ACCOUNTING INFORMATION SYSTEM AND ITS IMPACT ON ADMINISTRATION

(IN THE CASE OF AWASH INTERNATIONAL BANK OF ETHIOPIA JIMMA

BRANCH)

ARESEARCH PAPER SUBMITTED TO THE DEPARTMENT OF ACCOUNTING

AND FINANCE FOR THE PARTIAL FULFILLMENT OF BACHELOR OF ARTS
DEGREE IN ACCOUNTING AND FINANCE

PREPARED BY: DINAOL FIKIRU

ADVISOR: MOHAMMED SULTAN (MSc)

JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUING

June 2016

JIMMA, ETHIOPIA
 Abstract
The research is conducted on Accounting Information System and its impact on
administration in Awash International Bank of Ethiopia Jimma branch. The need for
information is basic for concrete and explicit management decision to ensure the success
and survival of an organization and since the aim of any business organization is
“profitability” Accounting information is indispensable to achieving this goal. In carrying
out the work, various types of data collection methods were adopted, such as distribution
of questionnaires, interviews and observations. These methods were adopted for
gathering the primary and secondary data .The paper used primary and secondary source
of data in order to gather the required information. Primary data is collected through
unstructured interview and questionnaire distribution to employee s. Secondary data is
collected by the review of the documents and manuals of Awash International Bank of
Ethiopia. These collected data is processed, analyzed and interpreted by using tables,
percentage; recommendation and conclusion is forwarded based on the identified
problem.

I
 Acknowledgment

First and for most, I would like to thanks the Almighty “GOD” who guide me in every
direction. Secondly I would like to reward my deepest gratitude to my advisor
Mohammed sultan (Msc) who has provided his wise an intellectual advice, guidance and
directive up to the end of this research .Thirdly, my sincere thanks to Jimma university
social library workers for their assistance in giving me the book and computer..

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 Table of contents

Contents
Abstract................................................................................................................................I
Acknowledgment................................................................................................................II
Table of contents................................................................................................................III
List of tables........................................................................................................................V
Chapter one..........................................................................................................................1
1. INTRODUCTION...........................................................................................................1
1.1. Background of the study...............................................................................................1
1.2 Organizational Back ground..........................................................................................2
1.3 Statement of the problem...............................................................................................3
1.4. Objectives of the study.................................................................................................5
1.4.1. General objective.......................................................................................................5
1.4.2. Specific objectives.....................................................................................................5
1.5. Significance of the study..............................................................................................5
1.6. Scope of the study.........................................................................................................6
1.7 Limitations of the study.................................................................................................7
1.8. Organization of the paper.............................................................................................7
Chapter two..........................................................................................................................8
2. LITERATURE REVIEW................................................................................................8
2.1. Information systems......................................................................................................8
2.2. Accounting Information System...................................................................................8
2.2.1. Basic subsystems in the AIS......................................................................................9
2.3. Accounting Information System and Organizations...................................................10
2.4. Accounting Information System and Decisions.........................................................11
2.5. Management concepts and their effects an Accounting Information System............12
2.5.1. Establishing organizational Goals (a planning function).........................................12
2.5.2. Determining non operational Goals (typically a long range planning functions). . .12
2.5.3. Determining operational Goals (typically a short range planning functions...........12
2.5.4. Accounting Information System role in achieving operational goals.....................13
2.5.5. Accounting Information System contribution to non operational goals of
responsive and motivated employees................................................................................13
2.6. AIS and performance measures..................................................................................14
2.7. AIS effectiveness........................................................................................................15
2.8. AIS integration............................................................................................................15
2.9. The relationship between AIS integration and AIS effectiveness..............................16
2.10. Information Interdependence....................................................................................16
CHAPTER THREE...........................................................................................................18
3. RESEARCH DESIGN AND METHODOLOGY.........................................................18
3.1. Research design..........................................................................................................18
3.2. Source and method of data collection.........................................................................18
3.2.1. Primary data.............................................................................................................18
3.2.2. Secondary data.........................................................................................................18
3.3. Target population and method of sampling................................................................19

III
3.4. Method of data analysis and presenting the outcome.................................................19
CHAPTER FOUR.............................................................................................................20
DATA PRESENTATION AND ANALYSIS...................................................................20
4.1 Introduction..................................................................................................................20
4.2 Questionnaires analysis...............................................................................................20
4.5 Analysis of interview...................................................................................................29
Chapter five.......................................................................................................................30
5.0 Conclusion and recommendation................................................................................30
5.1. CONCLUSION...........................................................................................................30
5.2 RECOMANDETION................................................................................................31
APPENDIX........................................................................................................................32
BIBLOGRAPHY...............................................................................................................35

