MIDLANDS STATE UNIVERSITY
FACULTY OF COMMERCE
DEPARTMENT OF ACCOUNTING
IMPACT OF PARTIALLY ADAPTED ACCOUNTING INFORMATION ON
PROFITABILITY OF THE MIDLANDS PRIVATE HOSPITAL
BY
KUDAKWASHE MANWA
R173263Y
A Research Project Submitted to the Midlands State University in partial fulfilment of the Bachelor of
Commerce Accounting Honours Degree in the Department of Accounting at MSU.
2021
Gweru, Zimbabwe
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CHAPTER ONE
INTRODUCTION
1.0 INTRODUCTION
The application of accounting information systems fully and the application of accounting
information systems partially cannot yield the same results. The partial use of computerized
accounting systems has been seen making an impact on organizations. (Zivanai, 2016)With many
researches done on fully used computerized systems, little has been done to explain the partial
adaption of AIS. This research will help evaluate the impacts of partially adapted accounting
information systems on profitability.
1.1 BACKGROUND OF THE STUDY
There are perceived threats of using AIS in the organization, particularly when the system is
partially used and much time has been seen being wasted from switching from manual to
computerized systems. (Gannyam and Ivhungu, 2019) described AIS as having subsystems or
components designed to work hand in hand to enhance profitability. AIS is the whole of the
related components that are working together to collect, store and disseminate data for the
purpose of planning, control, coordination, analysis and decision making, therefore if AIS are
applied in partiality and one component is not utilized elements of organizational performance
such as financial performance will be required to be examined and analyzed on the impact on
them (Soudan, 2012). According to Patel (2015) Accounting Information system partial adoption
is marked when the system is not used to its fully intended capacity by its makers.(Rehab,2018)
argued that AIS has tools(modules) that are interrelated to communicate accounting information
and if the system is used in way that only utilize one less tool (module) to the originally designed
then the system is marked as partially adopted or used .Results produced by a partially adapted
used accounting information accounting system has been positively linked with the financial
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performance, these findings provided the guidelines to the policymakers that they should focus on
the systems of accounting information that enhances organizational and financial performance
(Al-Delawi and Ramo, 2020). Every organization either small, medium or large organization,
profit-making or a social service set up, a public or a private sector undertaking, a manufacturing
or a service organization, a local or a global corporation has an accounting information system,
the effectiveness of an organization depends upon how the accounting information system is
applied with that cognizance the level or degree applied to the use of accounting information
system has seen making an impact on the organization’s profitability (Al-Dalaien and
Dalayeen,2018).
(Hanin, 2012) explained the employee's entry of wrong information has seen them being allowed
access to AIS in partiality and the overall effect of this action is to reduce productivity which can
be traced back to profitability. Breakthroughs in accounting information systems involve greater
capabilities for organizations today, as there have been disparities in the outcome levels both
negative and positive, organizations realized that optimization of accounting information
applications depends first and foremost on the level to which the accounting information systems
is adapted, thus partially adapted accounting information systems can be seen having different
results from a wholly used system to financial performance (Reem Okab Al Khasawneh and
Mohammed Ali Al-Qool ,2014)
Organizations have often introduced the AIS in partiality as a way of reducing the overall
expenses (Ndubuisi et al, 2017) The full potential of using an accounting information system can
never be released when the AIS is used in partiality therefore the profit generated ability of a firm
will not be to its maximum with a partially adapted AIS (Shagari et al, 2017). The partial
adaption of accounting information systems can help monitor investments in staff training,
monitoring the progress of employee performance using Accounting Information Systems
reducing risk and errors that affect financial performance (Salehi et al, 2015). On the other hand,
precise work maneuvering is affected when other departments do not use computerized systems
(Romney et al, 2012). (Moqbel, et.al 2015) identified the degree of AIS implementation and its
impact on the improvement of production costs at the Jordanian manufacturing companies.
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With all the highlighted areas above, researches were being conducted in productive industries
where physical goods are provided and this research intends to understand the partial adaption of
accounting information systems in a service industry particularly a hospital. The research also
intends to fill the gap on the partially adapted accounting information systems on SMEs as
previous researches where carried on large companies This research, therefore, seeks to explain
the impact of a partially adapted accounting information system on profitability, trying to
establish the relationship between profitability and the partial use of accounting information
systems. The research will also explain if there are any risks to profitability due to the partial use
of the accounting information systems.
