Research Article

Received: October 9, 2019 The Annals of Research 2019; 4:5-11

Accepted: October 12, 2019
Published Online: October 13, 2019
Available online at https://annalsor.com
The Annals of Research

Barriers of accounting information system practice on the

commercial bank of Ethiopia, Bale Robe branches.

Tarik Kechema a *

a
School of Business and Economics, Madawalabu University, Ethiopia

Abstract
Accounting Information Systems are critical to the production of quality accounting information on a timely basis and an
important mechanism for organizations’ effective management, a decision-making tool for controlling and coordinating the
activities of an organization. This study was focused on the barriers of accounting information system practice in commercial
bank of Ethiopia Bale Robe branches. The key importance of this study was to determining the barriers on accruing entering
customers' records, billing customers, collecting customer payments, paying employees' issues for integration of accounting
information systems in their daily operations. Primary data were obtained through interviews and questionnaires to
judgmentally selected employees from the branch. The findings of this study indicate that lack of skilled man power in AIS
applications (mean 4.41), poor infrastructure and information quality (mean 4.31) and limited network availability or system
disconnection (4.31) were as rated high barriers for AIS practice. Additionally, high mean values given to lack of recent
technological advancement (4.29), in appropriate and unauthorized computer access (4.25), poor pertinent information for
decision making (4.24), service quality and errors during recording of data’s (4.20). poor computer security and cyber-attack
(4.20), limited available resource in E-banking (4.16), lack of sophisticated machine & System quality (4.07) and low
motivate employees for work performance (4.07) were rated as high barriers for AIS practice. While, lack of effective
training for employees (3.89) was rated as not high barrier for AIS practice in the bank. Finally, study conclude that AIS
become one of the most critical system to the capturing, processing, storing and distribution information, AIS must focus on
critical factor to minimize the failure effects by create or collect, design, develop, and operate for bank and consumers in
their work activities and managing the entire quality of commercial bank of Ethiopia in AIS practices.

Keywords Accounting information system practice, Barriers of accounting information system, Commercial
Bank of Ethiopia.

*Corresponding author: Tarik Kechema

School of Business and Economics
Madawalabu University, Ethiopia
Email: tarikacfn@gmail.com

Please cite this article as: Kechema T, et al. Barriers of accounting information system practice on the commercial bank of
Ethiopia, Bale Robe branches. Annals Res 2019;4:5-11.
6 Kechema T, et al.

1. INTRODUCTION This study would try to answer the following

principal questions:
Accounting information system (AIS) is an
organized means of collecting, entering and 1. Does the bank efficiently, effectively and
processing data, storing managing and reporting accurately collect, process and store data concerning
information so that an organization can achieve its the bank’s financial activities?
objectives and goals that designed to make the
2. What is the contribution of AIS in customer
accomplishment of accounting function possible [1].
attraction and its relevance in decision-making and
Accountants, consultants, business analysts, managers,
financial reporting?
chief financial officers (CFOs), auditors regulating,
can use it and tax agencies can use to make business 3. Is that necessary training was given to
decisions [2]. employees and customers’ how to practice AIS in the
Bank?
Accounting is the “language of business” because it
used in keeping track of business finances and its 4. What are the factors that determine
continued profitability; a business owner would not commercial bank of Ethiopia in a use AIS?
know what money was coming in or going out, or how
to plan for the future [3]. Finally, the overall purpose of the study was to assess
the accounting information systems practice of
Basic accounting information systems include commercial bank of Ethiopia Bale-Robe branches.
entering customers' records, billing customers, Hence, the findings on the problem would assess types
collecting customer payments, keeping track of of problems in the branch and an indicating structure
inventory, purchasing new stock and materials, paying on the bank collect, process, and record accurate data
employees' issues grouped in to three basic accounting concerning financial activities, to formulate for the
information system functions; best contribution of AIS practice in customer
attraction and its relevance in decision-making and
 The first function of AIS is the efficient and
financial reporting contributions to the bank.
effective collection and storage of data concerning an
organization’s financial activities, including getting
the transaction data from source documents, recording
the transactions in journals, and posting data from 2. LITERATURE REVIEW
journals to ledgers [4]. 2.1 The Need for Accounting Information System
 The second function of AIS is to supply Effective AIS is essential to any organizations for
information for making decisions, including long run success it is a means of maintaining the event
producing managerial reports and financial statements that occur there would be no way to determine how
[5]. well the organization performing [8]. The need for
 The third function of AIS is to make sure AIS about a business comes from people outside the
controls are in place to accurately record and process business usually want to summarized information
data. Some weaknesses of AIS may include failed presented in standardized forms and reported at
systems; internet and computer viruses- if undetected annually and quarterly intervals. In contrast, people
can destroy all files so a security system must be inside the business want detailed information to the
implemented to avoid this from happening, power need of specific decisions and reported at frequent
failure, hackers and frauds [6]. intervals- often weekly or monthly [9].