IV
List of tables
TABLE 1: back ground information of the respondents……………………….………19
TABLE 2: awareness of the respondents toward uses of AIS…………………………..20
TABLE 3: attitude of the respondents towards use of AIS for administrative
decision…………………………………………………………………………………21
TABLE 4: the effect of AIS on effectively decisions of the organization……………..22
TABLE 5: contribution of AIS for attainment of organization objective………………23
TABLE 6: the role of AIS in AIB organization…………………………………………24
TABLE 7: the existence of knowledge gap between different level of management in
awash international bank of Ethiopia…………………………………………………….25
TABLE 8: the standard service provided by AIS and its contribution over past year…...26
TABLE 9: strategic positions and AIS helpfulness in achieving this position…………27

TABLE 10: accounting information system problems existed in Awash international

bank..................................................................................................................................2

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 Chapter one
1. INTRODUCTION
1.1. Background of the study
Accounting information is a food for management planning and decision making. It
refers to report of relevant financial information regarding the economic activities of an
organization or business venture. Management is constantly confronted with the problem
of alternative decision making especially knowing that resources are relatively scarce and
limited. It is therefore pertinent that good accounting information be made available for
proper and accurate decision making, maximization of profitability and optimal
utilization of scarce resource. Accounting Information System is vital to all organizations
and perhaps, every organization either profit or non profit-oriented need to maintain the
AIS. To better understand the term “Accounting Information System”, the three words
constitute AIS would be elaborate separately, firstly, literature documented that
accounting could be identified into their components, namely information system,
language of business and source of financial information, secondly, Information is
available data processed that provides basis for making decisions, taking action and
fulfilling legal obligation. Finally, system is an integrated entity where the frame work is
focused on a set of objectives. The combination of the three words Accounting
Information System indicate an integrated frame work with in an entity such as a business
firm that employees physical resources (i.e. material, supplies, personnel, equipment,
funds) to transform economic data into financial information for conducting the firms
operations and activities and providing information concerning the entity to a variety of
interested users. Indeed, the combination or information between human, technology and
techniques would permit an organization to administer its knowledge effectively
(Romeny 2,003).

Accounting is the service function that seeks to provide the users with quantitative
information on the other hand, AIS is an information system that is designed to make the

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accomplishment of accounting function possible. AIS process data and transactions to
provide users with the information they need to plan control, and operate their business
an AIS can be a manual system, or a computerized system using computers regardless of
the type, AIS’s designed to collect, enter, process, store and report data and information .
Now days 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
technological change in combination with increasing costs of research and development.
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 (JamesA.O’brien ,2004).

1.2 Organizational Back ground

Awash International bank is a privately owned commercial bank of in Ethiopia After the
downfall of the military regime and Introduction of market economic policy in 1991 it
was established by 486 founder shareholders with a paid up capital of birr 24.2 million.
Licensed on November 10, 1919 it started banking operations on February 13, 1995.
Awash International bank S.C provides full-fledged banking services the major services
of the banking among other are mobilization of despots, provision of credit services
money transfer services and safe deposit services, International banking, Saving and
account, International money transfer, Core banking system, ATM banking post service
is among it perform service to its customers. In accordance with Art 312(2) of the
commercial code, the bank was not allowed to operate the blocked bank accouter relating
to share subscriptions until its registration in the commercial register was effected.

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The company’s registration in commercial register was affected on 23 June 2008 and the
board by its 11th resolution dated 24 June 2008 delegated the president to operate jointly
the bank accounts with the credit manager or the international banking department
manager. The bank obtained its license from the national bank of Ethiopia (NBE) on 17
one 2008 and stated its business activities on 2 October 2008, in accordance with the
NBE’s letter of 2008 September 2008.

The banks operational strategy is based mainly on the provision of unique

banking products with multi-channel banking form one branch in Addis Ababa
and the NBE’s a fore said letter stated that “we need time to assess risks related to
products have verify that an appropriate risk management system has been put in
place. In the mean time we understand that bank us incurring substantial overhead
cost that may negatively affect its short-term profitability. This, there appears a
need to commence operation initially by accepting deposits granting fully
collaterally formed that the NBE will shortly communicate to the bank its
decisions as to the other bank products” these restriction on the Awash
international bank’s operations are still in place

1.3 Statement of the problem

The main purpose of accounting is to provide financial information to be used for
decision making. For instance, business executives and managers need the financial
information provided by the accounting system to help them to plan, control and evaluate
business operations. Outsiders such as bankers, potential investors and labor unions and
other also need accounting information.

