Review Paper ACCOUNTING INFORMATION SYSTEM (AIS) ENHANCE EFFICIENCY LEVEL OF THE ORGANIZATION: EVIDENCE FROM INSURANCE INDUSTRY IN BANGLADESH

BANGLADESH RESEARCH PUBLICATIONS JOURNAL ISSN: 1998-2003, Volume: 9, Issue: 4, Page: 297-304, March - April, 2014 Review Paper ACCOUNTING INFORMATION SYSTEM (AIS) ENHANCE EFFICIENCY LEVEL OF THE ORGANIZATION: EVIDENCE FROM INSURANCE INDUSTRY IN BANGLADESH Md.Qamruzzaman 1 Md.Qamruzzaman (2014) Accounting Information System (AIS) Enhance Efficiency level of the Organization: Evidence from Insurance Industry in Bangladesh. Bangladesh Res. Pub. J. 9(4): 297-304. Retrieve from http://www.bdresearchpublications.com/admin/journal/upload/1309140/1309140.pdf Abstract The aim of this study is to assess impact of accounting informant system (AIS) on operational efficiency, internal control and performance management of the organization focusing on insurance industry in Bangladesh. The descriptive analytical method has been used through data collection by means of a questionnaire distributed to various respondents who are related with insurance business. A Sample of 240 respondents were selected by using stratified sampling technique and from each stratum respondents were selected by using random sampling technique and requested to response. Only 150 respondents out of 240 were considered as suitable for analysis purpose and remaining consider as unfitting for the study due to partial completion. Different statistical tools like t-test, ANOVA, matrix and Paired sample test used to assess the impact and relations with organizational performance with AIS. Study found that, accounting information system contribute significantly on enhancing operation performance by providing desired service to customers with efficiency and ensure effective and efficient internal control system of the organization by making appropriate decision on timely basis well as assist in providing reliable financial statement but study does not produce any substantial evidence of enhance performance management. JEL classifications: L8, M15, M41 Key words: AIS, Performance, Operational Efficiency, Internal Control, ANOVA. Introduction Accounting Information Systems (AIS) are a tool which, when incorporated into the field of Information and Technology systems (IT), are designed to help in the management and control of topics related to organization economic-financial area. But the stunning advance in technology has opened up the possibility of generating and using accounting information from a strategic viewpoint. Organization needs to formulate and implement strategic decision for ensuring sustainable development and growth. In ever changing global environment information technology play as crucial role in the decision making process by providing timely relevant and reliable information with no time. By considering significant contribution by accounting information system (AIS) organization always concern about its contribution on organizational efficiency. Accounting Information System (AIS) is vital to all organizations and perhaps, each organization either profit or non-profit-oriented need to maintain the AISs.On the other hand, an AIS is the whole of the related components that are put together to collect information, raw data or ordinary data and transform them into financial data for the purpose of reporting them to decision makers Management of any organization requires relevant and reliable information in every moment of making operational, procedural and strategic decisions to execute organizational tasks effective and efficient manner. Reliable and relevant information can be ensure through proper sorting and documentation in early phase of information *Corresponding Author: E-mail: qzamanfindu@gmail.com ACMA, MBA-IBA (DU), MBA-FIN (DU), Lecturer, School of Business Studies, southeast university, Dhaka, Bangladesh

Qamruzzaman 298 storing, indicating segregation and accumulation of information with respect to nature of application of those information and such process can be effectively done if organization implement accounting information system(ais) with the organization. Accounting information system is considered as a subsystem of Management Information System (MIS). To regard accounting as an information system, perhaps, is the latest definition of accounting, as can be deduced from the statement of American Institute of Certified Public Accountants (1966). Accounting actually is information system and to be more precise, accounting is the practice of general theories of information in the field of effective economic activities and consists of a major part of the information which is presented in the quantitative form Literature review Now a days Accounting Information System (AIS) consider as an integral component in modern management decision making process. Because modern decision making process is significantly different from traditional one in different aspects. Modern management consider information means pertinent and reliable as key to make successful decision for the organization which eventually contribute sustainable growth and development with increase operational efficiency. Over the last few decade number of researchers conduct study in order to assess impact of accounting information system (AIS) in different aspect of the organization. (Abdolkarimi, 2012) Explore that accounting information system has significantly effect on decision making process and also reduce uncertainty in those situation where it is imperative to use information as aggregate form which can be obtained through accounting information system. It is obvious that accounting information system should contribute in decision making process but some studied was ended with exceptional outcome. (Jawabreh, 2012) Found from his study, which was conducted on hotel industry, that there is no relationship between operational decision making processes with accounting information system. It is found from study that implementation of accounting