The Midlands Private Hospital has adapted the accounting information systems in partial. The
Midlands Private hospital uses its accounting information system only for billing. The hospital
came into existence in the year 2012 and has adapted AIS in partiality since then. Accounting
information systems in a hospital environment should be specifically tailored to meet the specific
need of the particular hospital taking into consideration the NAMAS signature and the AHFOZ
registrations, when the hospital came into existence it had to purchase the accounting information
system from a developer in Harare The management team perceived it right to use the system for
billing processes only with the anticipation of fully adapting the system at a later date, the reason
was being management wanted to ensure the Litesurg system suits their specific hospital
requirement first and also activation and use all the modules of the system required fees to be
paid and that particular time. Management saw partial adaption of the system as a cost-cutting
measure and decided to apply the system to what was crucial to the organization at the particular
time and since then the organization has been using the Litesurg partially as its accounting
information system since then.(minutes,30 August 2019)
Table 1.1 stationery expenses trend analysis
Years
2018
Number of
physical
folders bought for patient
details
10440
2019
0
2020
7164
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Movement
purchased
expense rate
in
the
stationery
Profits for the year
5%
-15%
12%
$10 234 120
$12 951 000
$11 004 760
Source: stationery requisition books
Cash flows from the year 2018 to 2020
The Midlands Private hospital uses its accounting information system only for billing, which has
been marked as partial adaption of AIS. From table 1.1 in the year 2018, the organization was
capturing personal data of patients on folders, which required the actual use of a folder and
stationery templates that had to be filled in the prescribed manner. From the start of the year
2019, the organization decided to start recording utilizing Litesurg accounting information
system; all patients' details were to be recorded through the use of the system. This action made
the overall stationery expense reduce by 15 % and boosted the organizational profits to $12 951
000 from $10 234 120. In the year 2020 the organization resorted back to using patient folders
since users this information was not only accounting department but other organization
departments as well, yet the system is not integrated and other departments are not fully
computerized, a decision was made to resort back to the folder system, something that can be
physical kept and moved around for all departmental use. (Performance and quality evaluation
report December 2019). This led to an increase in the stationery expense by 12% and led to a
reduction in profit to $11 004 760. The problem is that the system only used for details and
billing as opposed to the entire accounting process which would allow the system to be used
general inquires, general ledger, cashbook, reports, stock and service management and periodical
runs. In May 2019 minutes there were suggestions by the accounting department to utilize AIS
for the entire accounting process.
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Table 1.2 medical aids payback periods
Average number of clients per
2017
2018
2019
2020
28
29
30
40
5
5
6
5
day
Average number of completed
claims forms per day
Time taken for claims to be sent
29
29
30
30
25
28
30
30
to medical aids in days
Time taken by medical aid to pay
in days
Source: remittance, patient analysis book
From able 1.2 the organization has been failing to send its claim forms on time to medical
providers. This is due to the fact that the organization has been failing to utilize the online
claiming functionality of the accounting system, due to this the organization uses the manual
completion of claims forms takes more time as opposed to the real-time posting that could have
been done by the system(quarterly reports 2019). This has been regarded as partial use of a
computerized system since the Litesurg program used by the organization can do that but has
only been used up to the billing and claiming left out. This has led to a delay in revenue inflow to
the organization as it means much money is tied up in the midlands private hospital's hands as
unclaimed. The delays in revenue have affected the hospital negatively since the nation is in an
inflationary market. In performance evaluation reports (28 December 2019), it was stated profits
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and funds earned in 2018 were rolled over and received the mid-year 2019.The delays of money
transfer by medical societies to the midlands private hospital are hazardous in Zimbabwe, This is
because by the time the hospital receives it money it would lost its buying power. This means that
what was used to purchase by a single dollar today will cost more to purchase tomorrow.
According to (www.statista.com accessed on 26/06/2021 14:02 hrs.) Zimbabwe, inflation had
reached 577.21% by end of 2020. In an evaluation on the organizational quality report December
2019 it was noted that the organization has been receiving funds from the medical aid providers
late and this was affecting its profitability.
