EFFECT OF ACCOUNTING INFORMATION SYSTEM ON THE PERFORMANCES

OF SMALL AND MEDIUM SCALE ENTERPRISES IN MINNA, NIGER STATE

BY

USMAN FATIMA EGBAGI

MAN/2020/14888

BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF

ACCOUNTING, FACULTY OF MANAGEMENT SCIENCES, FEDERAL UNIVERSITY
DUTSIN-MA, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF BACHELOR OF SCIENCE(BSc) DEGREE IN ACCOUNTING

JULY, 2024

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 DECLARATION

I, USMAN FATIMA EGBAGI with matriculation number MAN/2020/14888, hereby declare that

the project titled “Effect of Accounting Information System on the Performances of Small and

Medium Scale Enterprises in Minna, Niger State” is a product of my research work carried in the

Department of Accounting, Federal University, Dustin-ma under the supervision of Mr Musa

Musa Muhammad.

...............................................

Signature/Date

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 CERTIFICATION

This is to clarify that this project research has been fully read and thus approved and acknowledged

as a partial fulfilment of the requirements of Faculty of Management Sciences, Department of

Accounting, Federal University, Dustin-ma, for the award of Bachelor of science (B.Sc) Degree

in Accounting.

MR. MUSA MUSA MUHAMMAD

(Supervisor) Sign Date

DR IDRIS ADAMU ADAMU

(Head of the Department) Sign Date

PROF. ALIYU SULEIMAN KANTUDU

(External Examiner) Sign Date

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 DEDICATION

This project work is dedicated to Almighty Allah for granting me the grace, gift time of life to

opportunity and sustaining me throughout the period of my studies in this University.

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 ACKNOWLEDGEMENT

All praises and gratitude be to almighty Allah, the most beneficent the most merciful, who gave

me the strength, life and health up to this moment, I wish to thank my supervisor Mr Musa Musa

for his untiring contribution and profuse considerations, I would like to express my profound

gratitude to the entire staff of the Department of Accounting whom by their help, things were

made possible for me the beginning of my program up till now

My Greatest gratitude also goes to the my parent professor Usman Defyan Alhassan, Mallama
Fatima Asabe, Mallama Fatima And Mallama Bilkisu for their support both advisably and
prayerful more also to my Uncles and Aunties; Mohammed Usman Haske, Mohammed Estu
Alhassan, Mohammed Abubakar Minin, Alhaji Aminu Dansambo, Bala and Umar Isah (Hajiya
Hauwa, Umar Ndanusa and Rukkaiyah) who are both there in the start of my endeavor but “Late”
at the end May Allah grant them Mercy Ameen.

My sisters; Fatima, Aisha, Hauwa, Khadija, Saidat, Amina, Zarah, Amina, Ramat, Binta and
Maijeedah.

To my Brothers; Abdullahi, Alhassan, Umar and Mohammed Awwal and many others who have
support me in my endeavor financially and advisably,

I would like to extend my gratitude to my school Friends (Barakkatullahi, Amina, Hafsat, Beebat,
Sakina, Liman, Hauwa, Fatima Bako, Hamisu, Dameey, Oiza Farida, Hassana & Hussaina Sarki,
Hamza shehu and Hamza Mannir.

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 TABLE OF CONTENTS

DECLARATION…………………………………………………………….……………….ii
CERTIFICATION………………………………………………………………...………….iii
DEDICATION……………………………………………………………………….………iv
ACKNOWLEDGEMENT……………………………………………………….…….……..v
TABLE OF CONTENT…………………………………………………………………..….vi
ABSTRACT…………………………………………………………………………….……x

CHAPTER ONE

INTRODUCTION

1.1 Background of the study………………………………………………………………….1

1.2 Statement of the Research Problem……………………………………………………….4

1.3 Objective of our Study…………………………………………………………………….4

1.4 Research Question…………………………………………………………………………4

1.5 Hypothesis………………………………………………………………………………….5

1.6 Delimitation and scope of the study………………………………………………………..5

1.7 Significant of the Study…………………………………………………………………….6

1.8 Definition of key terms…………………………………………………………………….6

CHAPTER TWO:

LITERATURE REVIEW
2.0 Introduction………………………………………………………………………………..8
2.1 Conceptual Framework of the study……………………………………………………….8

2.1.1. Accounting as Information……………………………………………………………….8

2.1.2 Sources of accounting information system………………………………………………10

2.1.3 Relationship between MIS AND AIS…………………………………………………….11

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2.1.4 Functions of an Accounting Information System …………………………………... 11

2.1.5. Characteristics of Accounting Information………………………………………………12

2.1.6 Component of an Accounting Information system……………………………………….14
2.1.7 Objectives of an Accounting Information System……………………………………...15

2.1.8 Goals of an Accounting Information System……………………………………………..16

2.1.9 Advantages of an Accounting information system Implementation……………………..17
2.1.10 Disadvantages of an Accounting Information System……………………………………19

2.2 Empirical perspective………………………………………………………………………...19

CHAPTER THREE

RESEARCH METHOD
3.1 Introduction………………………………………………………………………….23
3.2 Research Design…………………………………………………………………………23

3.3 Population of the Study………………………………………………………………….23

3.4 Data Collection Method ………………………………………………………………..24

3.5 Data Analysis Method……………………………………………………………………24

3.6 analyses of table of variable……………………………………………………………..25

3.7 Model Specification……………………………………………………………………..26

3.8 Validity of the Research…………………………………………………………………26
CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0 Introduction………………………………………………………………………………27

4.1 Demographic Profile of research Sample……………………………………………….27

4.2 Analysis of the objectives of Study ………………………………………………………29
4.3 Results from hypotheses…………………………………………………………………..31

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 CHAPTER FIVE

SUMMRY, CONCLUSION AND RECOMMENDATION

5.0 Introduction………………………………………………………………………………..44
5.1 Discussion of Research Questions………………………………………………………...44
5.2 limitation of the study………………………………………………………………………45

5.3 Conclusion…………………………………………………………………………………46

5.4 Recommendations…………………………………………………………………………47
REFERENCES…………………………………………………………………………………48
APPENDIX………………………………………………………………………………………50

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 LIST OF TABLES
Table 3.1: Population Table……………………………………………………………………24
Table 1: Age group of the respondents ………………………………………………………..27
Table 2: Level of education……………………………………………………………………28
Table 3: Duration at work …………………………..…………………………………………28
Table 4: Post occupied ………………………………...………………………………………29
Table 5a: Tools concerning Accounting Information System …..…………………..…………30

Table 5b: period of financial statement prepared………………….……………………………30

Table 6a: summary of respondent’s responses …………………….……………………………32

Table 6b: presentation of respondents’ responses on hypothesis I………………………………33

Table 7a: summary of respondent’s responses ……………………….…………………………35

Table 7b: presentation of respondents’ responses on hypothesis 2 ……………………………..36

Table 8a: AIS as a tool to small and medium size enterprise performance….…………………38
Table 8b: Model summary Table ………………………………………………………………40
Table 8c: Analyses of variance table ………………………..………………………………….42
Table 8d: Regression table ………………………………………………………………………42

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 LIST OF FIGRES
Figure No: 2.1.1 Illustrate Accounting as Information system…………………………………9
Figure No: 2.1.2 Illustrate Accounting as Information……………….……………………..…10
Figure No: 2.2.3 Illustrate AIS as a logical part of MIS……………………………………….11
Figure No: 3.6 Relationship between the independent and dependent variable……………….25
Figure No: 6c Relationship between AIS and Productivity (%).….……………………….….34
Figure No: 7c: Impact of AIS on Financial and economic Performance (%)………………….37

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 LIST OF APENDICES
SECTION A: General Information……………………………………………………….50

SECTION B: Questions concerning Accounting Information System …………………..51

SECTION C: AIS as a tool to small and medium size performance……………..….........52

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 LIST OF ABBREVIATIONS

SME: Small and medium size enterprises

AIS: Accounting Information system

SPSS: Statistical Package for Social Sciences

FASB: Financial Accounting Standard Board

GAAP: Generally accepted Accounting Principles

ITS: Information Technology System

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 ABSTRACT

This research study is aimed, based on empirical evidence, at measuring the relationship between

the use of the Accounting Information Systems (AIS) by the Small and Medium scale Enterprises

(SMEs) and firms’ improved performance indicators and productivity within the Chanchaga Town

Locality. This empirical study is based on a survey carried out among small and medium-sized

firms to ascertain the extent to which development and implementation of accounting information

systems had taken place, and subsequently an analysis was made as to how much this introduction

may impact on improvement in outcome indicators and productivity. As interesting results, we

have found that there is a positive relationship among the SMEs that use AIS for SMEs as we

analyzed its effect with respect to economic and financial performance, productivity and enterprise

performance. In order to carry out our study effectively and efficiently, we targeted one Town

popular and good in the North-Southe Region known as Chanchaga Avenue Minna. We carried

out our sample on 20 Small and medium size enterprises with the help of questionnaires, and using

a descriptive sample design, the data was analyzed using SPSS with the help of regression

analyses. This research provides value added in accounting literature given the scarcity of works

dealing with the relationship between the application and use of AIS and performance and

productivity indicators in SMEs at Commercial avenue Keywords: Accounting Information

Systems (AIS), Small and Medium-Sized Enterprises (SMEs), performance measures (economic

and financial performance),,

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 CHAPTER ONE

INTRODUCTION

1.1 Background of the study

From a general perspective, an enterprise can be defined as any company, business,

organization or other purposeful endeavor. Generally enterprises has specific motives for its
existence. Some are out for Profit making while other could just be out for the wealth of the
society or members within themselves. Enterprises makes use of information so as to ensure
effective communication. Stakeholders most especially makes use of the various report
presented at the board meeting or for a particular purpose so as to make a particular decision or
get his interest.