Accounting Information System is useful if it has a potential for making administrative

decision otherwise it misleads the users idea and also it lead them to decide wrong
decision and that may be the cause for bankruptcy or loss of the organization. In most
business organizations this problem is visible especially; they do not utilize AIS as a tool

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for the administration purposes. Besides, they have no proper AIS which help to improve
the administrative quality of the organization. Effective AIS is essential to any
organization’s long run success. Without a means of monitoring the events that occur,
there would be no way to determine how well the organization is performing. Other
researchers may conduct their research on this topic; therefore, it may have some
particular qualities or characteristics in common but not all of them. The research gap
which makes the research different from the other researcher is: based on objective,
statement of the problem, and scope of the study it differs from the other. The research
objective is assessing the accounting information system of awash international bank at
specific place which is called Badale branch. And also the research statement of problem
is; most business organizations they did not use accounting information system for
administrative decision because of this the users idea are misleading and managers are
deciding wrong decision. This is causing bankruptcy or loss in the organizations. Since
the objective is examining Accounting Information System of Awash International Bank
at specific place in Badale branch, it can never be exactly the same with others. As a
consequence the research will answer the main research question sequentially (orderly)
is as follows:
1- Did Awash International Bank use AIS effectively for administrative decisions?
2- What is the role of AIS in Awash International Bank on administration?
3- Does Awash International Bank uses AIS effectively to attain its objectives?
4- Is a knowledge gap exists on the use of AIS between different levels of management?
5- What is the relationship between AIS and quality of administration in Awash
International Bank

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1.4. Objectives of the study
1.4.1. General objective
The general objective of this study is going to examine the Accounting Information
System and its impact on administration in the case of Awash International Bank of
Ethiopia Badale branch.

1.4.2. Specific objectives

The study aims to assess the following specific objectives
- To know whether Awash International Bank is using AIS effectively for
administrative decisions.
- To deteracrole of AIS in Awash International Bank
- To assess whether Awash International Bank uses Accounting Information
System effectively to attain its objectives
- To identify whether a knowledge gap exists on the uses of Accounting
Information System between different level of management
- To know the relationship of AIS and quality of administration in Awash
International Bank

1.5. Significance of the study

The result of this study will help Awash International Bank to understand the weakness
and strength of its AIS. Besides, this research also use for other organizations on the
same sector. Therefore hope fully that Awash International will take all the necessary
measure to overcome the problem of the AIS after the findings and recommendation. The
important of AIS that transforming data into information that is useful for decision
making that enable management to plan, execute and control activities and by providing
accurate and timely information i.e. improving the quality of services, improving
efficiency, improved decision making and sharing of knowledge can be performed more
effectively and efficiently. In doing the research the student researcher will develop
research skills. The paper can be used as the base for other researchers who wish to

5
conduct a research in this area. It helps the bank to increase awareness of the
management information system and provide training and technical support for the
employees. Therefore, employees can be also beneficial because of this study. Since
information is used by internally, and externally the result of this the study do not benefit
only the organization, but also for other researcher who wish to conduct his/her research
on this related. And it also help the ,community by providing accurate and reliable
information about the banks .Generally ,the significance of this study is not only for the
Awash bank only but also for other organization ,community and for other researcher.

1.6. Scope of the study

The study is limited to the Accounting Information System and its Impact on
Administration of Awash International Bank specifically in Badale branch. The bank is
located at Markato in Jimma town and it uses core banking system. Beside this the study
cannot visualize overall impact of AIS on the organizations as a whole. The studies will
assess the area of status of administrative decisions, objectives and quality of administra

1.7 Limitations of the study

The success of every study greatly depends on the availability of resource with
conductive environment. However some of the limiting factors that the researcher faced
up while conducting this research paper were the following. .
1. The unwillingness of the respondents to give information.
2. Lack of sufficient written document about accounting information system and its
impact on administration.
3. Time and financial constrains.

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1.8. Organization of the paper
This research paper is organized in to five chapters. Chapter one states introduction that
includes background of the study, statement of the problem, objective, significance,
scope and limitation of the study. The second chapter presents review of related
literature. The third chapter deals with research design and methodology which include
research design, source of data and date collections, sampling method and method of data
analysis techniques. The fourth chapter composed data analysis and interpretation and
finally the last chapter deals with the summary, conclusion and recommendations.

7
 Chapter two
2. LITERATURE REVIEW
2.1. Information systems
In discussing what Information on systems is one must first understand what Information
is? Information is further processed data that has meaning and purpose. 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 today’s competitive and dynamic environment (Romney, 2003). An
Information System is a set of people, procedure and resources that collects, transforms
and disseminates information in an organization (O’Brien, 2004).

