University Accounting Information System Report: KPI Analysis

This report examines the application of Key Performance Indicators (KPIs) within Accounting Information Systems (AIS). It explores various aspects of measurement, categorizing KPIs into quantitative, qualitative, leading, lagging, and other types. The report emphasizes the importance of well-defined, quantifiable, and communicated KPIs that align with organizational goals. It distinguishes between financial KPIs, such as net profit, cost analysis, and days sales outstanding, and non-financial KPIs including process metrics, customer metrics like customer lifetime value, and people metrics like employee turnover rate. The report highlights the need for organizations to select KPIs relevant to their specific industry and strategic objectives. It references several academic sources to support its analysis of KPI measurement and its impact on business performance.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting Information System
University Name
Student Name
Authors’ Note

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Description of different aspects of measurement within key performance indicators
Key performance indicators essentially refer to one of the most important ways of utilizing
measurement as well as analysis of performance. Dillard & Yuthas (2013) asserts that there
are different categorization of performance indicators namely quantitative indicators,
qualitative indicators, leading indicators, lagging indicators, input indicators, process
indicators, output indicators, practical indicators, directional indicators, actionable indicators
and financial indicators.
The primary aspects of measurement of KPI are that KPIs need to be well defined and
quantifiable and have the need to be communicated properly through the entire corporation
(Adenike & Michael, 2016). In addition to this, KPIs also need to be crucial for the purpose
of achievement of firm’s goals and need to be applied to the line of the business of the
corporation.
Essentially there are both financial as well as non-financial indicators.
As rightly put forward by Dillard & Yuthas (2013), financial KPIs necessarily revolve around
particularly revenue as well as profit margins. Basically, the basic metric founded on profit is
known as net profit. Net profit also reflects the total amount of firm’s revenue that are treated
as profit for a specific period after taking into account all the expends of the firm, together
with the taxes along with the taxes as well as interest for the similar time period. As net profit
can be computed in amount, it needs to be converted into revenue percentage and can be used
as a measure or dimension of carrying out comparative analysis. Again, cost is yet another
important financial metric that helps in enumeration of the cost effectiveness and discover the
most appropriate manners to lessen and handle the costs of the corporation. Hassan et al.,
(2017) mentions that days sales (outstanding) of a business concern takes into account the
accounts receivable of the firm and divides the same by the total number of sales of the firm

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in credit. In this case, the lesser the value the better is the firm doing. This too can help in
gauging the financial performance of the business concern. Again, the costs of goods sold
matches different production costs of the products sold by the firm in order to derive better
idea regarding the mark up as well as actual profit of the business concern (Ismail & King,
2014).
There are several non-financial metrics such as process metrics, customer metrics and people
metrics among many others. Important process metric such as customer support tickets helps
in analysing the overall number of firm’s new tickets, total number of different resolved
tickets, time taken for resolution. This in turn assists in the process of development of the best
customer support and service department in the business and can help in indicating the level
of performance of the firm. Customer metric such as customer lifetime value is another non-
financial metric that helps in minimization of cost that is not the only way of optimization of
acquirement of customers (M Ancini et al., 2014). However, people metric namely employee
turnover rate is yet another metric or dimension of measurement of performance that helps in
the process of determination of employee turnover rate and takes number of members of
staffs who have departed and divide the same by the average number of members of the staff.
It is not that one metric is better or more important than the other. However, there are certain
performance metrics or dimensions that are right for one organization and this selected metric
might be inappropriate for another business concern (Simkin et al., 2014). Therefore, it is
important to make sure to study the performance indicators and select the ones that are
appropriate for a specific industry. Essentially, KPIs need to match the firm’s strategy and not
only the industry.

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References
Adenike, A. T., & Michael, A. A. (2016). Effect of Accounting Information System Adoption
on Accounting Activities in Manufacturing Industries in Nigeria.
Dillard, J., & Yuthas, K. (2013). Critical dialogics, agonistic pluralism, and accounting
information systems. International Journal of Accounting Information Systems, 14(2),
113-119.
Hassan, H., Nasir, M. H. M., & Khairudin, N. (2017). Accounting Information Systems.
In SHS Web of Conferences (Vol. 34). EDP Sciences.
Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting
information systems in small and medium sized Malaysian manufacturing
firms. Journal of Information Systems and Small Business, 1(1-2), 1-20.
M Ancini, D. A. A., Vaassen, E. H., & D Ameri, R. A. A. (2014). Accounting information
systems for decision making. Springer,.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting
information systems. John Wiley & Sons.