Effect of Information and Communication technology (ICT) on Accounting Information System and Business Performance

This study examines the impact of Information and Communication Technology (ICT) on accounting information system and business performance. It highlights the ways ICT can address the issues faced by the manual system of accounting by replacing the same with automated/computerised software based system of accounting. The study aims to examine the influence of the implementation of ICT on overall efficiency of accounting systems and evaluate the influence of the implementation of ICT on overall efficiency of business performance through development of accounting information system.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
University Name
Student Name
Authors’ Note

2CONTEMPORARY ISSUES IN ACCOUNTING
Selected Research Topic: Effect of Information and Communication technology (ICT) on
Accounting Information System and Business Performance
Introduction
This study intends to examine implementation of Information and Communication
Technology (ICT) on overall efficiency and quickening of accounting exercises and the way
it can make sure effective delivery of accounting operations.
Identification of accounting issue
Previously, accountants were dynamically involved in different accounting actions as
the conventional methods were in position. Records on a daily basis had to be maintained by
humans, financial statements had to be prepared and arranged as the declaration of pecuniary
position and announcement of comprehensive earnings were carried out manually by the
accountant (Eason 2014). However, there were different issues associated to manual
accounting practices that could weaken manual accounting actions. Procedures of accounting
using paper as well as ledgers else wise identical tools need time to complete tasks. Also,
manual system of accounting is also subject to errors as manual systems necessarily do not
possess internal checks as well as balances (Avgerou and Walsham 2017). Also, issues with
manual system of accounting include inability on the part of the firm to prevent workforces
from assessing sensitive data present in paper ledgers as well as journals. Implementation of
information and communication technology is said to exert impact on system of accounting
by replacing manual systems by automation. As per Eason (2014), proposition of technology
is supposed to cause alteration in business concerns associated to systems of accounting and
performance of enterprise, that necessarily has been of immense concern as well as interest.
Decisions and plans of accounting can be influenced by the implementation of ICT in
enterprises that in turn can help the firm to remain relevant and at the same time competitive.

3CONTEMPORARY ISSUES IN ACCOUNTING
It is essential to admit that computerized systems, have enhanced the functionality of
departments of accounting in enterprises. In this way, implementation of ICT has augmented
timeliness of accounting information that facilitate accountants to arrange reports and
examination of operations, thereby presents a clear image of present operations, helpful to
firm’s management. Records can be kept and tracked more effectively with the use of
computerized system increasing company efficiency and minimizing errors to ensure
customer satisfaction (Madon and Krishna 2018). So far, ICT has improved corporate
relationships, facilitated speed and enhanced quality delivery in jobs. It has also improved
productivity and increased value creation of organizations.
Importance of the research
The research work at hand can help in gaining deep insight and comprehensive
understanding regarding the way information and communication technology can prove to be
a pertinent and at the same time inevitable facet in system of accounting. The study helps in
highlighting the ways ICT can address the issues faced by the manual system of accounting
by replacing the same with automated/computerised software based system of accounting.
This study thereby helps in analysing the ways in which implementation of ICT can aid in
enhancement of speed of preparations of different accounting reports (Schaltegger and Burritt
2017). Also, this study can examine effect of execution of ICT on maintenance of both
reliability and accuracy of different financial reports that in turn has an impact on transparent
and honest business dealings of enterprises with customers, business partners as well as
outsiders
Practical Motivation
Demonstration of the reason why the issue is important to practice

4CONTEMPORARY ISSUES IN ACCOUNTING
The identified issues of utilization of manual system of accounting include dearth of
timeliness, proneness to errors, and lack of security and unavailability of copies. Essentially,
the manual system of accounting is in itself extremely laborious and requires huge time to
complete different tasks. Also, errors are also pretty frequent in manual accounting
procedures. In this regard, the study at hand can help in understanding impact of execution of
ICT on systems of accounting and the way the same can address the existing issues of manual
system of accounting (Simkin et al. 2014). The study of the current issue is said to be
important to practice as this can help in comprehending the causes and effects of
implementation of information and communication technology on system of accounting.
Theoretical Motivation
Overview of the contribution of the research to the theory
As per the open systems theme, a business concern interacts with, acclimatizes to and
intends to control business environment in a bid to continue to exist (Eason 2014). In current
times, it can be observed that environment pressures exert an influence on the behaviour of
different enterprises from the perspective of decision making and process selection. On the
whole, these environment pressures have formed a competitive environment for the business
arena. Generating superior-quality and well-timed decisions relies partially on data quality
and the subsistence of on-line as well as real-time data. In this regard, information
technologies are utilized to facilitate business dealings, smooth the progress of decision
making for enterprises (Avgerou and Walsham 2017). Therefore, the current research work
can positively contribute towards examining the function of information technology that is
accountable for developing, executing and maintaining several controls over business
procedures of a business enterprise.

