ABSTRACT

This research work highlights the result of a research carried out to examine “The Effect of Accounting Information System on the Quality of Financial Statements of Companies in Buea“. Specifically, the study aimed at analyzing the effect of the data collection unit on the quality of the financial statements of companies, analyzing the effect of the data operating unit on the quality of the financial statements of companies and analyzing the effect of the data storage and retrieval unit on the quality of the financial statements of companies in Buea. A substantial aspect of the study involved collecting data through the instrumentation of questionnaires and interview.

The data collected were classified and analyzed using the multiple regression analysis with the help of Statistical Package for Social Sciences (SPSS). The hypothesis was tested through a correlation test, and it revealed that there is a strong positive relationship between the variables (r = 0.689). This result showed that accounting information system is a tool for quality financial statements hence, the null hypotheses were rejected and the alternative hypotheses accepted which states that data collection unit, data operating unit and data storage and retrieval unit has a significant impact on the quality of the financial statements of companies. Based on the findings of the study, it was recommended that firms should adopt computerized accounting information system in a bid to ensure correctness in reporting and general record management as enterprises that had this system showed an increase in return on investment and quality financial statements as opposed to those that have a manual system.

KEYWORDS: Accounting Information System, Data Collection Unit, Data Operating Unit, Data Storage and Retrieval Unit and Financial Statements

CHAPTER ONE

INTRODUCTION

1.1 Background of study   

The accounting information systems represent a range of sources, namely persons and equipment, which are designed to collect financial data to reach the information needed for different decision-makers (Bodnar & Hopwood, 2010).

According to (Nnenna, 2012), the use of accounting information is indispensable in the management activities of a company, given its quantitative information on various activities. Accounting information is primarily intended to be useful in economic decision-making. Accounting information is needed not only by management in the direction of cooperation but also by shareholders, who need periodic financial data in order to assess the performance of the company’s management.

Accounting information systems rely on the quality of input data, as the poor quality of data used in the input process leads to poor results (XU, 2003).

From the point of view of Wilkin and Tayan (2003), the relationship between quality and information systems is determined by three basic components: system quality (technical components), information quality in terms of the accuracy and correctness of data entering the system, and service quality, meaning the assessment of the level of excellence in providing information to users.

The accounting information system is one of the most important systems in any company. Its objective is to provide the needed information to managers at various levels. This information helps them to effectively and efficiently carry out their responsibilities in planning, resource monitoring, performance assessment and decision-making (Saeidi, 2014).

The nature of accounting information is determined as a reliable tool in the use of modern information technology means, which aims at establishing modern accounting information systems; their main role is to improve the usefulness of accounting information (Fuhong, 2012).

According to Akgün and Kilic (2013, p.26), information systems are a system in which data is collected, evaluated and distributed over users when needed, and that is designed to assist the process of decision-making.

Romney and Steinbart (2012, p.686) believes that accounting information systems are a system for gathering, recording, storing and processing data to obtain the needed information for decision-making.

Knežević and Tepevac (2012) show that an accounting information system is concerned with each of the various business inputs that forms the data that is relied upon in analysis and processing data included in accounting reports, as well as its concern towards the system outputs represented in the financial statements published and used in the decision-making process by users.

Therefore In this study, the effect of the use of accounting information systems on the quality of financial statements of companies in Buea Municipality will be examined

1.2 Problem statement