ACCOUNTING INFORMATION SYSTEM AND

COMPANY PERFORMANCE AT SMALL

AND MEDIUM ENTERPRISE (SME'S)

BY

AMIR ADAN MOHAMED

NASRO SHIRE HASSAN
AHMED ISAK NUR

A GRADUATION PROJECT SUBMITTED IN

PARIAL FULFILLMENT OF THE REQUIREMENT
FOR THE DEGREE IN BACHELOR OF SCIENCE
IN ACCOUNTING

FACULTY OF MANAGEMENT SCIENCES

SIMAD UNIVERSITY

JUNE, 2016
 ABSTRACTA (English)

The study aims at examining the Relationship between accounting information system

and company performance at Small and Medium Enterprise in Mogadishu Somalia, the

study serves these objectives first is to Examine the relationship between system quality

and company performance at Small and Medium Enterprise scale and also to find out the

correlation relationship between Information Quality and company performance at

SME's in Mogadishu, The questionnaire employed in the study was an adapted

questionnaire. Furthermore, the target population of study was the service companies in

Mogadishu, particularly Hormuud, Somtel, Seven Star Hotel and Gabow Hotel. sample

size of the study was 86 respondents of some SME's operate in Mogadishu Questionnaires

were found useful for the purpose of the study representing of the total questionnaire

distributed. Data collected was analyzed using statistical package for social science

(SPSS) frequency table, percentage and mean score analysis while the non-parametric

statistical was used to test the formulated data analysis package/software. The results of

the findings shows that system quality have a positive influence on performance of SME's

also information quality have a positive significance correlation on performance of

SME's in Mogadishu. also the study recommends that Small and medium size enterprises

owner-managers ought to develop competencies in order to ensure quality of accounting

information in form of relevant, accurate, understandable and reliable information for

better decision making and improved performance.

II
 ABSTRACT B ( Somali)

Baadhitaanka ayaa lagu higsanayaa in uu baadho Xiriirka u dhexeeya nidaamka

macluumaadka xisaabaadka iyo waxqabadka shirkadda ee Yaryar iyo kuwa

Dhexdhexaadka Enterprise ee Muqdisho Soomaaliya, waxbarasho waxey u adeegeysa

ujeeddooyinka hore waa in imtixaanaa xidhiidhka ka dhexeeya tayada nidaamka iyo

waxqabadka shirkadda ugu baaxadda Enterprise Yaryar iyo kuwa Dhexdhexaadka iyo

sidoo kale in la helo xidhiidhka xiriirk ka dhexeeya Tayada Macluumaadka iyo

waxqabadka shirkadda ee SME ee Muqdisho, su'aalaha ay ku shaqeeysay daraasadda

aya ahayd su'aalaha loo habeeyey. Intaas waxaa sii dheer, dadka diirada daraasadda

ahaa shirkadaha adeegga ee magaalada Muqdisho, gaar ahaan Hormuud, Somtel,

Toddoba Star Hotel iyo Gabow Hotel. cabir muunad daraasadda ahaa 86 jawaabeyaasha

of qaar ka mid ah SME ee ka shaqeeya Muqdisho Weydiimo laga helay faa'iido u

ujeeddada daraasadda oo wakiil ka ah su'aalaha guud qaybiyey. Xog laga soo ururiyey

ayaa lagu falanqeeyay isticmaalaya xirmo tirakoobka for cilmiga bulshada (SPSS) miiska

soo noqnoqoshada, boqolkiiba oo macnaheedu falanqaynta score halka tirakoobka non-

parametric waxaa loo isticmaalaa in lagu tijaabiyo xirmo falanqaynta xogta / software ka

la diyaariyey. Natiijooyinka Natiijooyinka waxay muujinaysaa in nidaamka tayada ay

leeyihiin saamayn togan ku saabsan waxqabadka tayada macluumaadka ay sidoo kale

SME ee ay leeyihiin xiriir ah muhiimadda wanaagsan ku waxqabadka ee SME ee

Muqdisho. Waxa kale oo waxbarasho waxay ku talineysaa in yaryar iyo shirkadaha size

dhexdhexaad ah milkiilaha-maamulayaasha waajib ah in la horumariyo aqoonta si loo

hubiyo tayada tirinaya macluumaadka foomka macluumaad la xiriira, sax ah, la fahmi

karo oo lagu kalsoonaan karo, waayo, go'aan qaadasho wanaagsan iyo horumarinta.
 DECLARATION A

We hereby declare that this project is the result of our own investigations, except where

otherwise stated. Other sources are acknowledged by reference notes giving explicit

references and a bibliography is appended. We also declare that it has not been previously

or concurrently submitted as a whole for any other degrees at the SIMAD UNIVERSITY.

Name of the Candidate: Ahmed Isak Nur

Signature:

Date: / / 2016

Name of the Candidate: Nasro Shire Hassan

Signature:

Date: / / 2016

Name of the Candidate: Amir Adan Mohamed

Signature:

Date: / / 2016
 DECLARATION B

I officially state that I have supervised and read this study and that in my opinion; it

conforms to acceptable standards of academic presentation and is fully adequate. I hereby

also confirm that research proposal was conducted in accordance with degree regulations

and University Research Project Manual (RPM).

Name of the supervisor: Mohamed Abdulahi Mohamed

Signature :

Date : / / 2016

V
 APPROVAL SHEET

This project entitled" Accounting Information System and Company performance at Small

Medium Enterprise Scale (SME's) " prepared and submitted by: Ahmed Isak Nur, Nasro

Shire Hassan and Amir Adan Mohamed partial fulfillment of the requirements for the degree

of Bachelor of Accounting has been examined and approved by the panel on oral examination

with a grade of PASSED.

Name and Sig. of Chairman of the panelist Date: / /2016

Name and Sig. of Panelist Date: / /2016

Name and signature of research secretary Date: / /2016

Name and Sig. of Dean, faculty of Management Science Date: / /2016

 DEDICATION

We dedicate this work to the almighty for his gift of life to us, our parents that we

appreciate their endless love, care, moral and spiritual guidance and who taught us

control, patience, and self-righteousness and our supervisor who has given us any

kind of support during preparation this project at the university .May Allah

reward and keep them prosperous and wellbeing. May the almighty bless them

abundantly?
 ACKNOWLEDGEMENT

We would like to take the opportunity to acknowledge the support and help of all who

have assisted us in the research. Without their contribution and advice, we would have

never been able to progress with the work in the thesis. Firstly, the first and greatest thank

belongs to Allah S.W.T, Indeed, without His Help and Will, this thesis would not have

been possible to complete. Secondly, we would like to sincerely thank our thesis

supervisor, Mr. Mohamed Abdulahi Mohamed, for his guidance, support, technical

knowledge and encouragement in the whole research process as well as giving us

extraordinary experiences throughout the work. Thirdly, we are fully indebted to our

family and friends for their moral, spiritual and financial support during our period of

study. Without their continued support, this may have not been achieved. Our love for

them endures for a life time. Fourthly we would like to thank our dear research lecturer,

Dr Bashir Abdisamad Hareed who led us through the first stages of our research work

when we had no understanding it at all. Finely, we would like to show our gratitude to the

administration of the faculty of Management science specially dean of the faculty Mr

Mukhtar Hassan Mohamed.

