The impact of Accounting Information Systems’ Quality on Accounting

Information Quality
Dr. Ahmed Yass Algrari

PhD in information technology/Cihan University / suliymania

Mr. Rebwar Mohammed Ahmed

MSc in Accounting / University of Sulaimani / College of Commerce

Abstract
Managerial, Investors, and societies are interested in accounting information. This information
will assist managerial the extent of their development and value in organizations. The Investors
will assess effectiveness of accounting information. Therefore, this study aims to identifying the
impact of accounting information systems ‘quality on accounting information quality. Hence, the
questionnaire comprises of twenty questions was designed by the researchers to measure the
impact of the use of accounting information systems quality on accounting information quality to
the Asia Cell Telecommunication Company, this questionnaire was distributed on 40
accountants who work in the Asia Cell Telecommunication Company, all distributed
questionnaires were regained, and simple linear regression test was utilized to test the
hypothesis of the study. The study found that there is an impact of utilizing the accounting
information systems on the accounting information quality on Asia Cell Telecommunication
Company in Iraqi Stock Market. Based on the results, the study recommends to the
Telecommunication Company and other Companies in Iraqi Stock market should be keen to
update the AIS used in according within technology development, and pay attention to the
accounting information quality which are utilize to evaluate the organization performance.

Keywords: Accounting Information System, Accounting Information Quality, Asia Cell

Telecommunication.

1. Introduction
The accounting information systems (AIS) describe the accounting information, which are
intended to collect financial data to reach the information needed for internal or external
decision-makers (Bodnar and Hopwood, 2010). The use of accounting information is vital in the
management activities of a company, given its quantitative information on various activities.
Accounting information is primarily intended to be useful in economic decision-making.
Accounting information is needed not only by management in the direction of cooperation but
also by shareholders, who need periodic financial data in order to assess the performance of the
company's management (Nnenna, 2012). Accounting information systems rely on the quality of
input data, as the poor quality of data used in the input process leads to poor results (XU, 2003).
In according to Wilkin &Tanya (2003), the relationship between quality and information systems
is determined by three basic components: technical components, information quality in terms of

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the accuracy and correctness of data entering the system, and service quality, meaning the
assessment of the level of excellence in providing information to users. The accounting
information quality data is the basis to rely on in reaching good information that is valuable in
creation various decisions regarding the processes of the firm efficiently. Therefore, the
nonappearance of this quality leads to weakening the used decisions and lead to incorrect
decisions, which causes loss to decision makers. In concerns of the Iraqi Telecommunication
companies, there is an absence of clearness about the nature of the used accounting information
systems, and an absence of clearness concerning the quality of accounting information data.
However, we formulate the problem of the study as following questions:

1. What is the impact of the use of accounting information systems on the quality of accounting
Information in Asia Cell Telecommunication Company?

2. What is the quality level of the accounting information that is relied on Asia Cell
Telecommunication companies in Iraqi Stock Market?

Accordingly, the significance of this research arises from the standing of AIS, which their level
of quality The AIS are the basis for the making of accounting information used by Internal and
external users. The quality of the accounting information is the basis for making accounting
productions of the accounting information. The higher the quality of the accounting information
is, the more perfect accounting information results will be produced, which will make
dependence on financial and management decisions very reliable.

2. Literature Review
The study of Firas (2018) aimed at identifying the effect of the use of accounting information
systems on the quality of financial data, applied over service companies of Amman Stock
Market. The study sample consisted of 70 individuals who work in different services sectors,
where a questionnaire was designed a distributed. 56 valid questionnaires were retrieved for
statistical analysis purposes. The study results indicated that there is statistically significant
positive effect of the nature and security of accounting information systems on the quality of
financial data.
The study of Esmerry (2016) aimed at identifying the impact of the use of accounting
information systems (AIS) on the financial performance of small and medium-sized companies
in Turkey. To achieve the study’s objective. The analytical descriptive approach was applied by
designing a questionnaire and distributing it over the study sample which consisted of 60
companies in the city of Qaisariya. The results of study showed a statically significant positive
relationship between the use of accounting information systems and growth rate in sales, returns
and customer’s number.
The study of Nwinee, et- al (2016) aimed at identifying the impact of the use accounting
information systems on the organizational effectiveness of small and medium-sized companies in
Nigeria. To achieve the study’s objective, the analytical descriptive approach was followed by
designing a questionnaire and distributing it over the study sample which consisted of 156
employees of small and medium-sized companies in Port Harcourt city. The result of the study