Accounting information systems are a computer- 2.2 Banking and Information System
based method for tracking accounting activity in Information system is an academic study of systems
conjunction with information technology resources with a specific reference to information and the
and have some problems like lacks of effective complementary networks of hardware and software
training for employees; lack of skilled work force in that people and organizations use to collect, filter,
AIS application and lack of technological process, create and distribute data to support the
advancement are factors that hinder efficiently and stewardship function of management, management
effectively practice AIS [7].
7 Kechema T, et al.

decision making and in the banking sector day-to-day banks in attracting resource in the volume structure
operations [10]. Banking information system is an and maturities (term) meant to satisfy the
appropriate to enhance effectiveness and efficiency by opportunities offered by clients [16].
improving service delivery, reduce costs, and manage
their account deposit and withdrawals information via
automatic teller machine (ATM) that client can now 2.4. Resource of bank accounting information and
receive information as system over the phone and customers
through home computer [11].
The main resource generating accounting
2.3. Importance of Accounting Information in information in bank activities are client accounts that
Bank industry can be available in the bank accounts, current account
and stock account or credit account, account the
Accounting information allows commercial bank to
payment instruments, card operations, and other
speculate up on opportunity of attractive business and
electronic banking system are registered [17].
in the resource placements the role of accounting
information of bank management towards successful Bank entity accounts that refer specially to cash
strategies, by exercising the main functions accounts, current accounts, inter banking settlement
consecrated by law; banks generate extremely useful accounts, income and spending accounts of the bank
accounting information for both customers and bank and accounts outside the bank cash statement that
management [12]. reflected in to engage guarantee records engagement
unfolding credit guarantees related to credits claim
The classification of bank operations in to active and
from current assets and flowed after wards [18].
passive operations underlines the importance of
accounting information the whole bank activity In banks the main source for collecting accounting
regarding the international financial market fight information come from the front office, client
ferociously for supremacy accounting information and operations and inter and intra banking operations
transparency of their accounting system of the bank activity refers to the value of account surplus stock
lead to success [13]. (initial and final), debt and credit turnover of these
accounts, the number of registered account operations
The role and importance of accounting information
and their value of the quantitative structure of
in the bank activity is derived from the role and
accounting operation averages [19]. All these types of
function of commercial bank generate themselves
accounting information may exist in raw or advanced
extremely useful accounting information, both for the
form with the aid computerized programs users of
bank management and for the client. These functions
bank accounting information can be bank clients and
or operations traditional for the banks conformed by
stock holders, office, employees and bank managers,
law generators of accounting information refers
client business partners, suppliers and their clients,
mainly to accepts deposit from clients, management of
financial and fiscal institutions, insurance companies
payment and credit payment, fund transfers
and other banks [20].
transaction in the client account and mandate
operating [14].
The classification of bank operation in active bank 3. METHODOLOGY
operations generate accounting information regarding
the placement of bank credits, placement on the The cross-sectional was used in the study.
interbank market; passive bank operation operates Furthermore, to achieve the objective, the study
accounting information regarding the attraction of manipulated both descriptive and inferential statistics
resource by the bank own capital, deposit for clients were employed. To select the sample of respondents,
depending on the balance sheet and importance of the combination of nonprobability (convenience) and
accounting information in the whole bank activity [15]. probability (stratified) sampling methods was
Bank accounting information allows the commercial employed one after the other.
bank to speculate up on some attractive business Five sub branches selected as samples of population
opportunities connected to give credit guaranties, by convenience sampling method. The sample-
other facilities in favor of performing clients help
8 Kechema T, et al.

