THE IMPORTANCE OF ACCOUNTING INFORMATION SYSTEMS TO RETAIL BUSINESSES IN ZIMBABWE Essay Sample
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THE IMPORTANCE OF ACCOUNTING INFORMATION SYSTEMS TO RETAIL BUSINESSES IN ZIMBABWE Essay Sample
The purpose of this study is to investigate the nature of accounting information systems to Retail Enterprises. There are a number of retail enterprises in Zimbabwe which include TM supermarket, Spar and OK only to mention a few, but n this research the researcher will focus on OK supermarket. Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analyzing and reporting these transactions for use by both internal and external stakeholders for decision making in an organization. Accountants employed by the business must exercise professionalism in recording business transactions and for the preparation of financial statements to support management’s day to day operations and accurate decision making. Computer advancements have improved accounting systems. Accounting information systems are nowadays computer-based for tracking accounting activities in conjunction with information technology resources. It facilitates proper bookkeeping of accounting records of a business using the real-time transaction processing.
Accounting Information Systems is a set of interrelated subsystems that work together to collect, process, and store, transform, and distributes information for decision making and control. It combines traditional accounting practices such as General Accepted Accounting Principle (GAAP) with modern information technologies. Retail enterprises can also use computer technology to identify and pursue economic and business opportunities. Nowadays supermarkets are using the plastic money for easy transactions with customers so as to minimize time wastage and opportunity cost associated with time wasted.
1.1 BACKGROUND OF THE STUDY
1.1.1 GENERAL OVERVIEW
Accounting information systems is a very essential service to each and every business organization for the efficient achievement of its set objectives. There are three basic functions of accounting information systems in retail enterprises. The first function of AIS is the efficient and effective collection and storage of data from source documents, recording the transactions in journals, and posting the data from journals to ledgers. The second function of the IAS is to supply information useful for decision making, including producing managerial reports and financial statements. The last function of AIS is to make sure that controls are in place for accurate records of transactions and data processing. Usually, the people who use the system include accountants, managers and business analyst. This shows clearly that, for effective use of accounting information systems, the retail enterprise has to employ personnel for setting the control measure for the use of accounting information systems, Carol ( 2013).
Accounting Information Systems as a tool in financial accounting, it enhances the preparation of financial statements to reveal the true financial position of the retail business and its profitability Mika (2007). The use of AIS is again effective since it reduces the human error or falsification of financial statements for embezzlement of funds in the retail business. It also facilitates the sharing of information internally among different departments and managerial advice for the efficient management of the retail business. This will enable the comparability of the retail business with other businesses in the same line of business and to identify areas which need improvements.
1.1.2. RETAIL ENTERPRISES IN ZIMBABWE
In the retail businesses in Zimbabwe, the core functions of the accountants are the accounting of business transactions, auditing, and giving assurance on the reliability of the financial statements produced and finally the calculation of tax. Due to the growing of government regulations and expansion of business operations the business has to adopt the use of accounting information systems for efficiency in their operations. The accounting department also has to adopt the use of accounting information systems for quick preparation of financial statements in the business so that they will have updated information in place to make it easy for managers to make decisions which are of good quality.
1.2 PROBLEM STATEMENT
The primary objective of this research is to study the use, impact and problems which are being faced by retail businesses when applying Accounting Information system in their operations. The researcher wants to find out the impact of how the Accounting Information System operates in the recording of transactions and preparation of financial statements and other operations within a retail business and how they assist the business stakeholder in making decisions with the regards to current problems which are being faced. It is again vital to understand how the whole system and its subsystems operate within a retail business and their impact on each and every aspect of the business. In this scenario, the researcher wants to concentrate on the retail business called OK Supermarket in Zimbabwe. The researcher also wants to determine how useful accounting information has in the operations of other business functions too such as swipe machines and ecocash payments. By the end of this research, enough information will have to be gathered to fully understand the operations and functions of an effective and efficient Accounting Information Systems to retail businesses.
1.3 RESEARCH OBJECTIVES
1. To determine the effectiveness of operations of Accounting Information Systems in a retail business.
2. To look at how Accounting Information can been used to assist in decision making by both internal and external stakeholders of a retail business.