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showed that the use of accounting information systems supports the effectiveness of
organizations and increase the ability to control costs.
The study of Patel (2015) examined the impact of accounting information systems on
companies’ profitability. The study the study was based on the theoretical analytical approach to
reach the results by reviewing the previous studies and concept of accounting information
systems, the quality of accounting information systems, and the nature of the relationship
between accounting information systems and profitability of companies and decision making.
The result showed that there is an impact of accounting information systems on the profitability
of companies and decision –making , also it was found that the accounting information systems
contribute to provide the necessary information to take financial and economic decision.
Hezabr & Qatanani (2015) studied the impact of accounting information systems on improving
the value chain in companies in the Kingdom of Bahrain. To achieve the study’s objective, the
analytical descriptive approach was applied by designing a questionnaire and distributing it over
the study sample which consisted of 60 employees in 23 industrial companies. The results of
study indicate that there is lack in the availability of accounting information systems’ basic
components. In addition, there is a lack in the accounting information quality needed to improve
the value chain for the business organizations in the public industrial shareholding companies in
the UK. As for the contribution of accounting information systems in value improving was found
to be weak.
The objective of Rapina’s study (2014) was to identify the factors affecting the quality of
accounting information systems in Indonesia. The study sample consisted of group of
accountants working in 33 cooperative institutions in Bandung City, where a questionnaire was
distributes to measure the information needed to serve the purposes of the study. The results
showed that the commitment of management, organizational culture and organizational structure
has a great impact on the quality of accounting information systems moreover, the quality of
the accounting information systems on e-commerce in service companies in Jordan.
The study of moqbel (2014) sought to demonstrate the impact of accounting information systems
on e-commerce in Jordan. To achieve the objective of the study, the analytical descriptive
approach was applied by designing a questionnaire and distributing it over the study sample
which consisted of 75 financial managers working in 25 service companies. The results of the
study showed that there is a statistical significant positive effect of accounting information
systems on e-commerce in service companies in Jordan.
2.1 Accounting Information System Quality
Accounting information systems play crucial and important role, providing information that
could help the organization’s management perform its duties to the fullest. Many researchers
have pointed out that the success or failure of an organization in achieving its objectives depends
on the quality of the accounting information systems. The development of accounting
information systems has a significant impact on the performance and effectiveness of operations
in the organization, as the management of organization needs information that is characterized by
consistency and confidence in decision –making. Further, the success of decisions and increasing
their effectiveness depends heavily on the success accounting information systems presented to
the decision makers at the right time (Al-Ali, 2014). In this regard, Al-Samaerraie, and Al-Zoubi

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(2004) stated that good and successful systems must be characterized by integrity, simplicity,
flow of information, multiplicity of elements, in addition to excellence, correlation and correct
outputs. In the same context, in order for the accounting information system to be of high
quality, and should be distinguished from other systems, identified by Al-Sibaei (2010) as
follow:
-Alignment: Refers to the alignment of the accounting information system with external
environment surrounding the entity, as well as the duties and restrictions on management. The
accounting information system designer should take into account the circumstances surrounding
the user of accounting information and meet their requirement to assist them in making decision;
inadequate information and information user unawareness of the restrictions imposed on it would
force the user of accounting information to ask for more information.
- Integration: The integration of the accounting information system with other secondary
systems, such as management information systems. An entity achieves integration between
systems through group of central units related to data employment and information preparation.
-Differentiation: The accounting information system makes a distinction between accounting
information in terms of time and organization. Planning and policy information covers long-term
periods, while other information, such as information required for monitoring is short-lived. It
needs to be regularly checked to reflect the condition and the nature of the activity of the entity
on a daily, weekly or monthly basis. As for organization, the function of control depends on the
sequence in the determinants of authority, as defined by the organization structure of the entity; it
defines the tasks and duties required of each individual within the entity.
-Flexibility: The ability of the accounting information system to respond to changes in the
organization structure of the entity, or the changes to the economic or competitive environment
of the entity.
-Response: The ability of the accounting information system to respond to the users of
accounting information and their constant demand for accounting information. The system
produces and stores information until is requested, taking into consideration the determination of
stored accounting information to be in conformity with the needs of the users.
The quality of accounting information system is expressed as the measurement of its capability
in producing the output that meet the information requirement for the decision makers (Post &
Anderson, 2003). According to Baltzan (2012), a high quality accounting information is the
integrated information that has the attributes of accuracy, completeness, consistency,
comparability and timeliness. According to Laudon& laudon (2008), a quality accounting
information can only be generated for decision making process by implementing a quality
accounting information system.
2.2 Accounting Information Quality
Information by Romney and Steinbart (2015) is the data has been organized and processed to
give meaning to the user. Users need the information to the make decisions or improve the
decision making process. Gelinas and Dull (2008) describe the notion of information as follows:

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Information is the data is presented in a form that is useful in decision making activates. In line
with various previous opinions (Laudon and Laudon, 2014) states the information is the data that
has been shaped into something that has meaning and useful for users. Likewise with the views
expressed by Susanto (2013). The information is the result the data processing that gives
meaning and benefits for the user. Based on various definitions that has been presented, it can be
concluded that has meaning and useful for variety of users.
Valuable information/Quality and can be used in decision making should have the
characteristic/traits of certain (Stair and Reynolds, 2011). A high quality product information
own characteristics, attributes or quality that makes information through the information timely,
easily understood and can be verified Valuable information /quality accounting to Stair and
Reynolds (2011) must have the characteristics: easily accessible, accurate/precise, complete,
economical, flexible, relevant, reliable, safe, sample, available timely and verifiable.
3. Methodology of the Research
3. 1 Framework and Hypotheses Development
Based on the research questions the theoretical framework is as follow:

H1

AIS AIQ
H2

Figure1: theoretical framework of the study

The hypothesis is answer to the singularity that arises based on theory or previous research. This
study examines whether there is impact the quality of accounting information systems on the
accounting information quality. The hypotheses describe as follows:

H1: There is no significant impact for the accounting information systems quality over the
accounting data quality over Asia Cell Telecommunication Company.

H2: There is no significant impact for the quality level of utilizing accounting information
quality on accounting information quality that is relied on Asia Cell Telecommunications
Company.

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 3.2 Data
The population of the study consists of Asia Cell Telecommunication Company listed in Iraqi
stock market. For the purpose of the study we conduct 40 employees working in Asia Cell as
follow:
Sector: telecommunication
Code: TASC
ISIN: IQ000A1J4EL6
Address: Iraq-sulimaniya – salim Street – Asia Cell building/
Baghdad bravch/Al-mansour/Hai-Al-Andlas/SEC(611)/st(11) buld(97)
Phone: (+964)7701195006
Email: info@asiacell.com
Website: www.asiacell.com
Company activity: providing mobile communications services under the license qranted to it by
the media and communications
Establishing Date: 25/07/2007
Establishing Capital: 1.000.000
Listing date: 12/05/2007
Capital at Listing: 270.000.00
Executive Director: Amer Faez Al-sana’a
Auditor: Aras Mohammed Saeed / Adel Alhasson&co
Participants Ratio: Private 100%
Capital at 30/6/2018: 310.000.000
Table 1: Financial ratio and Trading Statement of Asia Cell from 2013 to 2017
Financial Ratio 2017 2016 2015 2014 2013
Share Turnover Ratio 1.00 0.80 0.31 0.26 29.48
Earing per share (ID) 0.124 0.095 0.172 1.277 `2.150
Ownership Rate (%) 52.45 58.06 55.45 52.05 64.54
Interest Repetition 42.30 66.71 41.63 10.18 8.60
Trading Rate 0.80 0.69 0.48 0.52 0.95
Book Value (ID) 5.445 6.321 6.225 6.949 7.173
Working Capital -293,483,.000,000 -389.069,000,000 -710,666,000,000 -679,592,000,000 -337,417,000,00
Market Capitalization (million) 1627500 1968500 2219600 3510156 4995222
Profit Distributed (%) - 75% 25% - 150%
Trading Statement 2017 2016 2015 2014 2013
No. of traded Shares 3,108,716,991 2,481,269,083 948,563,835 694,901,561 79,593,248,901
Trading Volume 17,566,273,225 13,746,878,735 7,480,829,516 10,971,189,359 1.752,565,564,255
Annual Closing Price 5.250 6.350 7.160 13.000 18.500
Annual Average price 5.650 5.540 7.890 15.790 22.020
Highest Price 6.900 7.500 13.500 19.500 24.200
Lowest Price 4.800 3.450 5.100 11.250 18.300

3.3 Results for Testing the Study Questions

According to Khan, A. (2017); Al-Dalaien and Khan (2018), we analysis the data which collect
from Self-administered questionnaire is the survey in which respondents take responsibility. It is
considered as a superior mode for minimizing bias and improving response rates. The

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questionnaire consists of sixteen statements fewer than two variables. AIS were independent
variable whereas financial performance was dependent variable. The effects of independent
variables on the dependable variable are assessed by the 5-point Liker attitude scale. A total of
20 questionnaires were distributed as showing in the table below, were all valid for data analysis.
The data collection period was ten on 2017.
3.3.1 Data Analyses:
The tables bellow demonstrates the reliability of 20 questions used in the study. The uppermost
value of Cronbach alpha (0.940) in the statement followed by (0.934) in the statement. The value
of Cronbach alpha of all statements is more than 0.7 and thus, the data is reliable for testing
hypotheses.

