SCHOOL OF INFORMATION SCIENCE STUDIES COLLEGE

OF COMPUTING, INFORMATICS, AND MEDIA

BACHELOR OF INFORMATION SCIENCE (Hons.) RECORDS

MANAGEMENT

IMS552: INFORMATION SYSTEM MANAGEMENT

ASSIGNMENT: ARTICLE REVIEW

INFORMATION SYSTEMS QUALITY IN MANAGEMENT ACCOUNTING
AND MANAGEMENT CONTROL EFFECTIVENESS

PREPARED BY:
NUR A’ISYAH BINTI AZIZI
(2021847272)
JIM2465B

PREPARED FOR:
MADAM NIK INTAN SYAHIDDATUL ILANI BINTI JAILANI

SUBMISSION DATE:
28 NOVEMBER 202
 TABLE OF CONTENTS

ACKNOWLEDGEMENT...................................................................................................3

1.0 INTRODUCTION........................................................................................................ 4

2.0 CONTENT.................................................................................................................. 5

2.1 WHY ARE INFORMATION SYSTEMS SO IMPORTANT TODAY FOR

BUSINESS AND MANAGEMENT............................................................................... 5

2.2 THE ROLE OF INFORMATION SYSTEM ENVIRONMENT................................. 5

2.3 THE MAJOR CHALLENGES TO BUILDING, IMPLEMENT OR USING

INFORMATION SYSTEM............................................................................................6

2.4 THE IMPORTANT INFORMATION SYSTEM DEVELOPMENT IN

ORGANIZATIONS....................................................................................................... 8

2.5 VALUE OF INFORMATION SYSTEM DEVELOPMENT IN ORGANIZATIONS.... 9

3.0 CONCLUSION..........................................................................................................10

APPENDIX..................................................................................................................... 12
 ACKNOWLEDGEMENT

Alhamdulillah. I thank Allah SWT, who with His will gave me the opportunity, internal
strength, and a chance to accomplish this assignment till the end. I would like to express my
gratitude to Madam Nik Intan Syahiddatul Ilani Binti Jailani, Lecturer of IMS 552 – Information
System Management at Universiti Teknologi MARA (Segamat Campus) for her guidance,
kindness, and patience while I completed this individual assignment. Her willingness to give me
some time to complete this assignment has been very much appreciated.
I also would like to express my deep gratitude to various people for supporting me to
finish this task, especially my dearest parents - lots of love to all of them. I wish to acknowledge
all of them and I wish to make special mention of the following. I also would like to extend my
thanks to our friends for providing me with moral support, and also their friendly advice
throughout this assignment. I would not be able to get this far without all of your great
assistance.
1.0 INTRODUCTION

This article discusses the relationship between the quality of information systems in
management accounting and the effectiveness of management control. Although qualitative
studies show a positive relationship, the article highlights the need for more in-depth quantitative
analysis to explore this relationship in more detail. The introduction of the article also
emphasizes the role of automation in the modern production environment and its potential
impact on management control systems. This study aims to analyze the overall effect of the
quality of the information system in management accounting on the effectiveness of
management control in an organization. In addition, the article also details previous research on
the relationship between the quality of accounting information systems and the effectiveness of
management controls, particularly in small firms in the context of rapidly developing countries.
The article sets the stage for the study by detailing the hypotheses to be tested. By summarizing
qualitative research and highlighting the need for a quantitative approach, this article provides a
holistic view of the role of information system quality in the context of management accounting
and provides a basis for further research.
In Germany, SMEs, or small and medium-sized businesses, are referred to as
Mittelstand companies. These companies' notable contributions to the German economy, family
ownership, long-term commitment, and strong emphasis on innovation are common
characteristics of these businesses. Mittelstand companies are renowned for their emphasis on
quality and workmanship, their ability to swiftly adjust to changing market conditions, and their
specialisation in specialised areas. They are a major factor in Germany's employment and
economic growth. The Mittelstand is frequently referred to as the "heart" of the German
economy, and for good reason—mid-sized businesses generate the majority of the nation's
economic output, employ roughly 60% of the labour force, offer essential training, and make
substantial contributions to corporate tax receipts.
A survey question is used in the article to measure the positive relationship between the
quality of information systems and the effectiveness of management controls. Respondents
were asked to rate the status quo of information systems in management accounting based on
criteria such as fast access and computation time, user-friendliness, automation and
standardization, flexibility/customization, full integration of information technology systems, and
data quality. The ratings given by the respondents are used to evaluate the quality level of the
information system. The relationship between the quality of the information system and the
effectiveness of management control is studied based on the feedback received in the study.
2.0 CONTENT

2.1 WHY ARE INFORMATION SYSTEMS SO IMPORTANT TODAY FOR

BUSINESS AND MANAGEMENT

The importance of information systems in management and business is

emphasized. The effectiveness of the management control system can be increased
through its use. Better data quality can be produced by high-quality information systems
in management accounting, and better data quality can support more efficient
management control. In addition, a positive influence on the overall effectiveness of the
organization in management control can be achieved through the use of advanced
information systems such as business systems, analysis, and enterprise resource
planning (ERP). The benefits of automating corporate operations information systems
include lower costs, better quality, and increased productivity. Furthermore, automation
opens the door to automated data collection and analysis by facilitating the generation
and use of real-time data. Overall, information systems are considered useful
instruments for improving management decisions and control in contemporary
companies.