5CONTEMPORARY ISSUES IN ACCOUNTING
Prior studies have already towards importance of accounting system in development
of functions in enterprises. However, the previous studies do not present a well-developed
theory on the economic impact of the implementation of the (ICT) on accounting information
system of business concerns. Therefore, the current study intends to fulfil the gap and
examine the way working, maintaining, processing and communicating information (using
ICT) to diverse internal as well as external stakeholders can affect financial information used
the purpose of decision making (Avgerou and Walsham 2017).
Therefore, the current study can add to the knowledge regarding the way
implementation of ICT can change processes of accounting when information subsists in
electronic form and ascertain economic influence of the same on performance of business
concern. Eason (2014) ascertained the way ERP (Enterprise Resource planning) systems
augment the procedure of complicated methods of managerial accounting, that is to say ABC
as well as Balanced Scorecard. Laudon and Laudon (2016) mentioned that the ERP methods
causes a alteration in managerial accounting exercises, as regards delivering universal flow of
information and consistency, and that traditional managerial accounting systems get
eliminated after implementation of ERP (Simkin et al. 2014). Implementation of Information
technology can cause a transformation in budgeting as well as reporting issues and address
the concerns related to the same and facilitate increasing usage of sophisticated managerial
accounting techniques (Laudon and Laudon 2016). Even though, prior studies have carried
out detailed study of importance of implementation of ICT in accounting information system
for resolution of identified accounting issues, no well-developed theory is present that
substantiates effect of ICT on accounting information system and as a consequence business
performance of firms.

6CONTEMPORARY ISSUES IN ACCOUNTING
Information technology
- ICT
-ERP
Accounting Information System
Influencing change
Business Performance of
Firms
Influencing change
Literature Review
Theoretical Framework
The implementation of information as well as communication technologies has
significantly affected the accounting information system and has addressed several
accounting issues previously faced by firms. Thus, it can be hereby mentioned that ICT has
altered work environments along with running of businesses on the whole. In line with this
characteristic, the significance of accounting information has augmented. The central
objective of system of accounting is to deliver well timed, fast and accurate information
(availed using ICT) for the purpose of decision making, improving entire system of
accounting information and correcting accounting issues within an organization (Eason
2014). The current study considers one independent variable that is “Information and
communication Technology” and two different dependent variables “Accounting Information
System” and thereafter “Business Performance”.

7CONTEMPORARY ISSUES IN ACCOUNTING
Empirical evidences on relationship between the variables
Avgerou and Walsham (2017) assert that a study was conducted by Apulu and
Latham on analysis of influence of Information and Communication Technologies (ICT).
This paper stressed that the execution and effectual usage of ICT in business concerns
introduces competitive advantage. The utilization of ICT has an immense impact on
performance of firms as this aids to deliver a stage for growth in numerous firms. Basically,
ICT is observed to enhance organizational functioning, growth as well as competitiveness of
firms. Based on literature assessment and as well as detailed evaluation of case studies, it is
quite certain that there are several advantages related to the implementation and usage of
ICT. Thus, it is said that effective employment of ICT in different business concerns can help
in the process of generation of numerous opportunities.
Eason (2014) concentrates on the impacts of IT associated organizational
transformations on the division of management accounting function. This literature
contributed in developing knowledge regarding the degree and extent to which IT exerts
impact on overall capability to resolve accounting functions. The association between IT and
accounting exercises was evaluated qualitatively by means of six case studies and the impact
of IT was measured. Findings of the study suggest an inclination for transformation and
decentralization of different tasks of accounting. (Madon and Krishna (2018) examined the
issues related to information and communication technology (ICT) in particularly
management of system of education. The study revealed that no meaningful advancement can
be carried out in educational segment without modifying to technological innovations as well
as discoveries.