Most of this information are gathered by the accounting or finance department and constitute
what is termed an Accounting information.

Accounting information therefore are to a simple term any financial or material information
gathered and prepared by the Financial manager or the accountant so as to present a report to
the various stakeholders in need of it at an appropriate period. In order to reduce paper work,
and ease referencing, some enterprises (especially large enterprises) makes use of a system.
This system differs from enterprises as well as jobs but most at times they are out to produce
almost the same outcome based on its design. For our case we shall be talking of an Accounting
Information System which is to a simple language is the various processes undertaken to
collect, analyze and present the output to various users.

AIS is a system which uses the financial data of an organization, but it also combines the
accounting techniques and controls along with different methodologies by using IT to track the
external and internal reporting data, financial statements and trend analysis, and thus to impact
on the performance of an organization (Grande, Estebanez & Colomina 2010).

SMEs in Nigeria normally use external accountants as a source of professional advisory

services in order to prepare their financials, but sometimes the owners or managers do not keep
proper records neither do they understand the data and figure from the report and also not aware
or convinced of the usefulness of accounting and financial reporting requirements for control

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and decision making purposes. That is why the SMEs are unable to carry out the accounting
functions internally, (Marriott & Marriot, 2013).

To the best of our knowledge, there is no study focusing on the effect of Accounting
Information System on SMEs decision making, performance, mode of accounting and the
challenges faced in adopting accounting practices in Nigeria, this study sought to fill this gap.
Also most previous studies on the AIS and the performance focused on the data of large
companies and banks. This study is one of the few that shed light on how SMEs use AIS and
their attitude towards it.

It is because of the above problems that prompted the researchers of this study to write about
the effect of accounting information system on SMEs performance in Nigeria.

According to (sibley, 2013), The revolution in information technology has changed the nature
of business in small or medium-sized businesses. E-commerce has made it possible to cross
border transactions being carried out. As understood by the business community, accounting
information is regarded as a business language and processing daily business transactions are
highly important for efficient and effective business decision. Towards making this information
readily available in various forms as needed by users such as financial statements and various
reports, the implementation and adoption of the proper accounting system are crucial for the
future success of any business, regardless of the size of the industry such as in small and
medium enterprises.

The main purpose of AIS is to provide usable information to managers in decision-making.

Accounting information is sometimes expressed as financial accounting information and it

provides information to the interior departments of a business (Akgün and Kılıç, 2013).

A lot of definitions have been made on AIS. Some of these definitions are as below: AIS is a
system which provides the past and future financial information about financial accounting, cost
accounting, responsibility accounting, cash and capital budgeting, assets, debts, capital and
expense and income of businesses (Sürmeli, 2013).

AIS can be defined as the integration of accounting with technology, information and
managerial approach (Gökdeniz, 2013).

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AIS are considered as important organizational mechanisms that are critical for effectiveness of
decision management and control in organizations (Sajady, et al., 2013).

AIS deals with (Knežević and Tepevac, 2013):

1. Input: Measurement or quantification of business events in monetary forms (by recording in

accounts)

2. Process: Data processing in business books and drawing account reports

3. Output: Publication of financial statements with which the accounting communicates with
internal and external users thus giving them in formation necessary for business and financial
decision-making.

AIS is the most important system of MIS and it is the most different system among the sub-
systems because as mentioned above its input is mostly monetary data and naturally its output is
formed with monetary data; these outputs affect directly the internal and external users. By AIS
past, recent and future information can be reached. This information is used by the internal and
external users and this creates an opinion about the businesses.

It is an undeniable fact that the developments in computer technology have a great influence on
every aspect of live as well as in information system. With this point of view AIS is defined as
“AIS is generally a computer-based method for tracking accounting activity in conjunction with
information technology resources.” (Belfo and Trigo, 2013).

An accounting information system is one that captures, stores, manipulates, and presents data
about an organization’s value-adding activities to aid decision makers in planning, monitoring,
and controlling the organization

Therefore, an Accounting information system must constitute key features such as:

 collecting the data

 analyzing the data
 Reporting or presenting the information
 storing the information for future use

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We should note that the financial Accounting system must be prepared based on the Generally
Accounting Accepted Principles (GAAP).

1.2 Statement of the Research Problem

Most small and medium scale enterprises make use of accounting information without knowing
the importance it plays into their enterprises. They even find difficulties in assessing the
importance of incorporating the need of designing a system for such an accounting information.

Thus, our research is based on finding if an Accounting Information System has an effect on
Small and Medium scale enterprises performance as well as finding how we can convince those
enterprises to design an Accounting Information System to best suit their activities carried out.

For this to be carried out effectively, we shall make use of three key variables which will be
used to design our hypothesis. They include the financial and economic performance, the
productivity of the enterprise and the stakeholder’s decision making.

1.3 Objective of our Study

1. To evaluate the influence an accounting information system has on Stakeholders’ decision

making
2. To evaluate the impact of AIS on SMEs productivity.
3. To assess the impact an AIS has on SMEs economic and financial performance

1.4 Research Question

In order to successfully carry out our studies, some research questions have been developed so
as to help this study.

1. Does an AIS creates an impact on the SME productivity?

2. Do small and medium enterprises using AIS have better economic and financial
performance?
3. What influence does an accounting information system has in decision making of
Stakeholders?

1.5 Hypothesis

These are assumption put in place so as to guide us in our research.

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H1: Accounting information System has an impact to a Small and Medium scale enterprises
performance

H2: Accounting information system creates an impact in SMEs productivity increase

H3: There is a relationship between AIS and SMEs economic and financial performance

1.6 Delimitation and scope of the study

This study is based in Nigerian. It is carried in Minna to Commercial Avenue on

Small and medium scale enterprises such as retail shops and wholesalers and services
companies from of that locality located in Niger at the North Central Region of the

Nigeria. Our target was made on 20 Small and Medium scale enterprises. We made our study
for over a period of 3 months of observation.

This study is based on the Importance of accounting information System on small and medium
scale enterprises performance particularly those in the Chanchaga Town locality. An accounting
information system should not be compared to an accounting Software. An accounting software
is simply a system put in place to automatically record and provide basic solutions as needed by
the user while an Accounting Information system are set of processes put in place so as to
interrelate all accounting activities so as to provide the basic result. An accounting software
could therefore be integrated in one of the accounting system phase.

1.7 Significant of the Study

We shall be seeing how important our study is. This study particularly touches a majority of
internal Stakeholders such as management and the accountants or financial managers, as well as
well as some external stakeholders such as the Investors.

It will help the Management to know what processes occurred so as to have financial report
presented in the way it is. He will also be aware of the importance of An accounting
Information system into the effective management of the enterprise performance, It will be
helpful to Accountants or Finance Managers to ease collection, analyses and preparation of
financial statements and Report to be presented, It will also save time to other internal

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 stakeholders of the enterprise since specialization could happen easily, To investors, this
research will help them understand what an Accounting, and this will act as a guide to
Accounting Information System as well as how they can improve on applied information
already.

1.8 Definition of key terms

There are a variety of terms which needs to be described which relates to our research.

These include

1. Importance: this simply refers to the significance, relevance or the value of something to a group
of people. Given the fact that we are in a business study, importance thus capitalizes on the
relevance of a particular piece of work to an organization or individual in the organization
2. Impact: this simply means what cause or effect a variable has to another or others.

We shall mostly be seeing the impact of accounting information System to Small and medium
scale ale enterprises in Commercial.