2.2 THE ROLE OF INFORMATION SYSTEM ENVIRONMENT

The article examines the link between the quality of information systems used in
management accounting and the efficacy of management control in German Mittelstand
firms, focusing on the research function of the information system environment. An
analysis of how process automation may make this connection simpler was also
conducted. This article examines how better information systems may enhance
organisational decision-making, boost management control efficacy, and yield strategic
advantages. Since instantaneous data may be accessible, automation plays a crucial
role in the modern decision-making process and enhances the efficacy of information
systems in management accounting.
2.3 THE MAJOR CHALLENGES TO BUILDING, IMPLEMENT OR USING
INFORMATION SYSTEM

NO. CHALLENGES ELABORATION

1. Cost To develop and implement information systems,

substantial financial resources are required for
hardware, software, infrastructure, and skilled
personnel, which can be expensive.

2. Complexity The complexity of information systems can

involve multiple components, integration with
existing systems, and customization to meet
specific organizational needs, which can be
challenging to manage.

3. Technical Issues Technical challenges such as system crashes,

software bugs, data corruption, and compatibility
issues with other systems may be faced by
information systems. Operations may be
disrupted by these problems, which call for
technical know-how to fix.

4. Data Security & Privacy By storing and processing sensitive data,

information systems become open to security
errors and unwanted access. One of the main
challenges in data security and privacy is
ensuring compliance with security protocols and
providing strong security measures.

5. User Adoption & Training Because they lack training, have never used
new information systems before, or are fearful of
change, users may be reluctant to embrace
them. To ensure the system is used effectively, it
is crucial to offer sufficient training and user
support.
6. Integration With Existing It can be challenging to integrate new and old
Systems information systems, particularly in companies
that still use legacy systems. Keeping data flow
and system integration running smoothly is one
of the main obstacles.

7. Scalability & Flexibility It needs to be flexible enough to change with

business demands and scalable enough to
support future expansion of the information
system. It might be challenging to design a
system that is both scalable and flexible over
time.

8. Change Management Implementing new information systems often

requires organizational change, including
changes in processes, roles, and
responsibilities. Managing this change effectively
and gaining buy-in from stakeholders can be a
significant challenge.

9. Data Quality & Governance Dependent on accurate and reliable data, the
entire information system. Ensuring data quality,
integrity, and governance becomes difficult, as
these tasks include validating data, cleaning it,
and providing a framework for data governance.

10. Vendor Selection & It can be difficult to select the best technology
Management provider and maintain vendor relationships.
Important factors to consider include evaluating
vendor skills, negotiating contracts, and securing
ongoing support and maintenance.
2.4 THE IMPORTANT INFORMATION SYSTEM DEVELOPMENT IN
ORGANIZATIONS

These elements emphasise the necessity of taking into account organisational

context, level of process automation, and information system quality while creating
information systems inside an organisation.

NO. FACTORS ELABORATION

1. High-quality Investing in IT, using innovative technologies,

information systems enhancing internal IT skills, and adopting external
consulting can improve information systems quality.

2. Process automation The degree of process automation in an organization

can moderate the relationship between information
systems quality and management control
effectiveness. Higher degrees of process automation
can enhance the positive relationship between the
two.

3. Contextual factors Other contextual factors, such as organizational

culture (e.g., data-driven culture), personal skills (e.g.,
management accountants' IT skills), and
technology-related factors (e.g., homogenous data
infrastructures), may also impact the relationship
between information systems quality and
management control effectiveness.
2.5 VALUE OF INFORMATION SYSTEM DEVELOPMENT IN ORGANIZATIONS

Because information systems may increase the efficacy of management control

systems, an organisation can benefit from their growth. A high-quality information system
in management accounting provides the sufficient, timely, and trustworthy information
required for efficient control activities. By utilising this approach, management may
establish a more efficient control system and lessen issues brought on by information
asymmetry. The paper also makes the case that the level of process automation may
increase the beneficial effects of information systems on management control
effectiveness. Automation prevents control issues and enables the generation and use of
real-time data, providing management accountants with quicker and more thorough
information access.
3.0 CONCLUSION

The importance of the impact and usability of high-performance information systems in

management accounting is emphasized. Emphasis is placed on the important role of
information technology in increasing productivity, improving valuation, and identifying potential
for future commercial ventures. Additionally, the article highlights the need for more empirical
studies on the relationship between management control procedures and the quality of
accounting information systems. In the context of management control systems, process
automation refers to the use of technology and software to coordinate and automate various
business processes. Some examples of process automation in management control systems
include:
1. Automated data collection: The use of automation technology can automatically obtain
data from various systems and databases, replacing the need for human data collection
from various sources. This reduces the possibility of errors and eliminates the need for
manual data entry.
2. Workflow automation: Workflow automation, known as automating tasks and
operations within an organization, may involve submitting paperwork for review,
automating approval procedures, and providing alerts or reminders for pending matters.
3. Report generation: Automatically, reports and dashboards can be generated using
predefined criteria through automation. By implementing this, the time and effort
previously required to manually collect and evaluate data for reporting purposes can be
reduced.
4. Alerts and notifications: Through automation, alerts and notifications can be
programmed for specific occasions or situations. For example, a management control
system can be configured to issue a notification when certain performance indicators
deviate from predetermined limits.
5. Budgeting and forecasting: Using automation solutions can improve the efficiency of
forecasting and budgeting procedures. This involves automating data entry and
computations as well as creating financial predictions based on historical data and
pre-established assumptions.

These are just a few instances of how management control systems are used in process
automation. The particular automation methods and instruments employed may change based
on the requirements of the company and the makeup of its management control procedures.
REFERENCES

Papiorek, K.L., & Hiebl, M.R.W. (2023). Information systems quality in management accounting
and management control effectiveness. Journal of Accounting & Organizational Change.
https://doi-org.ezaccess.library.uitm.edu.my/10.1108/JAOC-09-2022-0148.
BDI. (n.d.). German Mittelstand. https://english.bdi.eu/topics/germany/german-mittelstand#
APPENDIX