8CONTEMPORARY ISSUES IN ACCOUNTING
ICT and System of Accounting
Accounting system by itself is very hectic as it involves dealing with numerous,
charts, figures, numerals, mass calculations and a good deal writing. However, ICT
essentially has made the system smooth and relatively easy in maintaining the entire system.
Schaltegger and Burritt (2017) suggests that accounting information system is by and large a
computer-based means for monitoring accounting action in combination with resources of
information technology. The ensuing statistical pronouncements can be utilized internally by
administration or else externally by diverse other interested users or parties counting
financiers, creditors and authorities of taxation (Tayeh et al. 2015). Fundamentally, both
accounting systems as well as Accounting Information Systems are necessarily utilized
interchangeably since they serve up the same objective. Accounting Information Systems -
AIS can be considered to be the most commonly used owing to high rate of adoption of
particularly information technology in systems of accounting of firms in modern times.
ICT and Organizational Performance
Enterprises view see investment in Information and communication technology (ICT)
as a way by which they can enhance organizational performance founded on measures (that is
to say, effectiveness, productivity, profitability as well as quality). ICT essentially helps
business organizations to acquire competitive edge among rivals in market. Also, this system
helps in better evaluation of available accounting information with the usage of accounting
software. Additionally, ICT is also said to provide a direction for business concerns since
they can stay up to date and pertinent with specific information, detecting accurate procedure
to adopt (Galliers and Leidner 2014). On the whole, this helps in improved decision making
in firms. Therefore, this kind of investment can generate positive influences over successive
periods and can be observed to have enhanced company’s productivity.

9CONTEMPORARY ISSUES IN ACCOUNTING
Objectives
1. To critically examine the influence of the implementation of ICT on overall efficiency of
accounting systems
2. To evaluate the influence of the implementation of ICT on overall efficiency of business
performance through development of accounting information system
Development of Hypotheses
Null Hypothesis
1) HO: The implementation of ICT exerts no impact on efficiency of accounting system
2. HO: The implementation of ICT exerts no influence on efficiency of business performance
through development of accounting information system

10CONTEMPORARY ISSUES IN ACCOUNTING
Reference
Avgerou, C. and Walsham, G. eds., 2017. Information Technology in Context: Studies from
the Perspective of Developing Countries: Studies from the Perspective of Developing
Countries. Routledge.
Avgerou, C. and Walsham, G. eds., 2017. Information Technology in Context: Studies from
the Perspective of Developing Countries: Studies from the Perspective of Developing
Countries. Routledge.
Eason, K.D., 2014. Information technology and organisational change. CRC Press.
Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and
strategies in managing information systems. Routledge.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education
India.
Madon, S. and Krishna, S., 2018. The Digital Challenge: Information Technology in the
Development Context: Information Technology in the Development Context. Routledge.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues,
concepts and practice. Routledge.
Simkin, M.G., Norman, C.S. and Rose, J.M., 2014. Core concepts of accounting information
systems. John Wiley & Sons.
Tayeh, M., Al-Jarrah, I.M. and Tarhini, A., 2015. Accounting vs. market-based measures of
firm performance related to information technology investments. International Review of
Social Sciences and Humanities, 9(1), pp.129-145.
Appendix

11CONTEMPORARY ISSUES IN ACCOUNTING
Author/s Date Title Journal Type of
Paper
(Theoretica
l or
Empirical)
If empirical,
dependent &
independent
variables
Summary of
contribution to the
research question
(100 words)
Tayeh,
M., Al-
Jarrah,
I.M. and
Tarhini,
A., 2015
Apr, 15 Accounting vs.
Market-based
Measures of
Firm
Performance
Related to
Information
Technology
Investmentsvs.
Market-based
Measures of
Firm
Performance
Related to
Information
Technology
Investments
Internationa
l Review of
Social
Sciences and
Humanities
Empirical Information
technology-
Independent.
Firm
performance-
dependent
Several learners
believe the
Information
Technology (IT)
and its suppleness
as an enabler
to attain the
desired
competitive return,
measured as a
strategic weapon,
and as a
vital support to
operational as well
as strategic
business
procedures. As
firms that have
attained
Information
Technology -
business strategic
can develop a
strategic
competitive
benefit that can
offer them with
enhanced
visibility,
competence and
productivity to
compete in altering
markets; this study
intends to reassess
and talk about the
dimensions/metric
s
of performance,
and the manner in
which Information
Systems
researchers

12CONTEMPORARY ISSUES IN ACCOUNTING
evaluate firm
performance in
association to
investments in IT
and