 Table of Contents
ABSTRACTA (English).......................................................................................... II
ABSTRACT B ( Somali)......................................................................................... III
DECLARATION A............................................................................................... IV
DECLARATION B................................................................................................ V
APPROVAL SHEET............................................................................................. VI
DEDICATION................................................................................................. VIIVII
ACKNOWLEDGEMENT..................................................................................... VIII
LIST OF TABLES............................................................................................... XI
CHAPTER ONE.................................................................................................. 1
INTRODUCTION................................................................................................ 1
1.1 BACKGROUND OF THE STUDY................................................................... 1
1.2 PROBLEM STATEMENT.............................................................................. 3
1.3 OBJECTIVES OF THE STUDY...................................................................... 4
1.4 RESEARCH QUEASTION............................................................................ 4
1.4.1 Research questions.................................................................................... 4
1.6 SIGNIFICANT OF THE STUDY..................................................................... 5
1.7 OPERATIONAL DEFINITION....................................................................... 5
CHAPTER TWO................................................................................................. 7
LITERATURE REVIEW....................................................................................... 7
2.0 INTRODUCTION.............................................................................................. 7
2.1 HISTORY OF ACCOUNTING INFORMATION SYSTEM..................................... 7
2.2 ACCOUNTING INFORMATION SYSTEM........................................................ 8
2.2.1 SYSTEM QUALITY.............................................................................. 10
2.2.2 INFORMATION QUALITY..................................................................... 10
2.3 PERFORMANE OF SMALL AND MEDIUM ENTERPRISE (SME'S)....................11
2.3.1 Financial Measures............................................................................... 14
2.3.2 Non Financial Measures........................................................................ 14
2.4 PRIOR STUDY OF ACCOUNTING INFORMATION SYSTEM AND PERFORMANE OF
SMALL AND MEDIUM ENTERPRISE (SMES)..................................................... 15
2.5 SUMMARY.............................................................................................. 18
CHAPTER THREE............................................................................................ 19

I
X
METHODOLOGY............................................................................................. 19
3.0 INTRODUCTION...................................................................................... 19
3.1 RESEARCH DESIGN................................................................................... 19
3.2 RESEARCH POPULATION......................................................................... 19
3.2.1............................................................................................. Sample Size
20
3.2.2.................................................................................... Sample Procedure
20
3.3 RESEARCH INSTRUMENT........................................................................ 20
3.3.1................................VALIDITY AND RELIABILITY OF THE INSTRUMENT
20
3.4 DATA GATHERING PROCEDURE............................................................... 21
3.5 DATA ANALYSIS...................................................................................... 21
3.6 ETHICAL CONSIDERATIONS...................................................................... 22
3.7 LIMITATIONS.......................................................................................... 23
CHAPTER FOUR.............................................................................................. 24
FINDINGS AND DESCUSSION........................................................................... 24
4.0 INTRODUCTION....................................................................................... 24
4.1 DEMOGRAPHIC INFORMATION OF THE RESPONDENTS............................... 24
4.2 DATA PRESENTATION AND ANALYSIS......................................................... 26
4.2.1 CORRELATION ANALYSIS BETWEEN THE VARIABLES............................ 29
4.3 MAJOR FINDINGS.................................................................................... 31
4.4 DISCUSSIONS.......................................................................................... 32
CHAPTER FIVE................................................................................................ 34
CONCLUSION AND RECOMMENDATION.......................................................... 34
5.0 INTRODUCTION....................................................................................... 34
5.1 CONCLUSIONS......................................................................................... 34
5.2 RECOMMENDATIONS.............................................................................. 35
5.3 FUTHER RESEARCH.................................................................................. 36
APPENDIX A QUESTIONNAIRE........................................................................ 44

X
LIST OF TABLES

Table 3-1 Validity and Reliability..................................................................................21

Table 3-2 Mean Range and Interpretation.........................................................................22

Table 3-3 Target Companies.............................................................................................22

Table 4-1 Demographic Characteristics of the respondents...............................................26

Table 4-2 System Quality...................................................................................................28

Table 4-3 Information Quality...........................................................................................29

Table 4-5 Relationship between AIS variables and company performance....................31

X
I
 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Globally, Accounting Information System can be use for education and learning, there is a

lot of accounting Information aimed for different field accounting, include Financial, Management,

Cost, Intermediate, Advanced accounting and others. Such information is used learning purpose

and have relation with the accounting information system about the business used for financial

reporting purpose. Another understanding accounting information is that it covers information used

to prepare financial statement which report the results and financial position of the business to the

to the decision makers. Accounting is the language of the business that can tell with reasonable

accuracy the degree of success an organizations has achieved in approaching its financial goal of

profit. Accounting System can be defined as records, procedures, and equipment that routinely deal

with the events affecting the financial performance and position of the organization, (Horngren and

Foster, 1975).

According to Boochholdt (1999) defines accounting information system as system that

operate functions of data gathering, processing, categorizing, and reporting financial events with

the aim is to provide relevant information for purpose of score keeping.

Attention directing and decision making. According to Romney and Steinbart (2000)

define an accounting information system as a system that processes data and transactions to grant

users with information they need to plan, control and operate their business .

The definition of this Study is derived from Romney and Steinbart (2000) Accounting

Information System is the collection, storage and processing of financial and accounting data for
1
reporting to the decision makers internally by the management and externally by other interested

parts. To guarantee the above characteristics each business must have people, accounting

procedures, software to process information and control System to control all purpose. All these

means are called Accounting Information System, an Accounting Information System (AIS) is a

system of collection, storage and processing of financial and accounting data that is used by the

decision makers . An Accounting Information System generally is a computer based method for

tracking Accounting activity in combination with information technology resources, the resulting

statistical reports can be used internally by the management or externally by other interested parts

including investors, creditors and tax authorities, (Longenecker, 2008).

All organizations need information in order to make effective decision. In addition, all

organizations has certain business process that they are continuously engaged in a business process

is a set of related, coordinated, structu'red activities and tasks that are performed by person or by o

computer or machine and help accomplish a specific organization, to make effective decision,

organization must decide what information they need to make decision, and how together and

process and data needed to produce the information. The data gathering and processing is often tied

to the basic business processes in organization,(Mashall,Paul,nd).

The purpose of accounting system is to provide an orderly method for gathering and organizing

information about the various businesses transactions so that it may be used as an aid to manage in

operating the business,(Copeland and Daschar, 1978).

In Somalia during last decade some service organizations were created these companies

may often make decisions regarding operational improvements or selecting new business

opportunities for maximizing the companys profit. But the relevant information required for

planning are not available at the appropriate time, there is bound to be poor planning, inappropriate
decision making, poor priority of needs, defective programming or scheduling of activities

(Gordon, 1993).