information system ensure enhancement of operational efficiency within the organization through reduction of customers service delivery time. (Sajady 2008) found from their study that is effectively implemented accounting information system contribute enhance productivity, quality of service, effectiveness of internal contral of the organization. Study alos found that accounting information does not contribute for improving performance evaluaiton process. (Mndzebele, 2012) study revealed that effective internal control system can be ensured by implementation of AIS within the organization. (Ismail, 2007) found from his study that accounting informantion system act as intermediary role between information technolooy and firm operational development. (Spremic, 2012) Study indicated that accounting information system contribute on performance of e-business by supply judicious up to dated information to different users. It is a preconception prevail regarding competitive advantage which can be gained from using accounting information system. (W,R.Ring 1989) explored from their research that AIS provide competive advantages in competitive environment. Accounting information system allow aggregated rather than segregted infromation about the organization such aggregation reduce time for making decision and eventally expediate entire decision making process. Study also explored that information system immensely contribute on strategic decision making process. (Abdallah, 2013) conducted study focusing on determination of income tax by income tax authority in Jordan and the outcome revealed from his study that qualility of finanical statement immensely depends on effective implementaion of accounting information system with in organization which is used by income tax authory in determination tax liability. Several studies also conducted in this regard and all studied conformed that computarizied accounting informaition system immensely contribute in internal control system, prevent fraud and detection error which eventually enhance operational perfomance.

AIS Enhance Efficiency level 299 Accounting information system (AIS) act as backbone of the organization value creation process with enhancement of operational efficiency of the organization. Information system strengthen flow of information from one department to another and eventually reduce operational time in case providing service to customers (Urban et al., 2012). (Tunji, 2012) revealed from their study that organizational should put considerable effort towards implememtation of accounting information system and arrange necessary program so that level of operational efficiency can enhance. Organization should trained their employee so as to they can retain valuable information for decision making process. (Etim, 2011) exploed from study that continuous flow of information is imperative for sustainable success of organization irrespecitve of size of business. Accounting information system can perform effectively through internal control, proper docummentation and monitoring of organizational activities. Effective performance of accounting informantion not only enhance oprational performance but also put right direction towards achieving strategic goals. (Soudani, 2012) found from his study that accounting infromation system significantly contribute to enhace operational efficiency but study did not find any relationship between AIS and performance measurement. (Irene, 2013) originated from his report that performance of AIS is significantly differ from industry to industry. It is clearly understood from previous researchs that AIS system can contribute substantially in different industrie like banking, manufacturing, holets as well as public organization to enhance operational efficiency, improved merformance, effective internal control with the organization. It is also found from research that AIS contribute significantly in the organization performance especially operational perfromanc where informattion is uesed as product by ensuring effective internal control, improve quality of financial reporting, proper monitoring through out organization, efficient docummantion process. Considering above, here I would like to see the impact of AIS in insurance industry s performance of our country Problem statement The use of accounting information is becoming critical factor in ever changing competitive environment in order to provider service effectively and efficiently. The major problem discovered by management is the identification of fundamental concept of accounting information which to be implemented by the company and eventually affect the company s performance positively. If a particular concept of accounting information used by the company affect the management decision negatively, and this helps us to recognize the reason for the negative effect, which can be as a result of adoption of wrong accounting information or uncertified accountant giving wrong information to the company which can lead to wrong decision to the progress of the company. Considering the fact, the present study focus on assessing the impact of accounting information system to insurance industry performance of Bangladesh and examine how it aids in performance management. Objective of the study 1. To assess AIS effects operational performance. 2. To assess AIS contribution to internal control system. 3. To assess AIS impact on performance management Research Hypothesis For the purpose of analyzing the data, the following hypotheses were tested: Ho1: Accounting information does not have any effect on management decision making Ho2: There is no significant relationship between the perception of employees and accounting information Ho3: Accounting information does not have any effect on the company s performance. Methodology Data collection This study is based on primary data which is collected through questionnaire by considering Liker s 5 points scale with a choice of strongly agree to strongly disagree.

