BINDURA UNIVERSITY OF SCIENCE EDUCATION
FACULTY OF COMMERCE
DEPARTMENT OF ACCOUNTANCY
AN EVALUATION OF THE SUITABILITY OF THE ACCOUNTING INFORMATION SYSTEM AT THE ZIMBABWE UNITED PASSENGER COMPANY (ZUPCO).
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SUBMITTED BY
BETSERAI NYAPFERE
(BO823639)
SUPERVISOR: MR MABHUNGU
DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE BACHELOR OF ACCOUNTANCY HONOURS DEGREE OF BINDURA UNIVERSITY OF SCIENCE EDUCATION. FACULTY OF COMMERCE.
(AUGUST 2012) RELEASE FORM
Name of Author : Betserai Nyapfere
Title of project : An evaluation of the suitability
of the accounting information system
at the Zimbabwe United Passenger
Company
Degree for which project was presented : Bachelor of Accountancy Honours Degree
Year this degree granted : 2012
Permission is hereby granted to Bindura University library to produce single copies of this project and to lend or sell such copies for private, scholarly or scientific research purposes only. The author reserves the other publication rights, and neither the project nor extensive extracts from it may be printed or otherwise reproduced without the author’s written permission.
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Permanent address : Madziwa High School P Bag 1023 Madziwa Bindura
i APPROVAL FORM
Title of dissertation
An evaluation of the suitability of the accounting information system at the Zimbabwe United Passenger Company.
To be completed by the student:
I certify that this dissertation meets the preparation guidelines as presented in the faculty guide and instructions for typing dissertations.
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To be completed by the supervisor:
This dissertation is suitable for submission to the faculty. This dissertation should be checked for conformity with the faculty guidelines.
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To be completed by the chairperson of the department:
I certify, to the best of my knowledge, that the required procedures have been followed and the preparation criteria have been met for this dissertation.
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ii DECLARATION
I BETSERAI NYAPFERE B0823639, declare this research project as my own work and has not been copied or lifted from any source without the acknowledgment of the source.
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iii DEDICATION
This work is a special dedication to my young and promising nephew Lloyd, my family and Dawe family which ever stood beside me in different capabilities.
iv ABSTRACT
Evaluating the success or failure of accounting information systems has been identified as one of the most critical issues in the information system field. The study focused on evaluating the suitability of the accounting information system at ZUPCO. The objectives of the study were to evaluate the impact of manual and computerised accounting, significance of management support to the accounting system and the nature of information produced. A case study method was used in the study to gather data for the purposes of evaluating respondents` perceptions, opinions and suggestions of the accounting information system. From the total population of 70 participants from the finance department, accounts department, operations department and audit departments at ZUPCO, a sample of 38 respondents was chosen in the study. Questionnaires were distributed to one finance director, one finance manager, two finance clerks, twenty one accounts clerks, one divisional accountant, three divisional and depot managers, nine external and internal auditors. Interviews were also used to provide data for the research. Stratified sampling was used. Chi-square tests at 5% significance level using SPSS Version 16.0 revealed that meeting information needs is independent of the level of competence in the use of computerised accounting information system at ZUPCO. The study also found that lack of management support in different forms including training of accounting system users and use of manual books led to poor quality information and a poor transaction trail. The study recommended that effective and continuous management support should be available starting from the idea of the system, through approval, development and operational phases to enhance a suitable and effective accounting information system.
v ACKNOWLEDGEMENT
The dissertation would be incomplete without giving thanks to the Almighty living God for His guidance in the process of executing this work. My heartfelt gratitude also goes to Mr I Mabhungu who sacrificed his time towards the success of my dissertation. A debt of gratitude also goes to my late supervisor, Mr Mapanzure who tirelessly gave me an educated critic. May I also take this opportunity to thank everybody in the
Accountancy Department at Bindura University of Science Education for all forms of support you had. Keep up the good work.
To my brothers Stanley and Caleb, I thank you for the support you gave me in your different capabilities and to my Mother and Father, I cannot find words that adequately express my appreciation and love you have shown to your Last Born. However, I really thank you for the love and morale you have always shown me. You have been and you are my pillar of strength. May the Lord Jesus Christ provide you with more years, of good health and I will always appreciate your support.
vi TABLE OF CONTENTS
RELEASE FORM...... i APPROVAL FORM ...... ii DECLARATION ...... iii DEDICATION...... iv ABSTRACT...... v ACKNOWLEDGEMENT ...... vi LIST OF TABLES...... x LIST OF FIGURES ...... xi
CHAPTER I ...... 1 INTRODUCTION...... 1 1.0 Introduction...... 1 1.2 Statement of the Problem...... 3 1.3 Research Objectives...... 3 1.4 Statement of Hypotheses ...... 3 1.5 Research Questions...... 4 1.6 Significance of the Study...... 4 1.7 Assumptions ...... 5 1.8 Delimitations...... 5 1.9 Limitations of the Study ...... 5 1.10 List of Abbreviations...... 6 1.11 Summary...... 6
CHAPTER II...... 7 LITERATURE REVIEW ...... 7 2.0 Introduction...... 7 2.1 Accounting Information System...... 7 2.2 Conceptual Framework...... 8 2.2.0 Manual Accounting Systems ...... 8 2.3 Processing of Transactions and Information Reporting ...... 12
vii 2.4 Transaction Processing Cycle...... 13 2.5 Drawbacks of Adopting Computerised Accounting Systems...... 16 2.6 Causes of an Information System Success or Failure ...... 16 2.7 Empirical Framework ...... 17 2.8 Management Support on Implementation and Operation of Accounting Information Systems ...... 17 2.8.0 User Involvement during Information System Implementation...... 18 2.9 Information Quality of Effective Information Systems...... 20 2.10 User Knowledge and Training...... 22 2.11 Justification of the Current Study...... 23 2.12 Summary...... 24
CHAPTER III ...... 25 RESEARCH METHODOLOGY ...... 25 3.0 Introduction...... 25 3.1 Research Design ...... 25 3.3.1 Stratified sampling...... 27 3.4 Data Collection Instruments...... 28 3.4.1 Questionnaires ...... 28 3.5 Validity and Reliability of Instruments ...... 30 3.6 Data Collection Procedure...... 31 3.7 Data Presentation, Analysis and Interpretation ...... 31 3.8 Summary...... 32
CHAPTER IV...... 33 DATA PRESENTATION, ANALYSIS AND DISCUSSION ...... 33 4.0 Introduction...... 33 4.1 Response rate...... 33 4.2 Sample Characteristics...... 35 4.3 Research Questions Responses...... 36 4.4 Impact of Manual and Computerised Accounting Information Systems ..36 4.5 Management Support on Accounting Information System Success...... 37 4.6 Quality of information produced by the accounting information system..39
viii 4.7 Users` competence in computerised accounting information system at ZUPCO...... 40 4.8 Summary...... 42
CHAPTER V ...... 43 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ...... 43 5.0 Introduction...... 43 5.1 Summary of Findings ...... 43 5.2 Conclusion ...... 44 5.3 Recommendations...... 45 5.4 Suggestions for Future Research ...... 45 Appendix 1: Employee Questionnaire ...... 51 Appendix 2: Interview guideline...... 55 Appendix 3: Chi-Square Tests Working 1...... 56 Appendix 4: Chi-Square Tests Working 11...... 58
ix LIST OF TABLES
Table 3.1: Measuring the level of agreement
Table 4.1: Summary of questionnaire response rate
Table 4.2: Interviews response rate
Table 4.3: Working experience
Table 4.4: Levels of agreement towards deficiencies of the accounting system
Table 4.5: Chi-square Tests
Table 4.6: Chi-square Tests
x LIST OF FIGURES
Figure 4.1: Response rate per category of information users
Figure 4.2: Perceived level of management support provided
Figure 4.3: Nature of information quality produced
xi CHAPTER I
INTRODUCTION
1.0 Introduction
This chapter is a blueprint that gives the reader a revelation to the general research problem and what the researcher aims to achieve and the chapter covers background to the study, statement of the problem, research objectives, research questions, significance of the study and assumptions. The chapter further highlights delimitations and limitations of the study, definition of major terms and summary. Certain terms and abbreviations will be defined as they will be used in the study.