3. Small and medium scale enterprises: this has to do with any organization with a maximum
number of staff of 50 for small enterprises and 150 for large enterprises. They also count a great
percentage of the Cameroon Enterprises of say 80%. They greatly contribute in the country Gross
Domestic product.
4. System: “It is a set of parts that connected with each other and with circumferential environment,
which those parts working as one group, to achieve the system goals”. (Schaerbeek et al., 1980)
5. Accounting: Accounting can be seen as a process of collecting, recording, analyzing, reporting,
interpreting and communicating information to the various stakeholders of a company for
decisions to be made
6. Information: this data which has been processed so as to produce a meaning to the various users

7. Accounting information System: A system put in place to produce information from a

significant accounting data and processed such as financial reports and budgets to the required
users.

8. Management: the ability to plan, control, coordinate, staff, direct and organize activities in an

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 organization.

9. Financial performance: the ability to measure an enterprise productivity and capacity in terms
of quantitative unit and mostly deigned in financial statements

10. Economic performance: the act of determining an enterprise position with respect to the market
or the economy

In this chapter, we will bring up concepts relevant in this studies. We shall start by examining
the key concepts of the study. We shall then continue by looking at the relevant theories in the
study and the empirical perspective revealing what others authors have written on a similar
topic. We will end by analyzing other concepts such as the factors influencing Accounting
information system designing, the advantages and disadvantages and the importance of job
description.

CHAPTER TWO

LITERATURE REVIEW

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2.0 Introduction
This chapter shall be taking about various conceptual framework and theoretical framework
with respect of effect accounting information system on the performance of small and medium
scale enterprise.
2.1 Conceptual Framework of the study

Here, we shall be talking the main things to be contained in the study. It will include such as the
functions of an AIS, the characteristics of an AIS, the objectives and goals of an AIS as well as
both the advantages and disadvantages of the AIS;

2.1.1. Accounting as Information:

Viewing accounting as an information system focuses attention on the information accounting

provides the users of the information, and the support for financial decisions that is provided by
the information. External users of accounting information are individuals and other enterprises
that have a financial interest in the reporting enterprise. External users of the financial
information as owners, creditors, labors unions, governmental agencies, suppliers, customers,
trade associations and public. Each of these groups of external decision makers have unique
information needs to be able to make their decisions about the reporting enterprise. Providing
information that meets the needs of such a large set of diverse users is difficult, if not
impossible, in a single set of financial information. These relationships are depicted below

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Figure No 2.1.1 Illustrates Accounting as Information System

Source: Meigs, Williams et al “Accounting: the basis for business decision”

McGraw – Hill companies, 1999, P.8

Viewing the accounting as information system means; a group of systems, methods, and
process, governed and controlled by following the fair principles and rules, in order to operate
the data about the financial process occurred in the entity to produce financial information.
Then, there are three main parts of accounting information system,

INPUTS ----- PROCESSES ----- OUTPUTS. As it is shown in the Figure No 2.2.2 below

Source: Matar,Mohamed Atia ; et al "Accounting Theory and the Information Economy,

the Theoretical framework and its Practical applications" Dar Hunin , Jordan, 1996, P.22.

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2.1.2 Sources of accounting information system
There include generally two sources of accounting information system. They include the
internal and external sources. The internal sources include all the various departments
furnishing the information needed by the system. Most of the information found in the AIS are
from the accounting department.
Information are also gotten from the external source most especially through feedback from the
consumers. The importance of this is to enable modify processing of the product as well as
improvement of the system (updates). The external source here include the public, the
competitors, the Government…

An AIS must therefore be secured and backup on a particular period of time of say quarterly so
as to avoid crash and loose of information. It should also be kept from other users except those
in charge of handling them and should even differ from department to department.

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2.1.3 Relationship between MIS AND AIS
The Figure No 2.7 has shown accounting information system as logical part of MIS.
Management Information System (MIS) is defined as an organized method of providing each
manger with all the data and only those data which he needs for his decisions when he needs
them and in a form, which aids to understand and stimulate his action. (Patakar, M.G, Op.Cit .
P. 24)

Figure No 2.2.3 Illustrates AIS as a Logical Part of MIS.

AIS
MIS Internal reports External reports

Source: Designed by Ronney, Marshall B.; Steinborn, Paul John." Accounting

Information Systems" 8ed, Prentice-Hall Inc., 2000, P2.

In short, the researcher agrees with the definition by (Remney; steinbart, 2000): An Accounting
information system (AIS) consists of people, procedures and information technology.

2.1.4 Functions of an Accounting Information System

(Meigs et al. 1999) specified the basic functions of accounting systems, in developing
information about the financial position of a business and the results of its operations; every
accounting system performs the following basic functions:

• Interpret and record the effects of business transactions.

• Classify the effects of similar transactions in a manner that permits determination of the
various totals and subtotals useful to management and used in accounting reports.
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• Summarize and communicate the information contained in the system to decision makers.

The differences in accounting systems arise primarily in the manner and speed with which these
functions are performed.

Ensure the fully control, which confirm accuracy recording and manipulating the data related to
business activity. Also, protect those data and organizations assets.

2.1.5. Characteristics of Accounting Information:

(Stambaugh; Carpente, 1992) counted in briefly the Information characteristics as follow:

• Provided on timely basis.

• Presented in an aesthetically appealing format.

• Relevant to the decisions at hand.

• Concise yet sufficient in scope to allow” what-if” analysis.

• Flexible to interface with information from other functional units.

There is also a several characteristics determine the qualities that make information valuable:

• Costs-versus-benefits: sometimes information costs more to get additional information

than the information is worth. Thus, cost-benefit considers provide an overall constraint on the
amount of information a decision-maker will get. (Pincus, Karen.V. Op.Cit.P.35.)
Understandability/Granularity/Aggregation: Many factors can contribute to the
understandability of information, including user knowledge, skill, training, and motivation. In
addition, information design choices such as its level of aggregation (or granularity) will affect
its understandability, hence, its usefulness for controlling information integrity. For some
purposes, highly aggregated information may be called for; whereas for other purposes, very
detailed information may be required. Thus, appropriately tailored levels of
granularity/aggregation can be enablers of information integrity. A proxy for the
understandability of information is its conformity with user specified requirements. ( Boritz J.
Efrim. “IS Practitioners’ September 30, 2003, Revised March 12, 2004 P.10.)

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 Reliability: the information must be reliable, you must be able to count on its being what its
purpose to be (this is known, more formally, as representational faithfulness), and on its being
reasonably free from error and bias (this is known, more formally, as neutrality). Additionally ,
for information to be reliable, it ought to be true if several different people(or systems)set out to
derive the information from the data, they would all come to the same conclusion (this know,
more formally, as verifiability).

Information that is not variable, or not neutral, or not representationally faithful can’t be relied
on for decision-making. (Pincus, Karen.V. Op.Cit.P.35.)

• Currency/ Timeliness: It must be accepted that absolute completeness and accuracy are
impossible or impractical to achieve. Information Currency is affected by real world changes over
time (as well as by information processing delays) with a commensurate impact on information
accuracy. Since time is continuous, completeness and accuracy must be understood in a context
that defines acceptable limits for information currency, hence accuracy. For example, if certain
information, such as cash receipts is only updated on a weekly basis to accounts receivable, then
accounts receivable could be considered accurate if it was missing a day’s worth of transactions.
However, if information such as airline reservation transactions updates available seat inventory
in real time, then seat inventory would be considered unacceptably inaccurate if a day’s worth of
transactions were omitted.

As presented here, processing timeliness and information currency are really aspects of
information completeness, which in turn, determines the degree of accuracy that information
possesses; however, because of their unique relationship to the dimension of time and the
change that time engenders, it is useful to identify currency/timeliness as separate attributes of
information integrity. (Boritz J. Efrim. Op.Cit Pp.8-9.)

• Validity/Authorization: Representational faithfulness of information about intangible

objects implies that the information is valid in ways other than correspondence with an original
physical condition. The concept of validity means that information represents real conditions,
rules or relationships rather than characteristics of physical objects. In a general context,
conditions, rules or relationships are valid if what they purport is true. In a business context,
conditions, business rules or relationships are established or approved by parties with the

xxvi
delegated authority to do so. Thus, transactions are valid if they were initiated and executed by
personnel or systems that have been granted the authority to do so and if approvals are authentic
and within the scope of the authority granted to the approver(s). For example, if the credit limit
assigned to a customer reconciles to the company’s rules and procedures used to set credit limits,
the credit limit would be “valid.” Thus, the concept of validity includes elements of both accuracy
and authorization. A validation process may therefore require an investigation of an individual
item, a relationship between one item and another item, or a relationship between an item and a
business rule, policy or standard. (Boritz J. Efrim. Op.Cit P. 9.)
• Completeness: Accuracy by itself is insufficient to convey the full dimensionality of the
requirements for representational faithfulness which requires completeness of information in both
space and time. Thus, there is a fundamental trade-off between completeness and accuracy
because measurement and processing limitations of information processing systems will prevent
100% real-time completeness, especially for subject matter that changes frequently. This, in turn,
prevents 100% accuracy. In other words, every discussion of accuracy is also a discussion of
completeness, and vice versa. (Ibid. P.8.)