Qamruzzaman 300 Further the questionnaire consisted of 2 sections the first section focused on demographics of the target audience. The second section covers main questions. Out of 46 insurance companies listed in Dhaka Stock Exchange a sample of 30 renowned companies are selected. In case of data collection, random sampling technique is used with stricter questionnaire. A sample 240 respondents are asked to response about implication of AIS in different aspects in this case stratified sampling technique used for selecting sample group and random sampling technique is used for collecting primary data through questionnaire. Entire sample was divided into three groups: Customers - who are ultimately getting service from insurance industry means the policy holders. Insurance representative those groups of people who try to sell insurance policies to potential customers Employee who provide different services to customers? Table 1: responses receive from different groups Group of respondents Questionnaire sent Questionnaire received Response rate Customers 80 65 81% Insurance 80 50 63% representative Employee 80 35 45% Total 240 150 Statistical tools: SPSS 20 being used for data sorting and different statistical tools used for analysis purpose like paired comparison, t-test, correlation matrix, ANOVA analysis. Data analysis and findings From Appendix A: it is obvious that significant numbers of respondents are moderately believe that AIS has impact on operational efficiency, it is also manifest from descriptive analysis that respondents believes that AIS contribute for preparing reliable financial statement. Analysis of variance (ANOVA): test being done among pair of dependent variables with independent variables with a view to establish relations between AIS and internal control system with significant level 5% for each case test. From table 2 it is found that there is a strong association between internal control and recording system of accounting information within the organization which is initiated by implementation of AIS. In all case test significant value is higher than calculated F-value means respondents fell that AIS has significant influence on internal control system and encourage storing information in effective and efficient manner. Table 2: Variance index between internal control and keeping records AIS has contributed to internal controls * AIS keep track of all events in an effective and efficient manner Sum of df Mean F Sig. Squares Square (Combined).741 2.370.650.523 Between Linearity.510 1.510.896.345 Groups Deviation from Linearity.231 1.231.405.526 Within Groups 83.719 147.570 Total 84.460 149 Table 2: assess relations between financial reporting with compliance of accounting standard, laws and regulations. It obvious from test that is AIS encourage full compliance with accounting standard which eventually assists for financial reporting with reliable information. F-test value is significantly lower which is within acceptable range at significant value 5% level of confident. Result and Discussion From table 3 it is apparent that test value is significantly higher than significant value, i.e., (59.58 > 1.645) which means that null hypothesis is rejected. Respondents fells accounting

AIS Enhance Efficiency level 301 information has significant effects on management decision making process by providing reliable and timely information through integration of other department information as well as accounting information system ensure full compliance of accounting standard. Table 3: Accounting information does not have any effect on management decision making AIS is integrated with other management information systems t df Sig. (2- tailed) Test Value = 0 Mean Difference 95% Confidence Interval of the Difference Lower Upper 59.682 149.000 3.633 3.51 3.75 Result from hypothesis testing, it is found that (Table 04) test value is significantly higher than acceptable limit at 5% significant level, i.e., (58.63>1.645) indicating hull hypothesis is rejected. Respondents fell that employees feel strong relationship exist between accounting information system and internal control system. Table 04: There is no significant relationship between the perception of employees and accounting information regarding internal control system AIS provide preventive controls which are designed to discourage errors or irregularities Test Value = 0 t df Sig. (2- Mean tailed) Difference 95% Confidence Interval of the Difference Lower Upper 58.638 149.000 4.000 3.87 4.13 Table 5 indicating that respondents fell that accounting information system has impact on company performance with moderate degree. It is found that perception regarding AIS effect on overall company s performance in