1.1 Background to the Study
Today’s business organisations are described as changing entities that are largely driven by the implementation of modern accounting information systems which have become inevitable towards realising organisational goals. The goals are measured by the difference between financial costs of inputs and value of output which is called profit. The major function that is necessary to transform inputs into outputs is decision making and the decision making process cannot be made without information. Then, the value of information for the process of decision making is determined from the value of an accounting information system (AIS) of an organisation.
The Zimbabwe United Passenger Company (ZUPCO) is a parastatal which operates urban and long –distance bus routes. Due to liberalisation of the road passenger transport industry in 1997, ZUPCO mainly relies on the accounting information system for economic decision making to remain competitive in the market. According to ZUPCO`s Annual Review Report (2000), ZUPCO operated seventeen depots in thirteen cities and used a manual accounting information system till acquisition of computer
1 systems in 2003 to computerise the AIS. However, the following observations within ZUPCO`s current accounting information system were noted:
Though computer systems were acquired for the computerisation process, data capturing and processing at ZUPCO is characterised by more of manual accounting with little computer applications. Thus, the revenue and expenditure cycle involves more paperwork and manual accounting books such as cash record books, cash summary books, revenue analysis books, petty cash books and all purchases cycle books. In most cases, computer systems are used for storing manually processed information for subsequent retrieval. Therefore this has negatively affected accuracy and processing time of management accounts for decision making.
Since acquisition of computers up to the present, ZUPCO adopted Pastel Partner as its accounting software which offers flexible accounting and business management solutions. The full benefits of Pastel are also not derived. For instance, Pastel Partner completes all purchases cycle documents, from ordering to receiving and issuing of stocks. However, all stock information and purchases information appears in manual books causing inconveniences in accessing stock information and unnecessary duplication of same stock information from books into the Pastel system.
Most of accounting information appears in isolation with revenue ledgers, debtors` ledger, creditors` ledger, inventory ledger and assets register not directly interfaced within the general ledger or common database. This has delayed in generation and reporting of month end accounts and financial year end reports are overdue with a year. Management may need revenue and expenditure information for the whole division, per bus, on a daily basis for a month; however, this would be time consuming to gather isolated information and decision making would be not fruitful as it would be if information had been availed in time.
Computer systems are slower to cope with high demand of computing in sections where computer systems are used for accounting purposes. Consequently, users become frustrated with information technology (IT) services offered which hinder progress of operations caused by poor computer performance and storing capacity.
2 1.2 Statement of the Problem
The accounting information system at ZUPCO has proved to be unsuccessful in delivering expected benefits since it is being plagued by late production of management accounts, financial year-end statements and ad hoc reports to stakeholders. Moreover, the accounting information system is characterised by more of paperwork, slower computer systems and consequently fails to disseminate information closer to interested stakeholders in time. The present study seeks to evaluate the suitability of the accounting information system at ZUPCO.
1.3 Research Objectives
The following objectives were proposed under this study;
To examine how manual and computerised accounting information systems have impacted on data processing and information reporting to stakeholders at ZUPCO.
To assess the level of management support provided on the accounting information system at ZUPCO. To assess the quality of information produced by the accounting information system at ZUPCO.
1.4 Statement of Hypotheses
H0: Level of competence in the use of computerised accounting system is independent of the time an employee has served in the accounts department.
H1: Level of competence in the use of computerised accounting system is dependent on time an employee has served in the accounts department.
3 H0: Meeting information needs is independent of users` level of competence in computerised accounting system.
H2: Meeting information needs depends on users` level of competence in computerised accounting system.
1.5 Research Questions
The research aims to answer these questions.
How do manual and computerised accounting information systems impacted on data processing and information reporting to ZUPCO’s stakeholders?
What could be the level of management support provided on the accounting information system at ZUPCO? What quality of information is produced by the accounting information system at ZUPCO?
1.6 Significance of the Study
1.6.1 To ZUPCO
The study will expose weaknesses and areas that need a face lift within ZUPCO`s accounting information system aiming to ensure a suitable accounting information system.
1.6.2 To the University The organisational relationship between ZUPCO and Bindura University of Science Education will be enhanced in terms of continual recruitment of students who will add a body of knowledge to the management through their researches.
4 1.6.3 To the Researcher The researcher gained an invaluable experience in terms of practical knowledge in the field of research and on accounting information systems.
1.6.4 To Other Scholars
Future researchers will access a platform for further researches to improve the current knowledge on accounting information systems used in organisations.
1.7 Assumptions
This study based on the following assumptions:
Data and information gathered from the sample was reliable and representative of the population.
ZUPCO would not change its accounting system during the course of the research.
Accounting information systems have impact on data processing and reporting.
1.8 Delimitations
The thrust of this study was based on ZUPCO`s Head Office and its two divisions; Northern Division and Southern Division based in Harare and Bulawayo respectively for the period December 2010 to August 2011.
1.9 Limitations of the Study
The study was affected by the following factors:
Transport to outside depots was a challenge but however the researcher sent out questionnaires and made telephone interviews.
5 Some participants seemed to provide biased answers due to fear of releasing confidential information. However, this was minimised by consistent assurance to respondents that their views shall be treated with confidentiality and anonymity.
1.10 List of Abbreviations.
IT - Information technology
AIS – Accounting information system
CAIS – Computerised accounting information system
TPS – Transaction processing system
1.11 Summary
The chapter focused on introducing what has given rise to this study in the background to the study, leading the researcher to define research objectives that formulated the appropriate literature to be reviewed in the next chapter.
6 CHAPTER II
LITERATURE REVIEW
2.0 Introduction
This chapter explores and cites various literatures in order to ascertain what other authorities have contributed in an attempt to evaluate the suitability of accounting information systems. Reviewing literature enables the researcher to identify any research gaps to be filled by the present study as well as compare his findings with those of other researchers. To bring the research problem into focus, the study is of two folds including the theoretical fold which deals with the conceptual elements leading to the appropriate evaluation criterion and the empirical fold which deals with assessing previous studies.
According to Hart (1998), literature review is the selection of available documents on the topic which contain information, ideas, data and evidence written from a particular stand point to fulfill certain aims or express certain views on the nature of these topics and how it is to be investigated and the effective evaluation of these documents in relation to the research being proposed. Bell (2003) suggests that literature review bars the researcher from redoing the work already done in the same field of study but learn from past works and take from where it had been left on a different perspective.
2.1 Accounting Information System.
Nazir (2008), defined an accounting information system as the practice of accounting with the design, implementation and monitoring of information systems to provide users with financial information necessary to manage an organisation. According to Beard et al (2007), accounting information system refers to the system of collecting and processing data and disseminating financial information to interested stakeholders. Boochhold (1999) defines accounting information systems as systems that operate
7 functions of data gathering, processing, categorising and reporting financial events with the aim of providing relevant information for the purpose of score keeping, attention directing and decision-making.
According to Nicolaou (2000), an accounting information system is defined as a computer-based system that processes financial information and supports decision tasks in the context of coordination and control of organizational activities. However, Gelinas, Dull and Nazir (2008) described an accounting information system as a man- made system which generally consists of an integrated set of computer-based and manual components established to collect, store and manage data and to provide information to users.
2.2 Conceptual Framework
2.2.0 Manual Accounting Systems
Bernstein (2009) defined a manual accounting system as a system which comprises paper ledgers, typewriters, and files which typically include a cash book, sales and purchase day books and petty cash sheets. Marshall et al (2006) forwarded that manual accounting involves employees performing the whole accounting cycle manually on a periodic basis. Hall (2008) is convinced that a lot of paperwork in most of daily transactions characterise this system as recording, processing and reporting of accounting information is concerned. Josh (2006) has the opinion that the growth of enterprises made manual accounting systems no longer adequate due to too much time, resources and effort needed to process transactions and reporting.