.
Table 1.3 Analysis of errors on the cash book
2017
2018
2019
2020
Errors on monthly cash books
5
6
7
8
Average period took to correct
8
7
8
7
Source: cash book records
The midlands private hospital prepares a manual cashbook. The preparation of a manual cashbook
has seen the organization is susceptible to mistakes. Table 1.3 illustrates the number of times the
organizational cash book was erred and overstated and led to believe that it has much cash at
hand. This caused the organization to increase its expenditure basing its actions on erred
cashbook totals. (Expenditure analysis reports, 2019)
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TABLE 1.4 PATIENTS WITH TERMINATED MEDICAL AIDS ERRONEOUSLY
ADMITTED
2017
2018
2019
Patients
Numbe
Hospita
Numbe
Hospita
Numbe
Numbe
r
l
r
l
r
r
patients
charges
patients
charges
patients
patients
7
$10000
4
12000
9
$50000
1
$1300
1
3000
3
$36000
of
of
of
of
with
suspende
d medical
aids
Patients
with
terminate
d medical
aids
Source: medical aids analysis book
Table 1.4 illustrate that patients that were admitted and or received medical care by the hospital
with suspended medical aid or terminated medical aid. The illustration represents that people
received medical care that includes drugs, sundries, and food without paying. The Litesurg
system used by the Midlands Private Hospital has the online claims module. This allows the
hospital to send for claims to medical aids to pay funds for services provided to patients via the
system. The online claims utility has then the sub function. the online membership check utility .
Table 1.5 Analysis of drugs purchased and drugs sold
2018
Drugs purchased
$1
932
2019
$2
2020
684
$3 240 000
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100
Drugs sold
Variances
$2
120
005
$2
634
020
000
$72920
$50120
$3 210 000
$30000
Source: annual cash flow statements
From table 1.5 the organization's drugs expenses have been increasing but the revenue generated
from the sale of drugs has not been increasing likewise. The organization has been failing to
provide drugs to patients due to stock outages meaning that most of the ordered drugs are being
utilized (pharmacy dept., stock reports December 2020). Although Litesurg has the stock and
service management module which helps to monitor stock issue, provide stock journals, prepare a
stock master sheet and provide stock reports, this module has not been utilized. Regulation of
drugs stock level and revenue generated drugs has therefore been done manually (Minutes dated
25 October 2019). The application of Litesurg in inventory management could help explain why
revenue from drugs has not proportionately increased with drugs expenditure level. (Minutes
dated 25 October 2019)
1.2 STATEMENT OF THE PROBLEM
The use of a partially adapted Accounting Information System has affected the financial
performance of The Midlands Private Hospital. The hospital has been receiving funds from
medical aid late this has reduced the organization’ profitability. The organization has been
incurring expenses that they could avoid if they fully utilized the available AIS. There also have
been the problem that costs to purchase drugs have increased but they have not proportionately
increased with revenue generated from the sales of those drugs, explanations of why revenue
from drugs has not proportionately increased with drugs expenditure systems have been not been
found within the organization. Unnecessary accounting mistakes have been made, so as
unnecessary wastages of resources through the partial use of accounting information systems.
1.3 MAIN RESEARCH QUESTION
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What is the impact of a partially adapted accounting information system on the profitability of
The Midlands Private Hospital?
1.4 OBJECTIVES
 To establish the relationship between partial adaption accounting information systems and
profitability
 To evaluate
 To investigate the impacts of a partially adapted Accounting Information System on
profitability.
 To determine whether there is an extent to which accounting information systems should
be applied to the Midlands Private Hospital.
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1.5 SUB RESEARCH QUESTIONS
 What are the impacts of using partially adapted accounting information Systems on
profitability?
 What are the risks of using a partially adapted accounting information system?
 What is the relationship that can be drawn between financial performance and the extent to
which accounting information systems are used?
 What are the factors that influence the partial adaption of accounting information systems?
1.6 JUSTIFICATION OF THE STUDY
The research will help other the students to gain more insight on scientific and technological
knowledge about how to improve and maintain computerized information systems used in
relation to accounting. The study will also help explain to the Midlands Private Hospital how
partial adaption accounting information systems affect their profitability and help give analysis to
the hospital if partial adaption disadvantages or advantages the hospital.