selected branches were Souf omer, Sinana, were Bachelors and 36.2 percent were Diploma and
Madawalabu, Donsa and Jitu are taken. below. To conclude, majority of participants in this
study had Diploma and below.
Then after, researchers had taken stratified random
sampling technique. The criterion for creation of strata In terms of work experience, 28.7 percent of the
was type of sectors respondents. Three strata namely responses had less than 5 years, 44.3 percent had
internal users of the banks, external users or customers between 6 to 10 years and 26.9 percent had more than
and utility providers for banks selected as respondents. 11 years’ experience (Table 2).
All respondents from all stratums chosen using simple
4.2 Analysis on Open-Ended Questions
random sampling method. Sample size determination
formula: Description: To identify the barriers of accounting information
system practice on the commercial bank of Ethiopia
Bale Robe branch’s, an open-ended question was used
Z p q2 (1.96) (0.5) (0.5)2 and finding was analyzed as follow. In the following
Table 3, the degree significance of the twelve factors
n= 2 =2 =386
(barriers) that may hinder an AIS practice rated by
E (0.05) respondents.
In descending order of the mean values, the twelve
factors were rated by respondents in table below. Due
4. RESULTS AND DISCUSSION to marginal difference in the mean values they were
4.1 Description of the Sample Profile ranked as high (mean ratings of 4.00 and above),
middle (mean ratings under 4.00 and over 3.5) and low
In order to analyze the data, which was collected (mean ratings of 3.5 and below). As result in Table 3,
through questionnaires descriptive statistical tools, indicates, lack of skilled man power in AIS
were used. According to the results of the applications (mean 4.41), poor infrastructure and
demographic questionnaire, the following summary information quality (mean 4.31) and limited network
information about the profile of the sample were
presented (Table 1).

Table 1. Education information

Description Frequency Percent Valid Percent Cumulative Percent
Education background
Master and above 88 22.7 22.7 16.1
Bachelors 158 40.9 40.9 100.0
Diploma and below 140 36.2 36.2 54.2
Total 386 100.0 100.0
Source: Sample result from questionnaires (2019)

Regarding educational background, 22.7 percent of

the samples were MA/MSC and above, 40.9 percent
9 Kechema T, et al.

Table 2. Work Experience

Description Frequency Percent Valid Percent Cumulative Percent
Work Experience
Less than 5 Years 111 28.7 25.8 25.8
6 – 10 Years 171 44.3 51.3 77.1
More than 11 years 104 26.9 22.9 100.0
Total 386 100.0 100.0
Source: Sample result from questionnaires (2019)

availability or system disconnection (4.31) were as lack of effective training for employees (3.89) was
rated high barriers for AIS practice. rated as not high barrier for AIS practice in the bank
(Table 3).
Additionally, high mean values given to lack of
recent technological advancement (4.29), in
appropriate and unauthorized computer access (4.25),
As per current finding, lack of skilled man power in
poor pertinent information for decision making (4.24),
AIS applications was high barrier for the AIS practice
service quality and errors during recording of data’s
in the bank. This finding is consistent with the
(4.20). poor computer security and cyber-attack (4.20),
assertion made by [21], maintained that effective AIS
limited available resource in E-banking (4.16), lack of
applications plays a vital role in enhancing modern
sophisticated machine & System quality (4.07) and
organizations, especially in the banking sector through
low motivate employees for work performance (4.07)
the provision of an integrated value chain system that
were rated as high barriers for AIS practice. While,
Table 3: Barriers of accounting information system practice in commercial bank of Ethiopia Bale Robe
branches -rank order based on mean values for significant affect ratings.
Rank Factor Mean Std. Deviation
High Lack of skilled man power in AIS application 4.41 0.7406
High Poor infrastructure and information quality 4.31 0.51191
High Limited network availability or system disconnection 4.31 0.5095
High Lack of recent technological advancement 4.29 0.5446
High In appropriate and unauthorized computer access 4.25 0.57143
High Poor pertinent information for decision making 4.24 0.7124
High Service quality and errors during recording of data’s 4.20 0.65424
High Poor computer security and cyber attack 4.20 0.54069
High Limited available resource in E-banking 4.16 0.63029
High Lack of sophisticated machine & System quality 4.07 0.67829
High Low motivate employees for work performance 4.07 0.61198
Medium Lacks of effective training for employees 3.89 0.79875
n=322, Mean Ratings: 5=Extremely Significantly.
1=Extremely Insignificant
10 Kechema T, et al.

leads to rapid financing services, excellent fund Therefore, results from study conclude that AIS
allocation and payments, global capital logistic become one of the most critical system to the
services and cost savings compared to traditional bank capturing, processing, storing and distribution
accounting information. information, AIS must focus on critical factor to
minimize the failure effects by create or collect,
Poor infrastructure and information quality rated as
design, develop, and operate for bank and consumers
the second-high barrier for the AIS practice in the
in their work activities and managing the entire data
bank. This result consistent with the finding of [22],
quality in AIS.
was stated Ethiopia are high cost of electricity, poor
communication facilities, lack of market information,
the procurement processes for financial loans and
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