not volatile among different groups. Test results indicate that standard deviation and standard error of mean are 0. Due to nonvolatility of respondent s response value of F - test is not possible assuming that nothing can be said precisely about AIS impact on companies performance. Table 5: Accounting information does not have any effect on the company s performance N Mean Std. Deviation Std. Error Mean implementation to AIS incurred additional cost than benefits received from system 150 3.00.000 a.000 a. t cannot be computed because the standard deviation is 0. Considering Appendix C: it is apparent that correlation among significant number of variables has negatively related i.e., implementation of accounting information system (AIS) does not put significant contribution in every aspect of the organization performance which eventually contribute overall performance enhancement. It is also found from Appendix C: that significant number of variables represent P-values are fall in the rejection area indicating null hypothesis are rejected. Conclusion This study examined the effectiveness of accounting information systems (AIS) in different extents: operational efficiency, more effective internal control systems, enhancement of the quality of financial reports, improvement of performance measures, facilitating financial transaction processes. The findings of the research indicated that implementation of accounting information systems could lead to better decision-making by managers, more effective internal control systems, enhancement of the quality of financial reports and facilitating financial

Qamruzzaman 302 transaction processes. But there is no significant evidence found from this study that AIS contribute to performance management of the organization. Recommendations Based on the finding of this study, it is recommended that: Employees should be encouraged to develop themselves by becoming professionals in their chosen career, this will affect the company to grow positively; Efforts should be made to measure the effects of currently employed accounting concept on management decision making; Regular meeting with staff should be organized to disseminate information about the company and also elicit feedback that help to improve the company. Reference Abdallah, A. A. (2013). The Impact Of Using Accounting Information Systems On The Quality Of Financial Statements Submitted To The Income And Sales Tax Department In Jordan. European Scientific Journal, Pp:41-48. Abdolkarimi, M. M. (2012). The Effects Of Task, Organization And Accounting Information Systems Characteristics On The Accounting Information Systems Performance In Tehran Stock Exchange. International Journal Of Innovation, Management And Technology, Pp:443-448. Etim, E. O. (2011). Enhancing The Efficiency Of Accounting Information System In Organizations. International Journal Of Economic Development Research And Investment, Pp:19-27. H. Sajady, M. D. (2008). Evaluation Of The Effectiveness Of Accounting Information Systems. International Journal Of Information Science And Technology, Volume 6, Number 2. Irene, N. (August, 2013). Accounting Information Systems And Internal Efficiency: A Case Of Vision Group. Makerere University. Ismail, N. A. (2007). The Impact Of Information Technology On Performance: The Mediating Role Of Management Accounting Systems. Jurnal Teknologi, Pp: 27-44. Jawabreh, D. O. (2012). The Impact Of Accounting Information System In Planning, Controlling And Decision-Making Processes In Jodhpur Hotels. Asian Journal Of Finance & Accounting, Pp:173-188. Mndzebele, N. (2012). The Usage Of Accounting Information Systems For Effective Internal Controls In The Hotels. International Journal Of Advanced Computer Technology, Pp:1-3. Snežana Knežević, A. S. (2012). Accounting Information System As A Platform For Business And Financial Decision-Making In The Company. Journal For Theory And Practice Management, Pp:65-69. Soudani, S. N. (2012). The Usefulness Of An Accounting Information System For Effective Organizational Performance. International Journal Of Economics And Finance, Pp:136-145. Spremic (2012). The Impact Of The Accounting Information System Usage On Companys' E-BUSINESS EFFICIENCY. Annals & Proceedings Of DAAAM International. Tunji, S. &. (2012). Accounting Information As An Aid To Management Decision Making. International Journal Of Management And Social Sciences Research, Pp:29-34. Urban Ask, J. M. (2012). Improving Effectiveness And Efficiency In Large Swedish Firms Through AIS. MMW Application. William R. Ring, V. G. (1989). Using Information And Information Technology For Sustainable Competitive Advantage: Some Empirical Evidence. North-Holland Information & Management, Pp:87-94.