1.7 DELIMITATIONS OF THE STUDY
The research will be carried out in the case of The Midlands Private Hospital with no comparison
with other organizations. The study primarily focuses mainly on the partial adaption of
accounting information systems of The Midlands Private Hospital and its impact on profitability.
Financial information used during the course of the research shall be provided by the midlands
private hospital..The period of the study is focused mainly on January 2017 to July 2021.
1.8 LIMITATIONS OF THE STUDY
.
1.9 ASSUMPTIONS
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The research assumes that there is a positive relationship between partial adaption of accounting
information systems and profitability. The researcher assumes that The Midlands Private Hospital
will continue operating under Covid-19 conditions up to year-end and computational results are
enough and reliable in carrying out the research. The researcher assumes that the resources
available will be sufficient to carry out the research resources needed to carry out this study will
be sufficient. The researcher assumes that participants or respondents will cooperate during the
research process and contribute to the research without bias.
1.10 DEFINITION OF TERMS
The definitions that are given below are there for a better understanding of the study.
Accounting Information System- An accounting information system (AIS) involves the
collection, storage, and processing of financial and accounting data used by internal users to
report information to stakeholders.( Manchilot , 2019).
Partially adapted Accounting System- is when an accounting information system is used to
perform other accounting functions, leaving other accounting functions which it could be done by
the system to be done manually. (Rehab,2018).
Accounting- summarizing, analyzing and reporting these transactions to oversight agencies,
regulators and tax collection entities (Fernando, 2021).
Profitability- profitability is referred to as the ability to make profits progressively over a long
period of time (Patel, 2015).
Shortfall- A shortfall is an amount by which a financial obligation or liability exceeds the
required amount of cash that is available (Hayes,2020).
1.11 ABBREVIATIONS
AIS- Accounting Information system
NAMAS- National Association of Medical Aid Society
AHFOZ-Association of Health Funders of Zimbabwe
MPH- Midlands Private Hospital
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1.12 SUMMARY
The focus of chapter one has been the investigation of the impacts of partially adapted accounting
information systems on profitability. The significance of the study, assumptions, limitations and
delimitations study were given. Chapter 1 also highlighted the objective of the study, the research
questions and the statement of the problem. The next chapter
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
The research intends to study literature on partial adaption of Accounting Information Systems.
The chapter sought to research on material that provided authoritative and qualitative points of
research by reviewing theories and concepts that are closely linked to the impact of a partially
adapted Accounting information System on financial performance. The material sought to justify
the undertaking of this research.
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2.1 OVERVIEW OF ACCOUNTING INFORMATION SYSTEMS
Accounting information system according to Manchilot (2019) may be a computer-based
electronic system used for collecting, storing, processing and communicating financial and
accounting data through financial statements with the aim of supporting and guiding
organizational decision making process. Computers are the heart of accounting information as
they create a platform for the working process of all information systems. For an accounting
information system to be fully operational, its appropriate software application must be on the
computer system intending to be used. Borhan and Bader (2018) defined accounting information
systems as systems which contains a combination of harmonized business, components, and
resources which processes, manage, and control the data for producing and carrying the relevant
information for decision makers in the firm. Accounting information will requires series of
processes to carry out its function, just like any computer system. It is a connected and
homogeneous set of the resources and different components (human, equipment, finance, etc)
that interact simultaneously inside a specific framework to work towards the achievement of
organizational goals. According to Borhan and Nafees (2018) accounting information system is
the process of collecting, analyzing and converting data into action. Kashif (2018) states that
accounting information system is a combination of people, equipment, policies, and procedures
that work together to collect data and transform it into useful information. AIS is a system that
provides people with either data or information relating to an organization's operation to support
the activities of employees, owners, customers, and other stakeholders in the organization's
environment by effectively supplying information to authorized people in a timely manner.