2.1.6 Component of an Accounting Information system

An accounting system consists of the personnel, producers, devices, and records used by an
organization to develop accounting information and to communicate this information to
decision makers. The design and capabilities of these systems vary greatly from one
organization to the next.

In very small business, the accounting system may consist of little more than a cash register, a
check book, and an annual trip to an income tax prepared. In large business, on accounting
system includes computers, highly trained personnel, and accounting reports that affect the
daily operations of every department. (Meigs; et al.Op.Cit. p.6.)

But in every case the basic purpose of the accounting system remains the same to meet the
organization’s needs for accounting information as efficiently as possible. Many factors affect
the structure of the accounting system within a particular organization. The most important are:
the company’s needs for accounting information and the resources available for operation of the
system.

2.1.7 Objectives of an Accounting Information System

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Naturally, there is no system without goal, we should differ between stated objectives and the
real objectives, which the entity declares its objectives are consumes satisfaction while the real
objectives is gaining a maximum profits.

Each enterprise has implicit and explicit goals and objectives, most SMEs have a mission
statement that describes their goals. These goals can vary widely among SMEs ranging from
market targeting, to profit maximization where cost will be mostly supply based than demand
based.

It may seem at first sight to be an easy thing to do, but it can be seen as a complex problem, the
absence of stated objectives. It means that the firm has no criterion against which to evaluate its
success or failure or to use in the process of choosing between alternative activities.

One of the problems in stating objectives for a firm is that only people involved with the firm
can have objectives, not the firm itself. If this is accepted, then it is obviously possible that
there is more than one relevant objective.

Accounting is purely human invention, having no independent existence in nature. Hence, it

cannot in any true sense have been discovered, but it must have been constructed by human
minds to serve human needs. Accounting information system objectives as follows: (Ijiri Y.
“Theory of accounting measurement” Association, 1975)

Internal control, including the safeguarding of organization money and other property, the
regular collection and payment of sums of money owed to and by it, and the prevention and
detection of inefficiency, waste, and dishonesty by employees of the organization.

• Measurement of financial data, by means of the recording of transactions and events

affecting the financial state of the organization, and their processing in accordance with consistent
rules.

• Provision of information for planning and decision making to management.

• Reporting of financial information to properties, investors, and other interested persons.

2.1.8 Goals of an Accounting Information System

xxviii
Another author also gives his contribution in accounting system objectives, such as (Ijiri, 1975)
in addressing the question of what an accounting system should do identifies 'accountability'
and 'information usefulness' as the two main broad objectives that any accounting system
should achieve. He states that accountability has clearly been the social and organizational
backbone of accounting for centuries. In this sense to account for he takes to explain a
consequence by providing a set of causes that have collectively produced the result. To provide
accountability is thus an essential feature of an accounting system. However, in the modern
business world, information usefulness is also an important, albeit secondary, requirement.
Thus, the core of any accounting system is to provide accountability with 'information
usefulness a necessary adjunct.

All accounting information systems seek five basic results (Henry, Lauri. Op.Cit.):

• To record an actual, valid transaction;

• To accurately classify the nature of the transaction;

• To record the correct value of the transaction;

• To place the transaction in the proper accounting period; and

• To generate financial statements containing information about the transaction.

2.1.9 Advantages of an Accounting information system implementation

According to the several researchers, AIS have a lot of benefits to any company and corporation
as follow:

• Good cooperation
Anything is always linked to certain environment, exists and develops third-party logistics
enterprises in the supply chain linking play a role of a bridge. Although the third-party logistics
business as a separate entity exist in the market, it and other enterprises still have to maintain a
close relationship. This is because the consumers in order to ensure normal operation of their
production, they must understand and control the flow and the keeping of materials timely,
which calls that third-party logistics enterprises accounting information systems cooperate with
up-downstream enterprises, together control and manage the value-added activities occurred in

xxix
the whole supply chain, and achieve really supply chain competition. In addition, in the
traditional enterprise organization mode, the enterprise's business activities are divided in
accordance with the functions and implement, so the lack of co-ordination between departments
the "islands of information" inevitably come into being. The new system really record and
reflect the economic business activities, do not require accountants note into the system
according to the pre-format, consequently avoid duplication of information collection and
shortcomings; and accountant no longer were limited to the accounting departments, but to
participate in the enterprises operational activities to coordinate other departments do well
accounting information records and analytical work. In addition, other companies could line on
a third party logistics enterprises accounting information system through the Internet, timely
query and know the flow situation of logistics, do well their production plans.

• To meet the needs of multi-users

With the change of the environment, the use objects of accounting information become
expansion, including all levels of enterprise management, all investment bodies outside,
government agencies, intermediary organizations, and so on, among them there are accountant
and non-accountant. Traditional accounting information system can only generate financial
statements afforded to financial executive and fewer accounting information, which make the
use objects become narrow. But in the new system entity DB record all resources and economic
business activities, users through event-driven buttons on interactive interface can get the
information they want. According to the value chain management, any of the activities should
be the value-added process, and account is a measure means of the value of economic activity,
therefore, any economic activity through the accounting information system can be measured
and reflected. However, as part of the current business activities cannot be measured by money,
and we are currently unable to find suitable means of measuring the value, which caused some
economic activities not reflected through accounting information system.

• To control afterwards, and control in advance and in concurrent

Account has the functions of supervision and control of the economic activities of the
enterprise. And the traditional manual account and of the computer accounting system for
"accounting" can only do inspection afterwards, the mistakes could not be avoided. New
accounting information system integrate of real-time processing, the standard cost, authorized

xxx
the approval process control, budget management, and so on, so that employees based on the
standard budget, change from passive to active to manage their own activities, do Real-time
check, control, and timely identify problems, correct deviations and do truly Control afterwards,
in advance and in concurrent.

Brynjolfsson and Hitt (2003) estimated a production function for a panel of 600 large US firms,
finding that the contribution of IT investments to output growth significantly exceeds its factor
share, implying a positive effect of computers on productivity growth in the long-run. The
results also suggest that IT capital deepening is associated with far-reaching organizational
changes within the firm.

OECD (2004) gathers a set of empirical papers that offers a comprehensive overview of the
impacts of IT on economic performance in advanced countries. The nine studies based on
micro-data show significant impacts of digital technologies on firmlevel performance. In most
cases there is also evidence that IT investment is associated with more rapid TFP growth and
that this effect differs across industries. Firms in the financial sector are among those that have
benefited more from the new technologies.

2.1.10 Disadvantages of an Accounting Information System

Despite of some authors who postulate that the direction of the cause-effect relationship is only
that companies achieve a high performance when they can afford the implementation of certain
technological developments (Damanpour and Gopalakrishnan, 2001). Others indicate that firm
performance drops just after the implementation, taking several years to realize the benefits
from IT adoptions (Wah, 2000). There are several research works, which, in the widest sense,
have studied relationships between performance indicators and IT, and how IT impact on firm
performance achieving inconclusive results.

2.2 Empirical perspective

The definition of AIS has evolved over the years from one focusing on the provision of more
formal, financially quantifiable information to assist in decision making processes to one that
embraces a much broader scope of information. The dimensions used to reflect the design of
AIS include focus, orientation, time horizon, aggregation, integration, timeliness, financial and

xxxi
non-financial, and quantitative and qualitative. (Noor, Ismail; King, Malcolm. Op.Cit.Pp. 12-
13)
Defining AIS has been difficult to day and research in this area is quite diverse. It includes
behavioral studies of audit decision – making tools, field studies of organizational systems,
design, development of general ledger systems, and development of accounting models that
effectively utilize advancement in computer technology, application of different technology
solutions to AIS situations, and many other types of studies.

In general, an information system is used to represent the real world phenomena with a set of
symbols which are captured and implemented within a computerized environment (McCarthy,
w. e. “An entity-relationship view of accounting models”.
The Accounting Review, October, 1979, Pp.667-686.)

Therefore, an Accounting information system is one that translates representations of economic

activities into a format that is valuable to accountants and to their customers

That is business decision makers, who need information about economic activities.
Accountants are being pressured to redefine their contribution to organizations and to expand
the scope of their activities beyond financial statement preparation and analysis.