However, in our best awareness, the role of Accounting Information System Mogadishu

seems to be unclear, therefore, this study will investigate Accounting Information System and

Company Performance specially Small and Medium Enterprise scale.

1.2 PROBLEM STATEMENT

Accounting Information System ( AIS) collects, records, stores, and process accounting and

other data to provide information for decision makers and also financial report has to provide

relevant, reliable, complete, timely, understandable, verifiable, and accessible information to meet

the needs of both internal and external users of financial report in order to facilitate for decision

making process. Romney and Steinbart (2000). According to Lallo and Selamat (2014) and Saira et

al. (2010) they suggest that AISs functions are not only for the purpose of producing financial

reports. It role goes further than this traditional perspective. AIS should be utilized to take account

of planning and managing business activities. Moreover AIS is the complete of the related

components that are place together to collect information, raw data or normal data and transform

them into financial data for the purpose of reporting them to decision makers (Mahdi Salehi, vahab

rostami and Abdolkarim Mogadam, 2010). Additionally Small and Medium Enterprises (SMEs)

are responsible for most net job creation and they make an significant contribution to productivity

and economic growth. They play a important role in all economies and are the key drivers of

innovation and growth (Ali, Rahman, & Ismail, 2012; Harash, Al-Tamimi, & Al-Timimi, 2014a;

Harash, Al-Timimi, & Alsaadi, 2014c & d). According to the Organization for Economic

Cooperation and Development (2006:21) SMEs are now documented worldwide to be a key source

of dynamism, innovation and flexibility.

 Unfortunately, some companies are using accounting information system and producing

financial information but the relevant, reliable, complete, timely, understandable, verifiable, and

accessible of their financial statement are ambiguous, because the system quality and information

quality are not reliable.

If these companies fail to use proper AIS , their financial report will mislead management,

investors, creditors, and regulatory agencies. it will also cause to decrease the performance of

SME'S and various performance problems. we propose to research the relationship between

Accounting Information System and performance of SME regarding how system quality, and

information quality of AIS at a minimal cost for service companies in Mogadishu Somalia.

1.3 OBJECTIVES OF THE STUDY

1. To investigate the relationship between system quality and SME'S performance of

Telecommunication companies and Hotels in Mogadishu Somalia.

2. To find out the relationship information quality and SME'S performance of

Telecommunication companies and Hotels in Mogadishu Somalia.

1.4 RESEARCH QUEASTION

1.4.1 Research questions

1. What is the relationship between system quality and company performance of Small and

Medium enterprise scale?

2. What is the relationship between information quality and company performance of Small

and Medium enterprise scale?

 1.5 SCOPE OF THE STUDY

The study was purposely focus on the accounting information system and company performance of

Small and Medium Enterprise scale of service companies in Mogadishu Somalia specially

Telecommunication and Hotels and was conducted between September, to June 2016. The study

will be conducting at Telecommunication companies and Hotels in Mogadishu. The data was

collected using questioners. The study specifically seeked to determine the relationship between

accounting information system and Company performance of Small and Medium Enterprise

particularly service companies in Mogadishu.

1.6 SIGNIFICANT OF THE STUDY

The findings of the study are expected to help the following parts:

Business Consultants. The findings of this study will be influential guiding business consultants

when accounting policies for the companies.

The finding may act as a guiding document on the approach those companies when making

decisions on the accounting procedures in their firms.

To the researchers and scholars. The findings may act as reference for the future researchers who

may choose to carry out similar research in the related.

1.7 OPERATIONAL DEFINITION

Accounting Information System collects stores and processes of financial and accounting data that

is used by decision makers. It measures timely and accurate of financial and statistical reports for

internal and external users.

System Quality is defined as technical characteristics of flexibility, ease of use, reliability, short
response time and useful specific function.( Zhang et al.,2005)
Information Quality is the good quality and reliable information that is crucial t the success of the

system (HongjiangXu,2010).

SME'S a small enterprise is an enterprise employing a minimum of 5 people and maximum of 50

people; and/or has an annual sales/revenue turnover of maximum of Ugandan shilling 360 million

of total asset, while a medium enterprise is defined as enterprise employing 50 more people and/or

has an annual revenue of Ugandan shilling more than 360 million of total asset. (MFPED,2008).

the performance of a business over a particularly period of time, expressed in terms of in general

profit and loss during that time. Evaluating financial performance of a business allows decision

makers to judge the outcome of business strategies and tasks in purpose economic terms.

Non-financial Performance is also known as the objective performance measures of performance

that are not found in charts of accounts and complements accounting measures and gives data on

advancement relative to customer requirements or competitors.

 CHAPTER TWO

LITERATURE REVIEW

2.0INTRODUCTION

This chapter explains past relevant literature from other researchers who have conducted research

in the same field. It contains opinions, attributes, research outcomes and conclusions thereon from

previous research work done by other people and organizations. Section 2.2 discusses the

theoretical literature. Section 2.3 presents the empirical literature. Section 2.4 looks at the local

studies of the case study and section 2.5 summarizes the literature review. This chapter focus

mainly on related to Accounting Information System and performance of Small and Medium

Enterprise, prior study and summary & conclusion.

2.1 HISTORY OF ACCOUNTING INFORMATION SYSTEM

Accounting Information Systems have been generally adopted by organizations within both the

public- and private sector (Rom & Rohde, 2007). AIS as an academic topic educated at

Universities is defined as (an example): "a specialized subsystem of the IS that collects, processes,

and reports information related to the financial aspects of business events." (James, 2013).

However, we have a broader point of view and AIS covers not only the crossroads of accounting

and information system, but also accounting and information system as separate domains as noted

by Steinbart (2009). For us AIS also covers both structured and unstructured financial and non-

financial information for decision making, management control and performance management.

Earlier research within AIS has been reported to be haltering and not reaching its full potential

(Granlund, 2011; Sutton, 2009; Grabski et al, 2011). The aim of this research program is for that

reason to offer an increased understanding of AIS by creating new knowledge within the research
fields Accounting, Management, Information Technology and Information System as well from the

connection of the research fields.

2.2 ACCOUNTING INFORMATION SYSTEM

According to Romney and Steinbart (2000) define an accounting information system a system that

processes data and transactions to give users with information they need to plan, control and

operate their business. It suggests that accounting information system functions are not only for the

purpose of producing financial reports. It role goes beyond this traditional perspective. Accounting

information systems are viewed as a system that helps management in planning and controlling

processes by providing relevant and reliable information to decision making (Gordon & Miller,

1976). Accounting information system should be used to include planning and managing business

activities. It could also be used as a controlling mechanism such as budgeting. Therefore, full

adoption of the system is essential to fully achieve the systems benefits.

Similarly to that aide( Hollander et al. 1996). said AIS used to be focused on the recording ,

summarizing and substantiation of data about business financial transaction. these functions were

performed for the various groups within the organization that were that were concerned about the

respective decisions associated with financial accounting, managerial accounting, and tax

compliance issues.