2.2 PARTIALLY ADAPTED ACCOUNTING INFORMATION SYSTEM
According to Zivanai (2016) is the accounting system which is not fully computerized, that is
work is done using both the manual and computerized system. The full potential of using
accounting information system can never be realized when the AIS is used in partiality therefore
the profit generated ability of a firm will not be to its maximum with a partially adapted AIS
(Shagari et al, 2017).It is expected that the extent to which accounting information system (AIS)
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are applied should be correlated with the financial state and outcomes of firms, this means that
the degree to which financial objectives are accomplished and the degree to which accounting
information are utilized have a positive correlation (Ivungu,2019) According to Patel (2015)
Accounting Information system is a part of company’s information system which help company
in providing processed information. This processed information helps the management in taking
decision and which has great impact on organizational profitability. Good information provides
efficiency, consistency and internal control of the organization. Good accounting information
systems have many determinants and the level to which the systems are used can be seen as
other determinant i.e. fully computers system or partially adapted computer system. (Patel,
2015)
2.3 RELEVANCE OF ACCOUNTING INFORMATION SYSTEMS
The main function of AIS is to assign quantitative value of the past, present and future business
events (Rehab, 2018). Accounting information systems play a vital role in boosting the
organizational profitability as a management tool for effective planning and control (Samer,
2016). In the planning function, AIS provide data relating to situations and analyze the targets
set for the organization. The analyzed targets involve the best outcome in relation to the profit
making ability of the organization. It also provides information regarding the relationship
between cost, volume and profit required to determine the amount of interdependence and
interaction between them (Abdullah, 2017). AIS under the planning function also helps in
preparing lists of future needs and financial flows and planning of budgets for the development
of the organization, creating financial standards to reflect the different aspects an organization's
activities and reflect organization success through profits yield (Frezatti, Andson, Guerreiro and
Gouvea ,2012). On the other hand, in the control function, it requires a clearly outlined and
specific plan that shows the desired objectives. It also defines the foundations on which
financial results are evaluated and analyzed if they reflect the required levels. This function is
regarded as a practical test to the decision making ability and implementation, follow up on the
actual implementation in accordance with the plans, policies and standards established This
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many lead to the discovery of discovery of deviations if any and corrections might be necessary
(Onaolapo and Odetayo, 2012). Advantages of an optimal use of AIS in an organization might
include: Better adaptation to a changing environment, better management of internal business
transactions and a high degree of competitiveness (Patel, 2015)
2.4 rtaining to the acquisition, maintenance, and disposal of fixed assets, while the management
reporting system, which provides internal management with special purpose financial reports and
information needed for decision making, such as budgets, variance reports, and responsibility reports..
The inventory control system is designed to process the bills of stored materials, identify materials
that need to be re-supplying, and generate reports showing the inventory situation. Additionally, the
system is intended to produce a monthly customer accounts and credit reports. A computer-based
customer accounts system provide the organization with accurate bills and monthly reports on credit
provided to customers, which in turn enhances the processes of payment, collection and provision of
liquidity. Suppliers accounting system provides daily information on procurement and payment to
suppliers, preparing checks, pay bills and treasury reports. The list of subsystems of accounting
information systems is not limited as these systems are designed for management of firms to meet
their day to day accounting need
2.5 COMPONENTS OF ACCOUNTING INFORMATION SYSTEMS
In a typical organization setting, accounting information system (AIS) is made up of several
components. According to Ganyam and Ivungu (2019) an accounting information system is
made up of six components as presented in figure 2.1
Figure 2.1 components of accounting information system
Information
Procedures
Component
of
Data
accounting
Individual
information
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system
Software
Internal control
Components of accounting information systems
Source: Ganyam and Ivhungu, 2019
2.5.1. AIS People (individuals)
2.5.3 AIS Data
2.6 MODULES OF ACCOUNTING INFORMATION SYSTEMS
Figure 2.1 modules of accounting information systems
ACCOUNT
RECEIVABLE
SS
PAYABLES
CASH
BOOK
GENERAL
ACCOUNITNG
LEDGER
INFORMATION
SYSTEMS
INQUIRIES
REPORTS
INVENTORY
/SERVICES
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Modules of accounting information systems
Source: http://www.conetic.com/cbooks.html accessed on 30/06/21 21:00hrs
2.6.1 CASH BOOK
2.7 PROFITABILTY
According to Patel (2015) the term profitability is referred to as the ability to make profits
progressively over a long period of time. The term profits itself has different interpretations to the
different individuals. The term profit has various perceptions to business owners, accountants,