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 (Lucas, 1997). AIS perform three important
functions in an organization first, it collect and store data about activities and transaction
so that the organization can review what has happened. Second it, process data into
information that is useful for making decision that enable management toplan, execute,
and control activities. finally it provide adequate control to safeguard the organization
asset, including its data these control ensure that the data is available when needed what
is accurate and reliable(rift valley university college, Adama AIS acct-4525)

2.2. Accounting Information System

An Accounting Information System (AIS) is a system that collects records, stores, and
processes data to produce information for decision makers. 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).

8
2.2.1. Basic subsystems in the AIS
1. The revenue cycle- is 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.
2. The expenditure cycle- is currying 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.
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.

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.
5. The financing cycle- involves activities of obtaining necessary funds to
organization, repay creditors and distribute profits to investors (Romney, 2003).

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2.3. 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. Many
of the same concepts, techniques and principles are equally applicable to AIS in other
kinds However of organizations (Murphy and katharinne, 2002).

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.

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).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

10
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 (O, Brien, 2004).

2.4. 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).

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2.5. Management concepts and their effects an
Accounting Information System.
2.5.1. 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 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 Katharine, 2002)

2.5.2. Determining non operational Goals (typically a

long range planning functions)
Most organizations perform both longer and short range planning. The former is normally
the function of an organization’s top management and it’s sometimes also called strategic
planning. Through its long range strategic planning, the organization develops a “plan of
attack” for the future. The strategies established by top management are usually
expressed in broad, non operation terms (Murphy and Katharine, 2002).

2.5.3. Determining operational Goals (typically a short

range planning functions
Employees within the company’s individual subsystems (accounting, production,
marketing, finance, personal and electronic data processing) must thoroughly understand
their company’s long range goals and attempt to contribute positively to these goals. Each
subsystem is responsible for developing operational goals that will help accomplish the
company’s nonoperational goals. to achieve these non operational goals, employees from
the various subsystems should communicate with one another so that their goals are in
harmony, rather than in conflict we will now examine the role played by the company’s

12
Accounting Information System in achieving the company’s operational goals (Murphy
and Katharine: 2002).

2.5.4. Accounting Information System role in achieving

operational goals

The AIS’s major contribution to the company’s top management non operational goals is
the development of long range as well as short range operational budgets. Because
budgets affect all organizational sub systems, the accountants must communicate with
each subsystems employees and seek their participation in planning, implementing and
controlling the budgetary system (Murphy and Katharine 2002).

2.5.5. Accounting Information System contribution to

non operational goals of responsive and motivated
employees.
The personal subsystem has the primary responsibility for achieving these goals. As a
result of effective personal selection procedures, adequate compensation, efficiently
operating training programs, and the involvement of employees in challenging activities,
the company labor force should have positive attitudes toward their work environments
the accountants, in performing their cost accounting budgetary and systems study
functions, must consider the human element within a company. Rather than just
informing the employees what their budget allowances isor unilaterally introducing
systems change for instance, the accountants should seek the employee’s participation in
making these decisions. Employees should be more responsive and positively motivated
to achieve their company’s goals if they participate in various decisions affecting their
work environment (Murphy and Katherine, 2002).

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2.6. 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.
Despite of some authors who postulate that the direction of the cause effect relations hops
only those companies achieve 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;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

14
advantage and the chance to position themselves to achieve better results since they are
more flexible and have better response capability.
In Spain, in most sectors there is a generalized opinion that using information
technologies has been decisive in expanding the business market and in saving
commercial management cost. Given that AIS are a basic component derived from
technologies in general the main issue is whether applying Accounting Information
System contributes to firms improving their results(Plunkett;1986).

2.7. 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
(Murphy and Kathrine, 2002).

2.8. AIS integration

At the operation level, AIS integration is defined in terms of the following two
characteristics (a) the degree of integration in internal AIS applications and (b) the degree
of integration between the inter organizational systems and the internal AIS applications.
Accounting systems are primarily influenced by contextual factors that affect accounting

15
processes for transaction processing, reporting, internal control, process monitoring, and
performance evaluation. These characteristics can capture the range of potential
contractual influences. The integration of AIS applications was measured by the extent of
standardization in coding schemes and by the extent to which applications systems adhere
to standard coding schemes. These two items were developed in this study and were
based on the operational concepts of data integration which refers to the use of common
field definitions and cods a cross different parts of the organization (O, Brien, 2004).

2.9. The relationship between AIS integration and AIS

effectiveness

AIS integration has been defined above as a system design state that influences the ability
of the system to provide output information that can be effectively used to respond to
outside classroom curriculum requirements. At the conceptual level therefore, AIS
integration is related to AIS effectiveness. Increased system integration has been
suggested to improve communications both within and across organizations. The
relationship between the use of integrated systems and users evaluations of “task –
technology fits”, that is, the degree to which a technology assists an individual in
performing his or her portfolio of tasks. Electronic integration among inter organizational
and internal information systems has also been reported to have a significant association
with a perceptual measure of user information satisfaction and an objective measure of
shipment discrepancy reduction in the automotive industry. In conclusion system
integrations is shown to be an important construct in past research. Accounting systems
are primarily influenced by contextual factors that affect accounting process for
transaction processing, reporting, process monitoring and performance
evaluation(plunkett;1986).

