CHAPTER ONE

1. INTRODUCTION
1.1Background of the study
From time immemorial, Information has always played a prominent role in human life but the
emergence of social progress and the vigorous development in science and technology has
immeasurably increased the role of information in every face of human endeavor. The rapid
expansion of amass of diversified information has born the term information and elucidation of
its most characteristic properties which has led to principal changes in interpretation of the
concept of information ( Romney, 2003)

Accounting to this the service function that seeks to provide the users with quantitative
information. On the other hand, Accounting Information System (AIS) is an information system
that designed to make the accomplishment of accounting function possible. AIS processes data
and transactions to provide users with the information they need to plan, control, and operate
their businesses. An accounting information system can be a manual system, or a computerized
system Regardless of type, AIS is designed to collect, enter, process, store, and report data and
information.(Romney,2003).

Accounting Information System (AIS) as one of the most critical systems in the organization has
also changed its way of capturing, processing, storing and distributing information. Nowadays,
more and more digital and on-line information is utilized in the accounting information systems.
Organizations need to take an action, which put such systems at the forefront, and consider both
the system and the human related factors while managing their accounting information systems.
(Romney, 2003)

Accounting Information system is sub-system process financial transaction and non financial
transaction that directly affect the processing of financial transaction. For example change of
customer’s names and addresses are processed by the AIS to keep the customer file current. In
managing an organization and implementing an internal control system, the role of AIS is
crucial. (James. O brien, 2004).

Now a day the business world is changing at a faster and faster change. The reasons given for
this is globalization, high information technology investments and the rapid change of
1
technological change in combination with increasing costs of research and development (James.
O brien 2004)

The role of information technology has shifted over the last decades to become an important part
of how companies manage and control their resources. Organizations are responding in different
ways, and at different rates to the wide range IT based opportunities and pressures. Decisions
regarding the building of technical IT a architecture should be closely linked to decisions made
in designing the IT organization that should be linked to the organizational design of the
company itself. As a result, information technology plays a critical role in modern business,
especially regarding accounting function. IT have radically transformed the nature of business
and accounting practice. (James. O brien 2001).

Thereforethe role of accounting information system is important to company’s profitability and

for the knowledge gap in learning and applying of AIS. The researchers weremotivated to assess
the applying face of AIS and to solve the knowledge gap.

1.2 Profile of the organization

Geographically, Commercial Bank of Ethiopia Bote branch is located to the south eastern parts
of town, on the way of Modjo main road. The bank was introduced to the town in
16/09/2010G.C by having 12 workers in total. Currently the bank has 13 males and 7 females,
totally 30 skilled workers who provide different Services to the customers.

1.3 Statement of the Problem

The main purpose of accounting is to provide financial data that uses for decision making. For
instance, business executives and managers need the financial information provided by
accounting system to help them to plan, to control and evaluate business operation. Outsiders
such as bankers, potential investors, labor unions and other also need accountinginformation.
(Plunkett:1986).

An accounting information system generates all financial reports without the clerk calculating
anything. The dates for the reports are entered in to the system and the computer generates
reports for specific period. This comes in handy when a report from a different period is needed
immediately. The system has the capability of producing reports for any period that the
information was recorded for, year-end closing is often a tedious process for an accountant. An
2
unadjusted trial balance is created, adjusting entries are made and recorded unadjusted trial
balance is calculated, closing entries are made and finally post closing trial balance is generated.
This process is complicated and time consuming, but with an accounting information system the
computer does most of the work on its own.(Plunkett, 1986)

Banks operating with effective accounting information systems improved Customer efficiency,
satisfaction as well as time effectiveness. It has also greatly improved accuracy in issuance of
bank statements, processing of financial statements and auditing procedure as well as accuracy,
efficiency and speed of service delivery to their customers which makes them highly competitive
within the banking industry.

But sometimes human error may not beidentified as quickly hence there must be some sort if
validation for records input need for accuracy. Banks using manual banking system have not
been apt in delivering quick and efficient service to their customers. Accounting information
system is useful if it has a potential for making good decision, otherwise it misleads the users
idea and also that lead them to decide wrong decisions, and that may be the cause for bankruptcy
or loss of the organization. In Ethiopia, this problem is visible; they do not utilize AIS as tool. So
this was the main reason that motivated the researchers to study in effectiveness and practice of
Accounting Information System in Commercial Bank of Ethiopia in Bote branch.

1.4 Research Question

In order to achieve the objectives of this research, the researcher tries to answer the following
questions.

 What is the importance’s of AIS in CBE?

 What is the role of AIS in CBE forDecision making activity?
 How CBE solve a knowledge gap exist on the use of AIS by employees?
 What are the challenges associated with using AIS in CBE?

1.5 Objective of the study

1.5.1. General objective
The general objective of this study is to examine the effectiveness of AIS in commercial bank of
Ethiopia in Bote district.

3
1.5.2 Specific objective

 To examine the importance of AIS in CBE.

 To know the role of AIS in CBE in decision making activity.
 To evaluate how the CBE solve the knowledge gap exists on the use of AIS by
employees.
 To identify the challenges and problems associated with using AIS in CBE.

1.6.Significance of the study

This research paper would have the following important

 The researchers weredeveloped research skills.

 The final result of this research would help the CBE to solve its problems related to the
AIS.
 Finally the research paper can be used as a base or a stepping stone for further findings.

1.7. Scope ordelimitation of the study

The study was assessed in Commercial Bank of Ethiopia in Bote branch. The research was cover
as much as possible all AIS practice in CBE. The study was focus on the assessment of
effectiveness of Accounting Information System in CBE. Although the bank has many branches
throughout the country, but the study is restricted on Bote branch.

1.8 Limitation of the study

The study was focused on the assessment of effectiveness of AIS in CBE. It’s mainly restricted
on if the bank uses AIs effectively or not. Lack of reliable data and adequate information for the
study was major problems and the other problem was it has defect on the questionnaire paper and
also some respondents was careless to respond the questions. Most of the information we got
came from interview and questionnaires but the managers did not have so much time to allocate
to our study. Lack of related researches done at the country level. We have underlined also that
most of our members have lack of experience before in conducting a study in this extent.

4
1.9 Organization of the study
The study comprised in five chapters. The first chapter deals with theintroduction; this includes
the background, statement of the problem,objectives of the study, significance of the study,
scope andlimitations of the study. The second chapter describes the existingrelevant literature of
theoretical and empirical review. The third chapter was focuses on research methodology. The
forth chapter deals with data presentationand analysis. The final chapter is about summary of
finding, conclusion and recommendation.
1.10 Definition of key terms

Accounting information system: is an information system used in different organization used to

encode all financial data to analyze, interpret and make financial decision.

Information Technology:the entire infrastructure used in the accounting information system.

These are Network, computer accessories, internet and the like.

5
 CHAPTER TWO

2. Literature Review

2.1 Theoretical Review

2.1.1 Information systems

In discussing what information on systems are one must first understand what information is
further processed data that has meaning and purpose. It’s a combination of hardware software
infrastructure and trained personnel organized to facilitate planning, control, coordination and
decision making in organization. This gives the information value for specific persons and meets
their particular information needs thus, information is a basic source that individuals and
organization must have, to survive and succeed in todays competitive and dynamic
environment .An information system is a set of people, procedure and resources that collects,
transforms and disseminates information in an organization. (Romney 2003).

An information system is a set of organized procedure that, when executed provides information
to support the organization. Thus information system are systems designed process data and
produce information which is a vital resource for individuals, organizations, and the society as a
whole. Information system is the collection of technical and human resources that provides the
storage computing distribution and communication for the information required by all or some
part of an enterprise. A special form of IS (information system) is a management information
system which provides information for managing an enterprise. (Lucas, 1997).

2.1.2 Value of information

Information is valuable when the benefit (improved decision making) exceeds the cost of
gathering, maintaining, and storing the data. (Romney 2003).

2.1.3 What makes information useful?

There are seven general characteristics that make information useful:

 Relevant: Information needed to make a decision (E.G the decision to extend customer
credit would need relevant information on customer balance from an A/R aging report.)