revenue Authority and economist. Profit is sometimes taken as return accruing to investors and
shareholders. According to Patel (2015) to a common man, the term profit refers to all revenue
that flows to the investor and accountant, profit refers to income excess of revenue realized out of
cost both manufacturing and other operating expenses. For all practical purposes profit is business
income taken in the implication of an accountant. Profitability is the only realistic measures of
return from funds invested in the business (DeBenedetti, 2018). It is measured in terms of market
share which has been gained for a given period. So that profitability can be calculated on the basis
of return on sales or profit margins which are used in business enterprises to ascertain profit
proportions on income. These profitability ratios are useful for future comparability, references
and helps management in taking important decision (Watts & Connolly, 2012). The profitability
ratios can also be used in preparations of organizational budgets Data recorded and processed
enables accounting information technology to yield reports that aid interested parties in their
decision making process. Most accounting information technology can yield statistics that
indicate performance of product or service. In order to improve the usage of financial information
in the context of the decision making process AIS is very useful tool. It helps to analyze the data
and generate various alternatives. With the help of these processed data management can take
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correct decision which will lead to increase of the profit of the organization. Implementation of
improved business system has increased profitability and improved cost control in the
organization (Al-Dalaien and Dalayeen, 2018). The reports produced by the business system
make information for decision making readily available to managers.
2.8 EFFFECT OF PARTIAL ADAPTED ACCOUNTING INFORMATION SYSTEM ON
PROFITABILITY
Two of the important aspects in decision making process is existence of quality and timely
information (Manchilot, 2019). Important information comes from accounting information
systems and from financial statements. Qualitative and quantitative characteristics of accounting
information include consistency, relevance, understandability, comparability and timeliness of
decision making, the qualitative and quantitative characteristics are linked decision-makers and
their impacts, are ultimately linked to the profitability of the organization (Patel, 2015). This
means accounting information systems though partially adapted should meet the requirements of
the decision makers and business evaluations made by decision makers should be guide the
partially used accounting information system. With the partial accounting systems general
principles of accounts can be applied to business management and reports of accounting profits
can be presented (Rehab, 2018).
2.9 RELATIONSHIP BETWEEN ACCOUNTING INFORMATION SYSTEM AND
PROFITABILITY
Accounting information systems are very useful for every business because it gives necessary
information how to plan and prepare accounts and can make necessary changes as when required
(Hanini, 2012). Accounting activities of companies becomes efficient and effective through the
use of such accounting systems. Profits generated in the organisations is always linked the
existing accounting information systems in the organisation, partially or wholly implemented
(Muhundo et al, 2014).The partially use of accounting information can be manipulated to give
accurate and timely accounting record profits of the organisation which are prepared within the
system ( Adewoye and Akanbi ,2018). Though in partial adaption accounting information
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systems can make future predictions on profitability and business growth, calculated business
strategies can be initiated to enhance the profit based on the predictions (Abdullah, 2017). These
accounting information systems are pre-set with error free system of collecting material
information and data regarding the transactions of the business, thus data can be collected and
with limited errors thus the profit margin is not inconvenienced. These systems are automatically
proceeding with the desired information of transactions and they save much of your time with
timely accounting and accurate accounting information. With the completion of accounting
systems requiring time and much necessary investments firms can partially use the accounting
systems and divert other funds to much needed investment that boost organisational profits
(Soudani, 2012). In managing an organisation and implementation of internal control system for
achieving high profitability accounting information system is crucial. In the field of accounting
the most important question is why accounts are necessary? The common answer is to get profit
or loss of the business, the partial computer systems presence gives a better profit margin
compared to their absence (Ndubuisi et al, 2017). Partially computerised allow for
communication with supplier and customers that used both manual and computer systems, this is
enabled as the partial use of accounting information systems incorporates both, hence the
organisation targets all players in the market (computerised and non-computerised) for effective
profit makings (Shagari et al, 2017)
2.10 BENEFITS OF PARTIALLY ADAPATED ACCOUNTING INFORMATION
SYSTEM
Accounting literature argues that strategic success is considered an outcome of Accounting
Information System’s (AIS) design Several studies have analyzed the role of AIS in strategic
management, examining the attributes of AIS under different strategic priorities It has also been
analyzing the effect of each attribute (e.g. different modules of AIS ) on financial performance.