2.10. Information Interdependence

Information Interdependence is defined as the required information sharing between pairs
of organizational functions that are supported by AIS applications. Applications in AIS

16
were identified by a large. Scale study in the United States to relate to the following four
areas (a) accounting (b) procurement, (c) shipping /distribution, and (d) reporting/
budgeting. These areas encompass a set of interacting activities that share financial
information processed by AIS. Prior accounting studies have used a single item to
measure task interdependence or a dichotomous measure of work flow inter dependence,
where interdependence was measured as the extent of resource sharing among
organizational sub units. The present approach directly relates interdependence to
requirements for organizational coordination and control that are relevant to the design of
AIS(Romeny 2003)

17
 CHAPTER THREE
3. RESEARCH DESIGN AND METHODOLOGY
3.1. Research design
To put the objective of this study into effective descriptive research design method is
conducted to observe on Accounting Information System and Its Impact on
administration in Awash International Bank of Ethiopia, Jimma branch

3.2. Source and method of data collection

As most other research does the study under consideration attempt to apply research
design and data collection method which are suitable for successful accomplishment of
the research.
In this study the researcher used both primary and secondary data types. The primary data
are interview made on target population and questionnaires. The researcher issues open
ended and close ended questions to gather information in which explanation takes place
briefly in sequential manner. Secondary data were collected from Secondary source data
available in the organization which is related to accounting information system.

3.2.1. Primary data

The researcher conducted to obtain primary data through direct communication with
respondents. At the time of the study the primary data would have been in questionnaire
and interview. Most of the respondents answered the expected questions on the
questionnaire and through interview. Hence the method that the researcher used in this
study is convenience sampling technique approach. This is convenient and reliable to the
researcher to collect related information from the respondents.

3.2.2. Secondary data

The researcher gathers secondary data from published and unpublished materials that
reported as to examine the impact of AIS on the quality of Awash International Bank to
obtain relevant information related to the study. The researcher tried to get relevant

18
information through preparing relevant way for target population and sampling.
However, primary data may be good way to obtain more wide and relevant information.

3.3. Target population and method of sampling.

In different sampling method, for this study, purposive and one of non-random sampling
called convenience sampling method is employed. Convenience sample is a type of non-
probable sampling that is based on judgment of the researcher. It is a simple one where
the units that are selected for inclusion in the sample size are the easiest to access. As
such the researcher could continue to invite all to take part in the research until the
sample size is reached. This method is selected because this method help to collect the
relevant information from employees, it save time, save money, and ease of available and
access the respondents since, the researcher does not have to do any extra effort or go out
of the way to gather the data. By using this method the researcher got information from
management and employees who have known about Accounting Information System and
its impact on administration. The target population of this study is employees of the bank
such as individuals with their respective profession accountant of different stage cashiers;
loan officers, internal auditors, and manager’s .Samples of 15 out of total population of
30 were selected.

3.4. Method of data analysis and presenting the outcome

In conducting this research, the researcher used descriptive data analysis. This method
helps to analysis and suggests that data is finding both primary and secondary sources.
Descriptive data analysis also assists to analysis data using table, percentage and related
explanation as they are

19
 CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 Introduction
This chapter deals with the brief description of Awash international bank accounting
information system contribution in the effective administration of the organization. Data
analysis and interpretation is also included in this chapter. The analysis based on data
collected form documents on Awash International bank and form primary data collected
by questionnaires and by holding interviews with staff at various management and with
finance department whose day to day activities 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 distribution to (15) employees of Awash International bank who hake
direct work relationship with management and finance department and all respondents
have completed and submitted the questionnaires. Thus, the methods used to collect the
data have enabled to get reliable information about the study area.

4.2 Questionnaires analysis

Table 1, Background information of the respondents
No Question No Respondents %
1 Educational background
Diploma 5 33.3%
BA Degree 8 53.3%
Above BA degree 2 13.4%
Total 15 100%
2 Position
Account clerk 2 13.4%

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 Call center 3 20%
Call cashier 3 20%
Manager 2 13.3
Teller 5 33.3%
Total 15 100%
5 Service year
1-3 4 26.7%
4-7 6 40%
8-11 3 20%
12-15 2 13.3%
Total 15 100%
Source: Data gathered through questioners

The educational background distributions of the respondents show that most of the
respondents have educational qualification of BA degree and some of them are diploma
holders.
The positions share by respondents constitutes 13.4% of account clerk call center 20%,
cashier 20% manager 13.3%, and 33.3% tellers. This has an advantage to study in that
it is mainly taller who involved in the use of accounting information system in the
routine activity of Awash International bank. As far as the distribution of service year
of respondents’ is concerned, most of the respondents’ stayed in organization from 4-7
years and some of them, are also stayed from 1-3 years, because of the organization
established after military government down fall, so that most respondents’ did not
stayed for long years.