6
  Reliable: information free from bias
 Complete: doesnot omit important aspects of events or activities
 Timely: information needs to be provided in time to make the decision
 Understandable: information must be presented in meaningful manner
 Verifiable: two independent people can produce the same conclusion
 Accessible: available when needed (Romney 2003).

2.1.4 General uses of Accounting Information

Accounting provides companies with various pieces of information regarding business
operations. It’s often conducted by a company’s internal accounting department. ( Romney
2003).
1. Performance management
A common use of accounting information is measuring the performance of various business
operations. While financial statements are classical accounting information tool used to assess
business operations, business owners may conduct a more thorough analysis of this information
when reviewing business operations. Financial ratios use the accounting information reported on
financial statements and break it down into leading indicators. These indicators can be compared
to other companies in the business environment or an industry standard. This help the business
owners understand how well their companies operate compared to other established businesses.
(Romney 2003).
2 .Credit budgets
Business owners often use accounting information to create budgets for their companies.
Historical financial accounting information provides business owners with detailed analysis of
how their companies have spent money on certain business functions. Business owners often
take this accounting information and develop future budgets to ensure they have a financial road
map for their bossiness. These budgets can also be adjusted based on current accounting
information to ensure a business owner does not restrict spending on critical economic
resources(Romney 2003).
3 .Business decisions
Accounting information is commonly used to make business decisions. Decisions may include
expanding current operations, using different economic resources, purchasing new equipment or
facilities, estimation future sales or reviewing new business opportunities. Accounting
7
information usually provides business owners information about the cost of various resources or
business operations. These costs can be compared to the potential income of new opportunities
during the financial analysis process. This process helps business owners understand how current
business operation will be affected when expanding or growing their businesses, opportunities
with low income potential and high costs are often rejected by business owners.(Romney 2003).
4 .Investment decisions
External business stakeholders often use accounting information to make investment decisions.
Banks, venture, lenders capitalists or private investors often review a company accounting
information to review its financial health and operational profitability. This provides information
about whether or not a small business is a wise investment decision. Many small businesses need
external financing to start up or grow. The inability to provide outside leader or investors with
accounting information can severally limit financing opportunities for a small business.(Romney
2003).

2.1.5 Characteristics of Accounting Information

For the accounting information to be useful, its necessary the fulfillment of four principal
qualitative characteristics: comprehensibility, relevance, reliability and compatibility of
information. (Osmond vitez 2010)
Comprehensibility: is an essential quality which implies that accounting information must be
easily understood by users. To that end, the users are assumed to have a reasonable knowledge of
business and carry out the tasks given by economic activities. ( Osmondvitez 2010)
Relevance: is their ability to be useful to the beneficiaries in decision making. Accounting
information is relevant when it influences the economic decisions of users by helping them
evaluate past, present or future events, confirming or correcting them. ( Osmondvitez 2010)

Credibility: accounting information has the quality of being reliable when it does not contain
significant errors and is not biased and users can trust that the information represents correctly
what it aims to represent or what is reasonably expected to represent. ( Osmondvitez 2010)
Compatibility: implies that users can compare the information presented in the financial
statements of an enterprise over time to identify trends in its financial position and performance.
Users can only trust information that is verifiable, neutral and fair. Verifiability of accounting
information is ensured through standardization activities and accounting rules. Neutrality of

8
accounting information means its fairness and the company's managers and producers of
accounting information must be neutral as regards the information they process and present. To
be reliable, accounting information should truly present the reality. ( Osmondvitez 2010)
2.1.6 Accounting information in banking activity
Accounting information allows commercial banks to speculate upon opportunity of attractive
business in placements and resource attraction. The role of accounting information in the
banking activity is extremely important in the orientation of bank management towards
successful strategies. By exercising the main functions, consecrated by law, banks generate
extremely useful accounting information for both customers and bank management. The main
generating sources of accounting information in bank activity are: client accounts, bank accounts
and bank computerized programs (which deal both with accounting data and statistical data, bank
management, etc).( Margaret. N 2012 ).
Users of bank accounting information can be:
−Internal users, respectively: bank clients and stockholders, front office, middle office and
back office employees, bank managers;
−External users, respectively: client business partners, suppliers and their clients, financial and
fiscal institutions, insurance companies, other banks.
In the context of world economy globalization the great banks which are the giants of the
international financial market are fighting for supremacy. Power means information, especially
in the banking world. The performances and the accounting information ensure banks the path to
success. (Margaret. N 2012).

2.1.7 Accounting Information System

An Accounting Information System (AIS) is a system of collecting, storing, and processing
financial and accounting data that are used by decision makers. An Accounting Information
System is generally a computer based method for tracking accounting activity in conjunction
with information technology resources. The resulting financial reports can be used internally by
management or externally by other interested parties including investors, creditors, and tax
authorities. (Kabi A.S 2004).

Accounting Information systems are designed to support all accounting functions and activities
including auditing, financial accounting and reporting, managerial or management accounting

9
and tax. The most widely adopted Accounting Information Systems are auditing and financial
reporting models.(Kabi A.S 2004).

AIS can be a very simple paper and pencil based manual system, a very complete and
information technology, or something between these two extremes, regardless of the approach
taken, the process is the same. The AIS and the people who use it must still collect, enter
process, store and report data and information. (Romney, 2009).
2.1.8. The role of AIS in banks
Accounting information allows commercial banks to speculate uponopportunity of attractive
business in placements and resource attraction.The role of accounting information in the banking
activity is extremelyimportant in the orientation of bank management towards
successfulstrategies. (Kabi, A.S 2004,).
By exercising the main functions, consecrated by law, banks generateextremely useful
accounting information for both customers and bankmanagement. Users of bank accounting
information are internal users(bank clients and shareholders, employees in front office and bank
office,bank managers) and external users (client business partners, taxauthorities, insurance
companies, other banks). Information Technologyis vital in banking today, it becomes
imperative for banks to realize itsimpact on operational performance in order to justify capital
Investments. Information Technology affects the operations ofcommercial banks in terms of
effectiveness, efficiency, competitiveness,customer base and globalization of the bank.
( Margaret.N 2012).
Information Technology led to increase customer satisfaction, improvedoperational efficiency,
reduced transaction time, better competitive edge,reduced the running cost and ushered in swift
response in servicedelivery and many successful financial institutions have clearlydemonstrated
that information systems and technologies can be apowerful competitive weapon that can be
used to capturemarket share ,improve customer service, reduce operating costs, and create new
Product and service.(Margaret.N 2012).
Chiefexecutive Officers (CEO) and top managers often have an intuitiveunderstanding of the
power and potential of IS, thus propelling manycompanies and institutions to invest large sums
of money in IS and IT.( Margaret.N 2012)

10
2.1.9. Components of accounting information systems
Accounting Information System generally consists of six primary components: people,
procedures and instructions, data, software, information technology infrastructure, and internal
controls.(Ugboma .E 2004)

People

The people in AIS are simply the system users. Professionals who may need to use an
organization’s AIS include accountants, consultants, business analysts, managers, chief financial
officers, and auditors. AIS help the different departments within a company work together.
(Ugboma .E 2004)

With well-design AIS, everyone within an organization who is authorized to do so can assess the
same system and get the same information. AI also simplifies getting information to people
outside of the organization, when necessary. The AIS should be designed to meet the needs of
the people who will be using it. The system should also be easy to use and should improve, not
hinder, efficiency. For example management can establish sales goals for which staff can than
order the appropriate amount of inventory. The inventory order notifies the accounting
department of a new payable. When sales are made, sales people can enter customer orders,
accounting can invoice customers, the ware houses can assemble the order, the shipping
department can send it off, and the accounting department gets notified of a new receivable.
(Ugboma.E 2004).

Procedures and instructions

The procedure and instructions of AIS are the methods it uses for collecting, storing, retrieving,
and processing data. These methods are both manual and automated. The data can from both
internal sources (e.g., employees) and external sources (e.g., customers). Procedures and
instructions will be “coded” in to employees through documentation and training. To be
effective, procedures and instructions must be followed consistently. (Ugboma.E 2004).