Heeks (2002) reported that while a traditional paper based bookkeeping system will look suitable for many start-ups, the accounting functions could soon swallow up valuable time as the business starts to grow. Grudin (2005) and Josh (2006) all agree that in the past, much of the work required to maintain an effective accounting system involved extensive manual effort that was tedious, aggravating, and time consuming and such systems relied on individual effort to continually record transactions, to add, subtract, summarize, and check for errors.
8 However, Alles et al (2006) are not convinced that paper work has to be completely eliminated but in other cases a manual bookkeeping regime may be maintained in addition to a computerised system, and thus provide an additional layer of internal control mechanism for the business.
2.2.1 Computerised Accounting Information Systems
The impact information technology (IT) has made on accounting is the ability of companies to develop and use computerised information systems to track and record financial transactions (Diniz et al, 2005). According to Al-adaileh (2008), it is not a fiction that survival as well as organisational competitiveness relies heavily on efficient use of accounting information systems. Rai et al (2002) added that implementation of computerised accounting information system is not a choice in today’s high tech and technological led environment. Al-adaileh (2008) stated that information system initiatives are a costly investment and accordingly failure of information system is considered as an expensive failure.
Nahapiet and Ghoshal (1998) explored that information technology is pervasive in the world of business and competence with technology is imperative to accountants and organisations as a whole. They further highlighted that modern information technology can collect, systematize, structure, store, combine, distribute and present information of value to knowledgeable workers. Riccio and Marici (2002) stressed that exchange between countries should not only be International Accounting Standards (IAS) knowledge but also a number of business tools being extensively used today such as IT.
According to Barron (2009), an accounting information system is a subsystem of a business information system (IS) that processes financial transactions to provide internal reporting to managers for use in planning and controlling current and future operations and for non-routine decision making; and also provide external reporting to outside parties such as to stockholders, creditors, and government agencies. O’Brien, (1999) highlighted that keeping accurate accounting records is a vital part of managing
9 an organisation and every enterprise requires an information system for collection, storing and retrieving of data and statistics in order for it to function efficiently.
Since the invention and adoption of computers into the business world, the manual accounting system became slowly phased out as IT was growing (Lagsten and Goldkuhl, 2008). Grudin (2005) added to this assertion saying that growth in IT gradually replaced the traditional accounting system with computerised accounting information systems which are more efficient and can process tasks that are more complicated with greater efficiency.
According to Harsh (1981), the main advantage of computerised accounting systems is that each transaction needs only to be inputted once, unlike a manual double entry system where two or three entries are required.
The Voluntary Arts Network report (2005) found that computer systems have shortened the lead time needed by accountants to prepare and present financial information to management and stakeholders. Riccio and Marici (2002) do not agree that only IT has shortened the lead time required to present financial information, but it has also improved the overall efficiency and accuracy of the information. Davis (1993) argued that IT has not only restored accuracy and time processing of data but IT has made changes to the accounting such as; developing an accounting database for easy access, data base decision making and putting information close to accountants.
The use of computerised accounting information systems can achieve valuable benefits for an organisation including but not limited to gaining competitive advantage, increase productivity, shorter transaction processing cycle, automation of operational decision and supporting of strategic and tactical decisions (Al-adaileh, 2008).
An accounting system should be able to produce relevant information that is useful for decision making at any given period of time. According to Spiegelberget al (1995) and Johnson et al (2001) a computerised accounting information system can provide instant reports for management such as detailed trade receivables and payables, detailed inventory analysis, revenue analysis, budget analysis and variance analysis, value added tax (VAT) returns and payroll analysis.
10 2.2.1.0 Adoption and Use of Accounting Software.
Accounting software has become an essential accounting tool in today’s business evidenced by most enterprises adopting computerised accounting systems for processing daily transactions, which could be laborious, inaccurate and time consuming within a manual accounting system (Rama and Jones, 2006). According to Elikaiet al (2007), “accounting software packages are standard tools in today’s business environment.”
Breen and Sciulli (2003) and Copeman (2008) revealed that a typical computerized accounting package will offer a number of different facilities such as, automatic updating of customer accounts in the sales ledger, recording of suppliers’ invoices, automatic updating of suppliers' accounts in the purchases ledger and link all ledgers to the general ledger. The www.sagepastel.com (2011) added that recording of bank receipts, making payments to suppliers and for expenses, automatic updating of the general ledger, automatic adjustment of stock records, integration of a business database with the accounting program and automatic calculation of payroll and associated entries characterise most of accounting software packages.
Most of the popular accounting systems can also be tailored to specific industries or companies. According to Steinbart (2004), accounting software can be modelled into meeting the accounting needs for a particular organization. This allows companies to create individual reports quickly and easy for management decision making (Hall, 2008). Sajady et al (2008) cited that every business uses some form of accounting software and stated that, “of course, just as there are different sizes of firms, there are large scale and small scale accounting software solutions”.
2.2.1.1 Other Accounting Computer Applications.
Windows applications such as Microsoft Excel and Microsoft Access are used in many organisations to capture and record financial data. Harvey (2007) revealed that Microsoft Excel is a commercial spreadsheet application which features calculation,
11 graphing tools, pivot tables, and a macro programming language called visual basic for applications (VBA). Microsoft Excel has been widely applied spreadsheet for these platforms, especially since version 5 in 1993, and it has almost completely replaced Lotus 1-2-3 as the industry standard for spreadsheets(Wells and Harshbarger, 1997). According to Spiegelberg et al (1995) VBA allows spreadsheet manipulation that is awkward or impossible with standard spreadsheet techniques. Many accounting software packages provide special files with which one can query accounting data into Excel (Harvey 2007).
Wells and Harshbarger (1997) defined Microsoft Access as a relational database management system that combines the relational Microsoft jet database engine with a graphical user interface and software-development tools. Harvey (2007) forwarded that Microsoft Access stores data in its own format based on the Access Jet Database Engine and stores all database tables, queries, forms, reports, macros, and modules in the Access Jet database as a single file. According to Tony (1996), Microsoft Access imports or links directly to data stored in other applications and databases. Wells and Harshbarger (1997) revealed that software developers and data architects can use Microsoft Access to develop application software, and "power users" can use it to build simple applications. A power user is a user of a personal computer who has the ability to use advanced features of programs which are beyond the abilities of "normal" user.
2.3 Processing of Transactions and Information Reporting
2.3.0 Transaction Processing Systems (TPSs)
Transaction processing system is the first stage of computerised accounting information systems (Grudin, 2005). The purpose of any transaction processing system is to record, process, validate and store transactions that occur in various functional areas of a business for subsequent retrieval and usage. Laudon and Laudon (2006) are not convinced that the transaction processing system only involve computer systems but they outlined that the analysis and design of transaction processing system means focusing on the firm’s current procedures for processing transactions, whether those procedures are manual or automated. However, Laudon and Laudon (2006) added that computer systems may develop the transaction processing system to improve
12 transaction processing by speeding it up, using fewer people, improving efficiency and accuracy, integrating it with other organizational information systems or providing information not previously available. According to Haag et al (2004), a transaction processing system is an information system that processes data arising from the occurrence of business transactions.
Within a transaction processing system, every single transaction is overseen and monitored so that the system will recognise if entered data is authentic (Nazir, 2008). The article www.egtoget.com viewed transaction processing procedures as standard operating procedures aimed at improving the routine business activities on which an organisation depends.
2.4 Transaction Processing Cycle
According to Bocij et al (1996), Laudon and Laudon (2006) and O`brien (2004), transaction processing systems generally go through a five-stage cycle of; data entry activities, transaction processing activities, file and database processing, document and report generation, and lastly inquiry processing activities.
2.4.0 Data Entry
In this process, data is captured or collected by recording, coding and editing activities and the data can be converted to a form that can be entered into a computer system (Nazir, 2008). Bocij et al (1996) viewed data entry activities as always a bottleneck in the use of computers for transaction processing. Rama and Jones (2006) added that data processing presumes data entry.