Similarly to that aid Chenhall (2003) argued that the aim of AIS has risen from the simple

condition of formal and financial information to cover a broader range of information . the use of

enterprise resource planning (ERP) technology has facilitated the embodiment of this new vision

An ERP is a complex set of computer application are planned to integrate the process and

function within same company. this system apples to present a holistic vision of company's
business by sharing a common and incorporated data basis. In the era of ERP system, the AIS has

became richer. The amount of information has became more important, and the data are updated

and relevant. Thus, The AIS provide both historical and future accounting information that covers

financial accounting, management control and financial analysis. The ability of such an

information system will improve business performance. (Hazar, Mohamed, 2013). In contrast to

above aide (Chabellier, 1994) said that accounting rules, Financial accounting provides the

demonstration of the financial situation of companies. This representation is communicated

through financial statement at the end of each accounting period and accord with legal necessities

and tax regulations.

In contrast to the above decision the AIS have been limited before preparing financial

statement for legal purpose and producing historical accounting and financial information (Mia,

1993). The best advantage of AIS is to adopt the changing environment and better management of

arm's length transactions and high degree of competitiveness. There is also a enhancement to the

active nature of firms with a greater flow of information between different staff levels and the

possibility of new business on the network and improved external relationships for the firm, mainly

with a foreign customers assessed through the firm's web. ( Elana Urquia, Grande, Raquel Perez

Estebanez and Clara Munoz Colomina, 2010)

it seems that that the researchers have different perspective towards AIS specifically historical

and forecasting some of the researchers say that the role of AIS is to prepare financial reports while

others say its broader than that however in our view point it is possible that the argument also

exists in Somalia.
2.2.1 SYSTEM QUALITY

According to Guvence (2005) defined system quality as the technical characteristics of the

information system. According to Zhang et al. (2005), the system quality consist of its flexibility,

ease of use, reliability, short response time and useful specific functions. Ifinedo and Nahar (2007)

offered the characteristics of flexibility, ease of use, ease of leaning and integration to define the

quality of the system.

Mclearn (1992) projected that the success of information system is strong-minded by the

information system quality ( the technical quality of the system ) and the output quality of

information system ( the quality of information is produced ). These dimensions influence the use

level and user response to the information system ( user satisfaction). As a result, the user attitude

( individual impact) and organizational performance ( organizational impact ) are influenced.

Accordingly, gable et al. (2003) developed a model that redefines the scope used in the

original model of Delone and Mclearn (1992). In fact they eliminated the use and user satisfaction

dimensions in their model. The dimension retained are thus information quality, EPR system

quality, individual impact and organizational impact. In addition Gable et al. (2003) , Saeed and

Abdinnour -helm (2008) stated that system quality and information quality are two major

characteristics of information system.

2.2.2 INFORMATION QUALITY

Management is engaged with different type of activities which require good quality and reliable

information. Quality information is one of the competitive advantages for an organization. In an

accounting information system, the quality of information provided is crucial to the success of the

10
system (HongjiangXu, 2010). Quality of information generated from AIS is very important for

management (Essex & Magal, 1998). Business organizations often use accounting information

11
system to provide support for management decisions. Support usually includes financial analysis

from company accountants. Analysis is often taken for the company's accounting information

system. Using business technology, this system can process many amounts of documents

electronically for owners and managers (Osmond vitez, 2011).

At the some point said in accordance with Booth et al. (2000), Grandlund and Malmi

(2002), Galaniet al. (2010) and Kanellou and Spathis (2011). The information quality influence

accounting practices. One possible explanation for this result proposes that the complete

information provided by the AIS would allow companies to diversify their use of accounting

practices. Companies will use general accounting practices, cost accounting and financial

management in response to the new requirements of AIS that are producing fast, accurate, frequent,

analytical, predictive and forward-thinking company information.

2.3 PERFORMANE OF SMALL AND MEDIUM ENTERPRISE (SME'S)

In recent years, firm performance has received considerable attention as a substantial

academic subject for investigating SMEs in the financial and management literature. Researchers

and academicians have chosen different approaches for the investigation of this issue.

Performance is a widely used concept in many areas. generally, performance is a measure

of how well a mechanism/process achieves its purpose. In enterprise management, Moullin (2003)

defines an organizations performance as how well the organization is managed and the value

the organization delivers for customers and other stakeholders. For the aim of this research,

performance is related to achieving stockholder/investor interests.

According to literature defining performance is a challenge across the world. Performance

and success have been defined in a variety of ways in the literature, and in any business, the
connected parties always want to see good performance in their business (Harash et al., 2014). A
wide variety of definitions of company performance have been future in literature (Ajanthan,

Balaputhiran, & Nimalathashan, 2013; Korir & Imbaya, 2013; Uadiale & Fagbemi, 2012).

literatures (Anderson & Reeb, 2003; Ittner & Larcker, 2003; Juhl, Kristensen, & stergaard, 2002;

Petersen & Schoeman, 2008; zer, 2012; Sacristn-Navarro, Gmez-Ansn, & Cabeza-Garca,

2011; Selvarajan et al., 2007; Thrikawala, 2011; Watson, 2007) defines performance as a measure

of how well a company can use its assets from its primary mode of business and generate revenues

( as cited in, Harash, Al-Timimi, & Radhi, 2014)

On the other hand, in the modern literature defines performance as the results of the activities of a

company or investment over a given period.

Performance is so common in research about SMEs management that its arrangement and

definition is not often explicitly necessary; instead its appropriateness, in no matter what form, is

unquestionably assumed (March & Sutton 1997). Performance can also be defined as the

achievement of specified business objectives measured against known standards, completeness and

cost (Davis & Cobb, 2010; zer, 2012; Sacristn-Navarro et al., 2011; Thrikawala, 2011).

The performance is the result of strategies the company employs to achieve market-oriented

and financial goals (Harash et al., 2014). The stage of success of a company within the SMEs

sector is measured through its performance based on a selected period of time. In business studies,

the concept of success is sometimes used to refer to a companys performance (Islam et al., 2011).

Given that SMEs repeatedly participate an important role in improving the economy of a country

and leads to economy development globally, this makes performance as one of the key issues for

SMEs where management is considered. Usually a company's performance is seen from the level

of manages to achieve its purposes and goals (Harash et al., 2013).

 A variety of scholars have attempted to provide a clear definition of performance, but they

had yet to come to an agreement over a common definition, particularly concerning some aspects

of terminology issues, critical levels, and the conceptual basis for assessment (Harash et al., 2013).

Performance of a company can be defined in different ways depending on the questions in mind

when we inquire about a companys performance. The findings of many studies have not managed

to provide a common definition to point out ascertain performance (Harash et al., 2014).

Regardless of the differences among researchers on what the definition of performance is, they

have the same opinion that it is generally associated with expectations for success (Davis & Cobb,

2010; Harash et al., 2014 & d; Islam et al., 2011).

According to Richard, Devinney, Yip, and Johnson (2009) performance encompasses three

specific areas of company outcomes: (i) financial performance (profits, return on assets, return on

investment, etc.); (ii) market performance (sales, market share, etc.); and (iii) shareholder return

(total shareholder return, economic value added, etc.).