The appropriate design and levels to which of AIS adapted can be support business strategies that
help increase organizational profitability. Organizations have often introduced the AIS in
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partiality as a way of reducing the overall expenses (Ndubuisi, et al 2017).The partial adaption of
accounting information systems can help monitor investments in staff training, monitoring the
progress of employee performance using Accounting Information Systems reducing risk and
errors that affect profitability (Salehi et al, 2015). Accounting information systems can be used in
partiality to save costs, this notion is supported by idea that using all modules of the system can
require more funds as to partial adaption AIS, so rather organizations tend to use and service few
modules for task which are computer dependent and for task which are not computer dependent
they resort to manual accounting, this action is necessitated to reduce the expenses. ( Al-hiyari et
al, 2013). (Muhindo et al, 2013) Accounting is a vital to the organization and any tools that that
aids management in the accounting process should be used; the partial adoption accounting
systems can be seen comparatively making accounting process easier to the manual processes and
therefore should be used in any organization. Many organisartion wants to introduce accounting
information systems to their organasation but the they risk and uncertanities that are associated
with the intrdouction of AIS as well as expenses that are assccotid as
measeure to this
organisation tend to adapted AIS in partiallity to spread the over long period the expenses of the
AIS aswell as to asseses the risk of the adapted AIS.
2.11 DRAWBACKS OF PARTIALLY ADAPTED ACCOUNTING INFORMATION
SYSTEMS
Accounting information systems aid propelling accelerated positive change in the organisation as
a whole, which necessitates harnessed preparation to fill the information gap for better profitable
results, it is then when an accounting information system is adapted in partiality that the
information gap that was supposed to be filled for the betterment of the organisation cannot be fill
therefore the organisation is deprived from the best profitable results as intended (Al-Khasawneh,
2013). Researcher (Al_Frijat, 2013) argues that anything partially adapted cannot produce the
best results compared to that which wholly used, he argued a partially used Accounting
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Information system is less efficient which means that profit generating period is increased that
means it takes long to generate profit with a partially adapted accounting information compared to
a system which is wholly applied. Organizations today seek to enhance their profit, market share
and quality through applying AIS as a tool; it is an important system that has a crucial role as the
most important of source of internal information, the case that accounting information systems
are partially adapted means that the internal information might be limited to the partiality of the
AIS therefore decision making for profits might be limited(Trabulsi,2018), the researcher also
noted that decision making should be accurate, perfect and complete as it is the most important
enabler for the achievement of the organizational goals (profitability being included). Accounting
information Systems play a crucial role in the strategic management position of an organization
,AIS is a system of collection, storage, and processing of financial and accounting data to be used
by decision makers, this means that each and every module of the a accounting information
system was designed for best strategic advantages to produce the best accounting results, a
partially adapted accounting information though it intended to be strategic it might not produce
the best results because it is not applying all the modules of the accounting information system
(Salehi et al, 2015). The evolution of computer technology has completely transformed
accounting systems, and studies have shown investors are willing to invest to a wholly used
accounting information system compared to one which is partially adapted (Kayigamba, 2015).
2.12 EMPIRICAL LITERATURE REVIEW
Adewoye and Akanbi (2018) examined the effects of accounting information system partial
adoption on the profitability of commercial bank in Nigeria. A descriptive survey research design
was used on the examination. Data was administered and collect from 80 respondents randomly
chosen from 16 commercial banks and responded through questionnaires. Secondary data was
used during the study, obtained from the financial statements of the sampled banks. Collected
data was on return on capital equity (ROCE), return on total asset (ROTA), net operating profit
(NOP) and gross profit margin (GPM) within the recent 10 years post AIS adoption years (2007-
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2017). Linear Regression was used to test the substantial effect of AIS partial adoption on bank’s
performance. Findings established that commercial banks in Nigeria adopted and use AIS in
providing their services to their clients and with other banks partially using accounting
information systems but gradually leaning towards using the systems fully. The study concluded
that AIS adoption has a positive significant with all the indicators (ROCE, ROTA, GPM and
NOP).
