Issues with manual accounting
This study intends to examine implementation of Information and Communication Technology (ICT) on overall efficiency and quickening of accounting exercises and the way it can make sure effective delivery of accounting operations.
Previously, accountants were dynamically involved in different accounting actions as the conventional methods were in position. Records on a daily basis had to be maintained by humans, financial statements had to be prepared and arranged as the declaration of pecuniary position and announcement of comprehensive earnings were carried out manually by the accountant (Eason 2014). However, there were different issues associated to manual accounting practices that could weaken manual accounting actions. Procedures of accounting using paper as well as ledgers else wise identical tools need time to complete tasks. Also, manual system of accounting is also subject to errors as manual systems necessarily do not possess internal checks as well as balances (Avgerou and Walsham 2017). Also, issues with manual system of accounting include inability on the part of the firm to prevent workforces from assessing sensitive data present in paper ledgers as well as journals. Implementation of information and communication technology is said to exert impact on system of accounting by replacing manual systems by automation. As per Eason (2014), proposition of technology is supposed to cause alteration in business concerns associated to systems of accounting and performance of enterprise, that necessarily has been of immense concern as well as interest. Decisions and plans of accounting can be influenced by the implementation of ICT in enterprises that in turn can help the firm to remain relevant and at the same time competitive. It is essential to admit that computerized systems, have enhanced the functionality of departments of accounting in enterprises. In this way, implementation of ICT has augmented timeliness of accounting information that facilitate accountants to arrange reports and examination of operations, thereby presents a clear image of present operations, helpful to firm’s management. Records can be kept and tracked more effectively with the use of computerized system increasing company efficiency and minimizing errors to ensure customer satisfaction (Madon and Krishna 2018). So far, ICT has improved corporate relationships, facilitated speed and enhanced quality delivery in jobs. It has also improved productivity and increased value creation of organizations.
The research work at hand can help in gaining deep insight and comprehensive understanding regarding the way information and communication technology can prove to be a pertinent and at the same time inevitable facet in system of accounting. The study helps in highlighting the ways ICT can address the issues faced by the manual system of accounting by replacing the same with automated/computerised software based system of accounting. This study thereby helps in analysing the ways in which implementation of ICT can aid in enhancement of speed of preparations of different accounting reports (Schaltegger and Burritt 2017). Also, this study can examine effect of execution of ICT on maintenance of both reliability and accuracy of different financial reports that in turn has an impact on transparent and honest business dealings of enterprises with customers, business partners as well as outsiders
Impact of ICT on accounting
The identified issues of utilization of manual system of accounting include dearth of timeliness, proneness to errors, and lack of security and unavailability of copies. Essentially, the manual system of accounting is in itself extremely laborious and requires huge time to complete different tasks. Also, errors are also pretty frequent in manual accounting procedures. In this regard, the study at hand can help in understanding impact of execution of ICT on systems of accounting and the way the same can address the existing issues of manual system of accounting (Simkin et al. 2014). The study of the current issue is said to be important to practice as this can help in comprehending the causes and effects of implementation of information and communication technology on system of accounting.
As per the open systems theme, a business concern interacts with, acclimatizes to and intends to control business environment in a bid to continue to exist (Eason 2014). In current times, it can be observed that environment pressures exert an influence on the behaviour of different enterprises from the perspective of decision making and process selection. On the whole, these environment pressures have formed a competitive environment for the business arena. Generating superior-quality and well-timed decisions relies partially on data quality and the subsistence of on-line as well as real-time data. In this regard, information technologies are utilized to facilitate business dealings, smooth the progress of decision making for enterprises (Avgerou and Walsham 2017). Therefore, the current research work can positively contribute towards examining the function of information technology that is accountable for developing, executing and maintaining several controls over business procedures of a business enterprise.
Prior studies have already towards importance of accounting system in development of functions in enterprises. However, the previous studies do not present a well-developed theory on the economic impact of the implementation of the (ICT) on accounting information system of business concerns. Therefore, the current study intends to fulfil the gap and examine the way working, maintaining, processing and communicating information (using ICT) to diverse internal as well as external stakeholders can affect financial information used the purpose of decision making (Avgerou and Walsham 2017).
Therefore, the current study can add to the knowledge regarding the way implementation of ICT can change processes of accounting when information subsists in electronic form and ascertain economic influence of the same on performance of business concern. Eason (2014) ascertained the way ERP (Enterprise Resource planning) systems augment the procedure of complicated methods of managerial accounting, that is to say ABC as well as Balanced Scorecard. Laudon and Laudon (2016) mentioned that the ERP methods causes a alteration in managerial accounting exercises, as regards delivering universal flow of information and consistency, and that traditional managerial accounting systems get eliminated after implementation of ERP (Simkin et al. 2014). Implementation of Information technology can cause a transformation in budgeting as well as reporting issues and address the concerns related to the same and facilitate increasing usage of sophisticated managerial accounting techniques (Laudon and Laudon 2016). Even though, prior studies have carried out detailed study of importance of implementation of ICT in accounting information system for resolution of identified accounting issues, no well-developed theory is present that substantiates effect of ICT on accounting information system and as a consequence business performance of firms.