They are being called upon to become active enterprise-wide team members who provide
information and guidance in strategic decision- making salutations. Similarly, day-to-day
operations managers demand a wide range of financial and non-financial performance
measures.

Therefore, if AIS is going to allow today’s accountants to provide the information, business
decision makers need, should meet the following definition:

An accounting information system is one that captures, stores, manipulates, and presents data
about an organization’s value-adding activities to aid decision makers in planning, monitoring,
and controlling the organization.

This definition certainly includes financial accounting systems, which have the primary purpose
of generating financial statements in accordance with Generally Accepted Accounting
Principles (GAAP). However; this definition recognizes that businesses must perform a wide

xxxii
range of value-adding activities (such as production, distribution, sales, etc.) to be successful,
and that the types of information needed to manage such activities will be extensive.

Therefore, the scope of corporate systems that are included under the AIS umbrella is much
broader than the general ledger system and the programs that prepare journal entries to feed it.
Actually, AIS is a system that aids in processing transactions and in tracking the data that result
from such transactions.

These systems also must provide performance measurements (financial and non- financial) and
help to enforce management control objectives. They include transaction processing systems
(such as billing systems for sales processes), inter-organizational systems that share data with
upstream and downstream partners (such as web-based order systems and electronic data
interchange cash receipt processing), and support systems. (David, Julie Smith; et al. “The
Research Pyramid: A Framework for Accounting Information Systems Research” Journal of
Information systems Vol.13.No.1. Spring 1999, Pp. 8-9).
This enables economic exchanges (such as order processing, customer market analysis, and
inventory control systems). (McCarthy, 1979).

Accounting information system (AIS) is the information subsystem within an organization that
accumulates information from the entity’s various subsystems and communicates it to the
organization’s information processing subsystem. The AIS has traditionally focused on
collecting, processing, and communicating financial-oriented information to a company’s
external parties (e.g. investors, creditors, and tax agencies) and internal parties (mainly
management).

Under the traditional view of AIS, each organization’s functional areas, such as marketing,
production, finance, and human resources, maintain a separate information system. However,
organizations have found the need to integrate these separate systems into one seamless
database or to enterprise-wide information system. (Huuhtanen, Juha.Op.Cit). Today, the AIS
is concerned with non-financial information as well as financial data and information.

Nupakorn, et.al examines the effects of accounting practice effectiveness on financial

performance of Thai listed firms via decision making efficiency. This is conducted for the
purpose of tax purpose of tax management component resource allocation, and strategic

xxxiii
planning success as mediators, and also moderated by information technology. Moreover, this
study also test accounting standard understanding, accountant’s competency, and corporate
culture excellence as the precursor of accounting practices effectiveness. This study
encapsulates four dimensions:

• Adequate financial information integration

• Useful financial reporting establishments

• Effective financial reporting dissemination

• Accounting information trustworthiness

Accounting information system (AIS) is based on value accounting theory which are designed
to store and summarize financial transactions used to produce financial statements in
accordance with generally accepted accounting principles (GAAP) and to account to the owners
of the business in this way.

xxxiv
 CHAPTER THREE

RESEARCH METHOD
3.1 Introduction
This chapter shall constitute the research carried out so to as to have answers to our problem.
This will help us get a better understanding of our population as where our research has been
carried out. We shall also see the methods used in collecting our data and we shall briefly talk
on the method used in analyzing our data.

3.2 Research Design

Our study was primary designed to determine the effect an accounting information system has
on small and medium size enterprise performance.
Our population study shall therefore constitute managers, accountant and some employees of
small and medium size enterprises. They shall randomly be distributed questionnaires self-
designed to fill in the question provided.
3.3 Population of the Study

Simple random sampling was used so as to target small and medium enterprises within the
Chanchaga Town locality. We made use of this method so as to reduce biasedness and to enable
our data fee and fair. This method was also used to administer questionnaires to the available
employees most especially entrepreneurs of the locality.
We based ourselves on 10 companies targeting at least 2 employees in the locality. Therefore,
we made use of the 10 companies to get our answered data.
Basic assumptions taken when selecting our enterprises include:

xxxv
Table 3.1: Population table

Number of employees 0-250

Capital requirements 0-10,000,000 FCFA

Sectors involved Private sectors

Income monthly 0-10,000,000 FCFA

Output Products or services

Locality Chanchaga – commercial avenue Minna

Source: Research from the field, 2013.

3.4 Data Collection Method

The only method we used to collect our data was through the use of questionnaires. The
empirical data collection was done by issuing out questionnaires to 25 employees in the chosen
enterprise.
We shall therefore focused on primary data analyses when carrying out our research.
A questionnaire is simply a form containing set of questions either open ended or close ended
requiring respondents to fill personally so as to achieve or solve a particular problem. Our
questionnaires shall constitute 3 sections. These were distributed to managers so as to get their
responses.
Answers supplied to section 3 shall be used to analyze our data.

3.5 Data Analysis Method

Our collected data were analyzed using the descriptive statistics making use of frequency
distribution tables and percentages.

We also made use of regression analyses tool to test how well distributions are to match a
theoretical probability distribution.

The above data collected was carried out using a statistical software program known as SPSS
(statistical package for social science) for mostly analyses of our demographic information and
Microsoft excel for analyses of our variables. More of our result shall be described in our
chapter 4. It is worth noting that our regression line follow the equation

xxxvi
We shall use the statistical tool to test the validity of the hypothesis so to either reject or accept
our null hypothesis based on the regression analysis carried.

3.6 analyses of table of variable

We shall briefly summarize key authors to our variables as well as the books title and their
topic. They constitute authors which permitted us to gather our data to be used.

FIG 3.6 RELATIONSHIP BETWEEN THE INDEPENDENT AND DEPENDENT

VARIABLES

INDEPENDENT DEPENDENT
VARIABLE OUTCOME
VARIABLE

CHANGE IN TAX PAYMENTS

ECONOMIC AND CHANGE IN FINANCIAL
FINANCIAL STATEMENTPRESENTATIONS
PERFORMANCE CHANGE IN STORAGE AND
TRANSFER OF FIN INFORMATIONS
CHANGE IN THE FIN RESOURCES
USED

AIS PRODUCTIVITY
CHANGE IN THE PRODUCTIVITY
LEVEL OF THE ENTERPRISE
CHANGE IN THE AMOUNT OF
MATERIAL RESOURCES USED
CHANGE IN THE OPTIMISM LEVEL
STAKEHOLDERS OF THE ENTERPRISE
DECISION MAKING
CHANGE IN THE STRATEGIES TO
BE USED BY STAKEHOLDER
CHANGE IN THE ORGANIZATION
STRUCTURE AND PRODCTS
CHANGE IN THE MANAGEMENT
OF AVAILABLE RESOURCES
Source: Research Design (2013)

3.7 Model Specification

xxxvii
The model specification used in this study is based on the description of the relationship
between the dependent and independent variables of this research work.

Y= f(X) -------------------------------------------------------------------------------------- (1)

Y = f (fraud detection and correction) +f (Productivity increase) +f (Traceability of information

and report creation) +f (maintenance and update cost) + error term------------------------------------
----------------- (2)
Where: Y= Dependent Variable “Small and medium size performance”

X= Independent Variable which was represented by “factors causing Small and medium size
performance”.

The simple linear regression models for this study is defined as:

Y=β0+β1X1+e--------------------------------------------------------------------------------(3) Where: β0 =
Constant
e= Error term
3.8 Validity of the Research
We believe that through the available data, we were able to collect sufficient data using the
available data collecting method such as questionnaire and open interview.

It deals with defining correct operational measures for concept being studied. This can be done
through sources on our concept or variables used and establishing a proof of collecting data. We
compared these with other sources such as primary sources (interview and open ended
questions) and secondary sources (internet, textbooks, and articles).

xxxviii
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0 Introduction
This chapter shall present analyses of data collected or correspondent view of our data
collected. The analyses will help us to be able to give an answer to our questionnaires as well as
enable us to test our hypotheses. We shall therefore either accept our hypothesis or reject our
hypothesis

As earlier mentioned in our chapter 3, we shall make use of SPSS (statistical package for social
science) as well as Microsoft excel. Our result shall thereafter be exported to Microsoft word
and explained.

4.1 Demographic Profile of research Sample

This section shall comprise the demographic profile and background information of the
respondent. This is important because our research was carried out on small and medium size
enterprises and it will hint us in determining whether most of our enterprises are really small
and within the age group they fall.