Borhan and Nafees (2018) examined the partial adaption of accounting information system on the
profitability of nominated real estate organization in Jordan. A survey research design was
employed and data collected through questionnaires from 175 employees pooled from 5 selected
companies in Jordan. The study employs the linear regression statistics to analyze the collected
data. The findings revealed that there is a significant impact of partially using accounting
information system on the profitability of the company of the companies under study.
Abdullah (2017) examines the extent to which partial electronic accounting information systems
in the public and private universities in Jordan can provide quantitative indicators of financial
profitability. Through a survey research design employed and data is obtained from questionnaire
administered and personal interview of 20 chief finance officers (CFOs) of public and private
universities accredited to the Ministry of Higher Education and Scientific Research of Jordan.
Data was analyzed using mean and standard deviation statistics while the hypotheses are tested
using the t-test statistics. Findings from the study revealed that partialised electronic accounting
information systems in electronic public and private universities in Jordan provide quantitative
indicators of profitability.
Al-Dalaien and Dalayeen (2018) investigated the effects of partial used accounting information
system on the profitability of selected commercial banks in Jordan. A survey design was adopted
on the study. Self-administered questionnaires were used to collect data from 206 employees in
Jordanian banks. The study investigated the acquired data by means of the linear regression
analysis. From the research findings it was highlighted that highlights that there is a significant
impact of partially used accounting information system on accounting information system on the
profitability of banks under study.
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Rehab (2018) investigates the impact of accounting information systems operating partially on
profitability. The study collected data through 137 questionnaires from organisations issued in
Saudi Arabia and employed smart partial least squares to analyse the data and to test the study
hypotheses. Findings revealed that using partially AIS has a significant impact on profitability
generally, and on all its dimensions including cost reduction, improving profit quality reports and
effective decision making.
Muhindo et al (2014) investigated the effects of partially implemented accounting information
systems on profitability level of businesses in Kampala city Uganda, East Africa. The main
challenge identified was that, most businesses do not have adequate knowledge on accounting
information systems which result into continuous low performance levels. The research was
descriptive and it used qualitative methods to collect data. The research was carried on
secondarily collected data. Research results reviewed that most businesses implement accounting
information systems in partiality which result into low profits. In addition to that, the findings
show that there is a positive relationship between accounting information systems and
profitability level of small scale businesses. Accounting is very vital to the organization and any
tools that that aid management in the accounting process should be used. This study therefore
recommends that businesses should fully adopt accounting systems in their business management.
Salehi et al (2015) carried “The effect of partial implementation of accounting information system
on efficiency, profitability and productivity of organizations in Iran Organizations. The research
evaluated the ideal information requirements of organizations listed on Tehran Stock Exchange
(TSE) and compared it to the information processing (IP) capacity of the present systems using
19 standard IP indicators. The, sample firms were divided into good and poor AIS performance
groups based on their scores, and the effect of partial implementation of AIS on efficiency,
profitability, and productivity of these firms and was examined using Tobin’s Q. The research
findings indicated that AIS implementation is positively associated with Tobin’s Q of TSE-listed
firms.
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2.13 GAP ANALYSIS
{Ganyam and Ivhungu 2019) explained that carrying an investigation on one organization to
determine the impact of a only one partially used accounting information system might be biased
due to the fact that the system might already have problem even if wholly used therefore different
partially
used
systems
should
on
the
organization
to
evaluate
their
impact
on
profitability.Majed,2012 that the performance of an partially adapted accounting information
accounting information can reduce the profit making efficiency but cited that it of crucial
importance to analyze the computer literacy skill of the users of accounting information system,
there the research will be conducted in a environment where other research players are not
familiar to the computer world. Partially computerized system can be affected by integration, this
is when the system is connected to other department of the organization research therefore pends
to the partially nonintegrated accounting information system( Patel, 2015).Management’s
commitment should be evaluated to the use of partial accounting information system therefore a
analysis should be made to resolve the gap that what happen to the profitability of the
organizations due to the use of accounting information taking into consideration management
commitment to the use of the accounting information system.
2.14 CHAPTER SUMMARY
This chapter covered the overview of the research variables, it outlined the theoretical literature
review as well as the empirical literature review, covering the use of partial adapted accounting
information systems and their impact and relationship on the organisational the profitability. The
chapter also covered gap analysis and then the literature review summary.
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