2.4.1 Transaction Processing
Transaction processing systems process data in two ways which are:
a) Batch Processing
13 Data is accumulated over a period of time and processed periodically (Breen and Sciulli, 2003). According to Laudon and Laudon (2006), it involves capturing and storing batches of transactions data at remote sites and then transmits it periodically to central computers for processing. Bocij et al (1996) stated that batch processing is also characterised by gathering source documents originated by business transactions such as revenue receipts and payment invoices. According to www.sagepastel.com, batch processing enables speedy data capture and allows entering figures for multiple transactions.
b) Real Time Processing
Real time processing systems process data immediately after they are generated and can provide immediate output to end users and the system depends on telecommunication networks of online terminals and computers (Breen and Sciulli, 2003). O`Brien (2004) reported that in full-fledged real-time processing systems, data is processed as soon as it is originated or recorded, without waiting to accumulate batches of data. Wenzler (1996) expressed that with real time processing system, files and databases are always up to date since they are updated as and whenever data is originated, regardless of its frequency.
Hall (2008) compared batch systems versus real time systems and described batch systems as demanding fewer organisation resources such as programming costs, computer time and user training than real time systems. He justified his assertion saying batch systems can use sequential files stored on magnetic tape while real time systems use direct access files that require more expensive storage devices such as magnetic disks.
2.4.2 File and Database Processing
Breen and Sciulli (2003) viewed file and database processing as the basic activity of transaction processing systems and described them as file and database maintenance. This term emphasises that an organisation’s files and databases must be maintained by
14 its transaction processing systems so that they are always correct and up to date (Eckstein, 2007).
Lester (2008) outlined that transaction-processing systems update and make changes to corporate databases, which are then used to provide data to produce information and provide data needed for further processing by management information systems.
2.4.3 Document and Report Generation
The final stage in the transaction processing cycle according to Bocij et al (1996), Laudon and Laudon (2006) and O`Brien (2004) is the generation of information products such as documents and reports. Documents produced by transaction processing systems are called transaction documents (Laudon and Laudon 2006). Crystal (2003) highlighted that a transaction processing system produces several types of reports and are used by managers. O’Brien (1999)added that such reports provide an audit trail for transaction control purposes and the type of reports involve accounting statements of financial performance and status of the enterprise such as income statements, statements of cash flow and ad hoc reports.
2.4.4 Inquiry Processing
Laudon and Laudon (2006) found that many transaction processing systems allow using internet and web browsers or database management query languages to make inquiries and receive responses concerning the results of transaction processing activity. Fink (1999) stated that responses are typically displayed in a variety of pre specified formats or screens. He said an example would be checking balances in an account and receive immediate response on a personal computer. According to Eckstein (2007), the inquiring process is much quicker and accurate depending on the information technology architecture and information infrastructure.
15 2.5 Drawbacks of Adopting Computerised Accounting Systems.
Nolan (1973) reported in his initial stage of the stages of growth model that due to unfamiliarity of personnel with technology, users tend to take a “hands off” approach to new technology and management pay little attention to user departments which in turn works in a carefree environment. According to Grudin (2005), technologies are recommended but employees ignore some injunctions, obtain exceptions, use some features but not others and join with colleagues to advocate changes in policy.
The contagion stage of Nolan’s (1973) stages of growth model revealed that many users become unfriendly by computing hence managerial need to explain the potential of computer applications to alienated users. Smith and Green (1980) stressed that there is need to spend just as much effort what employees can and want to do than establish what they can and cannot do.
Indira (2007) outlined that power failure, computer viruses and hackers are the inherent problems of using computerized systems. She added that once data has been input into the system, automatically the output are obtained hence the data being input needs to be validated for accuracy and completeness and the concept of garbage input results in garbage output should not be forgotten.
Accounting system not properly set up to meet the requirement of the business due to badly programmed or inappropriate software or hardware or personnel problems can cause more havoc (Spiegelberg et al 1995). Nazir (2008) noted that there is also a danger of computer fraud if proper level of control and security whether internal and external are not properly been instituted.
2.6 Causes of an Information System Success or Failure.
Johnson et al (2001) reported that the overall information system success rate has increased for the past years due to top five factors such as executive support, user
16 involvement, experienced project manager, clear business objectives and minimised scope.
Rama and Jones (2006) revealed that an accounting information system is a subsystem of an information system (IS) that provides accounting information as well as other information obtained in routine processing of accounting transactions. According to CHAOS report (1994), an information system project initiative is considered as successful if it is completed on time and budget, with all features and functions as specified. Information system success includes; high levels of use, user satisfaction, favourable attitudes and achieved objectives (Heeks, 2002).
In addition, Al-adaileh (2009) found that an information system is considered as a partial failure if the project was completed but was over cost, over time and or lacking all features and functions that were originally specified. Finally, Al-adaileh added that an information system is considered as complete failure if the project was abandoned or cancelled at some point and thus become total losses. Information system failure is when the system does not perform as expected, when it cannot be used as intended and when it is not operational at a specified time Catherine (1995). Therefore, it is pertinent to identify major key influences for the success of accounting information systems.
2.7 Empirical Framework
2.8 Management Support on Implementation and Operation of Accounting Information Systems
Al-adaileh (2009) described management support as the management approval and continuous support not only during the information system implementation but also throughout the operational phase of the system. Catherine (1995) added that the
17 design and implementation process must be strictly adhered to and the first priority is to deal with the aspects of the system that are critical to the organisation’s operations.
Seddon et al (1999) found that stakeholders’ interest has to be taken into consideration during implementation of information systems. In their Technology acceptance Model (TAM), Delone and McLean Model (1992) emphasised user involvement to enhance user satisfaction during implementation of an information system. Catherine (1995) and Al-adaileh (2009) agree that the system must be integrated into the managerial processes and managerial support and finally, resources must be allocated to the project, and an appropriate methodology chosen to enact the systems design.
2.8.0 User Involvement during Information System Implementation; Catherine (1995). A research done by Catherine (1995) in North York-Canada, York University users of the information system were willing to participate in the design process and could have offered useful insights at the prototype stage. The secondary users had limited understanding of the true capacities of the system, and had few expectations regarding its performance. The primary users had met their expectations in designing the system and were happy with its goals but however, secondary users failed to embrace the system, but accepted it as a fait accompli. Senn (1981) points to user resistance as symptomatic of system failure and he indicated that users may aggressively attack the system, rendering it unusable or ineffective, or they may simply avoid using the system. On the other hand, the secondary users were constantly frustrated by the system. Bostrom and Heinen (2010) refer to the instance of the system being designed for the top level manager, leaving the secondary users with a system that does not meet their needs.
The registrar at York University and his staff thought the information system was remarkably good. However, there were numerous technical limitations that frustrated secondary users in their attempts to use the system. Furthermore, the registrar’s staff could, and frequently did, lock users out of the system.
18 From analysis of the results obtained, Catherine (1995) found that from the perspective of the registrar’s office, the system was clearly successful but for the staff in the faculty and marketing offices, the system was generally considered a failure. The system did provide the secondary users with some basic functionality. It was this functionality that was branded a success by the registrar’s staff, but they failed to understand or accommodate the extended needs of the other users. Catherine (1995) concluded that the major cause for the failure was lack of management support which excluded secondary users from participation in the designing, implementing and poor extensive training regarding the operation of the information system.
2.8.1 Components of a Suitable Information System; Khaddaj (2005)
Khaddaj (2005) found that software quality factors that had potential impact on the system’s performance of Monash University. Khaddaj (2005) also revealed that portability and usability are major problems that need to be considered when determining the relevant factors that affect software quality. Al-adaileh (2009) and Khaddaj (2005) all agree that many elements can fail which can have major impact on the system’s performance.
Bocij et al (1996), Laudon and Laudon (2006) and O`Brien (2004) emphasised components that management should concentrate that make an information system a success. Their models consisted of five major components namely; people resources, hardware resources, software resources, data and network resources.
2.8.2 Variables of a Suitable Information System; Al-adaileh (2009).
A European study by Al-adaileh (2009) reviewed five variables behind the success of information systems at Jordan Telecom Group. The variables included information quality, user technical capabilities, perceived usefulness of the system, perceived ease of use and management support. Among the five factors that were explored in the study, four factors were determined as influential factors including (according to their order):
19 system's usefulness, user's technical capabilities, information quality and management support. Al-adaileh (2009) recommended that an effective and continuous management support should be available starting from the idea of the system, through approval, development and operational phases.