This can be presented below:

Table 1: Age group of the respondents

AGE GROUP

Frequency Percent (%)

Valid 21-30 18 90,0

31-40 2 10,0

Total 20 100,0
Source: Research from the field, 2018

From the table, it is seen that 90% of our respondents are within the age group of 2130 years
while 10% falls within the age group of 31-40 years. This could be because our respondents are
still of a growing enterprise and are within their first period of existence. We can therefore say
that most of our SMEs are made up of youth than ageing group.

xxxix
Table 2: Level of education

EDUCATION LEVEL

Frequency Percent (%)

Valid Advanced level 1 5,0

HMD/ DIPET 2 10,0

Bachelor degree 13 65,0

Master degree 4 20,0

Total 20 100,0
Source: Research from the field, 2018

Table 2 is related to the educational level our respondent. We see that a majority falls within the
bachelor degree level. They make up a percentage of 65%. We also notice here that closed to
80% of our respondents falls within the class of bachelor degree and below. This clearly tells us
that SMEs are mostly made up employees and employers with a basic mastery of their field.

It also shows how important and cost efficient they are to SMEs. This is a good idea generated
to reduce employees’ salary and encourage in innovation.

Table 3: Duration at work

DURATION OF WORK

Frequency Percent (%)

Valid 0-5 years 17 85,0

6-10 years 3 15,0

Total 20 100,0
Source: Research from the field, 2018

Table 3 shows the time actually put in place by our respondents. Most of our respondents have
worked for a period of 85%. 17 of our 20 respondents falls within the working age of 0-5years.

15% of the respondents falls within the working period of 6-10 years.

xl
 This could be because most SMEs have not yet existed for more than 10 years or also due to an
increase in lay off of employees within the past 10 years of existence.

Table 4: Post occupied

POSITION OCCUPIED

Frequency Percent (%)

Valid Management 8 40,0

Accounting/ Finance 6 30,0

Others 6 30,0

Total 20 100,0
Source: Research from the field, 2018
Table 4 shows the positions occupied by our respondents. There are 8 managers making 40%, 6
accountants making a sum of 30% while 6 were from other departments (30%). This gives us a
total of 20 respondents.
We see that our sample was unbiased and it shows that though a SME, departments are clearly
existing even if two or more departments could be managed by a single employee in some
enterprises
4.2 Analysis of the objectives of Study
Our main objective was to determine the effect of Accounting information system to Small and
medium size performance. Questions with respect to this objective was established in our
section B as well as section C.

We shall first be concerned with analysis of data on the component relating to our independent
variable. We shall be focused on determining the sampled population to see how many made
uses of an AIS or better still have been practicing accounting and bookkeeping in their
enterprise. This shall be shown below:

Table 5a: Tools concerning Accounting Information System

QUESTIONS FREQUENCY (RESPONDENTS) PERCENTAGE (%)

xli
 MIS
MISSIN TOTA YE SIN
YES NO G L S NO G TOTAL

Does your enterprise keep 90,

accounting record? 18 2 0 20 0 10,0 0 100,0

Are there written Accounting 85,

policies in your enterprise? 17 3 0 20 0 15,0 0 100,0

Is there a relationship between

Accounting information and
Decision making by the 85,
Stakeholders? 17 3 0 20 0 15,0 0 100,0
Source: Research from the field, 2018

Table 5b: period of financial statement prepared

PERI OD OF FINANCIAL RECORD PREPARED

Frequency Percent (%)

Valid Monthly 14 70,0

Quarterly 2 10,0

Annually 2 10,0

Never 2 10,0

Total 20 100,0
Source: Research from the field, 2018

Table 5a shows questions related to the tools relating to Accounting Information System. It was
aimed at determining the amount of these enterprise already having the practice of Accounting.

From our responses gotten, we notice that more than 85% of the sampled enterprise make use of
such tools while 15% do not have an idea or not make use of such Accounting tools. Therefore,

xlii
they have an idea of Accounting as well as its importance it has in their businesses. This
observation seems more advantageous as well as enables us set or find the effect and AIS has.

Though a large number have an idea on the tools of Accounting, not all may still make use of a
computerized accounting system. Most of them still make use of a manual accounting system
and are based on recording done manually. This could be a reason for errors still made or follow
up as well as decision making.

Table 5b shows the details of the period our sampled financial statements are prepared. Our
results show that 70% of our respondents prepare their financial statements on a monthly base,
20% does that on a Quarterly base, and 20% on an annual base and 20% do not prepare
financial statements. Thus, we can conclude that most SMEs prepare their financial statements
on a monthly base so as to trace their activities easily, this could also be due to lack of a
computerized accounting system. When asked, we noticed that some SMEs also prepare their
reports on a daily base to ease traceability as well as to present it to the owners of the business
(enable control).

4.3 Results from hypotheses

Our research was based on 3 hypotheses. Our first 2 hypotheses gotten from our specific
objective analyzed using descriptive statistics. We shall be based on respondents’ views on
average to determine whether the selected questions cause make productivity and financial
performance to create an effect on Small and medium size enterprise.

Our 3rd hypothesis was also analyzed using descriptive statistics but we details analyzed it using
regression analyses. This is simply because it is the main focus of our research and other factors
take their stand from it.

Hypothesis 1: Accounting information System has an impact to a Small and Medium size
enterprises performance

We shall be focused here on determining if AIS has an impact on SMEs productivity. We shall
base ourselves on the respondent’s views to our questionnaires and thereafter conclude.

Table 6a: summary of respondent’s responses

xliii
STATISTICS

AIS AIS helps other

interprets Update dep of the AIS helps to
AIS provides and records AIS and enterprise in increase
accuracy in effects of helps in maintena decision productivity
outcome to business tax nce cost is making of the
be used transaction reduction cheap enterprise

N Valid 19 19 18 18 19 18

Missing 1 1 2 2 1 2

Mean 4.42 4.00 3.00 2.72 4.32 4.39

Median 5.00 4.00 3.00 2.00 4.00 4.00

Mode 5 4 2 2 4 4

Sum 84 76 54 49 82 79

Source: Research from field, 2018

Table 6b: presentation of respondents’ responses on hypothesis 1

Strongly Disagree Neutral Agree Strongly Missing

disagree agree

questions freq % freq % freq % freq % freq % freq %

Accounting Information 1 5,0 0 0,0 0 0,0 7 35,0 11 55,0 1 5,0

System provides more
accurate outcome to be
used

xliv
AIS interprets and record 0 0,0 1 5,0 2 10,0 12 60,0 4 20,0 1 5,0
effects of your business
transaction

It also helps other 0 0,0 0 0,0 0 0,0 13 65,0 6 30,0 1 5,0

departments of the
enterprise in decision
making

AIS helps in Tax reduction 1 5,0 7 35,0 4 20,0 3 15,0 3 15,0 2 10,0

AIS helps to increase 9

productivity of the 0 0,0 0 0 1 5,0 9 45,0 8 40,0 2 10,0
enterprise
Source: Research from the field, 2018

This information can be presented on a chart as follows,

Fig 6c. Relationship between AIS and productivity (%)

5 5 5 10 10
0
20 15 10
30

55 15 20
5

20
60
40
60
35 35

10 20
0
5 5 5
0 0
ACCOUNTING AIS EASE TRACING OF AIS INTERPRETS AND AIS HELPS IN TAX IT COST LITTLE OR NO
INFORMATION SYSTEM INFORMATION TO BE RECORD EFFECTS OF REDUCTION COST FOR
PROVIDES MORE USED IN CREATING OF YOUR BUSINESS INSTALLATION OF AN
ACCURATE OUTCOME REPORTS TRANSACTION AIS
TO BE USED

strongly disagree disagree neutral agree strongly agree missing

From our graph,

xlv
 • We notice that more than 90% of our respondents are for the fact that AIS provides more
accurate outcome to be used. That is they fall within the range of accepted and strongly accepted.
5% of our respondents disagree on that point and 5% of our respondents did not provide an answer
to the question.

• Our second questions show that 95% of our respondents are for the fact that AIS interprets
and records effects of the business. This is probably because they AIS has been specifically
designed for that purpose. Respondents also believes that if there is effective interpretation and
recording of transactions, it will lead to effective decision making which will cause productivity
to increase.

• Our third question relating to our hypothesis shows that 95% of the respondents believes
that AIS also helps other departments of the enterprise in Decision making. This is because, AIS
also has as purpose to aid management in decision making. Therefore, if there is effective decision
in one department or production unit, others will be affected by that decision made most
especially the marketing and accounting department.

• Question 4 of our hypothesis, proofs that only 30% of our respondents are for the fact that
AIS reduces the amount of tax paid. 65% are against the fact. The reason could be because
decision making could be made, results could be drawn, but with little or no idea on how to apply
it. This might cause still the SMEs to be paying excessive taxes. Since our tax are assessed by
humans, errors could still be made.

