must be comprehensible, essential,

reliable, and comparable. It must be prepared in such a way that its users will be

able to read all the data they need when making decisions. It should also enable

them to create information-based decisions on the future (Odar et al., 2011, p. 45).

The literature often reveals that accounting information from financial

statements is intended for external users of accounting information. However, such

a claim is incorrect because the internal user informing process is as vital. For

internal users of accounting information, financial statements give fundamental

information on company performance (Bergant, 2013, p. 77). It should also be

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known, however, that the substance of the accounting process isn't decision-

making but the provision of such data so that decision-making within the company

is facilitated and successful. Management must understand that it is responsible for

making decisions. At the same time, accounting must be viewed as a professional

service that assists in the management function (Hoevar, 2007, p. 230).

Information is a kind of fuel that drives a company, whereas the main

reason for a manager is to transform data into action through decision-making

processes. When management changes the data into action, the success of the

campaign depends on the completeness, relevance, and reliability of the data;

further, the success of a company is frequently dependent on the availability of

data to decision-makers in a company (Dimovski, Penger, and Škerlavaj, 2007, p.

66-67).

Walker, Fleischman, and Johnson (2012, p. 2) claim that management

accountants in a company ought to play the role of a partner in a company, as they

give value-added services through work within the company and hence should also

effectively take an interest within the company’s decision-making. Of course, this

implies that a company’s management accounting must give a quality base for

decision-making, for which there must be a certain quality control framework.

Panchenko (2018) revealed that management accounting is a necessary portion of

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management since it contributes to the enterprise's development and the approval

of its competitive market position.

The creation of accounting information for business decision-making

within an enterprise requires in-depth analytical processing of information and

includes huge costs, which makes it more difficult for business visionaries to

choose the creation of essential records. The quality of decisions stands for the

capability of managers to make decisions, which comply with the strategic

business objectives. In this regard, the fundamental factor deciding the quality of

the decisions is the mindshare paid to the strategic efficiency indices while

assessing the accounting information (Kuznetsova, 2017). It happens that, in

companies, accounting is frequently organized only to the fullest extent and is

limited to the treatment of past information to the extent that it allows companies

to report to external users of accounting information (Mayr, 2006a, p. 9).

Each business decision ought to be based on quality decision-making. If a

decision-maker in a company has important data, it must be a prerequisite for

making great business decisions (Mayr, 2006b, p. 37). Relevant data for decision-

making purposes in an undertaking can only be given by a company with

legitimately organized accounting, which depends on a company’s data needs.

Information and data of financial and cost-accounting are thus not satisfactory

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since they bargain with past events, are based on actual business events, and are

outlined by the prescribed accounting system. To make managerial information or

data for business decision-making within a company, data on financial and cost

accounting may not be adequate; hence, other nonfinancial data is required (Mayr,

2006b, p. 39–40).

STATEMENT OF THE PROBLEM

This study aims to determine the effectiveness of accounting

information system in decision-making and how accounting information

system leads to better decisions by managers in management.

It specifically seeks to answer the following:

1. How may the profile of the respondents be described in terms of:

1.1 Years of experience in using accounting information system?

1.2 Age

2. How may the importance of Accounting Information System

(AIS) be described in terms of:

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2.1 People

2.2 Softwares

2.3 Data

2.4 Instructions and Procedures

2.5 Information Technology Infrastructure

2.6 Internal Controls

3. How may the management decision-making using accounting

information system be described by the managers in terms of:

3.1 Relevance

3.2 Faithful Representation

4. Does the effectiveness of accounting information system have a

significant effect on management decision making?

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CONCEPTUAL FRAMEWORK

INDEPENDENT VARIABLES DEPENDENT VARIABLES

ACCOUNTING DECISION MAKING
INFORMATION
SYSTEM

 Professionals  Relevance

 Softwares
 Faithful
 Data Representation

 Instructions
and
Procedures

 Information
Technology
Infrastructure

Internal Controls

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The conceptual framework consists of two frames. The first

frame shows that the Accounting Information System are the independent

variables. The second frame shows that the Decision Making are the

dependent variables. This study will seek the effectiveness of accounting

information system to the management decision-making.

HYPOTHESIS OF THE STUDY

HO1: There is no significant effect between the effectiveness of

Accounting Information System and the Management Decision-Making.

SCOPE OF THE STUDY

The study is descriptive and focused on the effectiveness of accounting

information system to the management decision making in San Fernando,

Pampanga. The primary subject of this research study will consist eighty (80)

managers who are using accounting information system in San Fernando,

Pampanga.

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SIGNIFICANCE OF THE STUDY

The accounting information system consist of different elements

hence, this element helps the management and managers in making a good

decision. The findings of this study can be useful in making a good decision.