1.3.2 SECONDARY OBJECTIVES
1. To find out the benefits and drawbacks of using Accounting Information Systems in a retail business.
2. To find out the components of a good Accounting Information System to a retail business.
1. How effective are Accounting Information Systems to operations of a retail business?
2. How can Accounting Information Systems be used in decision making?
3. What are the advantages and disadvantages of using Accounting Information
4. What are the components of a good Accounting Information Systems?
1.5. RESEARCH HYPOTHESIS
H0: The researcher is assuming that the users use accounting information systems to collect, record and process business financial information for the use in decision making by the business stakeholders.
H1: Alternative Accounting Information systems have weaknesses, such as the need for expects and a strong control and monitoring on the use of accounting information systems in a business
1.6. SCOPE OF THE STUDY
The researcher is going to study the importance of Accounting Information Systems to retail business, OK supermarket in Zimbabwe. This particular research is also going to be held in Zimbabwe. Most or all of the activities under study are to be undertaken in the capital city of Harare and other surrounding cities near Harare
1.7JUSTIFICATION OF THE STUDY
Improvements in business technologies, modern businesses are now adopting the use of accounting information systems in their business operations. Accounting Information Systems are structures that a business uses to collect, retrieve and report its financial data that it can be used by management and other business stakeholders in the running of a retail business. Accounting Information Systems are used by management in performance management, create business budgets, and formulate business decisions and investments decisions in retail set up, Osmond (2011). Employees also can make use of accounting information systems to assess the profitability of a retail business to determine their job security. Accounting information systems are also used for comparison with other business organization and again for efficient management of retail resources. These can only be achieved through the effective and efficient use of accounting information systems in the day to day running of the retail business.
1.8 DEFINITION OF TERMS
a. Accounting – It is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analyzing and reporting these transactions for use by both internal and external stakeholders of a business in their decision making.
b. Accounting Information Systems – It is a set of interrelated subsystems that work together to collect, process, and store, transform, and distribute information for planning, decisions making and control. The use of the computer in information systems can improve the efficiency of information collection, processing, storing, transformation and distribution.
c. Information Technology – Information Technology (IT) deals with the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data. This may also be described as anything that renders data, information, or perceived knowledge in any visual format through any multimedia distribution mechanism
2. LITERATURE REVIEW
This chapter explains relevant literature from other researchers who have conducted research in the same field. It contains attributes, opinions, research outcomes and conclusions thereon from previous research work done by other and organization. Through literature review, it is found that Accounting Information System is a fundamental tool in the business processes and achievement of business objectives Eva Hughes and Chris Patel (2008) revealed the significance of accounting information system in decision making process.
2.1 THEORIES OF ACCOUNTING INFORMATION SYSTEMS
2.1.1 Contingents Theory
According to Lawrence A. Gordon, Contingency Theory suggests that an accounting information system should be in a flexible manner so as to consider the environment and organizational structure confronting an organization. Accounting information systems should be designed in an adaptive framework to match with a decision at hand.
The first paper to focus on this theory view of accounting information systems in accounting literature was “A Contingency Framework for the Design of Accounting Information Systems,”(Gordon & Miller, 1976). It described the basic framework of accounting information systems that were considered from a contingency perspective.
2.1.2 Agency Theory
Agency theory has been one of the most paradigms in accounting during the last 20 years. This theory allows us to explicitly incorporate conflicts of interest, incentive problems, and mechanisms for controlling incentives problems into our models. The importance of this theory is that it controls incentives in favor of accounting and auditing for motivational purposes, (Kaplan and Norton, 1993). Agency theory will also try to explain the relationship that exist between the shareholder and directors and directors and subordinates in that organization.
The main purpose of the meta-theory is to articulate a model for accounting information systems research that synthesizes the primary theoretical perspectives of the extant literature. It is built on the three orientations that are, technological, organizational and cognitive approaches and adopting an explicit system perspective. A model that links system design alternatives to the three orientations and to task performance. The model places a central focus on the accounting task and suggests a matching process between requirements of the task and system design alternatives at multiple levels of analysis.
2.1 TYPES OF ACCOUNTING INFORMATION SYSTEMS
2.2.1 TRANSACTION PROCESSING SYSTEMS
The purpose of transaction processing systems is to process business transactions with updated technology and generate reports in the form of financial statements that are to used for decision making by the management in that period.