SMEs performance can be measured using objective, subjective, or operational measures.

According to Previous studies Ittner and Larcker (2003), Juhl et al., 2002, Petersen and Schoeman,

(2008), and Selvarajan et al., (2007), the study suggest the goal approach as a combination measure

of SME performance. The goal approach measures performance using financial (objective) and

nonfinancial measures (subjective) measures (Dowling & Helm, 2006; Thrikawala, 2011; Watson,

2007). According to these literatures financial measures of performance can be referred to as the

results of a companys operation in monetary terms.

2.3.1 Financial Measures

Financial measures of performance are derived from the accounts of a company or can be found in

the companys profit and loss statement or the balance sheet. In addition, financial measures are

also referred to as objective measures because they can be independently measured and confirmed.

However, it is essential to introduce nonfinancial measures of performance in combination with

financial measures in order to fully measure performance (Ittner & Larcker, 2003; Juhl et al., 2002;

Petersen & Schoeman, 2008; Selvarajan et al., 2007).

2.3.2 Non Financial Measures

The non-financial measures are also known as the subjective performance measures of

performance (Petersen & Schoeman, 2008). Non-financial measures are measures not found in

charts of accounts of a company (Ittner & Larcker, 2003; Selvarajan et al., 2007). The use of

nonfinancial measures of performance complements accounting measures and gives data on

advancement relative to customer requirements or competitors and other non-financial objectives

that may be important in achieving profitability (Ittner & Larcker, 2003; Juhl et al., 2002;

Selvarajan et al., 2007).

In the modern literature, researchers have utilized measures financial and non-financial, as

the most important this measures in the measurement of SMEs performance. The study suggests

that no one measure of performance should be occupied on its own and to obtain a true measure of

how a company is performing, different measures (financial and non-financial) should be used

together on the basis of previous studies (Anderson & Reeb, 2003; Bhagat & Bolton, 2008; Davis

& Cobb, 2010; Dowling & Helm, 2006; Ittner & Larcker, 2003; Juhl et al., 2002; Petersen &

Schoeman, 2008; Sacristn-Navarro et al., 2011; Selvarajan et al., 2007; Thrikawala, 2011;

Watson, 2007). Therefore, in this study Performance measuring SMEs is measured by financial
measures and non financial measures.
2.4PRIOR STUDY OF ACCOUNTING INFORMATION SYSTEM AND PERFORMANE OF

SMALL AND MEDIUM ENTERPRISE (SMES)

According to SiamakNejadhosseiniSoudani (2012), investigated the usefulness of AIS for effective

organizational performance. the result of there study showed that although AIS is very useful and

have effect on organizational performance to listed companies in Dubai financial market (DFM)

but there is no relationship between AIS and performance management.

According to HazarDaoud and Mohamed Triki (2013) examined the influence of AIS in enterprise

resource planning (ERP) environment on firm performance. The results indicated that top

management involvement end external expertise have an impact on the AIS. Furthermore, they

showed that the accounting techniques used after ERP system adoption influenced firm

performance. The interaction effect of accounting staff competence with the accounting

information system had a positive impact on firm performance improvement.

One of the previous literature also the use of AIS can play a leading role in assisting SMEs

to performance small and medium enterprises better and stronger. Where, that many researchers

(Amidu et al., 2011; Ismail, 2007; Grande et al., 2011) are of the view that the role of using AIS is

important to enable SMEs to develop performance there (Ali et al., 2012; Lallo & Selamat, 2013).

To achieve this goal, SMEs need to be reactive to the changes in the environments, in particular to

the information technology revolution ( as cited in, Harash, Al-Timimi, & Radhi, 2014).

According to Mahdi Salehi (2010) an accounting information system, a permanently user

oriented system is the collection and recording of data and information regarding events that have

an economic collision upon organizations and maintenance processing and communicating of

information to internal and external stakeholders. The result of this study show that although AIS is

very useful to Iranian corporation, there is a gap between what accounting information system and
what should be. According to Ahmed S. Alanazi, Benjamin Liu and John Foster (2009) examined

the financial performance of 16 Saudi IPO firms that went puplic between 2003 and 2009, we

found that the performance deterioration was not due to the conflict between the original owners

and the new share holders issues

According to Yeniyurt (2003) and Gomes, Yasin & Lisboa, as traditionally practiced, is

limited

(2004) summarised the major inadequacies of traditional metrics in their literature

review; these weaknesses include:

Traditional accounting measures of performance are insufficient for strategic decisions (e.g.

Kaplan and Norton, 1992);

They are too historical and backward looking (e.g. Ittner and Larcher, 2003);

They are lack of analytical ability to explain future performance ( e.g. Ittner and Larcher,

2003);

They provide information on root cases (e.g. Ittner and Larcker, 2003);

They do not link the non-financial metrics to financial numbers (e.g. Kaplan and Norton,

1992)

They do not consider intangible assets(e.g. lehn and Makhija,1996)

There are too many measures, new measures are needed that have broader content, being

able to describe more with less numbers(e.g. Kaplan and Norton, 1992; Frigo and

Krumwiede,2000);

Traditional metrics do not aggregate from an operational level to a strategic level (e.g.

Kaplan and Norton, 1992; Frigo and Krumwiedw,2000)

Recent research development focuses on the relationship between SMEs performance of with the

sue of AIS (Amidu et al., 2011; Ismail, 2007). These studies recommended that there are positive

relationship between AIS and SMEs performance. A previous studies conducted by Ismail (2007),

Ismail and King (2005), and Saira et al. (2010) discovered that the use of AIS will be more capable

if the systems implementation is new information systems with the SMEs performance ( as cited

in, Harash, Al-Timimi, & Radhi, 2014).

Existing literature present humble evidence of the relationship between these AIS and

performance measures; though it is important to highlight the study made by Ismail and King

(2005) which discovered a positive relationship between AIS alignment and SME strategy and

performance measures.

In contrast the Spanish case, Naranjo-Gil (2004) posits an indirect relationship between

AIS and firms performance using the varying strategies that may be adopted by companies. This

study examined the use of AIS effect on the performance of SMEs( as cited in, Grande, Estebanez,

& Colomina, 2010).

Therefore this study is aimed, based on previous literature, at measuring the relationship

between the use of AIS by the SMEs in Mogadishu and Performance these Enterprises. This study

provides value added in accounting literature given the shortage of works dealing with the

relationship between the application and the use of AIS and performance indicators in SMEs in

Mogadishu.
2.5 SUMMARY

The main issue that was discussed in this chapter the relationship between Accounting

information system and Performance of Small and Medium Enterprise (SMES). Accounting

information system can serve a number of purposes.

There are statistics and figures you can use to determine the overall financial health of an

organization. Investors use Accounting information to determine if they should invest in a

corporation. Stockholders are always concern financial health of the organizations and they use

Accounting information to see if they are receiving a return on their investment. The researchers of

current study would emphases on the relationship between Accounting information system and

Performance of Small and Medium Enterprise (SMES)

 CHAPTER THREE

METHODOLOGY

3.0 INTRODUCTION

In this chapter the flowing issues will be explained. The research design, Research population,

Research instrument, and Data gathering procedure, Data analysis, Ethical consideration,

Limitation of the study.

