A STUDY

ON

"THE IMPACT OF ACCOUNTING SOFTWARE ON BUSINESS PERFORMANCE"

Submitted To
Dr. Md. Musfiqur Rahman (FCMA)
Associate Professor
Department of Accounting & Information Systems
University of Dhaka

Submitted By

Team Benchmark ID
Md. Mehedi Hasan 22-243
Md. Jamil Ahmed 22-246
Md. Imran Hossain 22-247
Riday Vadury 22-032
Md. Jahidul Islam 22-089

Table of Contents
1. Executive Summary

2. Introduction

3. Literature Review

4. Literature Gap

5. AIS and Business Performance

a. Efficiency and Business Performance

b. Reliability and Business Performance

c. Ease of use and Business Performance

d. Data Quality and Business performance

e. Accuracy and Business Performance

6. Research Method

7. Research Limitation

8. Conclusion

9. References

Executive summary
To find out how accounting software affects the financial performance, this article set out to
investigate and examine the topic. The study analyzes and investigates the effects of using AIS
on the performance of the company. The study's findings could help business owners and
managers better comprehend the value of employing Accounting Information System (AIS)
obtained by Accounting Software to improve performance. There are several aspects such as:
efficiency, reliability, usability, data quality, and correctness that have an impact on how well
AIS is used by businesses, affecting their results. AIS qualities including efficiency,
dependability, ease of use, data quality and correctness have a substantial impact on AIS use and
business performance, according to modern research and the findings of this study. A number of
studies have indicated that AIS is critical for companies in today's increasingly competitive
climate, as well as improving their operational competency and efficiency. There are only a
handful of studies that can show how using AIS improves company performance. According to
the findings of this research, characteristics of AIS use are critical for improving business
organization performance.

Introduction

Accounting now occupies a prominent position in the business world thanks to the wide range of
services it provides. A company's accounting system is critical to its success. It's critical for
every company's financial information to be current and under the supervision of the
organization. Simple to complex and even burdensome accounting processes are all part of
accounting. Companies must keep up with the rapid changes in information technology in order
to keep their accounting, statutory records, and inventory up to date and highly accurate (Igbaria,
et al., 1997). We had to develop a system that could process and store accounting data quickly
while also having enormous storage and processing capacity due to accounting systems
increasing complexity and growing volume of transactions. An accounting and information
technology (IT) integration was developed to meet the growing demand for current and accurate
information (Wickramsainghe, et al., 2017).
It's been proven time and time again that implementing an accounting information system
improves a company's performance, profitability, and operational efficiency (Saira et al., 2010;
Gullkvist, 2002; Sajady et al.,2008; Kouser et al., 2011). Adapting their accounting system in
dealings with customers and suppliers was made possible by new computer tools and the
information society (Esmeray, 2016). Aligning an IT strategy with the company's business
strategy, according to Cragg et al. (2002) and Chan et al. According to Raymond et al. (1995),
companies perform better when organizational structure and information technology structure are
aligned.
Doesn't accounting software use have any impact on the business performance of companies?
Sam et al. (2012) investigated the adoption of a computerized accounting system in small and
medium-sized businesses. No published studies, on the other hand, looked into the effects of
accounting software characteristics on the performance of businesses.