Data

To store information an AIS must have a data base stricture such as structured query language
(SQL), the computer language commonly used for data bases. The AIS will also need various

11
input screens for the different types of system users and data entry, as well as different output
formats to meet the need s of different users and various type of information. The data contained
in AIS is all the financial information pertained pertinent to the organizations business practices.
Any business data that impacts the company’s finances should go in to AIS. (Ugboma.E 2004)

Software

The software component of the AIS is the computer programs used to store, retrieve, process,
and analyze the company’s financial data. Before there were computers, AIS where manual
paper based system, but today, most companies using computer software as the bases of the AIS.
Qualities, reliabilities, and security are key components of effective AIS software. Managers
relay on the information it out outs to make decisions for the company and they need high-
quality information to make sound decision. AIS software program can be customized to meet
the unique needs of different types of businesses. (Ugboma.E 2004).

Information technology infrastructure

Information technology infrastructure is just a fancy name for the hardware used to operate the
accounting information system. Most of these hardware items a business would need to have
anyway, including computers, mobile devices, servers, printers, surge protectors, routers, storage
media, and possibly back up power supply. In addition to cost, factors to consider in selecting
hardware include speed, storage capability and whether it can be expanded and up
graded.Perhaps most importantly, the hard ware selected for AIS must be compatible with the
intended software. One way business can easily meet hardware and software compatibility
requirement is by purchasing a turnkey system that includes both the hardware and software that
the business needs. Purchasing a turnkey system means, theoretically, that the business will get
an optimal combination of hard ware and software for its AIS.(Ugboma.E 2004

Good AIS should also include a plan for maintaining, servicing, replacing, and upgrading
components of the hardware system, as well as a plan for the disposal of broken and outdated
hardware so that sensitive data is completely destroyed. (Ugboma.E 2004)

Internal control

12
Internal control of an AIS are the security measures it contains to protect sensitive data. These
can be as simple as passwords or as complex as biometric identification. An AIS must have
internal controls to protect against an authorized computer access to limit access to authorized
users which includes some users inside the company it must also prevent an authorized file
assess by individuals who are allowed to assess only select part of the system. (Ugboma.E 2004)

AIS contain confidential information belonging not just to the company, but also to its
employees and customers. These data may include social security numbers, salary information,
credit card numbers, and so on. All of the data in an AIS should be encrypted, and assess to the
system should be logged and survival. System activity should be traceable as well. It must also
be protected natural disasters and power surges that can cause data lose. (Ugboma.E 2004)

2.1.10 Objectives of Accounting Information System

Accounting information systems provides reporting for different layers of a business. An
accounting information system provides accurate and timely financial information for internal
management purposes. While these systems can include paper manuals and ledgers, most
systems in today's business environment are built upon accounting software programs or
applications. These systems provide financial or operational reports for business owners to make
decisions. An accounting information system can also integrate and fulfill departmental and
company-wide objectives. (James O brien 2004).
Central Information Collection
Accounting information systems collect information for various purposes in a business. Large
organizations often use this system to gather and organize financial and other information from
multiple business departments or divisions. An accounting system can also benefit organizations
with several national or international locations. This system allows for the electronic transference
of information from many sources into a central location where accountants gather and process
this data. Some systems can also gather information in a real-time format. (James O brien 2004).
Checks and Balances
Accounting managers and supervisors use an accounting information system to separate tasks
and ensure controls are in place for different accounting functions. Accounts payable, accounts
receivable, payroll, departmental financial data, fixed assets and purchasing each work under
separate modules in an advanced accounting system and demand individual handling processes

13
and procedures. Each of these individual modules feed summarized data into the general ledger
but allow for system checks and balances along the way. Reports can be generated from
individual modules to ensure accuracy of data before being passed on to a company's general
ledger. (James O brien 2004)
Improving the Flow of Work
Improving the flow of work in individual departments often gets a boost by the implementation
of an accounting information system. Departments outside of accounting must understand how
critical information is processed through the company's internal financial information system for
a variety of reasons. Source documents--such as invoices, purchase orders, employee expense
reports, time cards for payroll input, bills and asset acquisition forms--must all find their way
from the originator to the accounting department.( James O brien 2004).
Depending upon the software, the accounting system requires a variety of information for
different parts of the process be manually input into the system. This often determines the work
flow of other departments in regards to processing financial data. Procedures and processes that
clearly delineate the needed information, the steps to process that information and the approval
process, aid in reducing redundant work and ensure that the accounting department has the
necessary approvals to process financial data. ( James O brien 2004).
An accounting system serves to inform interested parties of past performance and to provide
guidance for future performance. It should provide information. (James O brien 2004).
Better process
Company typically uses several types of processes in their accounting department. Paying bills,
collecting customer accounts, posting journal entries and creating account reconciliation are just
a few common process. Accounting systems often allow managers to develop processes that take
advantage of the company’s information system. Business owners may also be able to reduce the
number of process in their accounting department. Reducing the number of process can
decreases the amount of time it takes to process financial information. (James O brien 2004).
Decision support
Business organizations often use accounting information system to provide support for
management decisions. Support usually includes financial analysis from the company
accountants. Analysis is often taken for the company’s AIS. Using business technology, this
system can process copious amounts of documents electronically for owners and managers.

14
Information systems also allow business owners and managers to request specific analysis
reports within the scope of the company’s accounting system. (James O brien2004 ).
Flexibility
AIS usually provide companies within certain level of flexibility. This flexibility allows business
owners and managers to change how their systems gather and distributes financial documents.
Changes to business operations usually can create significant changes in a company’s financial
or accounting processes. Business owners and managers need the most current documents when
reviewing their company’s overall performance. Automated information systems allow
companies to add new business divisions or departments into their accounting gathering process
(James O brien 2004).

2.1.11Features of an Accounting Information System

One of the features of AIS is the flow of information. It can be illustrated by the use of a pyramid
with management on the top, middle management just below that, operations management below
that, and operations personnel representing the base of the flow of information. Information
concerning the performance of the company drifts upward to all levels of management through
the personnel. The top management is responsible to the shareholders or owners of the company
for the information they receive. Contributing to this information about the performance of the
company are the customers and suppliers, with whom the operations personnel have d ay-to-day
contact. With the use of this information the top management filters down information on the
company's budget and instructions on how to change or improve the day-to-day interactions with
the customers and suppliers. Information from suppliers and customers is known as external
information flows. Those from personnel to management and management to personnel are
known as internal information flows. (GelinasJr 2008).
Processing Transactions
Another feature of the AIS is in the processing of transactions. AIS process two different types
of transactions. The financial transaction is any transaction monetary in nature that affects the
assets or equities of a business organization. The non-financial transaction is a decision that,
while it is not measured monetarily, can affect the overall accounting health of the company. For
example, if the company decides to change suppliers due to a substantial rise in prices from a
current supplier, the immediate effect is not financial in nature until the first order is placed.
All transactions are entered into the Accounting Information System for the purpose of affecting

15
the decision-making of the top management. If top management is aware of a coming increase in
costs, taxes or a potential loss of clientele, decisions can be made to counter negative
consequences of future events. (Gelinas Jr. 2008).
AIS and information
AIS include three different steps in handling information. First is the data collection. It is
considered the most important of all three steps; as if errors go undetected the system may create
unreliable output. The two main requirements of the data collection process are that the data used
be both relevant and efficient. It is in the data collection stage that the relevance of the data
should be weighed to filter out all irrelevant facts from the system. Efficiency involves collection
of the same set of data only once. Failure to do so leads to redundant data. ( GelinasJr 2008).
The second step is in the data processing, or the attempt to organize the data in such a way that
management can make decisions in regard to the financial decisions of the company. One
example would be in using sales data to forecast future sales expectations. Based on those
expectations decisions can be made about staffing requirements. ( GelinasJr 2008).
The third step is the actual generation of information that leads to decision-making. Whether the
decision is based in financial or nonfinancial transactions, the decision can affect the day-to-day
operations of the business and possibly the financial outlook of the company. (GelinasJr 2008).