Role of ICT in enterprise accounting
The implementation of information as well as communication technologies has significantly affected the accounting information system and has addressed several accounting issues previously faced by firms. Thus, it can be hereby mentioned that ICT has altered work environments along with running of businesses on the whole. In line with this characteristic, the significance of accounting information has augmented. The central objective of system of accounting is to deliver well timed, fast and accurate information (availed using ICT) for the purpose of decision making, improving entire system of accounting information and correcting accounting issues within an organization (Eason 2014). The current study considers one independent variable that is “Information and communication Technology” and two different dependent variables “Accounting Information System” and thereafter “Business Performance”.
Avgerou and Walsham (2017) assert that a study was conducted by Apulu and Latham on analysis of influence of Information and Communication Technologies (ICT). This paper stressed that the execution and effectual usage of ICT in business concerns introduces competitive advantage. The utilization of ICT has an immense impact on performance of firms as this aids to deliver a stage for growth in numerous firms. Basically, ICT is observed to enhance organizational functioning, growth as well as competitiveness of firms. Based on literature assessment and as well as detailed evaluation of case studies, it is quite certain that there are several advantages related to the implementation and usage of ICT. Thus, it is said that effective employment of ICT in different business concerns can help in the process of generation of numerous opportunities.
Eason (2014) concentrates on the impacts of IT associated organizational transformations on the division of management accounting function. This literature contributed in developing knowledge regarding the degree and extent to which IT exerts impact on overall capability to resolve accounting functions. The association between IT and accounting exercises was evaluated qualitatively by means of six case studies and the impact of IT was measured. Findings of the study suggest an inclination for transformation and decentralization of different tasks of accounting. (Madon and Krishna (2018) examined the issues related to information and communication technology (ICT) in particularly management of system of education. The study revealed that no meaningful advancement can be carried out in educational segment without modifying to technological innovations as well as discoveries.
Accounting system by itself is very hectic as it involves dealing with numerous, charts, figures, numerals, mass calculations and a good deal writing. However, ICT essentially has made the system smooth and relatively easy in maintaining the entire system. Schaltegger and Burritt (2017) suggests that accounting information system is by and large a computer-based means for monitoring accounting action in combination with resources of information technology. The ensuing statistical pronouncements can be utilized internally by administration or else externally by diverse other interested users or parties counting financiers, creditors and authorities of taxation (Tayeh et al. 2015). Fundamentally, both accounting systems as well as Accounting Information Systems are necessarily utilized interchangeably since they serve up the same objective. Accounting Information Systems -AIS can be considered to be the most commonly used owing to high rate of adoption of particularly information technology in systems of accounting of firms in modern times.
Enterprises view see investment in Information and communication technology (ICT) as a way by which they can enhance organizational performance founded on measures (that is to say, effectiveness, productivity, profitability as well as quality). ICT essentially helps business organizations to acquire competitive edge among rivals in market. Also, this system helps in better evaluation of available accounting information with the usage of accounting software. Additionally, ICT is also said to provide a direction for business concerns since they can stay up to date and pertinent with specific information, detecting accurate procedure to adopt (Galliers and Leidner 2014). On the whole, this helps in improved decision making in firms. Therefore, this kind of investment can generate positive influences over successive periods and can be observed to have enhanced company’s productivity.
Objectives
- To critically examine the influence of the implementation of ICT on overall efficiency of accounting systems
- To evaluate the influence of the implementation of ICT on overall efficiency of business performance through development of accounting information system
Development of Hypotheses
Null Hypothesis
HO: The implementation of ICT exerts no impact on efficiency of accounting system
HO: The implementation of ICT exerts no influence on efficiency of business performance through development of accounting information system
Reference
Avgerou, C. and Walsham, G. eds., 2017. Information Technology in Context: Studies from the Perspective of Developing Countries: Studies from the Perspective of Developing Countries. Routledge.
Avgerou, C. and Walsham, G. eds., 2017. Information Technology in Context: Studies from the Perspective of Developing Countries: Studies from the Perspective of Developing Countries. Routledge.
Eason, K.D., 2014. Information technology and organisational change. CRC Press.
Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.
Madon, S. and Krishna, S., 2018. The Digital Challenge: Information Technology in the Development Context: Information Technology in the Development Context. Routledge.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts and practice. Routledge.
Simkin, M.G., Norman, C.S. and Rose, J.M., 2014. Core concepts of accounting information systems. John Wiley & Sons.
Tayeh, M., Al-Jarrah, I.M. and Tarhini, A., 2015. Accounting vs. market-based measures of firm performance related to information technology investments. International Review of Social Sciences and Humanities, 9(1), pp.129-145.
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