Literature Review

Small and Medium Sized Enterprises (SMEs) in Bangladesh usage of Accounting Information
Systems (AIS) and factors Economic Returns, Financial Profitability, and Productivity were
studied using empirical data by. To find out how far accounting information systems
development and deployment had progressed, the researchers used a survey of small and
medium-sized businesses, which was analyzed using ANOVA to establish how the adoption of
AIS affected company performance and productivity. According to the findings, there's a link
between SMEs that use AIS for fiscal and bank management and better performance measures,
and this adds value to accounting literature because there aren't many studies looking at the link
between AIS use and performance and productivity indicators in SMEs in Bangladesh.
To find out how the Accounting Information System (AIS) affects organizational performance
and how organizational culture influences it in the Jordanian banking industry, Ali, Omar, and
Bakar (2016) conducted research. The study employed four categories of AIS success
characteristics as performance determinants: service quality, information quality, data quality,
and system quality. These were used to calculate the results. A structured questionnaire survey
was used to gather data, which was then analyzed using the PLS SEM approach. According to
the data, AIS success criteria for improving organizational performance include service quality,
information quality, and system quality. The results of this research also showed that
organizational culture has an impact on performance because it interacts with the quality of
information, data, and systems. AIS success criteria and a supportive corporate culture may both
be deduced from this research as ways for banking sector firms to improve their performance. As
a result, companies should create an environment where people are motivated to work more
because they are pleased.
Accounting information systems (AIS) requirements must be aligned with available AIS capacity
in order for this study's findings to have any impact on business performance. Using a postal
questionnaire, the researchers collected data on nineteen different types of accounting
information
Principal component analysis and varimax rotation with Kaiser normalization were used to
collect and analyze data from 310 small- and medium-sized enterprises (SMEs). According to
the findings, a sizable percentage of SMEs exhibited a high degree of AIS alignment.
Small and medium-sized enterprises (SMEs) with strong AIS alignment outperformed their
competitors in terms of organizational performance. Researchers found proof of the relevance of
AIS alignment, as well as new insights into what is required in accounting data, including how
IT may be used as a key tool for data processing. Further research into AIS alignment in small
and medium-sized enterprises (SMEs) may now be done both in Bangladesh and globally.
S&K (2014) investigated the factors that influence manufacturers' adoption of accounting
information systems. The sample included 214 organizations with accounting information
systems. Researchers discovered that accounting information systems are efficient because they
link data from the top to the bottom, enabling employees to fulfill their goals while also
providing correct information to the appropriate government entities.

Literature Gap
The use of an accounting information system has been proven in many countries to boost
business performance, profitability, and operational efficiency (Gullkvist, B., 2002; Kouser et al.,
2011; Sajady et al., 2008). The information society and modern computer technologies in the
United Arab Emirates (UAE) have helped businesses to better utilize their accounting system in
dealings with suppliers and consumers. AIS and electronic banking, for example, have allowed
businesses to save a significant amount of time in their transactions (www.ameinfo.com). In
other words, this research seeks to provide light on how AIS design, organizational strategy, and
performance—specifically, financial performance and performance management—all interrelate
and interact with one another.
There have been several studies looking at how computerized accounting systems affect
accounting functions' efficiency, effectiveness, and performance, as evidenced by the literature
mentioned above. Though computerized accounting systems have been widely used, there has
been very little research on how they affect corporate results. As a result, the goal of this
research is to close the knowledge gap.

AIS and Business Performance

According to Dibrell, Davis, and Craig (2008), organizations' performance may be improved by
combining an innovative product or process approach with an investment in IT/IS. SMEs with a
high degree of AIS alignment outperformed those with a lower degree of AIS alignment in terms
of organizational performance (Ismail & King, 2005). Earlier studies have shown that the
adoption of an accounting information system improves a firm's performance, profitability, and
operational efficiency. 

Efficiency and Business Performance

As a crucial organizational tool, the accounting information system is important for successful
decision-making and control in companies. Data collection and maintenance, accounting systems
and knowledge management, data control and information generation are just a few of the key
functions performed by an efficient accounting information system according to Wilkinson et al.
accounting information systems' efficiency and effectiveness are influenced by a wide range of
factors. These systems merged competent human resources with cutting-edge software and
technology, as well as a high-quality database, to maximize efficiency.
Increasing performance and maximizing shareholder wealth are two of any company's primary
objectives. These goals can only be met through the employment of appropriate strategies and
resources, which are then put into action.
Being efficient becomes even more critical when faced with limited available resources.
A company's capacity to maximize firm value while utilizing the fewest inputs is referred to as
efficiency in the business setting. The requirement for efficiency in the company's operations has
been underlined by empirical investigations. Similarly, Greene and Segal (2004) demonstrate
that in the insurance business, efficiency increases profitability in terms of return on equity. The
worth of a company is strongly correlated with its ability to utilize its resources.

Reliability and Business Performance

The dependability data generated by accounting software is crucial for planning, identifying, and
controlling corporate processes. When it comes to accounting information, dependability is how
error-free and accurate the data is, as well as how relevant it is when it comes to decision-
making. Despite its key significance in accounting information, reliability is a difficult and
elusive concept to grasp (Maines and Wahlen, 2006). Companies must disclose more
unvarnished revelations related to the underlying economic structures represented by accounting
information in order to enable users better judge the veracity of accounting information in order
to achieve accounting standards.