2.1.12 Accounting Information Systems Used in Banking

Bank information systems are classified as "hybrid" systems, which provide basic accounting
operations, bank information systems decision support software, offline banking products
(insurance, business financial management plans) implemented and initiated on intra-office
networks to serve customers. Bank accounting systems are under state and federal regulatory
agencies to ensure the accuracy and integrity of bank accounting systems. ( GelinasJr 2008).

General Ledger Systems

The general ledger is at the core of account processing and information systems in banking. The
general ledger is the record accessed to perform account transactions. It records every
transaction, which interfaces with a designation of accounts. A bank general ledger can be
slightly different from modern industry general ledgers because of certain compliance rules set
forth by the Federal Reserve Bank (FRB) and the Federal Deposit Insurance Corporation (FDIC).

16
Banking general ledger systems operate on mid-range software, which can be turnkey software--
out of the box software customized for banking industry applications. (Gelinas Jr. 2008).

2.1.13 Loan Accounting Applications

Banks make the majority of their money through loans and investments. Through loan
accounting software, bank personnel can process the forms and paperwork needed to make a
decision on a customer's credit standing. The managerial side of a loan accounting application is
managers can access data to examine the bank loan portfolio, generate compliance checks for
auditors and track loan loss reserve accounts. Loan origination software can interface with an
accounting information system through most PC-based systems.(Gelinas Jr. 2008).

2.1.14. Mortgage Banking Applications

For banks in the mortgage industry, mortgage bank application modules create and maintain
information according to mortgage loans provide by banks to its customers. The mortgage
information system generates customer statements, tax statements for federal and state tax
offices, and creates an escrow account for mortgages on the banks portfolio. On the general
ledger, mortgage bank accounts consist of several sub-account layers reflecting taxes, actual
value of the mortgage, assessed value of the mortgage and other variables. (Murphy and
Katherine2002).

2.1.15 Customer Account Applications

Customer account applications provide unique primary key identifiers to link customer
information to an account number assigned by the information system during a creation of the
account. The customer account is maintained on the system and referenced by the account
number, which is held in a field on the general ledger. The customer account number is the link
for customers to interact with online and offline banking system applications. Customer account
information is also the basis for transaction exception reporting for various customer account
issues.(Murphy and Katherine 2002).

2.1.16 Internet Banking Applications

The latest evolutions in banking information systems are web-based applications that support
Internet banking. Internet banking programs are interface with accounting information system
through a web server or portal with the website or page performing the role as a template or
17
"point of access." Through secure web-servers, customers can perform actions, which can affect,
update or change general ledger status. Management analyzes reports pertaining to Internet
banking, such as how many customers are using the Internet for deposits, transfers and accesses
other banking products. Internet banking applications are also used for the online marketing of
bank products through marketing software created for bank institutions.(Murphy and
Katherine2002).

2.1.17. Basic subsystems in the AIS

1. The revenue cycle- is are a recurring set of business activities and related information
processing operations associated with providing goods and services to customers and collecting
cash in payment for these sales. The primary external exchange of information is with customers.
Information about revenue cycle activities also flows to the other accounting cycles via the
centralized data base.(Romney 2009).

2. The expenditure cycle-iscuring set of business activities and related information processing
operations associated with the purchase and payment for goods and services. In the expenditure
cycle the primary external exchange of information is with suppliers. the primary objective in the
expand item cycle is to minimize the total cost acquiring and maintaining inventories, supplies,
and the various services the organization needs to function.(Romney 2009).

3. The human resources management (payroll cycle) is a recurring set of business activities and
related data processing operations associated with effectively managing the employee workforce.
The more important tasks include:- recruiting and hiring new employees training job assignment,
compensation (payroll), performance evaluation, discharge of employees (due to voluntary or
involuntary terminating.( Romney 2009).

4. The production cycle- is a recurring set of business activities and related data processing
operations associated with the manufacture of products. It involves activities raw materials and
labor in to finished goods.(Romney 2009).

5. The financing cycle- involves activities of obtaining necessary funds to organization, repay
creditors and distribute profits to investors. (Romney 2009).

18
2.1.18 Importance of Accounting Information Systems
The Accounting Information System is considered to be one of the most important systems of
any organization. It provides necessary information to the managers at different levels. This
information helps them in discharging their responsibilities in an effective and efficient manner
in the areas of planning, resource control, performance evaluation and decision making.( Lucas
Henry C .1997 ).
The automated AIS speed up the process to produces monthly projects’ income statements,
balance sheets and statement of changes in financial position for the strategic and tactical
managers to plan, control and make decision on the resources allocation. The role-played by AIS
enhanced the organizations’ accounting functions, and add information value and overcome
human weaknesses in data processing. The system enhances management of resources and the
process of monitoring, control and prediction of business for better future. ( Lucas Henry C
1997)
Business Transactions
An accounting information system is designed to record all transactions of a business. An
accounting clerk enters all business transactions into the program and the transactions
automatically are posted to the corresponding accounts. This is important because any time
information is needed it can found on the computer and is organized. (Lucas Henry C. 1997).
Accounts Payable
An accounting information system allows for easier payments made on accounts payable. Many
systems are designed to pay all bills due with a click of a button. A date is selected and checks
are automatically made out for all bills due. Most systems allow a clerk to unselect certain bills if
a company is not ready to pay a specific bill.( Lucas Henry C. 1997).
Accounts Receivable
This type of system also allows for easier billing. Information is recorded on the system and a
clerk chooses when to print bills. This is done daily, weekly or monthly, depending on the
business. The system generates all bills efficiently and easily for the clerk. (Lucas Henry C.
1997).
Financial Statements
An accounting information system generates all financial reports without the clerk calculating
anything. The dates for the reports are entered into the system and the computer generates reports
for that specific period. This comes in handy when a report from a different period is needed
19
immediately. The system has the capability of producing reports for any period that the
information was recorded for. (Lucas Henry C. 1997).
Year-End Closing

Year-end closing is often a tedious process for an accountant. An unadjusted trial balance is
created, adjusting entries are made and recorded, an adjusted trial balance is calculated, closing
entries are made, and, finally, a post-closing trial balance is generated. This process is
complicated and time consuming, but with an accounting information system, the computer does
most of the work on its own.(Lucas Henry C. 1997).

2.1.19. Accounting information system and organizations

Virtually all organizations from business and government agencies to hospital, educational
institution have an accounting information system. Among these groups, the AIS of business
organizations tend to be the most highly developed and innovative. However,some of the
concepts, techniques and principles are equally applicable to AIS in other kinds of organizations.
(Romney 2009).

The modern business organization served by the AIS is a very complex institution such an
organization may employee thousands of people in tasks ranging from the development and
engineering of new products to the management of a large sales force. The activities of
prominent companies are of interest to many segments of society customers, suppliers,
employee’s lenders stock holders and the various government under whose jurisdiction they
operate. (Romney 2009).

How can the modern business organizations plan coordinate, and control the multitude of
activities that it under takes? How can it supply information to the many people and institutions
that are interested in its activities? The AIS plays a vital role in accomplishing these tasks. It is
use full to examine AIS is from view point of uses who utilize accounting information as a
business for making decisions, there are two basic categories of such uses those external to the
business organization and those internal, external uses are many and varied. Their needs are met
to some extent by the publication of general purpose financial statements, such as the income
statement and balances sheet (Romney, 2009).

20
Trade owners usually employee an AIS to make their accounts bundling feasible, rapid and
precise. Since the system is all about the investigation and evaluation of the records with the
ultimate preparation of statements, it gives less room for errors. Moreover, many AIS have a
built in means of mistakes reduction all the information is complied in an automated way. The
communications are all electronic hence there are minimal instances of mistakes. In addition to
this the process takes less time with your work being more efficient than before. On the other
hand, the cost of the execution of an AIS may be high however, the advantages that it promises
in the long run out weights the cost incurred. AIS provide all the equipments that are needed to
keep track of one’s financial proceedings together the data about one’s clients and dealers. The
main objective of this structure is to endow he companies with their financial status and
capabilities. Here this can assist the managers to highlight and recognize the variation in their
business. Besides this in order to decide as to whether a particular company needs an AIS and
what type is required is that key information that a user has to find out by through scrutiny of all
the accounting procedures and the assessment of the nature of dealings. Only then one can
conclude an all the clear cur necessities of an AIS of any company. ( Romney 2009).

