ACCOUNTING INFORMATION SYSTEM IN CORPORATE

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THE ROLE OF ACCOUNTING INFORMATION SYSTEM IN CORPORATE ORGANIZATIONS

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Accounting has been globalized in the world. An accounting information system is a structure that a business uses to collect, store, manage, process, retrieve and report its financial data so that it can be used by accountants, consultants, business analysts, managers, chief financial officers, auditors and regulatory and tax agencies. According to Longe and Kazeem (2010, p. 2), the starting point of accounting can be linked to the merchants in the Babylonian and Assyrian civilizations, about 4000 years BC. The father of accounting is Lucca Paciolio, the crucial event in accounting was the introduction of double entry book system in Italy described as “Italian method”. In this 21 century, accounting professional body is IFRS – International Financial Reporting Standards. This standard helps in reporting accounting in uniform, which means that the financial statement prepared in Nigeria can be analyze and interpret in United State of America. The accounting information is based on numbers, measurable data. It is black and white: you have a profit of loss. The effectiveness of accounting information will promote profitability and given a clear decision making in the corporate organization. Accounting information ought to be objective, reliable and analyzable. So as to enable the corporate organizations achieve their set goals and objectives. Accounting is simply a process of providing financial information required to make economic decisions, whether in public or private organization. The case of proficiency with which economic decisions are taken depends largely on the accounting information available. Commercial selling information on all transactions and managers in order to assess the worth of the organization and ascertain in changes in the stock of wealth of shareholders. Accounting information is the language of business as it is the basic tool for recording, reporting and evaluating economic events and transaction the affect enterprises. It process all documents of a business financial performance from payroll, cost capital expenditure and other obligations to sale revenue and owner’s equity. Information has become a valuable commodity to managers, owners of companies and other interested parties because expect in business management have come to agree that today’s business environment, where competition have become extremely stiff. Available and effective information can indeed become a critical factor which enables a business organization to have that vital edge over its competitors. According to Anderson and Ruan (2009, p. 61) information is the life blood of business and it plays an increasing role in the day to day management of business. Accounting communicate information that owners, manager and investors need to evaluate a company’s financial performance. Management uses both financial and non-financial information to make effective decisions that would help achieve the goals and objectives of the organization. Bushman (2007, p. 30), financial information used by management accountants include sale growth, profits, return on capital employed and market shares, non-market shares, non-financial information include customer satisfaction level, production quality, performance of competing products and customer loyalty. According to Andrew-Essien (2008, p. 25), planning helps management to make decision on what to produce, how to produce and when to produce. Corporate organizations is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the right and responsibilities that an individual possess; a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, wire employees, own assets and pay taxes. Accounting information system provides a check for the validity through the process of auditing and accountability, Gray. Effective and efficient accounting information system plays a central role in improving profitability in the corporate organization. Union Bank of Nigeria Plc was established in 1917 and is one of Nigeria’s long-standing and most respected financial banking institutions. Mr. Emeka Emuwa is currently the Group Managing Director and Chief Executive Officer, Executive Director of Union Bank of Nigeria Plc since November 1, 2012. Union Bank of Nigeria is a deposit money bank which accepts deposit from customers and grant loans to customers who fulfilled the 5’cs of credit – capital, character, collateral, condition and capacity to gauge the credit worthiness of potential borrowers, Asukwo. An effective accounting information system will promote profitability of corporate organization. Accounting information system generally consist of six main parts: people, procedures and instructions, data software, information technology infrastructure and internal controls.

1.2 STATEMENT OF THE PROBLEM

Effective accounting information system is a means of achieving organizational goals and objectives in terms of profit maximization, management now sees themselves in one business problem or the other, such as how to solve the problem of cost, sales, customers requirements. The problem however lies in the quality and validity of the information, that is, if it is timely, adequate and clear. Bank crisis that took place in 2009 was as a result of false accounting information. The major purpose of the use of accounting information is to maximize risk, failure and uncertainties and also stay ahead of competitors. The use of accounting information is indispensable for decision. A qualified accounted has the duty of preparing the account of the company and the auditors must give a report that is unbiased. Computer equipment has been the main measures of accounting information system. The problem of having a computer expertise, qualified accountant and auditor. This research is carried out see the impact of accounting information system on corporate organizations in terms of profitability and earnings per share (EPS) in the period 2007-2016. 1.3

OBJECTIVES OF THE STUDY

1. To examine the impact of accounting information system on corporate organizations in terms of profitability and earnings per shares (EPS) in the period 2007-2016.

2. To assess if corporate organizations employee the services of qualified accountant.

3. To know whether accounting information system serves as a means for effective planning and control of organization resources.

4. To assess whether management of corporate organizations are acquainted with the usefulness of accounting information system.

5. To know if accounting information system influences the decision making of corporate organizations.

1.4 STATEMENT OF HYPOTHESIS

H : Accounting information system has no significant impact on corporate organizations in terms of profitability and earnings per share (EPS) in the period 2007-2016. H : Accounting information system has a significant impact on corporate organizations in terms of profitability and earnings per share (EPS) in the period 2007-2016.

1.5 RESEARCH QUESTIONS

1. What are the impacts of accounting information system on corporate organization in terms of profitability and earnings per share (EPS) in the period 2007-2016?

2. To what extent do corporate organizations employ the services of qualified accountant?

3. Do accounting information system serves as a means for effective planning and control of organizations resources?

4. Do management of corporate organizations acquainted with the usefulness of accounting information system?

5. What influence does accounting information system has on the decision making of corporate organizations?