• Question 5 shows that 85% of our respondents are for the fact that AIS helps to increase
productivity in the enterprise. Effective decision are made by management, there will be
production at an optimum output. This will help in producing effectively.

On average, we see that most respondents accept the fact that AIS helps increase productivity in
their enterprise. This is seen from our responses by the respondents and some taught for their
points.
Hypothesis 2: There is a relationship between AIS and SMEs economic and financial
performance

xlvi
 Our aim is here being to test our hypothesis 2. We want to see if there Small and medium size
using AIS have an improvement in their financial and economic performance. A summary of
our respondent’s answer is seen below.
Table 7a: summary of respondent’s responses

Statistics

AIS provides AIS Causes

accuracy in AIS ease in interprets and disruption in
outcome to be tracing of records the
used information effects of AIS helps It cost little enterprise
for report business in tax in installing environment
creation transaction reduction an AIS

N Valid 19 19 19 18 18 19

Missing 1 1 1 2 2 1

Mean 4.42 4.26 4.00 3.00 2.22 2.21

Median 5.00 4.00 4.00 3.00 2.00 2.00

Mode 5 4 4 2 2 2

Sum 84 81 76 54 40 42

Source: Researcher from field work, 2018

Table 7b: presentation of respondents’ responses on hypothesis 2

Strongly Disagree Neutral Agree Strongly Missing

disagree agree

Questions freq % Freq % freq % freq % freq % freq %

Accounting 1 5,0 0 0,0 0 0,0 7 35,0 11 55,0 1 5,0

Information System
provides more
accurate outcome to
be used

xlvii
 AIS ease tracing of 0 0,0 0 0,0 1 5,0 12 60,0 6 30,0 1 5,0
information to be
used in creating of
reports

AIS interprets and 0 0,0 1 5,0 2 10,0 12 60,0 4 20,0 1 5,0

record effects of your
business
transaction

AIS helps in Tax 1 5,0 7 35,0 4 20,0 3 15,0 3 15,0 2 10,0

reduction

It cost little or no 4 20,0 8 40,0 4 20,0 2 10,0 0 0 2 10,0

cost for installation
of an AIS

It causes disruption 4 10 3 1 1
in the enterprise
environment
Source: Research from the field, 2018

It can further be represented as follows;

Figure 7c: impact of AIS on financial and economic performance (%)

xlviii
Figure 7c shows us the impact of AIS on financial and economic performance.

Based on respondent view;

• AIS providing more accurate outcome is accepted up to a percentage of 90%. This

signifies that AIS has a major impact on the accuracy or outcome to be used. This was earlier
discussed in the first hypothesis. 5% of our respondents reject this proposal and 5% did not
provide an answer to the question

• Question 2 of our hypothesis 35% of our respondents accepts the fact that AIS eases
tracing of information. Statistics shows that 60% of our respondent are not certain that it eases
traceability of information. Therefore, we could not consider their responses since the degree of
doubtless is greater than 50%

• Question 3 shows that more than 80% of the respondents believe that AIS interprets and
records effects of business transactions. 10% of respondents disagree the aspect and 5% could not
provide response to the question.

• Question 4, 5 and 6 of our hypothesis revealed that less than 50% of the respondents agree
on the point. This means that they are against the state fact of 4 and 5. The points could be based
on their ideas have an inverse impact on financial performance. for example, tax is not influenced

xlix
 by the implementation of an AIS. Or the cost could yield more spending than benefits to the
enterprise.

Hypothesis 3: Accounting information System has an impact to a Small and Medium size
enterprises performance

To test this hypothesis, we made use of descriptive statistics as well as regression analysis. The
reason for using regression analyses is because we are out to determine the effects an AIS has
into a small and medium size enterprise. Our AIS being our independent variable to Factors
influencing SMEs performance. This is shown below:

Table 8a: AIS as a tool to small and medium size enterprise performance

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation

AIS PROVIDES ACCURACY IN 19 1 5 4,42 ,961

OUTCOME TO BE USED

AIS EASE IN TRACING OF 19 3 5 4,26 ,562

INFORMATION FOR REPORT
CREATION

AIS INTERPRETS AND 19 2 5 4,00 ,745

RECORDS EFFECTS OF
BUSINESS TRANSACTION

AIS IS EASY TO ESTABLISH 19 1 5 3,37 1,065

AND USE IN THE ENTERPRISE

AIS HELPS OTHER DEP OF THE 19 4 5 4,32 ,478

ENTERPRISE IN DECISION
MAKING

AIS HELPS TO INCREASE 18 3 5 4,39 ,608

PRODUCTIVITY OF THE
ENTERPRISE

AIS HELPS IN TAX REDUCTION 18 1 5 3,00 1,237

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IT COST LITTLE IN INSTALLING 18 1 4 2,22 ,943
AN AIS

UPDATE AND MAINTENANCE 18 1 5 2,72 1,364

COST IS CHEAP

HELPS IN FRAUD DETECTION 19 2 5 4,21 ,787

AND FRAUD CORRECTION

CAUSES DISRUPTION IN THE 19 1 5 2,21 1,032

ENTERPRISE ENVIRONMENT
Source: Research from field work, 2018
Table 8 shows a descriptive statistic of respondents. From the Likert scale of 5, the accepted
criterion is 3. From our analysis, we notice that most factors shows that an AIS has a positive
impact on small and medium size performance.

Question, 1, 2, 3, 5, 6, 10 of our table has a mean value greater than 4. This shows that most
respondents agree that they are important tools showing an impact AIS has on SMEs
performance. They therefore could be taken as the main characteristics accounting information
system has on small and medium size enterprise,

Question 4 and 7 of our table shows a mean value greater than or equals to 3 but less than 4
(3>x>4). This also contribute to the development in SMEs performance but they are not as
influential as those with mean value >4. The reason for this could be because some respondents
do not have the same perspective as others or some respondents could have experienced more
based on the factors yielding them a negative than positive outcome.

Question 8, 9, 11 of our table shows a mean response <3. This implies that most respondents
instead believe they inversely contribute to the increase in Small and medium size performance.
The reason could be because AIS also has some disadvantages which needs to be worked upon.
Most respondents’ views believes that they do not have a relationship as factors.

We can therefore calculate the average mean of our table so as to conclude if the overall factors
generally could be a tool to Small and medium size performance. This is gotten by looking at
the average mean of our table.

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 X= (∑mean of all questions in the table)/n

Therefore, we see notice an average mean of 3.556. We can therefore conclude that AIS
characteristics act as a tool towards Small and medium size performance.

Table 8b: Model summary Table

Model Summary

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 ,774a ,599 ,465 ,360

a. Predictors: (constant), update and maintenance cost are cheap, helps in fraud detection and
fraud correction, AIS ease in tracing of information for report creation, AIS helps to increase
productivity of the enterprise.

Table 8c: Analyses of variance table

ANOVAa

Sum of
Model Squares df Mean Square F Sig.

1 Regression 2,325 4 ,581 4,478 ,019b

Residual 1,558 12 ,130

Total 3,882 16

a. Dependent variable: AIS helps other department of the enterprise in decision making
b. Predictors: (constant), update and maintenance cost is cheap, helps in fraud detection and
fraud correction, AIS ease in tracing of information for report creation, AIS helps to increase
productivity of the enterprise

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 Table 8d: Regression table

Coefficientsa

Unstandardized Standardized
Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) ,558 1,151 ,484 ,637

FRAUD DETECTION AND ,289 ,116 ,487 2,477 ,029

FRAUD CORRECTION

INCREASE PRODUCTIVITY ,365 ,195 ,449 1,866 ,087

OF THE ENTERPRISE

EASE OF TRACING ,197 ,189 ,236 1,045 ,316

INFORMATION FOR REPORT
CREATION

UPDATE AND MAINTENANCE ,052 ,082 ,145 ,635 ,537

COST IS CHEAP
a. Dependent Variable: AIS helps other departments of the enterprise in decision making Critical
values: 2.132 at 10%, 2.776 at 5%, and 4.604 at 1% level of significance. From the regression
result, holding all the other variables constant, performance is
55.8%.

Y=0.558+.0289FD+0.365IP+0.197ET+0.052UAM………………regression line

From the results,

• Fraud detection and correctionhas a coefficient of .289 showing a positive effect on

performance. That is to say, a 1% increase in fraud detection and correction will lead to 28.9%
increase in performance. From the T- statistics, it is significant at 10%, because the t- calculated
is 2.477 which is greater than the table value of 2.132.