Accountant and systems developers help management achieve their control objectives by first
designing effective control systems that take a proactive approach to eliminating systems and
detect, correct, and recover from threats when they occur. Secondly, making it easier to build
controls into systems at the initial design stage than to add them after the facts. They also alleged
that internal control perform the following important functions; (Romney 2009).
Preventive controls: which deter problems before they arise, Examples include hiring qualified
personnel, segregating employee duties, and controlling physical access to assets and
information. (Romney 2009).

Detective control: which discovers problems that are not prevented .Example, duplicate
checking of calculations and preparing bank reconciliation s and monthly trial balances.(Romney
2009).

Corrective control:This identifies and corrects problems as well as correct and recover from the
resulting errors. Examples include maintaining backup’s copies of files, correcting data entry
errors and resubmitting transactions for subsequent processing.(Romney 2009).

21
General control: controls designed to make sure an organization‘s information system is stable
and well managed. Example includes security infrastructure, software acquisition, development
and maintenance control. (Romney 2009).

Application controls: Controls that prevent, detect, and correct transaction error and fraud in
application programs. They are concern with accuracy and authorization of data captured,
entered, processed, stored, transmitted to other system and reported. (Romney 2009).

2.1.20. Accounting information system and decisions

Decision making is defined as a rational choice among alternatives there have to be options to
choose from; if there are not there are no choice possible and no decision. Decision making is a
process, not a lightning bolt occurrence. In making the decision manager is making a judgment
reaching a conclusion from a list of known alternatives. (Plunkett; 1986).

A vital role of the AIS is to supply internal decision makers with information that relevant to
their needs. An organization is held together by its information network, the acquisition, use
retention and transmission of information one of the primary network members in an
organization is its AIS. The AIS summarizes and filters the data available to decision makes. By
processing the data, the AIS influence organizational decision. (Romney, 2003).

AIS and their effect on Management

Accounting information system is the row material for decision process. The accounting
decision lead to elaborating all other type of decisions that help achieving the main goal of the
management: continuing the activity. A manager can’t be sure upon making a right decision
unless owning information which is provided by AIS which must be alike, understandable,
relevant, and reliable and consistence. (Gelinas.Jr 2008).
The major function of AIS is to support management activities including management decision
making. The way managers ‘use this information: first they monitor current operation to keep
their “ship” on course for e.g., managers need to know if enough inventory is being produce each
day to meet expected demand. The second use is to help them achieve satisfactory results for all
of their stock holders for e.g., information that can major attainment of goals regarding product
quality, timely deliveries, cash flow and operating income. Finally managers use AIS to
recognize and adopt in a timely manner to trends in the organizations environment. For e.g.,

22
managers need answers to questions “how does the time it takes us to introduce a new product
compare to our competitors?”(GelinasJr2008 ).
Manager’s compares information about current performance to budget, forecasts, prior periods,
or other bench marks to measure the extent to which goals and objectives are being achieved and
to identify unexpected results or unusual conditions that require follow up. In the same way that
managers are primarily responsible for identifying the financial and compliance risks for their
separations, they also have line responsibility for designing, implementing and monitoring their
internal control system. Internal controls typically center in the companies AIS, which is the
primary function for moving financial information through a company, there for internal control
help managers to monitor and measure the effectiveness of their accounting system. (GelinasJr
2008).
Accounting system can aid in decision making providing information relevant to the decision
and to the decision maker. Effective and efficient accounting information plays a central role in
management decision making. Accounting information is one type of information recognized as
a learning machine that can help to evaluate how objectives might be achieved by quantifying
the financial impact of each alternative available to the decision. Accounting and financial
information are among the most important information widely used in the managerial decisions..
Within contemporary economic conditions, a successful manager needs a lot of reliable
accounting information in order to be able to make quality business decisions. Economical
information specially financial and accounting ones are the information which always managers
use in short term and strategic decision and they may have most application among different
variables effective in decision making and in all type of decisions. (GelinasJr 2008).
Strategic decision, when the decision maker aim for long periods of time, allocate all or part of
the company’s core assets to achieve that goal: such decision are usually adopted at top
management. Strategic decisions are among the most distinctive decision in an organizations this
are used for determining the goals and direction for long term company development. Basically
top management is involved in these sorts of decisions; they decide on company policy, long
term & annual business plans and the organizational, i.e. anything that linked to the future of the
company. Wrong strategic decisions have far reaching, negative effects on the company, which
in turn places a lot of responsibility or the shoulders of the strategic decision maker there is a
significant relationship between accounting information &strategic decisions. The strategic

23
decisions in all the selected areas (basic, manufacturing, human resource, marketing, long term
investment) significantly depend on AIS. (GelinasJr 2008).
Accounting information also helps to take long term investment decisions by giving the proper
view of present condition and future condition of the organization. Though, top management
needs accounting information which is provided by accounting information system in every step
to take any sort of strategic decisions. AIS can be evaluated by its impact on improvement of
decision making process, quality of the accounting information, performance evaluation and
internal control. Increasing AIS investment will be the leverage for achieving a stronger, more
flexible corporate culture to face persistence changes in the environment. (GelinasJr 2008).
One of The fundamental choices managers must make involves selecting the strategic position
they wish to adopt. There are three strategic positions: a variety based, a needs based and an
access based strategic positions. AIS play an important role in helping an organization to adopt
and maintain strategic positions. Achieving a close fit among activities require that data to be
collected about each activity. That data must then be transfers in to information that can be used
by management to coordinate those activities. To be off value, that information must be reliable
and always available. Thus well-designed AIS are essential to successfully adopting sustainable
strategic positions. (GelinasJr 2008).
Human resources Accounting Information and Decision

An important purpose of the financial reports prepare by the companies at the year-end is to
acquaint the share holders and outsiders with the working of the company during the past year.
This published information is used by the banks, financial institutions, government authorities,
creditors, shareholders, and investors’ etc .For various purpose. For instance such information is
made used by leading institutions before approving loans to the bodies corporate. (Lucas
Hennery C. 1997)

2.1.21. Management concepts and their effects on accounting information system.

Establishing organizational Goals (a planning function)

Accountants must thoroughly understand their organization’s goals in order to make positive
contribution to their accomplishment. A goal basically represents what one is attempting to
achieve. Most people as well as organizations have several goals. Ideally the multiplicity of goals
that employees and their organizations have should be in harmony with each other. The harmony

24
among employee’s goals and organizational goals is called goal congruence. This means that in
the process of achieving personal goals the individual employee also contributes toward
accomplishing organizational goals. On the other hand frustration can result when the positive
achievement of one goal conflicts with other goals, which is called goal incongruence. This type
of frustration occurs in both individuals and organizations. (Murphy and Katherine , 2002).

2.1.22. AIS and performance measures

Thanks to investment in AIS, the scope for action is expanded, thus providing time saving in
trips to and dealings with banks, the administration etc. this reduces firms cost productively
increases when these innovations are properly used. In so far as a firm’s culture is open to the
introduction of new accounting information’s system this will lead to a more holistic view of it
and make for greater flexibility and dynamism in organizational search for improved results.
( Plunkett warren Richard 1986).

Despite of some authors who postulate that the direction of the cause effect relations hops only
that company achieves a high performance when they can afford the implementation of certain
technological developments. Other indicates that firms performance drops just after the
implementation taking several years to realize the entities from IT adoptions. There are several
research work which, in the widest sense, have studied relationships between performance
indicators and IT, and how IT impact on firm performance achieving inconclusive results.
(Plunkett warren 1986).