This study will benefit the following:

Accounting and Finance Department. This will also benefit the Accounting

and Finance Department, which is responsible for optimizing day-to-day

operations and identifying the types of projects that could create future growth

prospects. The information they will obtain from this research study might be

helpful for them in making a good decision.

Managers. Managers may also benefit from this study because they are the

one who creates budgets, understand public perception, track efficiency,

analyze product performance, and develop short- and long-term strategies. In

short, they cover the overall impact of decision-making.

Future Researchers. This research study will serve as a reference for their

thesis. Having a reference as their guide will be easier for them to conduct

their study.

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Definition of terms

In order to provide a general grasp for better comprehension, the

terms and definitions are described. The following terms are thereby

conceptually and operationally defined:

AIS- Accounting Information System

Accounting Information System – Accounting Information System is a

combination of technology and accounting principles that helps in the

collection of data, proper storage of data, processing of data and to create a

readable output of the data which helps in the preparation of financial

statements (Sourav Sinha).

Softwares – The software component of an AIS is the computer programs

used to store, retrieve, process, and analyze the company's financial data

(Amy, F. 2022)

Data- The data contained in an AIS is all of the financial information

pertinent to the organization's business practices. The data can be used to

prepare accounting statements and financial reports, including accounts

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receivable aging, depreciation or amortization schedules, a trial balance,

and a profit and loss statement (Amy, F. 2022).

Relevance- is the concept that the information generated by an accounting

system should impact the decision-making of someone perusing the

information. The concept can involve the content of the information and/or

its timeliness, both of which can impact decision making

(Accountingtools.com 2022).

Faithful Representation- Faithful representation is the concept that

financial statements be produced that accurately reflect the condition of a

business (Accountingtools.com 2022).

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CHAPTER II: METHODOLOGY OF THE STUDY

In this chapter, research design, respondents and sampling method,

instrumentation and data collection procedure, ethical considerations, data

gathering procedure, and statistical treatment were presented and discussed.

RESEARCH DESIGN

Quantitative research was used in this study. Quantitative research is a

technique for measuring, analyzing, and reporting on variables using a numerical

system. Understanding, analyzing, describing, and predicting a product or service

is the primary objective. This study uses a descriptive research method. There

are several types of descriptive research, but researchers use the Descriptive

Survey Research Design, which generates data through a questionnaire (survey

questionnaire).

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RESPONDENTS AND SAMPLING METHOD

The researchers use convenience sampling. According to (research-

methodology.net), Convenience sampling (also known as availability sampling) is

a specific type of non-probability sampling method that relies on data collection

from population members who are conveniently available to participate in the

study. The sample from the population will be eighty (80) managers who are

using accounting information system in San Fernando, Pampanga.

INSTRUMENTATION AND DATA COLLECTION PROCEDURE

The main instrument of data collection is a questionnaire. The researchers

used adapted questionnaires from 3 different studies related to the present study to

gather information from the respondents. The researchers identified the

questionnaire for the elements of accounting information system were based from

Joyce, P. (2022) and for the factors affective decision making were based from

Akanbi, T. A. (2017) and Akinrinola, O. (2019).

It contains three parts: Demographic Profile, Importance of

Elements of Accounting Information System, and Factors affecting

Decision-Making. These questions were determined by rating each scale

from 1-to 4, one is the lowest and four is the highest. The set of questions

will determine the importance of the accounting information system to the

management decision-making.

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Data collection will be implemented via online platform. The

respondents who opted to participate via online data collection provide a

link to the questionnaire via Google form.

ETHICAL CONSIDERATIONS

To ensure ethical consideration, the researchers assured the

respondents that the information given was all treated with much

confidentiality. From the start of this study, the researcher made sure that all

necessary permission was sought from the concerned individuals.

Furthermore, the researcher assured the respondents that all data

coming from them will be used for the sole purpose of this study.

DATA GATHERING PROCEDURE

Data gathering will be carried out online. Respondents who plan to

participate online were given a link to the survey questionnaire via Google

form. The researchers prepared adapted questions which will be readily

conveyed online through Google form. Before the conduct of the survey, the

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researchers thoroughly explained the purpose of this study to the respondents.

The respondents were also informed that their answers will be strictly

confidential.

After the respondents have answered the survey questionnaire, the

researchers will collect and to interpret the gathered data.

STATISTICAL TREATMENT

To interpret the gathered data effectively, the researchers will use the

following statistical treatment.

1. To determine the profile of the respondents, the researchers use

Frequency Distribution and the Percentage.

2. To determine the average answers of the respondents, the researchers

use Weighted Mean.

