CHAPTER ONE
BACKGROUND TO THE STUDY
1.1 Introduction
The emerging global economic scenario characterized by advancement in information technology, rapid changes in production processes, increased sophistry of the consumer, fierce market competition and unethical skimming activities of producers in the drive to survive the unpredictable and complex business dynamics, has brought to the fore the crucial role of accounting information in economic and business discourse especially in relation to administrative effectiveness.
As we all know, accounting speaks the language of business as it records all transactions of an individual firm or other bodies that can be expressed in monetary terms. Predicated on the going concept, accounting is the art of collecting, classifying, summarizing and communicating data of financial nature required to make economic decisions.
Over several numbers of years the performance of accounting has increased right from the single entry system to double entry system. The main aim of the accounting system is to provide financial data like purchase, sales, expenses and income of the organization but in today’s modern world accounts maintenance is helpful in many ways. Previously accounts were maintained to know profit or loss of the organization but nowadays it is also useful for increasing profitability of the organization by way of accounting information system. Businesses include transactions which produce information for better analysis of business performance and accounting information system is a delivery system for accounting.
Accounting Information Systems (AIS) are tools which, when incorporated into the field of Information and Technology systems (IT), were designed to help in the management and control of topics related to firms’ economic-financial area. But the stunning advance in technology has opened up the possibility of generating and using accounting information from a strategic viewpoint.
Accounting information systems (AIS) as a part of company’s information systems (IS) are seen as facilitating decision making within organizations and should be tailored to an organization’s environment, requirements of task, and structure. An accounting information system is a structure that a business uses to collect, store, manage, process, retrieve and report its financial data so that it can be used by accountants, consultants, business analysts, managers, chief financial officers(CFOs), auditors and regulatory and tax agencies.
In addition, specially trained accountants work with AIS to ensure the highest level of accuracy in a company’s financial transactions and recordkeeping and to make financial data easily available to those who legitimately need access to it, all while keeping data intact and secure, this indirectly boost the productivity and performance of the organisation.
Furthermore, Management of various organizations in Nigeria relies heavily on information generated from the AIS employed by the company. Moreover, quality reports are keys to arrive at an ideal investment, and a traditional way of recording, summarizing and reporting company financial reports led to less optimal decisions. Investment in good and reliable accounting systems has become a major concern for all managers as it leads to better management and analysis of firm’s performance.
Accounting information system is an ingredient in most, if not all, financial managerial decisions for various organisation. In developed economies, these decisions are worth billions of dollars each year. In some cases, the decisions are lacking in quality. Consequently, if researches can improve decision making through improved information, society will benefit.
Finally, the main purpose of accounting information system in any organisation is to give information about profit or loss and financial position of the business to its owner. This information is also useful to investors, auditors, suppliers, buyers, bankers and other financial institutions etc. But more importance of accounting information is concern to the person within the organization. Since every decision involves a number of alternatives. Accounting information must help the user to decide his course of action.
1.2 Statement of the Problem
Accounting information is considered an essential resource for all organizations, such as the essence of all competitive businesses. Accounting information systems’ concept is very well established and many commercial packages and suitable systems have been developed. There are some problems that rose from the fusion of accounting and information technology (IT) fields in accountants’ point of view; one of these problems is that computerized systems are at constant risk of hackers, power failures, viruses and loss of information. Another issue is the relatively high cost of Accounting Information Expert systems, besides, these systems must be up to date, and usually, the firm’s staff needs some sort of special training courses for effective use of the system. There are also some security issues that are mainly summarized with computer fraud risk.
However, the introduction of accounting information system into the financial system of the Akwa Ibom State Transport Company (AKTC) is not exception to some of the above mentioned problems as most staff are still finding it difficult to cope with the new system. Inadequate staff training and proper sensitization had rendered the system ineffective in curbing some fraudulent practices, Lack of training had also make the system less effective in customer services delivery as customers (passengers) do complain of delay in getting their details display after payment for ticket, these and other related problems motivated the study.
1.3 Objectives of the Study
The main objective of this study is to assess the types and functions of accounting information system in Akwa Ibom State Transport System.
Other specific objectives aimed to be achieved are:
- To identify the type of accounting information system being maintained at AKTC.
- To evaluate the actual functions of AIS in AKTC.
- To examine how Accounting information system could assist in decision-making at AKTC.
- To identify the challenges confronting the implementation of the accounting information system in AKTC.
- To suggest measures that will enhance efficient use of AIS at AKTC.
1.4 Research Question
The research question provides a framework and guidelines through which substantial knowledge of the research can be understood.
The research question asked includes:
What are the types and functions of accounting information system is at AKTC?
What are the types of AIS which are being maintained at AKTC?
How does accounting information system really function at AKTC?
What are the challenges affecting implementation of the accounting information system in AKTC?
What measures could be adopted to enhance the implementation of AIS in AKTC.
1.5 Statement of Hypotheses
The hypotheses are stated in the null form for testing:
Hypothesis One
Ho: There are no significant relationship between accounting information systems and efficient and effective collection and storage of data in AKTC.
Hypothesis Two
Ho: There is no positive relationship between accounting information system and better decision-making by Managers in AKTC.
1.6 Significance of the Study
An accounting Information system is an orderly, efficient scheme for providing accurate financial information and controls, regulatory requirements and internal administration policies are the key considerations in the design of an effective accounting information system. Thus accounting information systems show the books, records, voucher, and files and related supporting data resulting from the application of the accounting process. It involves the design of documents and transactions flow through an organization.
The study is of key importance to the transportation companies as well as other firms in the same sector in terms of determining the benefits accruing due to the integration of accounting information systems in their operations. The study would enable AKTC in gauging the model in terms of enhancing organizational effectiveness. The study could be useful to other researchers interested in the problem under investigation as the study has laid a platform on which further studies related to the subject can be undertaken.