There are studies which obtain a positive relationship between investment in IT and economic
profitability, financial profitability and value added. Other research shows that no clear
relationship exists between this type of investment and the performance indicators. Their authors
argue that currently, It is readily available and using them gives no competitive advantage for
achieving improved results. Similarly, they maintain that many firms have invested in IT but
they do not succeed in attaining the established performance goals. Although research on the IT
performance ratio is more abundant in large sized firms, the analysis a of the impact an small
sized ones becomes particularly important because investment in these technologies may give
them a competitive advantage and the chance to position themselves to achieve better results
since they are more flexible and have better response capability. (Plunkett warren 1986).

25
2.1.23. AIS effectiveness
Information system has defined system effectiveness in terms of user information satisfaction or
perceptions of system users about the extent to which the information system available to them
meets their information requirement. Given the lack of objective systematic indicators of
information systems effectiveness that might suggest the potential impact of a system on
organizational performance, users information satisfaction as been generally accepted as far
utility in decision making. Accounting information in general has been categorical in to two
primary types (a) decision influencing information that is mainly used for organizational control
and (b) decision facilitating information that is mainly used for organizational coordination. The
whole set of “information usefulness” studies in accounting draws on a common base of
information concepts that were originally developed to capture report users reactions to
qualitative characteristics of accounting information. AIS effectiveness therefore, is defined in
this study in terms of the perceptions of decision makers that the output information available to
them through transaction processing management, reporting and budgeting systems meets their
requirements for organizational coordination and control. (Plunkett warren 1986).

2.2. Empirical review

This study was focus on the Accounting information system and its impact on administration of
commercial bank of Ethiopia. The main objective of the research is to examine the impact of AIS
on the administrative quality of commercial bank of Ethiopia. To fulfill this objective
theresearcher used descriptive study and sample of 20 from 25 total population selected based on
purposive sampling method. The study used primary data. A primary data were collected through
questionnaires and interview. Finally the research concluded that, AIS have one of essential
component of the organization to achieve organizational objective. In our case CBE use AIS
effectively to meet its objectives but there is a knowledge gap on the use of AIS between
different levels of management. Regarding to AIS problem existed in CBE by misunderstanding
about the system properly. The researcher recommends increasing the awareness of the
management about AIS, better if CBE will provide training and technical support and update its
AIS in order to competitive in this sector. (Gosawork and Muna June 2014, AIS and its impact
on administration)

26
 CHAPTER THREE

3. Research design and methodology

3.1. Introduction

This part of the study is composed of; the research Design, research approach, sources of data,
data collection techniques, target population, sampling techniques, sample size, method of data
analysis and interpretation.

3.2Research design
This study was used the descriptive research design to assess the effectiveness of AIS in CBE
because this method was favorable to processed and describe phenomena as they exist. The data
come to the researcher through observation and to describe precisely what the researcher see.

3.3. Source of data

To conduct this research study the researcher used both primary and secondary source of data to
get adequate and relevant information on the way how the CBE uses accounting information
system.

3.3.1 Primary source.

To conduct this research the researcher used Primary source of data included questionnaire,
observationand personalinterview.
3.3.2Secondary source data

The secondary data was been collected from report, and the relevant documents which are
important for the research.
3.4 Data collection techniques

In order to make an efficient and effective research study it is important collecting a good and
reliable data for the study. This study was used two type of data gathering instrument. For the
collection of primary data the researcher was used interview and questionnaires both close end
and open end type because the open end question provide the opportunity for in depth and detail
treatment of questions for the respondent and close end questions provide actualize questions to
the respondents. In the secondary data the researcher was used different documents.

27
3.5. Target population and Sampling technique and sample size

3.5.1. Target population

The target population of study was focus operational employees of the bank such as individuals
with their respective profession content at different stages, cashier, loan officer, internal auditor,
and the manager. The total numbers of target population was 25.By using non probability
purposive sampling technique, 20 respondents are taken. About the AIS in the bank and can
provide relevant data also to select the departments.

3.5.3 Sampling techniques

In this study the sampling method used to acquire the respondents was non probability purposive
sampling technique, because to select respondents those have the expected good knowledge to
conduct the study.
3.5.2 Sampling size

By using non probability purposive sampling techniques 20 respondents were taken; out of the
total population of 25 workers of the bank who are working at different level.

3.6. Method of Data analysis and Interpretation

After the required data were gathered, classified, and processed, it was analyze by using content
analysis because to describe the contents of our respondent comment systematically and classify
the various meaning to expressed in the material have recorded and interprets by tabulation and
percentage that can facilitate interpretation within focus on result that are relevant to the study.

3.7. Ethical Consideration

The carrying out of this study will be conducted following the required ethical standards
expected from the researcher and in accordance with academic and professional research
practice. The effectiveness of the study will be assured by following the written down procedures
for conducting the research. To conduct this study, the researcher keeps the confidentiality of the
organization and the respondents, while they are providing any information to the researcher.

28
 CHAPTER FOUR

 4. Data presentation, analysis and Interpretation

 4.1 Introduction
This chapter deals with the brief description of AIS how it Contribution effectively in the CBE
Bote branch. Data analysis and interpretation is also included in this chapter. The analysis based
on data collected from documents of CBE and from primary data collected by questionnaires and
by holding interviews with staff at various management levels whose day to day activates mainly
concerned with accounting information system and uses it directly in the management activity so
that conclusion could be drawn based on the findings.
Questionnaires were distributed to 20 employees of CBE who have direct work relationship with
management completed and only 16 were questionnaires submitted. The remaining five ( 4)
respondents are not replayed the question this means 80% of the respondents are participate in
our research the remaining 20% are not replayed the question. Thus, the methods used to collect
the data have enabled to get reliable information about the research.
Table 1: Background information of the employers

Respondent

Position No %
1. Educational back
ground Diploma 0 0
Degree 23 92%
MA Degree 2 8%
Others 0 0
Years No %
1-2 8 32%
2. Work experience
3-5 11 44%
Above5 6 24%
3. Current position Level No %
3. Current position Top Level 2 8%
Middle Level 15 60%
Lower Level 8 32%
Questionnaire

29
The educational background distributions of the respondents show that most of them have
educational qualification of BA Degree and some of them are MA Degree holders and have no
diploma.

The positional level of the respondents 8% top level, 60% of respondents are middle level and
32% of respondents are low level position. As far as the distribution of service year of the
respondents is concerned, most of the respondents stayed in the organization for 5 year and
above and a little less of that also stayed for 1-3 year

Table 2: Respondents answer the question does CBE gets advantage by using AIS?

Q1. Does CBE Response Respondents

get advantage
by using AIS? No %

Yes 15 93.75

No 1 6.25

Total 16 100

Questionnaire

Majority of the respondents agreed that CBE gets advantage by using AIS and 6.25% of
respondents does not agree in that CBE gets advantage by using AIS problem existed in CBE,
while most of them are agrees that CBE gets advantage. So we can say that currently CBE gets
advantage.

Table 3: Respondents answer the question does AIS contribute for the attainment of your
organization objectives?

Q2. Does AIS contribute to Response Respondent

the attainments of your
organization objectives? No %

Yes 14 87.5
No 0 0
Don’t know 2 12.5
Total 16 100

Questionnaire

30
Majority of the respondents are agree with the question does AIS contributes for the attainment
of your organization and 12.5% of respondent are not properly understand the objectives of CBE
and the use of AIS most of them are agree that AIS contribute for the attainment of
organizational objective a little to be not clearly understand the use of AIS in attainment of
organizational objective.

Table 4: Respondent answer to the question does the bank service is efficient by using AIS?

Q3. Does the bank service is Response Respondent

efficient by using AIS?
No %

Yes 15 93.75

No 1 6.25

Total 16 100

Questionnaire

The majority of the respondent are agree with the question does the bank service is efficient by
using AIS and 6.25% of respondent are not agree with the bank service is efficient by using AIS
in CBE. While the CBE efficient bank service within a little problem.

Table 5: Respondents answer to the awareness of implementing AIS and linkage of AIS in value
chain in CBE?