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• Increase on productivity of the enterprise has a coefficient of .365, showing a positive
effect on performance. A 1% increase in productivity increase of the enterprise will lead to a .365
increase in Small and Medium size performance. Though our t- analyses shows a positive value,
its figure is still insignificant as it does not fall within the critical value.
• Ease in tracing information for creation of report has a coefficient of 0.197. This implies
that there is a relationship between information traced, report creation and small and medium size
performance. Therefore an increase on tracing of information and report creation will lead to an
increase in small and medium size performance. Our T- analysis shows a value of 1.045 lying
above our critical value of 10%. We can thus say our analysis is insignificant but has a positive
effect on Small and medium size performance.

• Update and maintenance cost has a coefficient of 0.52. This implies that 1% increase in
update and maintenance cost will lead to a .52 increase in performance. This could be due to a
little relationship in the factors existing between both variables. Our T- analysis shows a
percentage of .635 which is insignificant but positive in value.

The coefficient of adjusted R- square shows that 46.5% change in performance of small and
medium size enterprises, is accounted for by the variables included in the model (fraud
detection and fraud correction, increase productivity of the enterprise, ease of tracing
information for report creation, update and maintenance cost is cheap). The coefficient of F- test
is 4.478 which shows that it is statistically significant at 5% level of significance indicating that
the independent variables jointly have a statistical effect on Small and medium size
performance. Therefore, we accept the alternative hypothesis.

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 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.0 introduction
This chapter shall comprise of the brief discussions on our findings. We shall also talk briefly
on the hypothesis analyzed and the research questions. We shall thereafter outline our
limitations and possible recommendations and finally our conclusion

5.1 discussion of Research questions

RQ1: Does an AIS creates an impact on the SME productivity?
Based on our hypothesis, we noticed that most factors contributed to the accounting information
system having an impact on SMEs. We should also note the key questions causing the influence
on SMEs (AIS providing accuracy in outcome, AIS interpreting and recording effects of
business transaction, AIS helps in other department of the enterprise in decision making, AIS
helps to increase productivity of the enterprise). From our statistics table in figure 6a above, we
see that on average, AIS plays an impact on productivity. This was also in line with
Brynjolfsson and Hitt (2003), who saw the impact of IT on productivity in the long run; His

lv
results also suggest that IT capital deepening is associated with far-reaching organizational
changes within the firm. We therefore accept our alternate hypothesis in this case.
RQ2: Do small and medium enterprises using AIS have better economic and financial
performance?
Based on our statistics table, the factors mainly contributing to improvement based on our
hypothesis are accuracy on outcome, ease in tracing of information for report creation,
interpreting and record of effects of business transaction. They have a mean value of 4.42, 4.26
and 4.00 respectively. Other factors either contribute very little or does not contribute based on
our statistics gotten.
We recorded on average 3.35 for our hypothesis tested. This simply means though AIS
contribute to a better economic and financial performance, its contribution is slightly felt. Elena
Urquia Grande, Raquel Perez and Clara Munoz (2010) identified the relationship AIS has on
financial performance which discovered a positive association between both. Based on their
results, AIS design organizational strategy and performance.

We also accept the alternate hypothesis here showing that there is a relationship between AIS
and SMEs economic and financial performance

RQ3: What influence does an accounting information system has in SMEs performance?
The result gotten from this question directly affects the stakeholder’s decision making.
For a better performance, stakeholders need to take effective decisions. From our analysis table
(fig 8a), research shows that on we had an average of 3.355. This shows that AIS contribute to
Small and medium size performance. We also see that some factors highly affect this hypothesis
as explained above. Management therefore has to be serious on those factors so as to either use
it as their strength or discard them.

According to Flynn (1992), the effectiveness of AIS can be received providing management
information to assist concerned decision with regard to the successfully managing of
corporations.

Also, H. Sajady, M. Dastgir and H. Hashem Nejad, (2008) defined AIS as one of the most
critical systems in the organization which has also changed the way of capturing, processing
storing and distributing information.

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 Our result here tells us how important AIS is to an enterprise. We therefore can say with
certainty that there is a need for an AIS is SMEs.

5.2 limitation of the study

We faced some difficulties while carrying out our research. Some of these are listed below:

• We had difficulties to access our appropriate target population. For us to solve this
problem, we decided to repartition our target population into Small and Medium size at a ratio of
2:1
• Most small enterprises visited lacked the appropriate staff such as the managers and the
accountant or some were playing a bi- function. This made us to explain facts and clarify some
questions so as for the employees to answer
• There was difficulty in getting information on our research. Despite the fact that some
elements were available on the internet, the researcher had to work with others and past responses
so as to effectively analyses and conclude on the present one
5.3 Conclusion
We started this research project by our general introduction (chapter 1) by getting a brief
understanding of the background as well as the objectives, study area and hypothesis. We also
saw the importance of our study in this chapter
We thereafter, had a literature review (chapter 2). We divided that into conceptual (definition of
various concepts based on authors), and empirical review (talking about the findings and ideas
authors had on our research). This helped us in comparing with the viewer’s results as well as
discussing our results
We moved on to our methodology to be used (chapter 3). We described our sample population
as well as the area sampled. We also described the method we used to test our hypothesis. This
act the key to how we shall analyze our data
We continued analyses of our results (chapter 4) which enabled us to have a review of our
respondent’s identity (demographic representation). We also analyzed our results so as to test
our hypothesis. It was done using descriptive statistics for the first two hypothesis and a
descriptive plus regression analyses on our third hypothesis. We also explained the results
gotten.

lvii
Our (chapter 5) finally enabled us have a brief discussion on the research questions after which
we identified some limitations and proposed recommendations.
Our findings showed us the effect an Accounting information system has on small and medium
size enterprise performance. We focused ourselves on three (3) key factors an AIS influences in
a enterprise in general. We also based ourselves on some key questions which could help us
analyze or determine our hypothesis. We noticed that AIS may be of disadvantage since it is
designed by humans and may cost a little, but it is of great importance to management. For that
reason, we had to search some importance it has such as recording, decision making.
With the rapid evolvement of the world, businesses and management have to think of evolving.
This calls on sacrifices to be made
Management is therefore advised to provide for this system with respect to their functions and
abilities.

5.4 Recommendations
After haven carried out this research on the effect of accounting information system on Small
and medium size enterprise, we came out with some proposed recommendations
so as to enhance the growth of SMEs. Some of these include:
• SMEs should make use of cheaper AIS especially small enterprises. This is because when
interviewed, most managers believe more on the burden an AIS has in their enterprise than the
benefits gotten from it
• Management of multi stores most especially should either employ an accountant of degree
level or below so as to permit they carry out effective recording. Most Small enterprises visited
made use of single entry and do not differentiate the company money from theirs. This is very
dangerous as he/she believe he gains when there is excess

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Ismail, N. A. (2009). Factors influencing AIS effectiveness among manufacturing SMES:
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Ismail, N.A.; King, M. (2005): “Firm performance and AIS alignment in Malaysian SME´s”,
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 APPENDIX QUESTIONAIRES
I am USMAN FATIMA EGBAGI a four-year student at the FEDERAL UNIVERSITY
DUTSIN-MA (FUDMA) offering Accounting carrying out a research titled “effect of
accounting information system on the performances of small and medium scale enterprises
in Minna, Niger State”. Answering some questions below will help me effectively carry out my
research and ease analyses of the responded answers. Any information disclosed here shall
strictly be for academic use.
Put a tick (√) in the corresponding box of your choice
SECTION A: GENERAL INFORMATION

1. What age group do you belong?

21-30 31-40- 41-50 Above 50

2. What is your level of education?

Advanced Level HND Bachelor degree Master’s degree Above masters

3. How long have you worked in this institution?

0-5years 5-10years Over 10years

4. What department do you occupy in the business?

Management Accounting/finance Others

SECTION B: Questions concerning Accounting Information System

lxi
number YES NO

Does your enterprise keeps accounting record?

1

Are there written Accounting policies in your enterprise?

2

3 Is there a relationship between Accounting information and

Decision making by the Stakeholders?

4 how often are financial reports prepared?

Monthly base Quarterly base Annually Never

The following section will be related to question 5 and 6

SECTION C: AIS as a tool to small and medium size performance

lxii
 Strongly disagree Neutral agree Strongly
disagree agree
1 Accounting Information System provides
more accurate outcome to be used
2 AIS ease tracing of information to be used
in
creating of reports

3 AIS interprets and record effects of your

business transaction
4 AIS is easy to establish and use in the
enterprise
5 It also helps other departments of the
enterprise in decision making
6 AIS helps to increase productivity of the
enterprise
7 AIS is helps in tax reduction
8 It cost little or no cost for installation of an
AIS
9 Cost of update and maintenance is cheap
10 It helps to detect errors and fraud correct
them
11 It causes disruption in the enterprise
environment

lxiii