2.9 Information Quality of Effective Information Systems; Delone and McLean (1992)
Behrens et al (2005) and Al-adaileh (2009) brought ten characteristics to present the quality of information including; simplicity, relevancy, accuracy, verifiability, timely, security, completeness, reliability, accessibility and flexibility.
The Audit Commission (2007) added that data should be captured as quickly as possible after the event or activity and must be available for the intended use within a reasonable time period. According to Sajady, Dastgir and Nejad (2008) data must be quickly and frequently available to support information needs and to influence service or management decisions. Another important concept from Harsh et al (1981) is the value of information. They noted that the value of information is the value of the change in decision behaviour caused by the information less the cost of the information. This statement implies that information is normally not a free good.
The most commonly cited model for information system success is the one developed by Delone and McLean (1992). Their model proposed six interrelated variables to measure the success of information system which are system quality, information quality, system’s use, user satisfaction, organisational impact and individual impact. A similar model was proposed by Seddon (1997) which includes system quality, information quality, perceived usefulness, user satisfaction and use of the information system, as variables behind the success and suitability of an information system. Delone and McLean (1992) and Seddon (1997) emphasised that an information system is considered successful if it produces information that is of value to the management for decision making.
20 Rai et al (2002) assessed Delone and McLean’s (1992) and Seddon’s (1997) models of information system success. Their findings supported Delone and MacLean’s model. Their findings also supported Seddon’s (1997) three variables which are system and information quality, general perceptual measures about net benefits of information system use and information system behaviour. In their later study, Delone and McLean (2003) revealed that information system quality has three dimensions including; information quality, system quality, and service quality and they emphasised that each should be measured or controlled which will affect “use” and “user satisfaction”.
2.9.0 Importance of information quality; Sajady et al (2008), Almutairi and Subramanian (2005).
Sajady, Dastgir and Nejad (2008) investigated the success of listed financing companies at Tehran Stock Exchange in Iran. Their findings supported Behrens et al (2005) and Al-adaileh (2009) ten characteristics of information quality including; simplicity, relevancy, accuracy, verifiability, timely, security, completeness, reliability, accessibility and flexibility. They argued that most of the companies listed at Tehran Stock Exchange succeeded due to the high information quality presented to management by the accounting information systems which enhanced quality decision making.
Almutairi and Subramanian (2005), based on their empirical application of Delone& McLean model in private sector organization of Kuwait, identified certain direct association between the variables in the original Delone& McLean model. They revealed that information quality and system quality impact user satisfaction significantly and system usage has significant influence on individual impact which also then affects information quality.
Concerning the perceived failure of the information system at York University, Canada, Catherine (1995) found that the quality of information the system produced was a function of the format in which it was provided. As faculty users could not write reports, they were dependent on the registrar’s staff to provide information. Often the information was provided in unwieldy reports which required much additional work on
21 the part of the faculty in order for it to be useful. As Ackoff (1967) suggests, the problem was not with a lack of information, but rather an “overabundance of irrelevant information”, in this instance in report format. Despite the importance of the marketing function, it was unable to get admissions information on demand, thus the strategic value of the admissions database was not exploited by the marketing management. Thus, in some instances, system information did have an impact on management decisions.
Elpez and Fink (2006) identified key information system success factors relevant to public sector in France and ranked them according to their importance as follows; meeting user requirements, system usability and performance, information quality and use, user acceptance and information system ownership and interaction with the rest of IT infrastructure. They put emphasis on the value of information produced by the information system as the major driving factor of information system success.
Haag et al (2004) focused on the benefits of high quality information and costs of low information. They highlighted that high quality information significantly improve the chances of making a fruitful decision and the decisions taken directly impact an organisation`s economic and efficient use organisation`s resources thereby maximising the value of a company.
Potential business effects resulting from low quality information include; inability to accurately track customers, difficulty in identifying valuable customers and inability to identify selling opportunities (Haag et al, 2004). Ackoff (1967) found that poor information quality results in marketing to non-existent customers, difficulty in tracking revenue due to inaccurate invoices and inability to build strong customer relationships which increases buyer power.
2.10 User Knowledge and Training.
As Ackoff (1967) noted, no accounting information system should ever be installed unless the users for whom it is intended are trained to evaluate and hence control it, rather than be controlled by it. This case also shows that information systems should fit the environment. According to Riccio and Marici (2002), tacit and explicit knowledge
22 could be seen from the intensive training of personnel at the early stage of system implementation to the development and use of company’s own manual in training of new staff and assisting the job of existing staff.
A study of Jordan Telecom Group by Al-adaileh (2009) proved that users' computer knowledge is an influential factor that can form success of an information system and formal technical education should be considered when recruiting and promotion decision. He added that on the case of Jordan Telecom Group, formal and informal training policy encouraged learning and skills exchange among organisational members.
End-user training curriculums differ from the initial project team training as they put much greater emphasis in the day-to-day user tasks and routine activities (Schiff, 2011). A quote from Riccio and Marici (2002) stated, “Instead, empower your users with the screens, information and knowledge to become better in their positions, not technology gurus”. According to Elgar (2011), accounting software training should not take a back seat even after implementation.
2.11 Justification of the Current Study.
The empirical framework dwells on the factors behind the success of information systems in different economies and different institutions in a manner that seeks to evaluate the suitability of accounting information systems. It has been observed that management support, information quality and user knowledge play a major role in enhancing the success of information systems. From the case of York University in Canada, management support is a requirement which also involve users of the information system. Information quality has been determined from the quality of an information system which in turn impact on users’ satisfaction. From the discussion above, training of users of the information system is a necessity from implementation throughout the operation phase.
23 The research seeks to improve previous researches in evaluating the suitability of accounting information system. The present study will also provide means on how to effectively implement suitable accounting information systems.
2.12 Summary
Various literature on accounting information systems, and growth of information within organisations has been explored. The chapter also briefly revealed the importance and features of accounting packages and also revealed features of an information system success as explored by other researches. It was observed that a computerised accounting system is inevitable for an effective accounting process. The various literature discussed gave rise to the researcher to identify the proper methodology for the next chapter, which covers the methods to be used to gather data, and the procedures to be followed.
24 CHAPTER III
RESEARCH METHODOLOGY
3.0 Introduction
This chapter focuses on how the research was actually carried. It involves the research design, the sample and sampling designs, the designing and organisation of data collection instruments. The purpose of this chapter is to outline and justify the research methodology employed in the study in terms of validity and reliability.
3.1 Research Design
A research design is a detailed blueprint used to guide research towards its objectives (Aaker et al; 2001). In addition, Skinner (1990) describes a research design as an overall plan for conducting a research investigation. The researcher used a case study with the aid of qualitative, quantitative and exploratory approaches.
3.1.1 Case Study
According to Shuttleworth (2008), a case study is an in depth study of a particular situation rather than a sweeping statistical survey. It is a method used to narrow down a very broad field of research into one easily researchable topic (Saunders et al, 2003). A case study design was chosen to enhance a closer and detailed analysis on the suitability of accounting information system within ZUPCO`s Head Office and its two divisions; Northern Division and Southern Division based in Harare and Bulawayo respectively.
25 Standardised questionnaires were administered and structured interview questions were asked. The case study research design was useful in testing whether theories and models actually work in the real world.
3.2 Target Population.
According to Saunders et al (2003), the full set of cases from which the sample is taken is called population. The population in this research was specifically limited to ZUPCO Head Office and its two divisions; Northern Division based in Harare and Southern Division based in Bulawayo. The total population consisted of 70 participants made up as follows;
Description Total number
Finance department 4
Audit department 3
External audit 12
Divisional and depot managers 6
Accounts department 45
Total 70
The population chosen reduced complexity in data analysis and in account of time and financial resources, this target population was ideal.
3.3 The Sample.
A stratified rather than a non-statistical base of sample selection was used from the above target population. Thus, finance department, audit department, depot management department and accounts department were the researcher’s areas of interest within the study.
26 3.3.1 Stratified sampling.