21
Table 2: This section present respondent’s attitude towards the awareness of Awash
International bank management about the use and implementation of AIS
Respondent
No %
Highly ware 6 40%
Aware 8 50.3%
Less aware 1 6.7%
No opinion 0 0
Total 15 100%
Source: primary from the branch banks workers
Question 4 how is the awareness of Awash International bank management about the use
and implementation of accounting information system?
Answer: the majority of the respondents’ to the extent to 50.3%having knowledge about
the awareness of AIS in usage and implementation and 40% of them have highly
knowledge. And the rest 6.7% of them have doubted or have less knowledge on the
awareness of it.

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 Table 3: This part exhibits respondents’ attitude towards the use of AIS for
administrative decisions
Questions Respondent
No %
Strongly agree 9 60%
Agree 5 30.3%
Disagree 0 0
Strongly disagree 0 0
Don’t know 1 6.7%
Total 15 100%
Very much helpful 10 66.7%
Helpful 5 33.3%
Not helpful 0 0
No opinion 0 0
Total 15 100%

Questions 5, do you believe that accounting information system is used by Awash

International bank effectively for administrative decisions?
Questions 6, How helpful has the AIS to your business in administrative decision?
Answer: As it can be from the table above 60% of respondents strongly agree on the use
of AIS effective administrative decisions and 33.3% of them simply agree. When we
come to the extent of help fullness 66.7% of the respondents replied that AIS is very
much helpful for administrative decision to their business and the 33.3% of them agree
on helpfulness slightly, so this shows that AIS have great role in administrative decisions.

As the annual report indicate, Awash International bank profit is increasing from the start
of its establishment, the probably results from effective administrative decisions using of
AIS.

Table 4: Respondents opinion about the effect of AIS on the effectively decisions of their
organization
factors Respondent
No %

23
 Increased the quality 13 86.7%
Decrease the quality 0 0
Not change its quality 2 13.3%
Not sure 0 0
Total 15 100%

Question 7 in your opinion how do you evaluate the effect of accounting information
system on quality of decision of your organization?
Answer: the majority of the respondents, to extent of 86.7% confirmed that AIS increased
the quality of decision and 13.3% of respondents replied than not change its quality.

This indicate that AIS have big role in increased the quality of decision. But it differs in
its performance of AIS; if there is good AIS system there is good quality of decisions
and vice versa.

Table 5: Respondents answer for question regarding the contribution of AIS for the
attainment of their organization objectives.
Questions Respondent
No %
Yes 15 100%
No 0 0
Total 15 100%

Question 8 Does accounting information system contribute for the attainment of your
organization objectives?

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Answer: All of the respondents confirm that the contribution of AIS for attainment of
organization objectives, the table will head use to, AIS is one of essential component of
organizations in order to achieve organizational objectives.
Table 6: This part shows respondents attitude towards the role of AIS in Awash
international bank administration.
Questions Respondent
No %
Improved decision making 2 13.3%
Improved management reporting 2 13.3%
In sharing of knowledge 1 6.7%
Improved efficiency 3 20%
Improved transactions processing 3 20%
Improved decision making efficiency 1 6.7%
Improved decision making, management reporting and transaction 3 20%
processing

Total 15 100%
Source: from bank employees
Question 9, what is the role of accounting information system in awash international bank
administration?
Answer: as the table depicts, above all of the respondents said that the role of AIS in the
awash international bank administration is in all aspect such as in decision making,
management reporting, sharing of knowledge, efficiency and transition processing. So
that we can perceive from this, AIS have a big role in administration of one organization.

Table 7: Respondents attitude towards the existence of knowledge gap between different
levels of management in awash international bank

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 Questions Respondent
No %
Yes 10 66.7%
No 2 13.3%
Don’t know 3 20%
Total 15 100%

Question 10 Does knowledge gap exist between different levels of management in Awash
international bank?
The majority of respondents, to the extent 66.7% confirm that there is a knowledge gap
between different levels of management and 2 (13.3%) of the respondents do not agree
in the existence. Therefore, this is shows a knowledge gap existence between different
level of management of the organization.