Reliability is built into the information, not imposed on it by modification. For dependability to
matter, measurement qualities and economic conceptions represented in accounting information
must be relevant. As a result, while dependability is required, it is insufficient to ensure that
accounting information is useful. In order for enterprises to provide economic structures with
relevant useful accounting metrics and classifications, accounting information must be reliable.
There are several elements that affect the accuracy and usefulness of accounting information in
projecting future cash flows, including the degree to which financial accounting structures and
measured values accurately reflect economic concepts (Cho, Kim and Lim, 2006).

It was found by Chandar and Bricker (2002) that returns to market-wide portfolios such as the
S&P 500 and Russell 2000 indexes give helpful information for determining the accuracy of the
funds' estimated fair value gains and losses. Sunder and Waymire, Casler and Hall, and Shriver
have all tested the dependability of measurement characteristics under SFAS 33 using different
industry- and economy-wide price-level indices and asset baskets in the past. These studies are
similar. Historical stock return volatility measurements utilized by Alford and Boatsman (1995)
to assess the credibility of predictions for predicted future return volatility when calculating the
fair value of stock option-based compensation at companies. Depending on how different your
expectations for return volatility are, you'll have to adjust your estimations of options-based
compensation costs. A number of recent research projects have demonstrated the importance of
making independent and verifiable baseline information for determining financial statement
accuracy publicly available. This makes it easier for investors to assess a company's financial
statement's overall trustworthiness by comparing it to the benchmark data.

Ease of Use and Business Performance

User benefit from high-quality software that's simple to use and comprehend. As a result, the
effectiveness of the system relies on how user-friendly it is. Overall, a rise in user-friendliness
benefits a company's output quality in numerous ways, such as higher sales and revenues,
productivity, or customer happiness; reduced training and support expenses; or decreased time to
market, or maintenance costs (Bias and Mayhew, 2005).

Employees who like their jobs perform better, remain longer in the face of temptation, and offer
ideas and excitement to the advancement of greater production, according to Landauer (1996).
Employees who dislike their jobs are more likely to leave. Using experimental design strategies
to define baseline values, companies set criteria for quality. workplace concerns include posture,
workstation design, office environment and organization challenges, input devices, screen
displays and software user interfaces (Celine, 2008). Firms may achieve their goals with
improved productivity at reduced costs while also producing optimal levels of customer
satisfaction by increasing the aforementioned elements. Over the years, various studies have
linked these variables to general betterment. The need for significant training may be reduced
with user interface software that is simple to comprehend, and thus decreases the time needed to
complete activities while increasing staff productivity and decreasing development time and
expenses. Each of these elements does not have to be mutually exclusive; rather, they should
work together to create a positive working environment.

Gould (1988) classified usability according on how well a system performs, what functions it
has, and how the user interface looks (Dubey et al, 2010). Technical soundness and error-
freeness, as well as user-friendliness, are all tied in a more indirect way to an organization's
overall performance. System quality does not have a direct bearing on an organization's
performance.

Data Quality and Business Performance

The output of an accounting information system (AIS) is heavily reliant on the quality of the data
input (Xu, 2003). Xu (2003) came to the conclusion that data quality is crucial to AIS and thus
affects the performance of the company by evaluating the quality of accounting information
using four attributes: accuracy, timeliness, completeness, and consistency. Data collection, use,
and storage must all function well in order to attain high levels of data quality (Lee and Strong
2003). As input control and staff competences are vital to the data quality of the accounting
information system, companies' competitiveness will be harmed if their data is missing or wrong
(Xu, 2009). They observed that data of poor quality might have a negative impact on decision-
making, which in turn affects the performance of the organization.