Kaplan (2003) forwarded that, stratified sampling provides for the selection of sample items by breaking the population down into subgroups called strata. The total population was broken into stratas, namely the Finance department, Audit department, Depot management department and Accounts department. Saunders et al (2003) explored that random or systematic samples are taken from each subgroup and the sampling fraction for each subgroup may be taken in the same proportion as the subgroup has in the population. According to Bryars (1992), stratified sampling can also sample an equal number of items from each subgroup. In some departments, all participants within each strata or subgroup were taken, for instance, all members in the finance and audit were chosen. The following benefits arose from stratifying the population;
Dividing the population into distinct, independent strata enabled drawing inferences about specific subgroups that could have been lost in a more generalised random sample.
The method led to a more efficient statistical analysis and estimates because the strata were selected based upon relevance to the criterion in question, instead of availability of the samples.
In some cases, data was more readily available for individual, pre-existing strata within a population than for the overall population and in such cases, using a stratified sampling approach was more convenient.
Since each stratum was treated as an independent population, different sampling approaches were applied to different strata enabling a cost effective approach best suited for each strata.
Bryars (1992) stated that a major advantage of the use of stratified sampling is that it can improve the accuracy of the results and more efficient statistical estimates.
However, Wegner (1999) said identifying strata and implementing such an approach can increase the cost and complexity of sample selection as well as leading to increased complexity of population estimates.
27 3.3.2 Sample Composition
Description Total number
Finance department 4
Audit department 2
External Audit 7
Stores department 5
Depot managers 3
Accounts department 17
Total 38
The researcher chose every present member in each department and a balanced sample to include all members involved in the accounting information systems within the ZUPCO.
3.4 Data Collection Instruments.
Both secondary and primary sources play a pivotal role in gathering data from different participants pertaining to this study. Secondary data include among others, past and present issues from journals, internet, textbooks, company files and databases whereas primary data consists of questionnaires, interviews and observations.
3.4.1 Questionnaires
A questionnaire is a survey instrument that consists of questions and the respondents are supposed to answer (Saunders et al, 2003). Questionnaires were distributed to the finance director, finance manager, depot managers, divisional accountant, accounts and finance clerks on the divisions under study. The researcher, to the mentioned research
28 participants distributed the questionnaires personally. The researcher used both closed and open-ended questions.
Open-ended questions were used in order to collect data that concerns the feelings and attitudes of respondents. These types of questions promote critical thinking and increase the responded participation (Cooper and Schindlers, 2003). Closed questions were used as well, as these required less time to fill, easy to answer and ensured that the respondent stick to the matters addressed.
Questionnaires had a number of advantages under this study such as;
Reduced administration costs and interviewer bias.
They were administered to many participants at the same time.
Responses were more likely to be truthful than they would be in personal interviews.
They were more appropriate considering the limited time available for the research.
However, questionnaires had their drawbacks of low reliability and validity, having no room for further probing by the researcher where there is need for clarification. The researcher overcame this by making sure that questions included eliminated ambiguity and were specific.
3.4.2 Interviews
Robson (1993) refers to an interview as a situation where one person asks and another listens and responds. Face to face interviews were made to the divisional depot managers, the external auditors and finance clerks; some who were not presented by the questionnaires.
Approaches varied from informal to formal interview. In the former, the interviewer had the freedom to interact freely with the interviewee thereby enhancing more reliable information that would not be available when a formal interview was made. The
29 questions were open-ended and the interviewer was free to change the wording of questions and to add questions.
3.4.2.0 Advantages of Interviews
It is a two-way communication and it allowed the researcher and respondents to interact on the matter of interest.
It gave the researcher chance to explain to the respondents the purpose for carrying the study.
3.4.2.1 Disadvantages of Interviews
Respondents were not willing to divulge certain confidential and sensitive information for fear of being exposed.
It was time consuming and access to the respondents was a challenge.
3.5 Validity and Reliability of Instruments
Validity involves an assessment of the research methods used in data collection to find out if they effectively measured where they were supposed. The researcher considered the target sample as the most reliable source to achieve dependable results. Instruments were measured for both reliability and validity through;
Avoiding ambiguity in the set of questions.
Avoiding difficult questions outside the respondents` previous experience, so as to lure honest responses.
In order to ensure validity, the researcher used a range of questions that included open- ended and closed-ended questions. Through the use of questionnaires the researcher
30 managed to demonstrate ethical considerations by the use of an informed consent and describing objectives of the study as well stressing anonymity and confidentiality to the respondents.
In this study the researcher endeavoured to ensure reliability of research results by using of structured questions in the questionnaire method. The use of structured questions enabled an independent researcher to come up with similar results.
3.6 Data Collection Procedure.
Sufficient questionnaires were produced and the questionnaires were self-administered by the researcher. Respondents were given maximum of 10 days to complete questionnaires. The researcher also carried out interviews. Confidentiality and anonymity was guaranteed to respondents and permission to write responses was solicited from respondents.
3.7 Data Presentation, Analysis and Interpretation
The level of agreement was measured by applying Likert scale to the overall measure within this study. The instrument was scaled as follows:
Table 3.1: Measuring the Level of Agreement
Strongly agree Agree Neutral Disagree Strongly disagree 5 4 3 2 1
If the mean/average value of the variable is more than or equal to 3.5, then the level of agreement with the statements measuring a certain variable is high. If the mean value of the variable ranges between 2.5 and 3.49, then the level of agreement with the statements measuring a certain variable is medium. If the means value of the statement
31 is equal to or less than 2.49, then the level of agreement with the statements measuring the certain variable is low.
The SPSS version 16.0 software was used to analyse data and to test the associations between the variables within this study.
3.8 Summary
This chapter concentrated on the methodology employed in gathering data and the approaches used like qualitative and qualitative research. It also outlined the target population, research instruments and their reliability and validity. Ways, in which data was collected and presented up to analysis and interpretation, has been dealt within the chapter. The next chapter presents and analyses the findings obtained through this research methodology.
32 CHAPTER IV
DATA PRESENTATION, ANALYSIS AND DISCUSSION
4.0 Introduction
This chapter looks at the presentation, analysis and interpretation of data which was gathered through questionnaires administered to accounting information providers and information users as well as interviews conducted with management and auditors from ZUPCO`s Head Office, Northern and Southern Divisions. Data is presented in the form of tables and graphs.
4.1 Response rate
Table 4.1: Summary of Questionnaire Response Rate
Research Subjects Target Actual Response Respondents Respondents Rate Finance director 1 1 100% Finance manager 1 1 100% Divisional and depot managers 3 2 66.67% Divisional accountant 1 1 100% Accounts &finance clerks 23 19 82.61% Internal & external auditors 9 7 77.78% TOTAL 38 31 81.58%
The average response rate of all participants was 81.58%. Bryman and Ema (2003) found that when the samples response rate is higher than 50%, its findings can be generalised on the whole population, that is, the sample will be representative of the population.
33 The high response rate was attributed to the nature of the topic since all targeted subjects/respondents had a role to play in the operational phase of the accounting information system at ZUPCO. Some targeted subjects did not return the questionnaires; this might be because they were suspicious about what the information might be used for and lack of interest in the topic. However, all these inconveniencies to the study were addressed with face-to-face interviews with participants.
4.1.2 Response rate per category of information providers and users
The figure 4.1 below shows questionnaire response rate per category of information users and information providers.
12.90% Management
22.58% Audit Accounts 64.52%
Figure 4.1: Response rate per category of information users
The overall response rate for information providers to information users including the divisional accountant, accounts and finance clerks was 64.52%. Bryars (1992) stated that a major advantage of stratifying responses is that it can improve the accuracy of the results and more efficient statistical estimates.
34 Table 4.2: Interviews response Rate
Research Scheduled Actual Response Subjects Interviews Interviews Rate Divisional and depot 2 2 100% managers External Auditors 2 1 50% Finance Clerks 3 2 66.67% Total 7 5 71.43%
A total response rate of 71.43% was achieved which was ideal for the information required by the researcher.
