Impact of Accounting Information Systems on the Quality of Financial Information in Saudi Arabia

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Impact of Accounting Information Systems on the Quality of Financial Information in Saudi Arabia
Impact of Accounting Information Systems on the Quality of Financial Information in Saudi Arabia

Background

Various studies have been conducted to determine the role that accounting information systems play in improving the quality of financial data and decision-making in firms. These systems represent an array of equipment and personnel that are tailored towards collecting financial information that is utilized by different departments in reaching conclusions (Susanto 2016, p. 4001. The quality of this information is essential in enabling a company’s shareholders to assess the financial health of a firm’s operations (Al-Hiyari et al. 2013, p. 30). Poor quality information used to determine input processes often result in poor outcomes.

The aim of these accounting information systems is to take advantage of the firm’s circumstances for the purpose of improving the quality and amount of information available to all stakeholders. Some of the attributes of an effective information system are reliability, accuracy, and timeliness of reporting feedback (Al-Muharf 2014, p. 329). These measures need to be in place for the information produced to positively impact the firm’s decision-making.  

Impact of AIS on Quality of Financial Information

The study by Abdallah (2013) was conducted to determine the impact of using accounting information systems on the quality of business statements on Jordanian companies’ income and sales tax sectors. The outcome of the research indicated that the application of the accounting information systems improved the quality of financial statements and other information available to the Jordanian government.

Impact of Accounting Information Systems on the Quality of Financial Information in Saudi Arabia
Impact of Accounting Information Systems on the Quality of Financial Information in Saudi Arabia

Other studies have also shown that accounting information systems have a positive effect on the quality of financial data by focusing on relevant financial information such as income statements (Uyar, Gungormus, & Kuzey 2017, p. 21). This study was similar to the one by Agourram (2009) that evaluated the impact of these accounting information systems on the quality financial data in Saudi Arabia.

The results of the study indicated that the AIS impacted positively on the quality of financial information generated. Other similar studies have also shown that better quality of the information provided by the accounting information system was more likely to result in better business outcomes for the firm (Xu 2003). The AIS filters data it receives and distinguishes which is relevant to the needs of the company. 

Impact of AIS on Decision Making

Studies by Daoud and Triki (2013) investigate the effect of accounting information systems on the decisions made by firms. The study revealed that information provided by the systems helps investors to analyze the firm’s financial health. This data is also used by other stakeholders to meet the various internal and external needs of the firm.

These systems provide the company with information such as balance sheets and income statements that influence the investment choices of the firms. In order for this to happen, the information the system provides has to be relevant, accurate, complete and provided within specific timeframes (Hla & Teru 2015). Thus, the information provided by these systems greatly influences the decisions made by management by highlighting which activities.

Existing Gap   

The above studies show that most of the existing literature focuses on the impact of accounting information systems on the performance and efficiency of firms, separate from the effect of these systems on the decision-making processes of firms (Iskandar 2015, p. 158).

The gap between the impact of accounting information systems on the variables of quality of financial information and decision making has not been explored concurrently. Hence, this research written by professional academic writers from smartwritingservice.com aims to address the existing gap in the information present in the mentioned studies through the analysis of the effect of these information systems on both the quality of financial data and decision making addressed in the research conducted, especially in Saudi Arabia.

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References List

Abdallah, AJ 2014, ‘The impact of using accounting information systems on the quality of financial statements submitted to the Income and sales tax Department in Jordan’, European Scientific Journal, vol. 1, pp. 41-48. http://dx.doi.org/10.19044/esj.2013.v9n10p%25p

Agoura, H 2009, ‘The quest for information system success in Saudi Arabia. A case study’, Journal of Global Management Research, pp. 51-58. 

Al-Hiyari, A, Al-Mashregy, MH, Mat, NK, & Alekam, J 2013, ‘Factors that affect accounting information system implementation and accounting information quality: A survey in University Utara Malaysia’, American Journal of Economics, vol. 3, no. 1, pp. 27-31. DOI: 10.5923/j.economics.20130301.06

Al-Muharf, 2014, ‘Accounting information system lessons from implementing enterprise resource planning in a Saudi case study’, Trends in Applied Sciences Research, vol. 9, no. 7, pp. 326-344. DOI:10.3923/tasr.2014.326.344

Daoud H, & Triki M 2013, ‘Accounting information systems in an ERP environment and Tunisian firm performance’, The International Journal of Digital Accounting Research, vol. 13, pp. 1-35. DOI:10.4192/1577-8517-v13_1

Hla, D, & Teru, SP 2015, ‘Efficiency of accounting information system and performance measures. Int. J. of Multidisciplinary and Current Research, vol. 3, pp. 1-10. 

Iskandar, D 2015, ‘Analysis of factors affecting the success of the application of the accounting information system. International Journal of Scientific & Technology Research, vol. 4, pp. 155-162. 

Susanto, 2016, ‘What factors influence the quality of accounting information?’ International journal of applied business and economic research, vol. 13, pp. 3995-4014. 

Uyar, A, Gungormus, AH, & Kuzey, C 2017, ‘Impact of the accounting information system on corporate governance: Evidence from Turkish non-listed companies. Australasian Accounting, Business, and Finance Journal, vol. 11, no. 1, pp. 9-27. DOI:10.14453/aabfj.v11i1.3

Xu, H 2003, ‘Critical success factors for accounting information systems data quality’, University of Southern Queensland. Retrieved from https://eprints.usq.edu.au/1526

 

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