2.2.2 DECISION SUPPORT SYSTEMS
Decision support systems use different areas of the business to build models. The software will assist the management on potential problems that could be faced and help the managers to resolve those models
2.2.3 EXPECT SYSTEM
It is a systems that used by management of the retail shop to incorporate specific expertise in the retail industry to diagnose and solve problems.
2.4 MEASUREMENT OF BUSINESS PROCESSES
It is advisable for a business to know the volume of a service or product required to be produced and sold to attain a set profit. By determining the volume the business will try to adjust the amount of resources required, orders to be made and labor force required for that period.
The sales personnel have to determine the amount to be sold basing on the objectives of the sales department and their personal role and its impact to the business at large. Measurement of sales should be based on the quantity, quality, timeliness and cost effectiveness. It is recommended for a business to predict futures sales and setting business standards.
To measure business processes accounting information systems use profitability ratios. These are a class of financial metric that are used to assess a business ability to generate earnings compared to its expenses and cost which are relevant in the specific period of time and also they can be used to measure business performance between two or more periods.
2.5 RELATIONSHIP BETWEEN AIS AND BUSINESS PERFORMANCE
Accounting information system can facilitate for reengineering business processes to improve business performance. Information systems make it possible for firms to manage all their information about their stakeholders, products and services to make better decisions and improve execution of other business processes. Redesign of business processes is usually done to achieve drastic improvements in cost, quality, service and quickness of business operations. Changes should be managed by top management to improve business inefficiency processes, to reorganize business functions and to improve current industry performance to be the industry leader.
3 RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
3.1.1 RESEARCH PHYLOSOPHY
This is a brief about the way in which data about a phenomenon should be gathered and used. Epistemology as opposed to doxology encompasses the various philosophies of research approach. Both positivist and phenomenological research philosophies will be used in the course of the research process to gather enough data required.
3.1.2 RESEARCH METHODS
The research methods will vary by the sources of information that are drawn on, how the information is sampled and the types of instruments that will be used in data collection. Surveys and action research will be used during the research. The main aim of action research is to enter into a situation, attempt to bring about change and to monitor results of using accounting information system in a partnership business. When using a survey, a sample of subjects will be drawn from a population and studied to make inferences about the whole population. To obtain the best intended objectives of the research primary and secondary data will be gathered and interpreted.
3.2 POPULATIONS AND SAMPING
This is a process of taking a sample of subjects that is representative of the entire population. The sample has to be of sufficient size to warrant statistical analysis. The researcher is going to concentrate on the accounting information systems of a partnership of Ernst and Young Zimbabwe.
The target population for this study is the management and other staff of OK Zimbabwe.
3.2.2 SAMPLE SIZE
A sample size of thirty (30) staff members of the selected case study institution is to be selected for the study. The thirty staff member is going to consist of five (5) management staff members and twenty-five (25) other staff.
3.2.3 SAMPLING TECHNIQUE
The staff will be taken from various departments which include Finance, Human Resources, Operations, Maintenance and Administration.
3.3 SOURCES OF DATA
3.3.1 PRIMARY DATA
Interview guide and Questionnaire are the main research instruments to be used to gather primary data for the study. Both open and closed ended questions, based on the objectives of the research are to be used.
3.3.1 SECONDARY DATA
Data that consist of issues that are linked to accounting information systems are to be employed and the changes in technology for the past 5 years. Information can be obtained from books, journals and periodicals that address the same issue, are to be collected and reviewed.
3.4 DATA COLLECTION
Data will be collected from two main sources for this study with the view to produce objective and valid conclusion. Data will be collected from primary and secondary sources. Most researchers agree that qualitative research should try to use as many different sources as possible.
4.0 PLAN OF ACTION
4.1 TIME BUDGET
1. INTRODUCTION 2 Week
2. LITERATURE REVIEW 2 Weeks
3. RESEARCH METHODOLOGY 3 Weeks
4. PLAN 2 Weeks
TOTAL 9 Weeks
The table shows that 9 weeks (63 days) are required to conduct the research in order to fulfill its requirements and this is to be done next semester.
4.2 FORECAST BUDGET
Activity Amount Required
Transport cost and food $45
The table above shows that $110 is required to conduct the project effectively and efficiently without shortages in resources.
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