3.1 RESEARCH DESIGN

This study was used correlation research design and research strategy was survey. The main

purpose is to explain the relationship between two variables, accounting information system and

company performance of small and medium enterprise scale. This design is considered suitable

because is to determine whether and to what degree a relationship exists between quantifiable

variables. So that questionnaire technique was used in collecting the primary data. However, this

study was used quantitative approach; Quantitative is any data collection technique (such as a

questionnaire) or data analysis procedure (such as graphs or statistics) that generates or uses

numerical data (Saunders et al, 2009).

3.2 RESEARCH POPULATION

The target population of this study was Small and medium enterprise operating in Mogadishu,

to determine the exact number of SME in Mogadishu will be difficult because the population of

SME's in Mogadishu is unclear since there is no data base available to access. However the

researchers was considered to select some Small and Medium Enterprise Scale specially

Telecommunication companies and hotels in Mogadishu. also the researchers were distributed the
questionnaire among the top managers, middle managers , financial directors and any other

employee enables to give us relevant data.

3.2.1 Sample Size

Choosing the exact sample size is a controversial issue among researchers, The Sample size

of this study was adopted from the study conducted by (Budiarto & Prabowo, 2015). the sample of

this study was selected 86 respondents from the Hotels and Telecommunication Companies in

Mogadishu and researchers will focus both Hotels and Telecommunication companies.

3.2.2 Sample Procedure

The sampling procedure of this study was used non-probability sampling technique, because the

population of this study is unknown, particularly purposive or judgmental sampling to meet

research objectives of the study. therefore, the researchers was used Judgmental sampling

techniques, one of the Non probability sampling techniques. This techniques was used to collect

focused information and chosen for the reason of the research topic.

3.3 RESEARCH INSTRUMENT

This study was used questionnaire as research instrument; questionnaire is a collection of items to

which respondents is expected to react in written and The main purpose of questionnaire is to

collect a lot of information over a short period of time Oslo et al, (2005). Because its suitable if the

population is large and time is limit. the researchers were used adapted Questionnaire from

(Oladejo, 2013). at the first two sections of information quality and system quality and the other

section self Administrated questionnaire by the researchers.

3.3.1 VALIDITY AND RELIABILITY OF THE INSTRUMENT

Reliability of measures was an indication of the stability and consistence with which the instrument

measures the concept and helped to assess the goodness of measure (Sekaran, 2005). Furthermore,

20
the reliability of measure was indicating the extent to which its without bias (error free) and hence

ensures consistent measurement across time and across the various items in the instrument. The

21
reliability test was conducted to determine the internal consistency of the measures used, the result

of the reliability test were provided here:

Table 3.1: Validity and Reliability of the Instrument

NO VARIABLES N ITEMS CRONPACH

ALPHA

1 Overall Alpha 3 .846

the above table shows that all variables have Cronbach Alpha values of more than 0.7.which makes

all variables accepted, internally consistent and the scale deemed reliable for further analysis.

3.4 DATA GATHERING PROCEDURE

In this study, the data required was collected through distributing questionnaire; the questionnaire

was distributed to the all selected members of each selected companies in Mogadishu. They fore,

the selection of this tool was guided by the objective of the study. after the research proposal is

accepted, the researchers established administrative process to get permission latter from

administration and record office to collect the study data within the selected SMEs in Mogadishu.

3.5 DATA ANALYSIS

The research put into use both traditional modern technology methods of data analysis, statistical

packages particularly statistical package for social science (SPSS version 16) will use in the

methods of the inferential statistics.

Table 3.2: Mean Range and Interpretation

Mean Range Scale Interpretation

1.00-1.75 Strongly agree Very High

1.76-2.5 Agree High

2.51-3.25 Disagree Low

3.26-4.00 Strongly Disagree Very Low

Table 3.3: Table Target Companies

NO Target Companies N Respondents

1 Hormuud 22

2 Somtel 22

3 7 Star Hotel 20

4 Gabow Hotel 22

Total 86

3.6 ETHICAL CONSIDERATIONS

The researchers make sure the researchers personal biases and opinions was not dominate for

other interests of the research and was given both sides fair consideration. The findings of the

research was kept not being disclosing under the condition of anonymity to avoid uncomfortable

and harming respondents.

The researchers were avoided any misbehavior during the date collection by protecting the

respondents rights and emphasizing keeping the confidentiality, the researchers also was
mentioned the all of the cited texts by referencing to their original authors , however it will be strict

all follow the standard ethics which protects the moral and the value of the respondent.

3.7 LIMITATIONS

The study would have the following limitations:

1. the internal limitations include the major one is the method will use is questionnaire, there

may be other suitable methods or mixed methods.

2. this study sampling procedure is non probability sampling technique that does not give

small and medium enterprise scale equal chance to participate the study.

3. Extraneous variable beyond the researchers control such as Respondents' honesty, personal

biases.

.
 CHAPTER FOUR

FINDINGS AND DESCUSSION

4.0 INTRODUCTION

The previous chapter discussed a detailed description of the research methodology.

therefore, in this chapter, the data was analyzed by using some statistical techniques. current

chapter has the following sections. Section 4.1 introduces the demographic data of the sample

based on data collected. Section 4.2 Data presentation and Analysis, Section 4.2.1 summarizes

descriptive of accounting information system. in Section 4.2.2 summarized descriptive of

performance of SME's. Section 4.3 discussed the relationship between Accounting Information

System( System Quality and Information Quality) and Performance at Small Medium Enterprise

scale. Section 4.4 presents the findings and the final section 4.5 presents the discussion of the

results.

4.1 DEMOGRAPHIC INFORMATION OF THE RESPONDENTS

The data comes from some selected companies in Mogadishu Somalia in relation to the

research objectives, and the implementation of accounting information system and performance at

SME's. the introduction statement of the research questionnaire was efficient the significance,

rationale and purpose of the study. Furthermore, the respondents have been given the confidence

that all data they provided will be used only for the purpose of academic research and will be

treated confidentially.
Table 4.1 Demographic Characteristics of the respondents.

Demographic characteristics Frequency Percentage

Male 66 76.70%
Gender Female 20 23.30%

Total 86 100%
18-30 years 21 24.40%
Age 31-45 years 57 66.30%
above 45 years 8 9.30%

Total 86 100%
Degree 22 25.60%
Qualification Master 19 22.10%
PHD 2 2.30%
Diploma 24 27.90%
Others 19 22.10%

Total 86 100%
Martial Single 31 36%
states Married 55 64%

Total 86 100%
Source: Primary Data 2016

Gender: Based on collected questionnaire, majority of respondents is composed male

76.7% of the respondents were male while 23.3 % were Female. this result shows that majority of

employees in most companies Somalia are male.