4.2 Sample Characteristics
Table 4.3: Working Experience
Frequency Percentage (%) (In Years) less than 1 3 9.68 Working 1-5 15 48.39 experience 6-10 7 22.58 more than 10 6 19.35 Total 31 100
Twenty eighty participants under this study have worked for more than a year and thirteen other participants for more than five years. The longer the period respondents served at ZUPCO minimised assumptions to the research questions, which enabled obtaining results that were more reliable since the respondents had the experience and knowledge of what the researcher aimed to achieve.
35 4.3 Research Questions Responses
4.4 Impact of Manual and Computerised Accounting Information Systems
The table below shows if the respondents agree or disagree to the deficiencies of the accounting information system at ZUPCO.
Table 4.4: Levels of agreement towards deficiencies of the accounting system
Variables/ measures of the accounting Mean/ average Level of information system agreement Late production of management accounts 4.10 High Poor transaction trail 3.58 High Poor working/user efficiency (user effectiveness) 3.77 High Accounting software not user friendly 3.06 Medium
The table 4.4 above shows that there is a higher level of agreement that the accounting information system is characterised by late production of management accounts. Grudin (2005) and Josh (2006) found that manual accounting contribute significantly in late production of information to users. Results from interviews revealed that decrease in employee morale has also played its part in late provision of accounting information to management.
Poor transaction trail characterise the accounting information system at ZUPCO. Interviews with both internal and external auditors revealed that the accounting information appears in isolation without a proper audit trail. However, O’Brien (1999), Behrens et al (2005), Copeman and Nazir (2008) revealed that a typically computerised accounting system enhances a clear transaction trail.
Respondents agree that working/user efficiency has been negatively affected by the accounting information system at ZUPCO. Results from interviews revealed that slower computer systems due to computer virus and obsolete technology have negatively
36 impacted on users` effectiveness. Indira (2007) outlined that power failure, computer viruses and hackers are the inherent problems of using computerised systems.
4.5 Management Support on Accounting Information System Success
The figure 4.2 below shows perceived levels of management support by both information providers and users throughout the operational phase of the accounting information system.
4.5.0 Forms and levels of management support
80%
70%
60%
50%
40% Perceived 30% level of support
Level of support provided support ofLevel 20% provided 10%
0% Training of Upgrading Management Upgrading User users accounting control over computer involvement on software computer use hardware system design systems Forms of management support
Figure 4.2: Perceived level of management support provided
The figure 4.2 above depicts that the management provides lower levels of support to the information providers in terms of training of users, control over computer use, upgrading computer hardware and involving information providers during system design and implementation. However, the level of upgrading accounting software is
37 higher but against lower level of user training. Catherine (1995) concluded that the major cause for the failure of the information system at York University was lack of management support which excluded secondary users from participation in the designing and poor extensive training. This goes back to emphasis by Seddon et al (1999), Delone and McLean (1999) to take into account stakeholders’ interest for an information system success.
The level of upgrading computer hardware systems remains pathetic despite upgrading of accounting software annually. The Finance Director also revealed that ZUPCO is approximately at 30% information technology (IT) acquisition. An interview with a finance clerk revealed that most computer systems are incompatible with recent accounting versions such as Pastel Partner 2011 and only few computers were compatible. This contradicts managements` goal of migrating to Pastel Evolution by 2012 since most computer systems are aged. This concurs with Spiegelberg et al (1995) that software acquisition to inappropriate hardware and personnel problems can cause more havoc to an information system.
The level of management control over computer use was perceived to be at 49.03%. Interviews with depot managers showed that they only required information for decision making irregardless of how the information has been processed. External auditors revealed that the rest of the management had little know how about the problems accounting system users face. It can be concluded that lack of user training might also be caused by the management that lacks insight of the problems and challenges faced by accounting system users.
38 4.6 Quality of information produced by the accounting information system
Figure 4.3 below shows the nature of information quality produced by the accounting information system at ZUPCO in terms of accuracy, completeness, reliability, verifiability, accessibility, relevance and validity.
4.6.0 Nature and quality of information produced
Verifiability 42.58%
Accessibility to information users 48.39%
Relevance and validity 50.97%
Reliability of information 46.45% Quality of information produced Completeness 63.87% Characteristics ofinformation Characteristics Accuracy 45.81%
0.00% 20.00% 40.00% 60.00% 80.00% Perceived level of information quality
Figure 4.3: Nature of information quality produced
Generally, the level of information quality is lower especially the accuracy and verifiability of the information which would raise a concern considering that the information is for decision making. However, the information is perceived to be complete.
An interview with divisional and depot managers who usually require accounting information to be within their finger tips everyday revealed that the information is not
39 always reliable. Concerning the failure of the information system at York University, Canada, Catherine (1995) cited poor information quality as another contributing factor. Both external and internal auditors echoed same sentiments to the quality of information produced as of low reliability due to inaccuracy and not easily verified due to use of manual books and poor transaction trail. However, Delone and McLean Model (1992) emphasised that an information system is considered successful if it produces information that is of value to the management for decision making.
High information quality led to success of Tehran Stock Exchange in Iran as revealed by Sajady, Dastgir and Nejad (2008).
Auditors forwarded that though the information was sometimes inaccurate, it was complete from past audits though it can consequently lead to a system failure. This is in agreement with Al-adaileh (2009). Divisional and depot managers had the same opinion saying the information remained relevant and valid for short term decision making.
Lack of user training, lack of management control over computer use, lack of employee morale and use of manual books of accounts have been cited by both information users and information providers as contributing factors for poor quality information at ZUPCO.
4.7 Users` competence in computerised accounting information system at ZUPCO.
4.7.0 Testing the association between work experience and level of competence in the use of computerised accounting system.
H0: Level of competence in the use of computerised accounting system is independent of the time an employee has served in the accounts department.
H1: Level of competence in the use of computerised accounting system is dependent on time an employee has served in the accounts department.
40 Reject H0 and accept H1 when the p-value is less than or equal to the significance level (α) where α=0.05
Table 4.5: Chi-Square Tests
Value Degrees of freedom Asymptotic (df) Significance (2-sided)
Pearson Chi-Square 2.615 2 0.270 Likelihood Ratio 3.693 2 0.158 Linear-by-Linear Association 2.406 1 0.121 Number of Valid Cases (number of 20 information providers)
The p-value 0.270 is greater than 0.05, therefore accept H0. Level of competence in the use of computerised accounting system is independent of the time an employee has served in the accounts department. This could be lack of training where employees do not upgrade their skills towards computerised accounting systems. Riccio and Marici (2002) emphasised empowering system users with information and knowledge to become better in their positions, but not to become technology gurus.
4.7.1 Testing the association between perceived levels of competence in the use of computerised accounting system and meeting information needs.
H0: Meeting information needs is independent of users` level of competence in the use of computerised accounting system.
H2: Meeting information needs is dependent of users` level of competence in the use of computerised accounting system.
.Reject H0 and accept H2 when the p-value is less than or equal to the significance level (α), where α = 0.05
41 Table 4.6: Chi-Square Tests
Value Degrees of freedom Asymptotic (df) Significance (2-sided)
Pearson Chi-Square 0.559 2 0.756 Likelihood Ratio 0.564 2 0.754 Linear-by-Linear Association 0.497 1 0.481 Number of Valid Cases (number of information 31 providers)
The p-value is 0.756, therefore accept H0 since p>0.05. This implies that meeting information needs is independent of the level of competence in the use of computerised accounting information system at ZUPCO. This could be attributed to lower employee morale where an employee who is capable to use computerised accounting system does not have any motive to avail timely, accurate and complete information to information users. According to Grudin (2005), technologies are recommended but employees ignore some injunctions obtain exceptions, use some features but not others and join with colleagues to advocate changes in policy.
4.8 Summary
This chapter presented and analysed the data collected from the field through questionnaires and interviews. The responses were indicative of shortcomings of the accounting information system at ZUPCO. The next chapter will be used to make recommendations and the conclusions to this research based on the above findings.
42 CHAPTER V
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This chapter presents a summary of the findings and the conclusions drawn from the research findings. Recommendations based on findings are presented.