AIS Enhance Efficiency level 303 Appendix A Descriptive Statistics N Mean Std. Deviation AIS has contributed to internal controls 150 4.06.753 AIS is integrated with other management information systems 150 3.63.746 AIS keep track of all events in an effective and efficient manner 150 3.87.711 AIS automatically posts transactions to the accounts receivables master file on 150 4.31.794 monthly bases AIS provides computer-based database system to store and retrieve data 150 3.22.767 AIS contribute to reliability of financial reporting, ie,gaap, ifrs 150 4.07.625 AIS encourage efficient and effective use of resources and operations 150 3.20.433 AIS enhance compliance with laws and regulations of accounting standards 150 3.65.478 AIS improves controls by limiting access to company data 150 3.65.478 AIS has policies, procedures, organizational design and physical barriers that contribute to the internal 151 3.40 1.249 control structure AIS provide preventive controls which are designed to discourage errors or 150 4.01.837 irregularities AIS comprise of detective controls which are designed to identify errors or 150 4.05.811 irregularities after they have occurred AIS results increase awareness of the need for internal controls which increases 150 3.70.958 budget, successes and failures implementation to AIS incurred additional cost than benefits received 150 3.00.000 from system Valid N (listwise) 150 Appendix B: Pair 1 Pair 2 Pair 3 AIS contribute to reliability of financial reporting ie,gaap, ifrs - AIS enhance compliance with laws and regulations of accounting standards AIS encourage efficient and effective use of resources and operations - implementation to AIS incurred additional cost than benefits received from system AIS provide preventive controls which are designed to discourage errors or irregularities - AIS results increase awareness of the need for internal controls which in-creases budget, successes and failures Mean Paired Samples Test Paired Differences Std. Deviation Std. Error Mean 95% Confidence Interval of the Difference Lower Upper t df Sig. (2- tailed).420.788.064.293.547 6.527 149.000.200.433.035.130.270 5.651 149.000.307.463.038.232.381 8.118 149.000

Qamruzzaman 304 AIS has contributed to internal controls AIS is integrated with other management information systems Appendix C : s Matrix AIS keep track of all events in an effective and efficient manner AIS encourage efficient and effective use of resources and operations AIS contribute to reliability of financial reporting ie,gaap, ifrs AIS improves controls by limiting access to company data implementation to AIS incurred additional cost than benefits received from system AIS results increase awareness of the need for internal controls which increases budget, successes and failures AIS has contributed to 1 internal controls Sig. (2-tailed) N 150 AIS is integrated with -.128 1 other management Sig. (2-tailed).119 information systems N 150 150 AIS keep track of all.078.198 1 events in an effective Sig. (2-tailed).344.015 and efficient manner N 150 150 150 AIS encourage efficient.230 -.125 -.065 1 and effective use of Sig. (2-tailed).005.129.427 resources and operations N 150 150 150 150 AIS contribute to reliability.133.202 -.099 -.079 1 of financial reporting Sig. (2-tailed).104.013.230.335 ie,gaap, ifrs N 150 150 150 150 150 AIS improves controls by -.016.036.001.013 -.004 1 limiting access to Sig. (2-tailed).842.658.987.875.959 company data N 150 150 150 150 150 150 150 150 implementation to AIS incurred additional cost. b. b. b. b. b. b. b. b than benefits received Sig. (2-tailed)....... from system N 150 150 150 150 150 150 150 150 AIS results increase awareness of the need.016 -.018 -.021 -.013.004.531 **. b 1 for internal controls which Sig. (2-tailed).842.831.798.875.959.000. in-creases budget, successes and failures N 150 150 150 150 150 150 150 150 **. is significant at the 0.01 level (2-tailed). *. is significant at the 0.05 level (2-tailed). b. Cannot be computed because at least one of the variables is constant.