Age: The ages of the respondents who were participated the questionnaire aged 18-30

frequency were 21 with percentage of 24.4%, 31-45 aged frequency were 57 with percentage of

66.3%, while 45 and above aged frequency was 8 with the percentage of 9.3%. Therefore, the most

respondents of the questionnaire were the age 31-45 with 66.3%.This implies that majority of
manufacturing employees are Senior, fresh and active that have the ability to produce more output

if motivated positively.

Level of education: The education level of the respondents in the organizations as

appeared in the table. the most and clustered area of the whole respondents were in the level of

Diploma which shown that the number of bachelor respondents were 24 which results 27.9%, the

second respondents were in the level of Bachelor which shown that the number of Bachelor level

respondents were 22 which results 25.6%, the level of educations were Others which results 22.1%.

the rest level of education were Master which results 22.1% and Phd which results 2.3% The

whole of the respondents were valid.

Marital status: The frequency of the single were 31 with percentage of 36%, married frequency

were 55 with percentage of 64%,This result showed that the majority of employees are married due

to their being employed.

4.2 DATA PRESENTATION AND ANALYSIS

This section was presented the analysis of the data that was collected from the respondents

through a questionnaire in relation to the research objective. This section was classified into two

subsections. The first subsection was related to identify the relationship between System Quality

and performance of SME's, and the second section tries to react the relationship between

Information Quality and performance of SME's.

Table 4.2.1 System Quality

Descriptive Statistics
System Quality Std.
N Mean Deviation
System quality responds quickly to user requirements and that is easy
to use and would facilitate the use of advanced accounting practices.
86 1.36 0.529
System quality consist of its flexibility, ease of use, reliability, short
response time and useful specific functions
86 1.43 0.785
System quality does not omit important aspects of the events or
activities it measures. 86 1.97 0.727
The system quality of automated data collection speed up the proves
to generate financial statements and overcome human weaknesses in
data processing. 86 2.01 1.035
The system quality of data storage contributes to the integrity of the
financial reporting practice 86 2.07 0.732
Valid N (listwise)
86

The results shown in Table 4.2.1 suggest that overall respondents perceived that System

quality responds quickly to user requirements and that is easy to use and would facilitate the use of

advanced accounting practices with a high mean score of 1.36 out of 4. This falls under Agree

in accordance with the scale of the study, And that System quality consist of its flexibility, ease of

use, reliability, short response time and useful specific functions with a high mean score of 1.43 out

of 4. This falls under Agree in accordance with the scale of the study. Moreover, respondents

perceived that System quality does not omit important aspects of the events or activities it measures

with a high mean score 1.97 out of 4 which falls under Agree in accordance with the scale of the

study. Additionally, The system quality of automated data collection speed up the proves to

generate financial statements and overcome human weaknesses in data processing with the high

mean score of 2.01 which falls under Agree in accordance with the scale of the study. Also
respondents feel that The system quality of data storage contributes to the integrity of the financial
reporting practice with a high mean score of 2.07 out of 4. which falls under Agree in

accordance with the scale of the study.

Table 4.2.2 Information Quality

Descriptive Statistics
Information Quality
N Mean Std. Deviation
Accounting information system should provide relevant
information in real time and should frequently report on the
most important events and provide rapid feedback on a
previous transactions . 86 2.41 0.658
Information quality provide information in time for decision
makers to make decision. 86 2.26 0.636
Information quality should be available to users when they
need it and in a format they can use it.
86 1.94 0.802
Information quality is relevant information that reduces
uncertainty and improves decision making process
86 1.81 0.623
Information quality is free from error or biases, accurately
represents organizations events and activities.
86 1.64 0.529
Valid N (listwise) 86

The results shown in Table 4.2.2 suggest that overall respondents perceived that

Accounting information system should provide relevant information in real time and should

frequently report on the most important events and provide rapid feedback on a previous

transactions with mean a high score of 2.41 out of 4. This falls under Agree in accordance with

the scale of the study, And that Information quality provide information in time for decision

makers to make decision.with a high mean score of 2.26 out of 4. This falls under Agree in

accordance with the scale of the study. Moreover, respondents perceived that Information quality

should be available to users when they need it and in a format they can use it with a high mean
score 1.94 out of 4 which falls under Agree in accordance with the scale of the study.
Additionally, The Information quality is relevant information that reduces uncertainty and

improves decision making process with the high mean score of 1.81 which falls under Agree in

accordance with the scale of the study. Also respondents feel that The Information quality is free

from error or biases, accurately represents organizations events and activities with a very high

mean score of 1.64 out of 4. which falls under Strongly Agree in accordance with the scale of the

study.

4.2.1 CORRELATION ANALYSIS BETWEEN THE VARIABLES

This study was used by Pearson correlation to test whether there is a relationship between

Accounting Information System and company Performance at Small and Medium Enterprise scale

of some selected companies in Mogadishu-Somalia. this study was divided by two main factors of

system quality and information quality as well as dependant variable of company performance;

these were computed using SPSS transform<compute procedure after which Pearson linear

correlation was used to correlate these variable in order to test the pertinent research objective as

indicated in the subsequent subsections the Pearson linear correlation coefficient (PLCC)

The first objective of this study was to identify the relationship between System quality and

company performance at SME's in Mogadishu , Somalia. Table 4.2.3. Shows the results of

correlation analysis of the relationships System quality, Information quality, and company

performance Hence, System quality has a significant positive relationship with firm performance

(r=0.586 and p<0.01). Changes in AIS results in inconvenience system quality and information

quality Then, firms with greater System quality tend to achieve higher performance, increase

system stab, gain better bright future of the organization, and promote higher business

performance. In addition, The second objective of this study was to examine the relationship

between Information quality and company performance at SME's in Mogadishu , Somalia.

Information quality had positive influence on company performance at SME's in Mogadishu

Somalia. The correlation between information quality and company performance as table below

shows is 0.680. It states that a one level increase of information quality leads to 0.680 higher

company performance. The probability of this correlation coefficient occurring by chance is .000.

This coefficient shows that there is a statistically significant moderate positive relationship between

Information quality and company performance (r= 0.680, and p < 0.01).

Table 4.2.3 Relationship between AIS variables and company performance

Correlations
Informati
on
System Quality Performance
Quality

** **
System Pearson

Quality 1 .822 .586

Correlation
Sig. (2-tailed) .000 .000
N 86 86 86
Information Pearson ** **

Quality .822 1 .680

Correlation
Sig. (2-tailed) .000 .000
N 86 86 86
Performance Pearson
** **
.586 .680 1
Correlation
Sig. (2-tailed) .000 .000
N 86 86 86
**. Correlation is significant at the 0.01 level (2-tailed).

30
4.3 MAJOR FINDINGS

This section presented the findings derived from the distributed questionnaires.

The main purpose of this study was to investigate and explore whether there is a

relationship between accounting information system and performance of SME's in some

selected companies in Mogadishu-Somalia. to achieve these objectives the respondent

asked to react several items by ticking according to their perception. Data on these

objectives were analyzed using SPSS16 Descriptive statistics tool that indicate the means

and standard deviation as following;

The research teams first objective: to investigate the relationship between system

quality and company performance of SME's in some selected companies in Mogadishu

Somalia. Thus the researchers found during conducting of the research study, that the

system quality have a positive influence on performance of SME's in some selected

companies in Mogadishu Somalia.