Table 2: Reliability Analysis

Cronbach
No. Statements
Alpha
1 Accounting Information systems are flexible in data processing 0.837
2 Accounting information systems help to achieve goals accurately and quickly 0.930
Data are processed through accounting systems consistent with accounting
3 0.753
polices
The cost of accounting information system in the company is consistent with the
4 0.821
nature and size of the accounting information provided by the system
5 Accounting information system in the company are easily updated data 0.849
6 The AIS provides accounting information that comparable 0.866
The AIS provides integrated accounting information that will effect the
7 0.940
effectiveness of the company
8 AIS are characterized by the case ease and high quality 0.934
9 The inputs of AIS are presented in an easy and clear manner 0.875
10 Input and output of AIS are maintained in a secure manner 0.773
11 The company is distinguished by its accounting information quality 0.919
12 Accurate accounting information help company make financial decisions 0.811
13 Accounting information prepared to ensure its quality , accuracy and correctness 0.767
The provided accounting information are consistent with user’s needs in different
14 0.931
financial periods per year
15 The company’s Accounting information are flexible in its use in various aspects 0.836
16 The company’s accounting information Are clear and uncomplicated 0.812
The company’s accounting information are easily understood among its various
17 0.923
users
The company’s accounting information are inclusive for all the financial aspects
18 0.724
that users need in the decision –making process
19 The accounting information provided in appropriate time 0.755
20 Accounting information are easily saved, are retrieved at any time 0.876
Source adopted from proves research

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3.3.2 Test of the Hypotheses:
The impact of accounting information system quality on the accounting information quality in
selected Asia Cell Telecommunication Company in Iraqi Stock market has been measured by
applying simple linear regression. The independent variable is accounting information system
quality and the dependent variable accounting information Quality. Furthermore, the table below
illustrates that the results of regression analysis of the two hypotheses in consolidated form.
Hence, the first hypothesis shows that the value of R square is 0.922 which means 92.2 percent
variation in accounting information is explained by Accounting Information System, and the rest
of the variation (1- R2) is an unexplained variation. As well as, the value of unstandardized beta
coefficient is 0.664 and the p value is 0.006 (P<0.05). Therefore, the hypothesis one is rejected
however; it means that there is a significant impact of Accounting Information Quality over
accounting information quality of Asia Cell Telecommunication Company.
On the Other hand, the second hypothesis shows that the value of R square is 0.885 which means
88.5 percent variation in accounting information is explained by Accounting Information
System, and the rest of the variation (1- R2) is an unexplained variation. As well as, the value of
unstandardized beta coefficient is 0.439 and the p value is 0.008 (P<0.05). Therefore, the
hypothesis two is rejected hence there is a significant impact for the quality level of utilizing
accounting information quality on accounting information quality that is relied on Asia Cell
Telecommunications company.
Table 3: Show the results of Regression Analysis
Hypotheses R R2 Beta SE t P Value Results
H1 0.922 0.850 0.664 0.5742 9.548 0.006 rejected
H2 0.885 0.763 0.439 0.6509 10.507 0.008 rejected
Beta: Unstandardized Coefficient
SE: Standard Error
Source: Output of SSPSS_20

4. Conclusion:
Accounting information system is a formal instrument for collecting, organizing and
communicating accounting information about an organization’s activities. It is a financial
information system which includes accounting terms, records instruction manuals flow charts
programs, and reports to fit the particular needs of the business. This study is built on a
questionnaire survey intended at examining the impact of Accounting Information System
Quality on Accounting Information Quality of Asia Cell Telecommunication Company in Iraqi
Stock market. However, most of the respondents agree that AIS contribute to Asia Cell
Telecommunication Company. Accounting information system can be integrated with other
management information systems, such as enterprise resource planning. They help cling to all
events in an efficient method and inspire on utilizing resources and operations by providing a
computer based database system to store and recover data. They also contribute to the
consistency of financial reporting such as General Acceptant Accounting Principles (GAAP),
and International Financial Reporting Standards (IFRS). Accounting information system cover
organizational designs, procedures, and policies that contribute to the control structure, which are
intended to discourage mistakes or wrongdoings after they have occurred. According to results,
there is a significant relationship between accounting information systems quality and
accounting information on Asia Cell Telecommunication Company. We believe that AIS

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contribute completely to their work. Besides, this study is not only beneficial for Asia Cell
Telecommunication Company, but also for other organizations for recognizing the significant for
usage of information technology in business world. Moreover, this study has limitation, which
only reflects on Asia Cell Telecommunication Company in Iraqi Stock Market. Therefore, for
future studies, it should be analyzed more organization in Iraqi Stock Market.

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