Abstract

This study was carried out to investigate the effect of accounting information on decision making process of organizations. Its main aim was further divided to three specific objections which were, to evaluate the effect of internal control on decisions making of organization, to evaluate the effect of accounting software on decision making of organization, to evaluate the effect of information technology infrastructure on decision making of organization.

This study employed a descriptive survey Purposive sampling was used while data collection was done through a primary source which was a questionnaire. The projected total population was 30 workers of an organisation. Data was analysed quantitatively with the use of Regression model analysis through SPSS computer statistical package and excel 2019.

The results also revealed that Organization mission and objective are communicated to all employees, management evaluates employee performance and hold individual accountable for their internal responsibilities, Policies and procedures are current in writing and properly approved. The results show that the p-values obtain for ANOVA (0.002) lower than the alpha level of significant of 5% specified in SPSS for the analysis,

Thus, the null hypothesis was rejected while the alternate hypothesis was accepted which state that accounting information has a significant effect on the decision making of an organisation. The study concluded that the company repairs and maintain the equipment. there are computers networked budget year. It was recommended that they should ensure that internal controls are clearly defined, communicated to all employees, and regularly evaluated to achieve organizational objectives and respond to risks effectively.

CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background of the study

Financial accounting is the method which records, summarize, and manage report of organization’s financial statement through transactions. It deals with the important financial information (Tekou 2010). Even though all organization has a unit to handle financial accounting, improving the management of truncation could exploit the more value from financial accounting. Researchers are still evaluating the importance of financial accounting with respect to the social and organizational aspects.

Harmonisation and creation of standards for financial account  management considering only the national level is also affects the quality of the financial accounting (Hopwood, 2000). This sometime causes the confusion and complication while managing and making business decision across international borders. For smoothing out the business decision internationally, many countries are constantly evolving.

Accounting is normally is viewed as the language use in the business. In simple terms it’s a tool use in measuring business activity, processing information into report and making available to decision makers. Accounting takes the role of processing all financial performance, documents from payroll, cost capital, expenditure and other obligations to sale services and owner equity, it provides financial information about one’s business for the internal and external users such as employees, managers.

The making of decision as everybody knows from one’s experience is a burdensome thing to do says Wadia (1966) at times indication is a disastrous as making a wrong one therefore a plan of action is indispensable management is constantly confronted with the problem of alternative decision making especially knowing that the resources are relatively scares and limited. Its therefore important that good accounting information be made available for proper and accurate decision making. wadia1966)

Accounting information is not only necessary for the evaluation of the past and keeping the present on course. it is useful in planning the future of the organization. It is part and parcel of today’s life which is necessary to understand the accurate financial situation of the organization and use as a base in making any decision.

Some strategy decision has long term effect on the business and therefore it’s important to analyze accounting information for making decisions. Accounting information helps managers to understand their task better and reducing uncertainty before taking any decision (Chong,1996). Effective and efficient accounting information plays an important role in mas decision making (Tiramisu, Unji, 2012).

Accountings and financial information are among the most important information mostly used in management decision. Within contemporary economy condition, a successful manager needs a lot of reliable accounting information in order to make quality business decision (Miko,1998) Economical information especially financial and accounting information are the information’s which managers use in short term and strategic decision and they may have most application among different variables effective and decision making. (Suma, 2010)

The term information and information system are viewed to have increasing effect on organizations, occupying model folds and as analysis, economic information contains news from different folds and information as found in any other system. In most cases this information is derived from the economic data base (Tiokell 2010). Resources are relatively scares and limited and so management at times find its self-confronted with the decision-making problems. In this regards, good accounting information should be accessible to offer suitable and precise decision making that could lead to maximization of profitability of an organization and utilization of scares resources optimally (Ovidia2013)

Decision making is the process of selecting alternative courses of action using cognitive processes. Making decisions is needed when there is no one clear course of action to follow. Accounting system can help our decision making by providing information relevant to the decision and decision making. It also provides check for the validity through the process of accounting and accountability.  The making of decision as everybody knows is a burden some tasks say Wadice (1996) In most cases indecision is as disastrous as making a wrong one.

Reliable accounting serves a practical function for the organization themselves beyond the regulatory and compliance huddles that financial accounting helps clear, also helps Managers to create budgets, understand public perception s and develop short- and long-term strategies Chong (1996)

Accounting information aid lending or dividend decision as number of common accounting ratios that creditors relay on such as the debt equity(D/E) ratios and time interest ratio are derived from the financial statement even for privately own businesses that do not necessarily follow the requirements of accounting system base

(Tiokou 2017)

Accounting information also helps decision making it provides investors a baseline of analysis and comparism between the financial health of security issuing institution. Financial accounting helps creditors assesses the solvency, liquidity and creditors of the business. financial accounting helps in making investment decision as fundamental of cashflows and its income statement. All of the financial statement for publicity traded companies are created and reported according to the financial accounting standard set forth by the financial accounting standard board. Financial accounting helps organization Make business decision on how to allocate scares resources Young (2002)

Without the information provided by financial accounting, investors would have less understanding about the history and current financial health of stock bond issue the requirements at forth by the FASB create consistency in the time and style of financial accounts which means that investors are less likely to be subject to accounting stands into that has been filtered base on the firm current condition. (Tiokou 2017)

In this study, 4 decision areas such as; financial accounting, financial decisions, investment decision and dividend decision were selected. These areas of decision somehow depends on accounting information, without accounting information; individuals, companies, organizations, information various kinds of investment cannot determine financial investment and dividend decision to be taken. Accounting information helps take long term investment decisions by given the proper view of present and future conditions of organization (Suma 2010)

1.2 Statement of problem

Thanks to information technology now our days there is rapid change in quality as well as quantity of accounting information systems (AIS) which is producing information. This information will be useful to make the useful decisions. Previous researchers conducted in 5hos area indicated the following output, AIS is one and most important variable for effective decision. Information’s is absolutely necessary for decision making in any business organization. The problem however lies in the quality and validity of the information that is if its timely, adequate and clear.

The main purpose of accounting information is to reduce risk, failure and uncertainty and also stay ahead of competitors not minding research conducted by Royace, Stageh and Aseman(2012) conducted that accounting information is the primary information use by managers in all types of decision making and are the variable which have the most application among all variable conditions not minding the mimes benefits derived from the ise of accounting information. It is generally acknowledged that most unqualified accountants enrate inaccurate information and it results in failure of organization to achieve its goals

Employee findings conclude that in manufacturing sectors accounting information has a statistical significant strong positive with both marketing linkage decisions and industrial related strategic decision making of companies operating in Siri Lanka, Hafij,jamil and syeda(2014).

The major problem discovered when making decisions in organizations the identification of fundamental concept of accounting information to be implemented by each company which can affect the company positively or negatively. These problems stated immensely contribute to the failure of the use of accounting information in companies with results that I appropriate decision are made to the detriment pf the organization.

It’s through accounting information that managers external ureses picture of the organization. (Syelda2014). It is patient that quality information is made available for proper and precise decision-making maximizing the profitability of optimal utilization of scare resources because accounting information is not only required for evaluation of past and keeping present on course. It is useful in planning the future of the organization (Nnenna 2012)

This study will seek to show that information can be derived from accounting information and their usefulness for decision making vin business organizations. The purpose is to see need for accounting information to any business organization how it helps in decision making.

1.3 Research Questions

1.3.1 Main question

What is the effect of accounting information on decision making process of organization?

1.3.2 Specific questions

1. What are the effects of internal control on decision making of organization?
2. What are the effects of accounting software on decision making process of organization?
3. What are the impacts of information technology infrastructure on decision making of organization?

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