The research teams second objective: to find out the relationship between information

quality and company performance of SME's in some selected companies in Mogadishu

Somalia. the study found that there is positive relationship between Job training gives the

employee the system quality and company performance of SME's in some selected

companies in Mogadishu Somalia. Finally two variables ( system quality and information

quality to company performance) have a strong positive correlation with a significant of

0.00.

31
4.4 DISCUSSIONS

This study investigates the relationship between Accounting Information System

and Company performance at small and medium enterprise scale and also to find out the

relationship between system quality and company performance and to examine the

relationship between information quality and company performance. To achieve the

objectives of the study, the respondents were asked to respond several items by ticking

according to their believe. Data on these objectives was analyzed using SPSS descriptive

statistics tool. The study has used an adapted questionnaire to collect the required

information about the objectives of the study. The sample size of the study was 86. The

items of the questionnaire were categorized into two categories, Accounting Information

System, Company performance. Examples of Accounting Information System are System

quality does not omit important aspects of the events or activities it measures,

Information quality provide information in time for decision makers to make decision.

And examples of Company performance are Hold training courses for the accountants in

the adoptability of accounting information system, The preparation of financial statement

become easier due to accounting information system.

The study found that Accounting Information System have strong positive

correlation on company performance at small and medium enterprise on Mogadishu-

Somalia.

According to Mahdi Salehi (2010) AIS a pre-eminently user-oriented system, is

the collection and recording of data and information organizing events that have

economic impact upon organizations and the maintenance, processing and

communication of information to internal and external stakeholders. the result of this

study shows that although AIS is a very useful to Iranian corporations, there is a gap

between what AIS is and what should be.

With the similar findings made by ( SiamakNejadhosseiniSoudani 2012) they

investigated usefulness of accounting information system( AIS) for effective

organizational performance. the results of that study showed that although AIS is a very

useful and have effect on organizational performance to a listed companies in Dubai

financial market
 CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.0 INTRODUCTION

This chapter presented the Conclusion and recommendation of study. The first section

5.1 presents conclusion of research projects, the second section 5.2 presents The

recommendation of the researchers , the third section 5.3 chapter summery.

5.1 CONCLUSIONS

This section elaborates on the conclusion of the research. Customers today are highly

informed and more demanding. System quality and information quality of accounting

information system to customers' needs and wants has became important for firms to

succeed and this call for improvement of customers satisfaction that leads to financial

performance.

Given the consistent interaction between the dimension of the system quality (relevant,

reliable, complete, timely, understandable, verifiable). The findings suggested that system

quality could aid a firm in continually satisfying its customers and lead to increase

organizational growth. Hence the result suggest that system quality acts as a driver of

customer satisfaction reacting to study second independent variable is information quality

may allow firms to adopt successfully to customers satisfaction. In reference with the

result and finding its revealed that a good service delivery creates customer delight.

The delighted customers in turn will remain loyal and always have positive impression

towards the company and its services. The implication of a slight drop from complete

satisfaction can cause an enormous drop in the customer loyalty.

In terms of the topic of this study. Accounting information system (system quality and

information quality). Is found to have significant impact of the performance of Small and

Medium Enterprise scale specially some selected companies, generally the researcher

concludes system quality significant relationship to information system at level of sig.

0.000.

5.2 RECOMMENDATIONS

This study indicates accounting information system have a significant impact on financial

performance that it interacts with de different components of system quality and

information to financial performance.

Therefore organizations hoping to enhance its accounting information system should

consider the following:

Small and medium size enterprises owner-managers is better to develop

competencies in order to ensure quality of accounting information in form of

relevant, accurate, understandable and reliable information for better decision

making and improved performance.

Companies would be better to provide effective system quality service to their

customers that enhance customer satisfaction and always have a positive

impression towards the company and its service.

managers would be better to ensure that records are well kept so that quality

accounting information can be generated. With quality accounting information in

place, unwillingness to disclose information will be reduced because they will be

sure of what they are disclosing.

 We recommend Companies to consider insight awareness of the usage and of AIS

to facilitate its wide adoption. Therefore, higher levels of formal education should

be encouraged, alongside workshops, training and re-training of users for adequate

improvement.

The study also recommends that organizations have to increase the uses of accounting

information in decision making to increase the sales volume and to take better marketing

strategy.

5.3 FUTHER RESEARCH

The researchers seem them that there is a golden opportunity that future researchers must

look it and search more these gaps as follows

1- To identify accounting information systems and their affect on the profitability of

SME's,.

2- The relationship between financial decisions and performance can be studied in order to

establish the extent of the relationship, if any.

3- The impact of AIS on the performance measures

.
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 APPENDIX A QUESTIONNAIRE

Dear Sir/Madam, this questionnaire has been made for collecting data to conduct a Research work

on Accounting Information System and Company Performance at Small and

Medium Enterprise scale ; so we mention that, all information will be used to academic

research purpose and all information from you will be secret and confidentiality.

General Questions (Demography)

Please tick in the appropriate answers

1. Gender Male Female

2. Age

18-30 31-45 46 and over

3. Qualifications

Degree

Master Degree

PhD

Diploma

Others (Please specify)

4. Marita

l status

Single

Married

44
 Please tick the relevant place according to your opinion (4 = Strongly Disagree; 3 =
Disagree; 2 = Agree; 1 = Strongly Agree)

No Part One 1 2 3 4
Accounting Information System:
System Quality
1. System quality responds quickly to user requirements and that is

easy to use and would facilitate the use of advanced accounting

practices.

2. System quality consist of its flexibility, ease of use, reliability,

short response time and useful specific functions

3. System quality does not omit important aspects of the events or

activities it measures.

4. The system quality of automated data collection speed up the

proves to generate financial statements and overcome human

weaknesses in data processing.

5. The system quality of data storage contributes to the integrity of

the financial reporting practice

Accounting Information System:

Information Quality
6. Accounting information system should provide relevant
information in real time and should frequently report on the most
important events and provide rapid feedback on a previous
transactions .
7. Information quality provide information in time for decision

makers to make decision.

8. Information quality should be available to users when they need it

and in a format they can use it.

9. Information quality is relevant information that reduces uncertainty

and improves decision making process

10 Information quality is free from error or biases, accurately

represents organizations events and activities.

No Part Two 4 3 2 1
Company performance of Small and medium enterprise scale:
Financial And Non financial performance
1. Awareness of inventory has increased as a result of application of

Accounting Information System.

2. Hold training courses for the accountants in the adoptability of

accounting information system

3. accountants apply their skills to assist financial managers in

evaluating profitability prospects and anticipated risks thereby

creating a competitive advantage

4. The preparation of financial statement become easier due to

accounting information system

5. The accounting information system increased sales because of the

availability of inventory.

THANK YOU SO MUCH FOR YOUR COOPERATION!