Table 8: this part exhibits respondent’s attitude towards the standard services provided by
AIS and its contribution in the administration process over the past years.
Questions Respondent
No %
Have improved 7 46.7%
Have improved little 3 20%
Have deteriorated 3 20%
Have not changed 2 13.3%
Do not know 0 0
Total 15 100%

Source: employees branch workers

Question 11, How do you rate the standard service provided by AIS over the past years?
Answer: above 46.7% of the respondent know the standard services provided by
accounting information system have shown improvement and 20% of the respondents

26
understand that the contribution made by AIS over the last years have little improved.
From the above table 8 the roles of AIS in providing the standard services are showing
improvement from time to time. As assistance of AIS in decision making is now widely
spread, it also helps the management of Awash international bank in order to increase
income efficiency effectiveness and enabling frequent data processing for its decision
making strategy.

Table 9: Respondents answer for questions regarding strategic positions and AIS
helpfulness in achieving this position
Questions Respondent
No %
Variety based 8 53.3%
A need based 4 26.7%
An access based 3 20%
Total 15 100%
Very much helpful 10 67%
Helpful 3 20%
Not helpful 1 7%
No opinion 1 6%
Total 15 100%

Question 12, what strategic positions is Awash International bank pursuing?

Question 13, How helpful has accounting information system to achieve this position
From the above table 9:- 53.3% of the respondents said that the organizations management
is pursuing a variety based strategic position and 26.7% answered that the management of
Awash international bank, is following need based. As it can be observed the majority of
the respondents replied the management of Awash international bank is pursuing variety
based strategic position. A variety based strategic position involves producing providing
subset of the industries products or services. Here it should be bear in mind that Awash
international bank is offering multi-channel banking that is providing via on ATM,
through the internet, or over the phone, visa card, gift card, payroll card and debit card
this shows that is using variety based strategy.

27
From the second question table 9 – above 67% of the respondents replied that the AIS
plays an essential role or very much help full in helping achievement of the strategic
position. So that AIS is crucial for the achievement of strategic position of an
organization.
Table 10 what is accounting information system problems existed in Awash international
bank?

problems respondents percentages

Delay in process 5 33.3%

Data redundancy 2 13.3%

Misunderstanding 0

Delay in 7 46.7%
communication

Inconsistence 1 6.7%

total 15 100%

Question 14 if there is a problem, what is accounting information system problems

existed in Awash international bank?

Based up on the above table there is some problem existed in the organization which is
accounting information system related. Most of the respondents or 46.7% of them said
that delay in communication of the information between each department or from
manager to employee and 33.3% of them also says that there is also delay in processing
of the information. The problem of miss understanding is not there because of all related
department work interpreted using one IT serve which every organization information
settled.

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4.5 Analysis of interview
In order to aid the research, the information was gathered by the way of interview from
Awash international bank staff. The AIS issues were raised during the interview in order
to make valuable discussion on study. The following are essential points that gathered
through the interviews.
1. The components parts of Awash international bank AIS. The main component part
of Awash international bank of jimma branch that is they are using is flex cube
software. FLEXCUBE software enables the bank to simplify the processes, track
and quickly manage complex transactions, identify bottlenecks and improve
customer service
There is benefit of flex cube software such as:-
 Sustain growth and ensure continuous improvement
 Achieve a rapid return on investment, ability and ownership
 Reduce the cost and time implementation with reliable methodology, standards
and best practices
2. The main inputs of awash international bank. The main inputs of AIS Awash
international bank is transaction such as: Foreign transaction, ATN tractions
purchase, deposit, withdrawals, salary payment, maintenance closing entry.
3. In the Awash international bank all related department work interpreted using one IT
serve which every organization information settled so the possibility for
misunderstanding is less

Chapter five
5.0 Conclusion and recommendation
From the research the finding and from review of related literature the following
conclusions and recommendations are forwarded by taking the objective of the research
under consideration.

29
 5.1. CONCLUSION
 A vital role of the AIS is to supply internal decision makers with information that
relevant to their needs. The AIS major contribution to the organizations is its
helpfulness for administrative decisions.
 Accounting information system is vital to all organization in decision making,
management reporting, sharing knowledge, in improving efficiency, in improving
transaction processing and so on. Every organization either profit or nonprofit
oriented need to maintain the AIS.
 The accounting information systems major contribution to the company top
management objectives is the development of long-range as well as short-range
operational budgets. So that AIS is main tool for the achievement of
organizational objectives.
 In our case, there is a knowledge gap on the use of AIS between different levels
of management.
 The quality of decisions in organizations is highly affected by AIS which in turn
affect the administration, in our case; AIS increased the quality of decision.