Several studies have focused on success characteristics and essential process aspects that
regularly affect information systems and AIS, with varying degrees of success. According to
Wixom & Watson (2001), data quality is a significant component that affects decision-making
effort directly. To increase the organization's dependence on (AIS) in this information era, a
proactive approach to data quality management is needed (Al-Hakim, 2007). Data and
information are referred to as vital components for all human endeavors (Emeka-Nwokeji, 2012).
Data quality management literature has been written to determine and handle crucial success
elements discovered by Xu (2003). Despite this, there have only been a few attempts to
determine the important AIS data quality parameters, resulting in a paucity of research on AIS
data quality. Based on her findings in 2012, Emeka-Nwokeji argues that high-quality AIS data is
critical to the success of the company. The rules for managing data quality help firms respond
and deliver services and products required by consumers in a proactive manner, as well as proper
decision-making and operating procedures. As an important success element for organizational
performance, data quality has received relatively little attention in research. Data quality,
according to Al Qudah and Shukeri (2014), is closely linked and has a positive effect on how
internal auditors perceive the company. A growing number of research investigations have
discovered a strong connection between data quality and AIS performance (Emeka-Nwokeji,
2012).
Accuracy and business performance

Fast and accurate aren't the only benefits of using accounting software; it is also dependable and
accurate. In order to collect data and process it into useful information, computers are used. The
entire data processing is done with accounting software through sorting, classifying, calculating,
summarizing the data and the production of reports. Management uses this information to make
timely and effective decisions.

Manufacturing companies process information systems and production in the same way. A firm
risk losing business if consumers (users) are unsatisfied with the product (information) because it
does not meet their demands (relevance) because it is not provided on time (timeliness)
(Clikeman, 1999). When information given by an IS is not up to snuff, activities in an
organization are disrupted, and maintenance expenses soar. Reduced labor expenses and waste,
efficient use of machinery, and cheap inventory costs are all advantages of having extremely
precise operational information from accounting software. By providing customers with
accurate, up-to-date and relevant information, organizations may better control their costs while
also increasing their profit margins and the effectiveness of their decision-making processes.

IT may be used by organizations to generate internal operational efficiency by efficiently and

effectively managing internal resources and by improving customer service in order to gain
strategic advantages, as claimed by Ravichandran and Rai (2000). As a result, companies place a
great importance on accounting software's accuracy in helping them make better decisions by
delivering timely and correct information. It also helps them uncover new business opportunities
and successful enterprises. Information systems dependency and losses associated with
information accuracy encourage management to improve IS quality proactively (Ravichandran
and Rai, 2000).

When information is free of serious flaws, is not prejudiced, and consumers can rely on it to
correctly reflect what it has set out to be or what they anticipated to be, it is considered accurate
and credible by many. In order for the data to be accurate, it must reflect the transactions and
other events accurately and be expected to do so. Accountants can eliminate or reduce human
mistake by using accounting software to help them enhance their overall accuracy. Accounting
necessitates a greater number of manual arithmetic computations than other professions. A small
blunder in the calculations at the start of the process can have a big impact on the outcome.
Instead, then relying on accounting software to supply incomplete or inaccurate information,
accountants may use it to their advantage by processing large amounts of data quickly while yet
maintaining high levels of accuracy. A company's performance and attainment of important
business goals are enhanced when financial data are accurate. This is true both operationally and
financially.

Research Method

The quantitative research technique was used in this study because it enables for the collection of
more data to analyze the facts and evaluate ideas and hypotheses. The quantitative approach is
more suited to depict tested ideas when compared to the qualitative one since the researcher was
not aware of crucial factors to be analyzed and of the sensitivity to data collection in relation to
social contexts. Using this strategy, researchers may focus their study on a smaller set of factors,
and it helps them to better grasp the analyst's findings. Since the researcher cannot interpret the
data of the investigation based on prejudiced viewpoint, this sort of research is more objective
and dependable.

Research limitation

There are only a few limits to this research. This research was conducted in English, which is a
significant factor. In order to have a more accurate result, survey questions should have been
available in Bahasa Malaysian. So the survey sample would be more evenly dispersed, reducing
the likelihood of incorrect interpretations. The second thing to note is that this study was
conducted on any Malaysian company, not just one in particular. Since different industries may
have varying needs for accounting software, the software's effect on performance may also vary.
 Conclusion

Finally, accounting software systems are critical to enterprises, organizations, and the economy
as a whole because of their importance and worth. The progress of the economy depends heavily
on the flow of precise and reliable information. The impact of performance management in
raising an organization's overall worth cannot be overstated. Accounting information system
adoption has been shown in prior studies to boost a company's overall productivity, profit
margins, and operating efficiencies. Research has shown that there is a strong link between the
features of accounting software and business performance, which suggests that organizations will
be more effective if they have access to correct accounting information. As a result, accounting
software can have an impact on organizations' financial success.
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