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ACCOUNTING INFORMATION SYSTEMS for MANAGEMENT DECISIONS: EMPIRICAL RESEARCH in CROATIA(A) Msec. Vlasta Roska, Total Balance LTD

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ACCOUNTING INFORMATION SYSTEMS for MANAGEMENT DECISIONS: EMPIRICAL RESEARCH in CROATIA(A) Msec. Vlasta Roska, Total Balance LTD ACCOUNTING INFORMATION SYSTEMS for MANAGEMENT DECISIONS: EMPIRICAL RESEARCH IN CROATIA(a) MSEc. Vlasta Roska, Total Balance LTD, Croatia MSEc. Jasenka Bubic, University of Split, Croatia ABSTRACT A turbulent business environment, shareholders, government, and tax authorities require managers to make countless quick, quality daily decisions. One tool that assists managers in decision-making is the Accounting Information System (AIS). The AIS market has experienced a significant boom in Croatia, allowing managers to choose the appropriate AIS to meet legal requirements and perpetually growing needs of managers and shareholders. This research aims to confirm that modern managers have changed their opinions from considering AIS merely a legal requirement for compliance with the tax regulations to as a source of valuable information necessary for making timely and quality business decisions. I. INTRODUCTION The present expressly competitive business environment forces fast-growing companies constantly to reexamine their strategies and adapt their business to the risks and conditions of the globalized market. To keep up with increasingly fast changes, business managers need an appropriate source of information to support daily decision- making. One of the tools that assist managers in decision-making is the Accounting Information System (AIS), a system in which accounting information about a company’s activities is identified, measured, recorded, and retained so that it can be communicated in an accounting report (Cunningham, Nikolni and Bazley, 2000). This paper aims to establish which way modern managers use the information provided by the AIS, that is, how much significance they attribute to the AIS. The research aims to confirm the fact that modern managers have changed their opinions from considering the AIS to be merely a legal requirement for complying with the tax regulations to viewing it as a source of valuable information necessary for making timely and quality business decisions. The reminder of the paper is organized as follows. In section 2 provides postulates of AIS use. Sections 3 and 4 discuss legal frameworks of AIS in Croatia and other countries. Section 5 is the literature review. Section 6 presents research goals and hypothesis. Section 7 presents the research method. Section 8 presents the results of the research. The paper finishes with concluding remarks. II. AIS POSTULATES The basic task of both accounting and the AIS in an enterprise is to ensure sufficient information required by statutory regulations for the requirements of the tax administration, various statistics, and executives/managers when making decisions at all levels. The accounting information from the AIS helps managers at all levels in the company to determine and manage all problems in the process of achieving the company’s goals. The information from the AIS helps them in all four stages of problem-solving and decision-making (i.e., recognize the problem, identify alternatives, evaluate the alternatives, and make the decision). Accounting captures and records the financial effects of transactions. The accounting also distributes transaction information to operations personnel to coordinate many of their daily key tasks. In addition to employees, managers, and shareholders, the operation of a company is also significant for the customers, suppliers, tax administration, and other authorities. Each of the above users has specific areas of interest in the operation of an enterprise, and they all use information obtained from the AIS. In short, the AIS produce information for internal and external users. Modern AIS are a combination of the standard AIS and a management information system (MIS), so that both financial and nonfinancial information may be obtained (i.e., all information required by decision-makers). Financial accounting information is for external users and for this reason is under the specific guidelines, rules, and laws known as generally accepted accounting principles, accounting law, or national standards in accounting. These principles must be followed in the external reports of all companies. The AIS comprises three major subsystems: (1) the transaction processing system (TPS), which supports daily business operations with numerous documents and messages for users throughout the organizations; (2) the general ledger/financial reporting system (GL/FRS), which produces the traditional financial statement, such as the income statement, balance sheet, statement of cash flow, tax returns, and other reports required by law; and (3) the management reporting systems (MRS), which provides internal management with special-purpose financial reports and information (e.g., budgets, variance reports, and responsibility reports) needed for decision-making (Hall, 2008). There are normally two ways to build an information system in an enterprise: (1) develop customized systems from scratch using in-house systems development activities, or (2) purchase preprogrammed commercial systems from software vendors. Large enterprises prefer independent AIS development due to the complexity of the programs. Smaller companies and larger firms that have standardized information needs are the primary market for commercial software. Three basic types of commercial software are turnkey systems, backbone systems, and vendor-supported systems (Hall, 2008). Turnkey systems are completely finished and tested systems that are ready for implementation. Typically, they are general-purpose systems or systems customized to support a specific industry. In either case, the end user must have standard business practices that permit the use of “canned” or “off-the-shelf” systems. The better turnkey systems have built-in software options that allow the user to use menu choices to customize input, output, and processing. Enterprise resource planning systems such as Oracle, SAP, J. D Edwards, and PeopleSoft are examples. Backbone systems consist of a basic system structure on which the enterprise may build. The primary processing logic is preprogrammed, and the vendor then designs the user interfaces to suit the client’s unique needs. A backbone system is a compromise between a custom system and a turnkey system. This approach can produce very satisfactory results, but customizing the system is costly. Vendor-supported systems are custom systems that client organizations purchase commercially rather than develop in-house. Under this approach, the software vendor designs, implements, and maintains the system for its client. This is a popular option with health-care and legal services organization that have complex systems requirements that are not of sufficient magnitude to justify retaining an in-house systems development staff. Management and accountants are legally responsible for the design, operation, and control of AIS. Accountants have the primary role in the selection of an AIS. Accountants are primarily involved in three ways: as system users, as system designers, and as system auditors (Hall, 2008). An accountant needs to specify accounting rules and techniques to be used as well as internal control requirements. When selecting the appropriate AIS, ethical and statutory requirements should be taken into account. To be useful for decision-making, and AIS must be relevant, reliable, material, and valid. Due to the significance of the information produced by AIS, each enterprise should pay special attention to protection of the AIS in compliance with the relevant internal control procedures and security measures. III. AIS LEGAL FRAMEWORKS IN CROATIA Over the past 10 years, the Croatian software market has experienced a real boom. According to information from the government Department of Statistics in Croatia (announced on their Web pages on February 29, 2008), there were 120,394 registered trade companies; of those, only 94,993 were active (Central Bureau of Statistics, 2008). A large number of Croatian enterprises of various sizes (small, medium, and large) require specific AIS to enable management to satisfy their needs and make quality decisions. Managers of all these companies need the appropriate AIS to support management activities by providing quantitative information about the company. The AIS can aid in planning, operation, and evaluation of the company’s activities. Several hundred Croatian enterprises are engaged in production and sales of AIS adapted to different activities. The popular AIS in Croatia are SYNESIS, POINT2000, PANTHEON 5.5., CIRUS, Diventa, IPOS, etc. In addition, some companies sell and implement in Croatian enterprises renowned foreign AIS, including SAP, SAGE, and SUN System. SAP has been in Croatia for more than 10 years and has, during that time, assumed an important position on the AIS market. Regardless of the effects of SAP implementation, it is still unavailable to most small- and medium-sized enterprises because of its price. SAP business range includes several modules such as SAP R/3, SAP MAG, SAP ERP, SAP Netweaver, SAP Business All in One, as well as the local version of mySAP. To help its users, SAP launched an online counseling portal for enterprises using SAP in Croatia. Forty-two users are registered at the portal, including Agrokor, Dukat, Hotel Sheraton, Vipnet, Pliva, Podravka, Peugeout Hrvatska, etc. (SAP, n.d.). For example, Pliva d.d., a pharmaceutical company, used SAP to maximize its value by providing access to integrated sales and marketing processes and data to support consistent information about customers,
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