5.2 RECOMANDETION
Based on the findings, in order to avoid or possibly reduce the problem existing in
accounting information system and its impact on administration some recommendations
can be suggested like:
 Awash international bank should check the information disperse in the company in order
to minimize the knowledge gap.
 To increase the awareness of the management about AIS, Awash international bank
should provide training and technical support.

30
 In order to provide good quality of decision Awash international bank should increase the
performance of AIS. For example by introducing latest AIS software.
 Awash international bank should update and revised its AIS in order to be competitive in
the sector.
 Effective communication and information flow is important for a good accounting
system, and the bank should provide communication channels between top and lower
levels of management regarding long and short term objectives and the practical
problems of implementing those objectives.
 Co-ordination from the top management will ensure proper interpretation and
implementation of the accounting information in decision-making. Therefore, I recommend
that every personnel should know where he or she belongs in the entire organization and
also see him or herself as part of the corporate whole. These individuals must take part in
decision-making process, at least at the functional levels.

APPENDIX
JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
Questionnaire

31
The purpose of questionnaire is to collect data and information on the impact of
accounting information system on administration of Awash International bank for the
requirement of bachelor degree in accounting and finance.

Instructions:
 Please use a () mark in the appropriate box to indicate the answer
 Please write a short and precise answer for open ended questions
 Multiple selection is possible among the choices
1. Educational background
 Diploma  BA degree  MA degree
 Other please specify ___________
2. How long have you been Awash international bank
 1-3 4-7 8-11 12-15
3. Current position __________________________________
4. How is the awareness of awash international bank management about the use and
implementation of accounting information system?
 High award Award  Less award  No opinion
5. Do you believe that accounting information system is used by Awash international
bank effectively for administrative decisions?
 Strongly agree  Disagree  Strongly disagree
 Don’t know
6. How helpful has accounting information system to your business in administrative
decisions?
 Very much help  Helpful  Not helpful  No opinion
7. In your opinion, how do you evaluate the effect of accounting information system on
the quality of decision of your organization?
 Increase the quality Not change its quality
 Decreased the quality Not sure
8. Does accounting information system contribute for the attainment of your
organization objectives?
 Yes  No

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9. What is the role of accounting information system in Awash international bank
administration?
Improved decision making  improved efficiency 
Improved management reporting  improved transactions processing 
In sharing of knowledge  in all of the above 
10. Does knowledge gap exist between different levels of management in Awash
international bank?
 Yes  No don’t know
11. How do you rate the standard services provided by accounting information system
over the past years
 Have improved  Have improved a little
 Have deteriorated  Do not know   Have not change
12. What strategic positions is Awash international bank pursuing?
 A variety based  A need based an access based
13. How help full has accounting information system to achieve this position?
 Very much helpful Helpful  Not helpful  No opinion
14. Is there accounting information system problem existed in Awash international bank?
 Yes  No  I don’t know
15. If there is a problem, what is accounting information system problems existed in
Awash international bank?
 Delay in process Delay in communication
 Data redundancy in consistency
 Misunderstanding  Other, please specify _______________________
16. Is there any problems existed in implementing accounting information system in
Awash international bank?
 Yes  No  I don’t know
17. If you have any other comment __________________________________________
Thank You!!

33
 Interview
1. What are the component parts of Awash international bank accounting information
system?
2. What are the main inputs of accounting information system of Awash international
bank?
3. Did accounting information system help strength your business skills in the last
years? Yes/No
4. Are all related departments of the organization work integrated using accounting
information system?
5. What benefit you get from the use of AIS? In case of record keeping, decision making
and performance evaluation etc?
6. Has AIS been a source of conflict during the last years? Yes/No if yes in what way do
you explain
7. Did AIS help your organizations in achieving its goals? Yes/No
8. Did AIS help your organization for administrative decision? Yes/No if yes in what
way
9. Has AIS been a source of new anxieties during the last years? Yes/No
10. Does in general AIS have effect or impact on the management or administration of
your organization? If yes, please describe
11. If you have any other comment?

BIBLOGRAPHY
Romney (2003), Accounting Information System 9th edition, practice Hall business
publishing.

Romney (2009), Accounting Information System 11th edition, Pearson education ince,
Brigham young university and artienstate university USA

34
James A. O’brien (2004) introduction to information system 10 th edition Von HOA mann
press Inc, northern Artonal university USA

James A O’Brien (2001) introduction to information system 6 th edition Boston McGraw.

Mid
Lucas, Henry C. (1997) management information system 5th edition new your

Plunkett warren Richard (1986) introduction to management 2 nd ed Boston Mass Kent

pub. Co

L. Murphy smith and Katherine T. Smith (2002) Accounting Information System 3 rd

edition south western college publishing

Mengistu Bogale (2008) principle of accounting 1 st Ethiopian edition published

accounting society of Ethiopia

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