5.1 Summary of Findings
In evaluating the suitability of accounting information systems at ZUPCO, the researcher summarised the following findings:
Slower computer systems due to computer viruses and outdated models and use of manual accounting books have been cited as major contributing factors to late production of management accounts, poor transaction trail and poor working/user efficiency. Management provides low level of support to accounting system users in terms of training of users, control over computer use, upgrading of computer hardware systems and user involvement on system design. However, the accounting software is regularly upgraded as per management and users` responses but against low levels of user training. The accounting information system has generally produced poor quality information. Lower levels of accuracy, reliability, accessibility to users and verifiability of the information characterise the accounting system at ZUPCO. The period an employee has served within the accounts department is independent to the level of competence in the use of computerised accounting system. This could be as a result of lack of training of information providers. The perceived level of competence in the use computers is also independent of
43 meeting information needs. Lower employee morale was cited as another contributing factor.
5.2 Conclusion
From the findings of the study, the researcher came up with the following conclusions;
The accounting information system at ZUPCO has proved unsuccessful in delivering expected results despite the initiatives to computerise the accounting system and this is evidenced by; late production of management accounts, poor transaction trail and poor working/user efficiency. While there is a lower level of training of information providers such as accounts clerks and upgrading of computer hardware systems, it was also observed that little effort was being done by ZUPCO`s management to address this issue. The period an employee has served within the accounts department was found to be independent to the level of competence in the use of computerised accounting system. Lack of user training could have contributed to this problem. Meeting information needs was found to be independent of users` level of competence in the use of computerised accounting system.This results could be attributed to lower level of employee morale leading to a mismatch between the perceived levels of competence in the use computers and meeting information needs.
It can be summarised that management is found wanting in terms of support throughout the operational phase of the accounting information system and management control over computer use. The existence of manual accounting could be as a result of poor training services leading to some users being unfriendly with computing hence poor quality of information produced.
44 5.3 Recommendations
One major reason for doing evaluations of information systems is to take actions based on the results of the evaluation to generate change and betterment (Lagsten and Goldkuhl, 2008). This is actually an important fact due to the expensive failure of information systems. Accordingly, and based on the findings of this study, the following recommendations are proposed to enhance the success of accounting information system at ZUPCO:
It is recommended that upgrading of computer hardware systems and training of users of the accounting system be given a priority to enhance quick production of information and a clear transaction trail. Effective and continuous management support should be available starting from the idea of the system, through approval, development and operational phases. This support can create a user vision that emphasises the importance of the target information system. Developing and upgrading of an accounting information system should consider the users' needs of information and the ability of the system to provide valuable information that match certain characteristics including simplicity, relevancy, accuracy, verifiability, timely, security, completeness, reliability, accessibility, and flexibility.
5.4 Suggestions for Future Research
As reported by Whyte et al (1997), it seems that there is no single overall set of attributes that relate to an effective and suitable accounting information system at ZUPCO, but it is possible to find subsets that do. Therefore, future research should consider other factors that might influence the success and suitability of the accounting information. These factors might include other socio-cultural, technological, and organisational factors. Moreover, further research is also needed to weigh the accuracy of these findings.
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50 Appendix 1: Employee Questionnaire
This image cannot currently be displayed. This image cannot currently be displayed. BINDURA UNIVERSITY OF SCIENCE EDUCATION
FACULTY OF COMMERCE
THE ACCOUNTANCY DEPARTMENT
Dear Sir/Madam
REQUESTING FOR INFORMATION
My name is NyapfereBetserai, a fourth year Bindura University of Science Education student, doing Bachelor of Accountancy attached at Zimbabwe United Passenger Company (ZUPCO) from December 2010 to August 2011 in the Internal Audit department.
Attached is a questionnaire and I am kindly requesting your assistance by way of furnishing my study with information to address my research which seeks to evaluate the suitability of the accounting information system at ZUPCO.
Be assured that the information will be strictly and specifically used for academic purposes only and shall be treated with confidentiality and anonymity.
Thank you in advance for your co-operation. Your assistance isgreatly appreciated.
51 Please tick (put an “x or tick”) in the appropriate box that matches your answer. Where you feel all suggested answers are appropriate, you may tick them all.
Section A
Department ……………………………………………………
Position ………………………………………………
Period in Department ………………………………………………
Section B
1) Manual book keeping is still adequate within ZUPCO`s accounting system. Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
2) Late production of management accounts is due to use of manual books Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
3) The accounting system has generally resulted in a poor transaction trail. Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
4) Computerized accounting information systems have a negative effect on the operational performance at ZUPCO.
5) Competence levels in computerised accounting system of users are generally low. Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
6) Competence levels of information providersare directly linked to working experience Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
52 7) What would you attribute to the late production of month-end and year-end financial reports? i) Poor accounting information systems [ ] ii) Lack of training [ ] iii) Under staffing [ ] iv) Less significance of reports to management [ ] v) Use of manual books [ ] vi) Other………………………………………………….
8) How do you rate ZUPCO`s accounting information system in terms of computerization?
i) effectively computerized [ ] ii) moderately computerized [ ] iii) poorly computerized [ ] iv) not computerised [ ]
9) The accounting software used at ZUPCO is not user friendly Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
10) Management has a policy of continual education and training regarding computerized accounting information systems at ZUPCO Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
11) In the table below, use a scale, 1 strongly disagree, 2 disagree, 3 neutral, 4 agree and 5 strongly agree.
53 Rating
The accounting software is regularly upgraded
Management has control over computer use
computer systems are regularly upgraded
Users are involved during and on system design
12) The information produced by the accounting system of acceptable quality Strongly agree[ ] Agree[ ] Neutral[ ] Disagree[ ] Strongly disagree[ ]
13) In the table below, use the following scale to rate the quality ofinformation produced at ZUPCO. [1 strongly disagree, 2 disagree, 3 neutral, 4 agree and 5 strongly agree.]
Rating More accurate information is produced The information is complete The information can be relied with The information is always relevant and valid The information is readily accessible to information users The information can be easily verified for accuracy and origin
14) What kind of problems do the employees normally face when using computers in accounting at ZUPCO?...... …………………………………………………………......
*****************************THE END*******************************
54 Appendix 2: Interview guideline
To Depot Managers
Are there any factors which you would attribute to the late production of accounting information to the management?
What factors would have led to lower employee morale?
Do you always rely on the information provided from the accounting information system?
To External Auditors
Do you think management has control over data processing?
What characteristics do you attach to the transaction trail at ZUPCO?
To Finance Clerks
What comment do you have regarding upgrading of accounting software?
In your own opinion, what hinders training of accounting information system users` training?
55 Appendix 3: Chi-Square Tests Working 1
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Duration one has worked within the dept * percived 20 100.0% 0 .0% 20 100.0% level of competence of CAIS
Duration one has worked within the dept * perceived level of competence in computerised accounting information system :Cross tabulation
Perceived level of competence in computerised accounting information system
Agree Neutral Disagree Total
Duration one has Less than 10 years Count 4 5 5 14 worked Expected Count 2.8 4.9 6.3 14.0 within the dept More than 10 years Count 0 2 4 6
Expected Count 1.2 2.1 2.7 6.0
Total Count 4 7 9 20
Expected Count 4.0 7.0 9.0 20.0
56 Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 2.615 2 0.270
Likelihood Ratio 3.693 2 0.158
Linear-by-Linear 2.406 1 0.121 Association
N of Valid Cases 20
57 Appendix 4: Chi-Square Tests Working 11
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Percived level of computer competence * 31 100.0% 0 .0% 31 100.0% Accounting system users meet info needs
Perceived level of computer competence * Accounting system users meet info needs: Cross tabulation
Accounting system users meet information needs
Strongly agree Agree Neutral Total
Perceived level Count 6 6 3 15 of computer : Less competent Expected Count 5.3 5.8 3.9 15.0 competence :More competent Count 5 6 5 16
Expected Count 5.7 6.2 4.1 16.0
Total Count 11 12 8 31
Expected Count 11.0 12.0 8.0 31.0
58 Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 0.559 2 0.756
Likelihood Ratio 0.564 2 0.754
Linear-by-Linear 0.497 1 0.481 Association
N of Valid Cases 31
59