Q4. How the awareness of Response Respondent

CBE workers about the use
and implementation of AIS? No %

Very strong 4 25

Strong 5 31.25

Medium 7 43.75

Total 16 100

Questionnaire

From the above table 5, 31.25% of respondents told that CBE workers about use and
implementation of AIS is strongly apply in the organization and 43.75% answer that medium
with in implementing and awareness of AIS and the remain 25% very strongly agree with
31
awareness and implementing AIS. As it can be observed the majority of the respondents respond
the CBE workers have better awareness in implementing AIS this is the advantage of CBE
within the industry to offering a better service.

Table:6 Respondents answer to the linkage of the AIS in value chain in CBE

Q5. How the linkage of the Response Respondent

AIS in value chain in CBE?
No %

Strongly linked 15 93.75

Weak linked 1 6.25

Un linked 0 0

Total 16 100

Questioner
From the question table 6, above 93.75% of the respondent respond that the linkage of the AIS in
value chain in CBE are strongly linked, 6.25% of respondent says weak linked AIS in value
chain.
Table 7: Respondents answer to the attitude of the linkage of the AIS in value chain in CBE.

Q6.Do you believe that AIS is used Respondent

effectively for decision making? Response
No %

Strongly agree 2 12.25

Agree 12 75

Disagree 0 0

Strongly disagree 1 6.25

Not sure 1 6.25

Total 16 100

Questioner

From the above table 7, 75% of respondent with agree to believe that AIS used effectively for
decision making and 12.25% of respondents respond strongly agree with used of AIS effectively
for decision making and 6.25% of respondent is replied strongly disagree and other 6.25% is

32
replied not sure about the used AIS effectively in decision making. There for a little problem in
AIS used effectively in decision making activity.

Table 8: Respondents attitude towards to help AIS on the quality of decision making?

Q7.How to help AIS in your Respondent

department in decision making? Response
No %

Very much helpful 4 25

Helpful 11 68.75

Not helpful 0 0

No opinion 1 6.25

Total 16 100

Questionnaire

From the above table 8, 68.75% of respondents replied AIS is helpful in department decision
making process and 25% of respondents respond AIS is very much helpful in decision making
process and 6.25% of respondent is not opinion on help AIS in department decision making. So
AIS is helpful in department decision making process

Table 9: Respondents opinion, how do you do evaluate the effect of AIS on the quality of
decision of your organization?

Q8.In your opinion how do you Respondent

evaluate AIS on the quality of Response
decision making of your No %
organization?
Increasing quality 15 93.75
No change its quality 0 0
Decrease the quality 0 0
Not sure 1 6.25
Total 16 100
Questionnaire
From the above table 9: question in table, 93.75% of the respondents are agree with to evaluate
the effect of AIS on the quality of decision is increase and 6.25% of respondent have not sure
with the effect of AIS in quality of decision making process. Therefore we may say, AIS is one
of essential component of organizations to deiced quality of decision making.

33
Table 10: Respondents attitude towards the role of AIS in CBE administration?

Q9. What is the role of AIS Respondent

in CBE administration? Response
No %

Improve decision making 5 31.5

Improved management report 0 0
In sharing of knowledge 0 0
Improved efficiency 2 12.5
Improved transaction processing 2 12.5
In all of the above 7 43.75
Total 16 100
Questionnaire

As the above table describe 43.75% of the respondents are respond to all improving decision
making, management reporting, sharing of knowledge, improve efficiency and transaction
process, 31.5% of the respondents improve decision making process, 12.5% of respondents says
improved efficiency and the remain 12.5% respondents replayed improved transaction
processing. Therefore the respondent says AIS is important role in every process of the CBE
banking transaction.

Table 11: Respondents attitude about does a knowledge gap exists by using of AIS how to solve
in CBE?

Q10. Does the knowledge Response Respondent

gap exist between different
levelsof workers in CBE? No %

Yes 12 75

No 2 12.5

I don't know 2 12.5

Total 16 100

Questionnaire:
As it can be seen from the table 11, 75% of the respondents response are agree with the
knowledge gap exist on the use of AIS by employees and 12.5% of respondents replied are not a

34
knowledge gap exist in using of AIS and the remain 12.5% respondents are not sure a knowledge
gap existed in using of AIS by CBE employees.

Table 12: Respondent answer to the question if there is knowledge gap, how you solve it?

Q1If there is knowledge gap , how Respondent

can you solve it? Response
No %

Training 11 68.5
Apparent ship 2 12.5
Don't solve it 0 0
I don't know 3 19
Total 16 100
Questionnaire
From the above question in table 68.5% of respondents said that to solve knowledge gap between
CBE employees by training and 12.5% of respondent replied the existence of knowledge gap
between CBE workers is solved through training and the remain 19% respondents are not
understand exact implemented solution in existence of AIS knowledge gap in CBE workers. So
in CBE a knowledge gap existed and mostly to solve by training workers.

Table 13: Respondents opinion is there existed in implementing AIS in CBE?

Q12.Is there any problem Response Respondent

existed in implementing AIS
in CBE Bote branch? No %

Yes 7 43.75

No 7 43.75

I don't know 2 12.5

Total 16 100

Questionnaire

As the above table describe 43.75% of respondents are replied the problem is exist to implement
AIS in CBE and 43.75% of other respondent says have no a problem existed to implement AIS
in CBE and remain 12.5% have no knowledge about the existence of a problem to implement
AIS in CBE. Therefore it shows that, in implementing AIS, there is misunderstanding between
CBE employers.
35
 In question 13-15 are open ended questions and only 9 respondents respond the question.
This means 45% of respondent respond the question.

13. How to solve the problem exists to using AIS?

Most of respondents said that,to solve the existing problem, by discussing in group, by provide
training, analyzing the information and updating the system, investigate the problem and then
decide a proper solution. Therefore, in existed aproblem in CBE they solve in training and group
discussion.

14. What benefit you get from the use of AIS? In cases of planning, controlling, and decision
making?

The respondents replayed that to minimize risk, increasing service quality, it creates clear
operation that helps to improve sharing of knowledge effectively in working area, it saves time,
reduced work load, to forecast the future problem, to manage organizational decision making
efficiency, to improve reporting and transaction processing. Therefore the respondents replayed
that to simplify the work and to create effective good working place and to organize transactional
information in decision making process, to increase efficiency and customer satisfaction.

15. To what extent the accounting information system produced influence in management
decision?

In the above question most of the respondents respond that to narrow the information gap
between top level and lower level management of the company. To provide more organized
datafor the management body and it helps to analyze decision before going to action. Therefore
most of the respondents agree that, AIS used to facilitate, organize, to give proper information
for the management, to predict the future problem and to decide proper action in exiting
problem.

4.2. Analysis of Interview

In order to assess in this interview, the information was gathered fromthe attitude of CBE in
Botebranch staff. The following conclusions are essential points gathered from through the
interview
 The Component parts of AIS in CBE.

36
The main component parts of AIS in CBE are flexible software. Under this software we can
cheek and observe the accounts report, accounts checking and accounts auditing real time.
There are benefits of flexible software such as:
√Sustain growth and ensure continuous improvement
√Achieve a rapid return on investment, usability andownership
√Reduce the cost and time of implementation with reusablemethodologies, standards, and
best practice.
√ To facilitate full information about decision making timely.
They said that internally every system is online and have no manual system.
Every transaction is passes through in the system. The system is recorded every customers
transaction. When the system is online it prevents the error that creates in using manual system.
By this system branches are connected and they can see a transaction passes through in every
branch. It also the customers are not one CBE branch customers.
The AIS used by the CBE is T-24 software. T-24 is an integrated core banking solution that is
often referred to as all in one technology resources. The customer is the heart of any financial
institution. Accurate and complete understanding of risk enables the financial institutions to
control its positions and to competitively price its products. By using this software the bank get a
lot of advantages. The first it creates real time customer information so all input data is read,
processed, and made available virtually immediately. Also it increase efficiency, it reduces the
problems that existed before and it make the service very fast.

