ABSTRACT

 This research with the topic The Effect of Accounting Information System on the Performance of Micro Finance Institution in Buea, had as main objective to examine the effect of accounting information systems on the performance of micro finance institution in Douala. The research has as main hypothesis being that Accounting information systems do not have significant effect on the performance of Micro Finance Institution in Douala. The descriptive research design was used. Data was gotten for the research from the primary source principally from the administration of questionnaires to 30 respondents of Micro Finance Institutions in Buea, the regression analyses was used to carry out analyses. The findings showed that Accounting Information system has an effect on the performance of Micro Finance Institution in Douala. Recommendations were made that Micro Finance Institutions in Buea need to establish courses to educate its employees about fraud regularly, the role and actual responsibilities of accounting department in preventing and increase the performance of MFIs. This may help users to have an understanding on the importance of accounting information system on the performance of MFIs in Douala. The accounting profession should increase the time frame of information system to carry out the duty and prepared accounting report so that they will have enough to accumulate enough evidence for the purpose of the information. This will produce quality report.

CHAPTER ONE

INTRODUCTION

1.1.            Background of study

According to Borhan and Bader (2018) accounting information system is a formal system for identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating accounting information about a particular entity to a particular group. A similar definition of accounting information system was also given by (Samer, 2016). An AIS combines traditional accounting practices, such as the use of Generally Accepted Accounting Principles (GAAP), with modern information technology resources.

AIS is vital to all organizations (Borthick and Clark, 1990; Rahman et al, 1988; Wilkinson et al., 2000) and perhaps, each organization either profit or nonprofit oriented need to maintain the AISs (Wilkinson, 2000: 3-4). On the other hand, an AIS is a whole of the related components that are put together to collect information, raw data or ordinary data and transform them into financial data for the purpose of reporting them to decision makers (LI, M., YE, L.R. 1999). To better understand the term accounting information system, the three words constitute AIS would be elaborated separately. Firstly, literature documented that accounting could be identified into three components, namely information system, language of business and source of financial information (Wilkinson, 1993: 6-7). Secondly, information is a valuable data processing that provides a basis for making decisions, taking action and fulfilling legal obligation. Finally, system is an integrated entity, where the framework is focused on a set of objectives (Watts, 1999).

An optimal implementation of AIS by Micro finance institutions means adapting more successfully to a changing environment and shows a high degree of competiveness, thus enhancing the dynamic character of a company (even when the institution is small, it must assimilate the use of AIS). In other words, there are improvements in administrative management regarding accountancy and finance. By using AIS, it is possible to gauge risk of some operations or predict future earnings with sophisticated statistical software applications.

Accounting information systems records accounting transactions with the utilization of computers and accounting software. This result to quick technology changes needs to attract these micro finance institutions to improvement. AIS will help keep several client’s information and transaction in the business and for several years which is quite important for taxes control and personal business needs.

Computerized accounting information systems automate the accounting process, enhancing productivity and cutting down expenses. What’s more, it has a tendency to be more exact, quicker to utilize, and less subjected to error than the manual system (Alexis, 2010)

In Cameroon the microfinance institution has given a bravo to the coming of computerized accounting. This is because it has developed their bookkeeping and has help removed them from paper work to an electronic system method which is more effective and efficient. Therefore, making financial information to be gotten on time and without errors therefore making management to present good and reliable decisions

1.2. Problem Statement

Today, information technology and increasingly transparent, financial sector have become key driving forces in business operations, strategies, structures, ownership, and performance. These forces cut across many industries to force changes that, in turn, have had significant economic and social impacts on the organizational effectiveness (Doms, Jarmin and Klimek, 2004). Structurally, the process which has gradually grown out of the need to increase efficiency and cut on the operations costs in the industry.

The use of AIS as a computer-based application brings a new trend of change from the conventional way of accounting to a computerized way which most people ae not prepared for or find it difficult to adapt. Yet, Organizations are designing more sophisticated accounting information systems to meet strategic goals and enhanced performance (Eb, Pretorious, Awesejo, and Zuva, 2013).

Research is needed to discover new potentials and or benefits that these systems can bring to the organization’s management and how they impact the role of the accounting function. The quality of accounting information systems can be improved through management commitment and user competence (Iskandar, 2015)

Typical problems faced with micro finance institutions in the adoption of computerized accounting systems are lack of capital and technological obsolescence, limited financial resources, management information, limited scale economies and management’s IT-oriented behavior, and lack of funds to improve skills (Malaranggeng, 2009; Levy, Powel, Yetton, and Francalanci 2011; and Morabito, 2008; Marriot and Marriot, 2000).

There is a need for specialized accountants with the mastery of the system software being used so that appropriate decision can be gotten from the system. In fact, they are the basis to any business. Maintenance of sound accounting records is a major factor that contributes proper decision making process since it’s the roots through which relevant informational requirement is derived (Alphonce, 2014).

Research Questions

The following research questions were formulated to guide this study:

• To what extent does Batch processing system effect performance of Micro Finance Institutions in Douala?
• What is the effect of legacy systems on the performance of micro finance institutions in Douala?

1.3. Objectives of the study

1.3.1. Main Objectives

The main objective of this research is to examine the effect of accounting information system on the performance of Micro Finance Institution in Douala.

1.3.2. Specific Objectives

• To determine how Batch processing system effect performance of Micro Finance Institutions in Douala.
• To examine the effect of legacy systems on the performance of MFIs in Douala

1.4. Research Hypothesis

This purpose is to put the research objectives into testable terms since for a problem to exist there must be an uncertainty over the best alternative for satisfactory attainment. The hypothesis is as follows:

H₀: Batch processing system has no significant effect on performance of Micro Finance Institutions in Douala

H₁: Batch processing system has significant effect on performance of micro finance institutions in Douala.

H₀: There is no significant effect of legacy systems on the performance of micro finance institutions in Douala.

H₂: There is significant effect of legacy systems on the performance of Micro Finance Institutions in Douala