Methods of Scoring:
The Likert Scale of each Statement of Agreement

Weighted Mean Range Scale Statements of Agreement Interpretation

1.00 – 1.49 1 Strongly Disagree Ineffective

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1.50 – 2.49 2 Disagree Less Effective

2.50 – 3.49 3 Agree Effective

3.50 – 4.49 4 Strongly Agree Very Effective

Part I. Demographic Profile

Name (Optional): _____________________

Years of experience in using Accounting Information System:

_0-10 years _ over 20 years

_11-20 years

Age: __

II. Kindly put a check (✔) on your best answer.

1 – Strongly Disagree
2 – Disagree
3 – Agree
4 – Strongly Agree

Part II

Accounting Information System (AIS) People

3 2 1
4 3 2 1
I am playing a big role in the company 4

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I am helping different departments

within the company to work together
I am responsible for getting the
information outside the organization
when necessary
I am responsible for managing the data
in the company
I am responsible for taking good care of
the functions of the accounting
information system in the company

Accounting Information System (AIS) Software

4 3 2 1
4 3 2 1
I can easily finish my work with the
help of accounting software
I prefer using computer programs when
recording transactions and data than a
paper-based system
I can easily access the data with the help
of accounting software

I can easily manage to make decisions

with the help of high-qualisoftwar
I am using a software to lessen the
difficulty in recording transactions and
data

Accounting Information System (AIS) Data

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4 3 2 1
4 3 2 1
I can make a decision with the
accounting data recorded in the database
I am given accurate information with
the help of the data recorded
I can easily identify the outcome of the
decision-making process with the help
of the collected data
I am using the recorded data of the
company in preparing accounting
statements and reports
I ensure that the data are complete,
relevant, and correct to be useful

Accounting Information System (AIS) Instructions and

Procedures

4 3 2 1
4 3 2 1
I always ensure to follow the
instructions and procedures to be
effective in the company
I always keep in mind the instruction
and procedures to make my job easy
I agree that following simple
insinstructionsows that you are
responsible
I always ensure to follow the
instructions to avoid mistakes

Accounting Information System (AIS) Information

Technology Infrastructure

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4 3 2 1
4 3 2 1
I can easily finish my work with the help
of an internet connection
I prefer printing instead of writing
I enjoy using high storage capability
computer
I ensure to plan for the disposal of
broken and outdated hardware to destroy
sensitive data
I ensure that my computer has
accounting software

4 3 2 1
4 3 2 1
I always ensure to protect the sensitive
data of my firm
I agree that internal controls are very
much important in a firm
I have a virus tracker on my computer to
avoid viruses
I agree that internal controls must be
protected from natural disasters that can
cause data loss
I agree that a firm must have internal
controls to protect against unauthorized
computer access and hackers

Accounting Information System (AIS) Internal Factors

Part III.

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4 3 2 1
4 3 2 1
The quality of AIS is relevant to an
organization performance.
AIS reports relevant financial
information regarding the economic
activities of an organization or unit.
The application of decision making on
matters that relate to an organization is
made easy by its AIS.
AIS is effective in decision making in
organization.

Relevance

Faithful Representation
4 3 2 1
4 3 2 1
Reports from accounting information provide
managers with useful information for taking
the right decisions.

Accounting information system provides

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managers and management with

necessary and appropriate information
facilitating decision making process.

Accounting information system provides

decision-makers with fact about
decisions in term of timeliness and cost
of decisions.

Accounting information reports provide

feedback to ensure reconsideration of the
taken decision to improve their
effectiveness.

Decisions are made by managers based

on information provided by the
accounting information system in the
bank without prejudice to personal
assessment.

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References
Accountingtools.com https://www.accountingtools.com/

Amy fontanelle (2022) “Introduction to Accounting Information Systems

(AIS)”
https://www.investopedia.com/articles/professionaleducation/11/accounting-
information-systems.asp

Akanbi, T. A. (2017). Accounting Information System and Management

Decision Making: A Case Study of Manufacturing Company in
Nigeria. European Journal of Accounting, Auditing and Finance
Research, 5(11), 66-74.

Akinrinola, O. O., Enyi, E. P., & Akintoye, I. R. Accounting Information System

as an Aid to Decision Making Process in Deposit Money Banks in Nigeria.

Akkermans, H. A., Bogerd, P., Yücesan, E., & Van Wassenhove, L. N. (2003).
The impact of ERP on supply chain management: Exploratory findings from a
European delphi study. European Journal of Operational Research, 146(2),
284-301.

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Bergant, Ž. (2013). Namen računovodskih izkazov = the purpose of financial

statements. V B. Mayr (ur.). Poslovodno računovodstvo, revija o poslovodnem
računovodstvu, 6(2), 73-79. Ljubljana: Visoka šola za računovodstvo.

De Gorostiza, J. A., Nordin, N. A. B., Pang, X. Y., Sabili, M. A., Ng, G., &
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