37
 CHAPTER FIVE

5. Summary, conclusion and recommendation

In the research finding carried and from the respondents answer and data analyses from chapter
four and the following summary of finding, conclusion and recommendation are forwarded by
taking the objective of the research to consideration.

5.1. Summary of finding

Based on the analysis and discussion made in chapter four the following summary can be drawn.

 Most of the employees are worked above 3 years and they are experienced so more
related to the knowledge of AIS that implemented in CBE.
 93.75% of respondents agreed on the advantage of AIS in CBE. But theremain 15% of
respondents don’t agree on the advantage of AIS.
 Above 87.5% of the respondents agree on the contribution of AIS for attain the
organization objective.
 93.75% of the respondents agreed on the efficient of bank service. The remain6.25%
doesn’t agree.
 43.75% of the respondents agreed on the awareness of CBE worker about the use and
implementation of AIS and the remaining 31.25% respondents said that they have a good
awareness and the remaining 25% of respondents are said that there is a little awareness
of workers in CBE.
 93.75% of respondents respond that they agree the value chain of AIS in islinked. The
remain 6.25% said that it is unlinked.
 Most of the respondents are agreed on the AIS used for decision making. And a little bit
respondents disagree.
 All of the respondents said that AIS is helpful for their department for decision making.
 The opinion of respondents are aware of AIS have a power to enhance quality decision
making.

38
  Most of the respondents said that the role of AIS in the CBE administration is in all
aspects such as n decision making, management reporting, sharing of knowledge,
efficiency and transaction process.
 Most of the respondents said that there is a knowledge gap exists between different levels
of employees. Based on this they said, to solve this problem 75% of respondents believes
that give training is better and the remains of respondents reply the problem is doesn’t
solve and don’t know how to solve.
 Half of the respondents agree on there is AIS problem in implementation.
 The respondents said that to solve the existing problem the bank use different type of
techniques. To simplify the work, to perfect planning and controlling that the bank wants
and to decide the necessary decisions for improving the service and satisfy the customers
by providing exact and timely information for the decision makers.

5.2. Conclusion
Accounting information is the most important tool for effective activities of a given
organization. The goal is to assess the effectiveness of accounting information system and to
improve the ability of employees and the managers for decision making by using of AIS. To
examine AIS in the bank activities such as recording transactions, checking accounts, checking
reports and documentation system. Based on the analysis the following conclusions are drawn.

 AIS are important tools for the organizationand in this study CBE get advantage from
AIS.
 AI is the essential tool for achieving the organizational objective. So CBE use AIS
effectively to achieve its goals.
 AIS rapid the service that provide to customers and CBE services are efficient by
using AIS. But there is a problem related to system and connections.
 The awareness of employees in AIS is basic tool for implement AIS in the
organization. So in CBE most of employees have a better awareness about AIS. But
some employees have not good awareness about AIS.
 It is better to have AIS linkage in value chain for the purpose of increasing the service
and value. So in our case in CBE the linkage of value chain is best.
 AI is an essential tool for decision making, based on this CBE uses AIS effectively
for decision making purpose.

39
  AIS have great role in administration decision. In our case AIS is helpful for
administrative and operational decision.
 In our case there is a knowledge gap between different level of employees.
 Proper implementation of AIS is a great role in effective service deliver. But in our
case there is a problem in implementing AIS in CBE because of the employees and
mangers not adapt the system in fast.
 When mobile banking and ATM card transaction problems are occurred, the branch
can’t fix the problem by itself. It goes to the CBE head office and it consumes time.

5.3. Recommendation
Based on the finding and conclusion of the study the following recommendation is forwarded.

 It is better if the bank updates the system timely.

 In order to be effective as well as efficient in the engagement at least the majority of
employees need to be fully aware of acting information system and to do this CBE
must work to upgrade it’s employees knowledge about AIS.
 If the bank will creates a good group discussions among employees and provide
training and management should improve its knowledge about AIS in order to
minimize the knowledge gap exists.
 If the bank will improve the quality of employees and give practical training about
implementation of AIS.
 Making huge investment in the network and application infrastructure will help to
gain ultra-low latency in response time and it’s also helpful for effective
communication and information flow through the company.
 To avoid the problems related with mobile and ATM transaction it is betterif the
branch will solve the problems by its self to satisfy its customers and to minimize
time.

40
 Bibliography
Gelinas, Jr, (2008) Accounting Information System. (2th edition), Practice
Hall, Inc, upper saddle river. New Jersey

Gosawork and Muna June 2014 AIS and its impact on administration ST. MARYS
University research paper

James A. O brien (2001) Introduction to information system 6th edition V on HOA mann press
Inc. northern artonal university USA

James O brien (2004) Introduction to information system 10th edition

Kabi A.S (2004).The role of the accounting information in improving the
administrative performance in the commercial banksin UAE.Yarmoukuniversity,
Irbid, Jordan
Lucas. Henry C. (1997) management information systems 5th edition
L. Murphy smith and Katherine T. Smith(2002) Accounting Information System 3rd edition
Margaret .N (2012)The use ofAIS as an aid to management in decision making.
Osmond Vitez,(2010).Accounting Organizations and Society.(7th
Edition). Thomson South-Western, ICC Macmillan, Inc.
Plunkett warren Richard (1986) Introduction to management 2nd edition
Romney (2003) Accounting Information System 9th edition
Romney (2009) Accounting Information System 11th edition
Ugboma E (2004) Essential guidelines for information systems data bases proceeding (6th
edition). New jersey U.S.A

41
 APPENDIX
Oromia State University

Collage of Finance and Management Studies

Department of Accounting and Finance

QUESTIONNAIRES FOR MANAGERSAND EMPLOYEES OF CBE BOTE BRANCH.
Dear respondents;
The purpose of this questionnaire is exclusively for academic purposewhichh is intended to
obtain relevant information for Assessment on the effectiveness of accounting information
system. The findings of thisstudy shall greatly depend on your cooperation for which we
aregrateful in advance. To achieve this you are kindly requested to cooperateby giving responses
for the following questions. Please put a tick mark ( √) on the box of your choice and fill the
blank spaces whereapplicable.
Questionnaire
Section 1 personal information
1. Educational backgrounds
Diploma BA degree
MA degree other, please specify:
2. How long have you been in Commercial Bank of Ethiopia Bote branch?
1-2 years 3-5 years above 5 years
3. Current positions

Top Level Middle Level Lower Level

Section 2 Company information

1. Does CBE gets advantage by using AIS?

Yes No

42
 2. Dose accounting information systems contribute for the attainment of your organization
objectives?

Yes No, I don’t know

3. Does the bank service is efficient by using AIS?
Yes No
4. How the awareness of CBE workers about use and implementation of AIS?
Very strong Strong Medium

5. How the linkage of the AIS in value chain in CBE?

Strongly linked weak linked Unlinked

6. Do you believe that AIS is used effectively for decisions making?

Strongly agree agree disagree
Strongly disagree don’t know
7. How to help AIS in your department in decisions making?
Very much helpful helpful
No opinion not helpful
8. In your opinion, how do you evaluate the effect of AIS on the quality of decision making of
your organization?
Increased the quality not change its quality
Decreased the quality not sure
9. What is the role of accounting information system in your Bank district administration?
Improved decision making improved efficiency
Improved management reporting improved transaction Processing
In sharing of knowledge in all the above
10. Does the knowledge gap exist between different levels of workers in CBE Bote district?
Yes No I don’t know
11. If there is a knowledge gap, how you solve?
Training Don’t solve it
Apparent ship I don’t know
12. Is there any problem existed in implementing AIS in CBE Bote branch?

43
 Yes No don’t know
13. How to solve the existing problems in using AIS?

______________________________________________________________________________
______________________________________________________________________________
___________________________________________________
14. What benefit you gate from the use of AIS? In the case of planning, controlling, and
decision making?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________
15. To what extent the accounting information system produce influences in management
decision?
______________________________________________________________________________
______________________________________________________________________________
________________________________________________

44