Impact of Accounting Information Systems on Organizational Effectiveness of Automobile Companies in Kenya

Abstract

Currently, most organizations continue to increase spending on information system and their budgets continue to rise. Moreover, economic conditions and competition create pressures about costs of information. Generally, information system is developed using information technology to aid an individual in performing their job. Therefore, most organizations focus on developing information system in order to support decision system, communication, knowledge management, as well as many others. The key part of information system needed for decision making in organization is accounting information system. Management in the automobile organizations in Kenya relies heavily on information generated from the AIS employed by the company. Quality reports are very key to arrive at an ideal investment. Traditional way of recording, summarizing and reporting company financial reports led to less optimal decisions. Investment in good and reliable accounting systems has become a major concern for all managers as it leads to better management and analysis of firm’s performance. This has led the researcher to investigate on the application and use of accounting systems by automakers and thus, its impact on the organizational effectiveness. The study is of key importance to the selected automobile companies as well as other firms in the same sector in terms of determining the benefits accruing due to the integration of accounting information systems in their operations. This enabled automotive firms in gauging the model in terms of enhancing organizational effectiveness. The study is useful to other researchers interested in the problem under investigation as the study has laid a platform on which further studies related to the subject can be undertaken. The design of the study is descriptive research method. In addition both qualitative and quantitative methods were applied in data collection and analysis. The descriptive design is found to be suitable because it addresses major objectives and research questions proposed in the study adequately. The study gathered both primary and secondary data. Primary data was obtained through interviews and questionnaires to randomly selected employees from the selected companies. The use of interviews was ideal since it guaranteed confidentiality to the v respondents thus they acted without any fear or embarrassment. Primary data was collected using interviews conducted one on one with the researcher and questionnaires were circulated and filled by the respondents. Secondary data included censuses, organizational records and data collected through qualitative methodologies or qualitative research. The findings of this study indicate that Accounting Information Systems are an important mechanism for organizations’ effective management, decision-making and controlling activities. The results are consistent with empirical reviews which indicated that there exist a relationship between AIS and organizational performance. AIS are an effective decision-making tool for controlling and coordinating the activities of an organization. The study concluded that AIS are critical to the production of quality accounting information on a timely basis and the communication of that information to the decision makers. In other words, empirical findings indicated that accounting information systems have a greater impact on the organizational effectiveness of automobile companies in Kenya.