Islamic University-Gaza
Faculty of Commerce
PALTEL
This research submitted for partial fulfillment of the requirements of bachelor degree in accounting department.
By
Hani Al-Ramlawy
Mustafa Kafina
Supervised by: Mr. Salah shubair
2011

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( نونمؤملاو هلوسرو مكلمع الله ىريسف اولمعأ لق (
ميظعلا الله قدص
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Table of Contents
Abstract
1 Introduction
1.1 Statement of the Problem
1.2 Objective
1.3 Research Questions
1.4 Significance of the project
1.5 Hypotheses
1.6 Scope and limitations of the project
1.7 Research methodology
1.8 State of The Art
1.9 Time table and budget
1.10 Duration and length of the research
1.11 previous studies
1.11.1 Ismail and king (2007)
1.11.2 Huang and liu (2005),
1.11.3 Jamoos Study (1991),
1.11.4 Al-Sarhan Study (1995),
2 Accounting Information System
2.1 introduction
2.2 Accounting Information Systems – Definition
2.3 Technology of the Accounting Information System
2.4 Financial Accounting
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2.5 Real-Time Reporting
2.6 managerial accounting
2.7 auditing
2.8 taxation
2.9 Accounting information system for (PALTEL CO.)
3 Effective Performance Measurement
3.1 introduction
3.2 Effective performance system
3.3 Organizational and employee objectives
3.4 Conducting the performance appraisal
3.5 Legal issues
3.6 The Performance-Based Management Handbook
3.7 What Is Performance Measurement
3.8 What are Performance Measures
3.9 Performance Measurement Terminology
3.10 Conclusion
4 Results and Recommendations
4.1 Results
4.2 Recommendations
References
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ABSTRACT
The aim of this study is to identify the applicability of the accounting information system (AIS) on the Palestinian major privet sector leading company. Organization context, organizational coordination and control
(OCC) are so important to affect the quality of information, which is produced from AIS of the company.
Accounting Information among subunits, electronic data interchange across organizations will used to investigate the consequences of AIS on the effective performance that will influence competitive advantage.
In this study the effectiveness of accounting information systems in
PalTel Company will evaluate. The expected results will indicate that implementing accounting information systems at this company in order to improve the managers’ decision-making process, internal controls, and the quality of the financial reports and facilitated the process of the company’s transactions.
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1 Introduction
Accounting information system is one of the first things a business must think about. Without an adequate information system, the company would soon find themselves in chaos. Strategic importance of accounting system in organizational plans and models is one of the core success factors that effectively support the achievement of accounting and financial objectives.
Most businesses must staff their operations. This involves bringing new people into the business and making sure they are productive additions to the enterprise. Effective accounting information matches and develops the abilities of job candidates and employees with the needs of the firm.
The accounting Information System (AIS) is a system of records usually computer based which combines accounting principle and concepts with the benefits of an information system and which is used to analyze and record business transaction or the purpose to prepare financial statement and provide accounting data to the users.
An effective accounting information system lead to make their accounting activities easier , quicker and more accurate since accounting records are analyzed and financial statement are prepared within the system which allows to safe time of employees and avoid mistake , provides information about financial position of the company.
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Every company in every industry can benefit greatly from an accounting software package. Not only will accounting software help improve the way critical financial-related processes are managed across the business – resulting in increased efficiency and smoother execution of core business operations – it can help companies avoid the risks and severe penalties associated with non-compliance with financial reporting laws and guidelines.
PalTel is the national telecommunications provider in Palestine. With the pace of technology rapidly changing, PalTel today leads Palestine into the new era of communications through its state-of-the-art technology and advanced services
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1.1 Statement of the Problem
This study is to examine the impact of accounting information systems
(AIS) on the effective performance in PalTel Company. The question to address in this study therefore is "How can accounting information system affect the effective performance?"
Fig. 1. Focus of the study of the research.
The effective performance
1.2 Objective/
Main objective/
The applicability of the accounting information system (AIS) on the
Palestinian major privet sector leading company .
Specific objective/
1.
Identify the effectiveness and efficiency accounting application that PalTel uses.
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2.
To what extent PalTel is applying the international accounting stander.
3.
Identify the tools of the internal control system and the effectiveness of that tools performance of PalTel employee.
4.
To measure impact of use (AIS) on the decision making level.
1.3 Research Questions

What is the role that accounting information system plays in the firm tasks, if any?

Do accounting information system are used in support of the firm tasks?

Is accounting information system an enabling technology?

Will accounting information system be used more in support of quality of financial reports in organizations in the future?

Does accounting information system be used to facilitate financial transaction process?
1.4 Significance of the project

The study aims to explore the role of accounting information system in the organization performance. It attempts to identify the main causes of using accounting information system.

This research will help us (As a researchers) to have an overlook to the accounting department in one of the finest company in
Palestine that will help us in our future career.
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
This research can be taken into consideration from the PalTel
Company to evaluate their accounting system.

This research can be a great benefit to the society specially inventors of PalTel Company and those who are interesting in business world to keep an eye on their investment corporation performance.

It attempts to examine how accounting professionals and managers see the effects of AIS on the tasks and job roles; also it tries to develop recommendations to improve accounting system.
1.5 Hypotheses
The following research hypothesis formulated to fulfill the aim of this study:
H1: There is relationship between accounting information system and decision making in PALTEL company .
H2: There is a relationship between accounting information system and effective internal system in PALTEL company.
H3: There is a relationship between accounting information system and
Quality of financial reports in PALTEL company.
H4: There is a relationship between accounting information system and improve the performance measures in PALTEL company.
H5: There is a relationship between accounting information system and financial transaction process in PALTEL company.
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Dependent variable:

Effective performance
Independent variables:

Decision making

Internal system

Quality of financial reports

Performance measures

Financial transaction process
1.6 Scope and limitations of the project

There is lack of time available to implement the research so we need more time.

All information that related to our research is so important according to the policies and regulation that restrict a full disclosure; we expect that we can attain limited information.

Little research that had been implemented in the local market.

This research need more than two researchers to study the relationship between accounting information system (AIS) and company performance.
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1.7 Research methodology:

Secondary sources: to address the theoretical framework of the study, the researchers tended to sources of secondary data, including English , Arabic books and related- foreign references, journals, periodicals, articles, reports, researches, and previous studies on the subject of study, and reading from various websites.

Primary sources: to address the analytical aspects of the subject of study, the researchers will tend to collect primary data through a questionnaire as a main research tool, which will specifically design for this purpose and will distribute to the staff of the PalTel company
.
1.8 State of The Art
The main advantages of an optimal use of accounting information system (AIS) in small and medium enterprises (SMEs) are: better adaptation to a changing environment, better management of arm's length transactions and a high degree of competitiveness. There is also a boost to the dynamic nature of firms with a greater flow of information between different staff levels and the possibility of new business on the network and . With the existence of more intercommunication there are increased chances for diversification of traditional businesses. Nonetheless, excessive use of these tools may decouple the quality of interaction between workers and customers with a consequent reduction in productivity.
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1.9 Time table and budget
Task
Prepare and writing the proposal
Collecting data for accounting information system
July Augest
W1 W2 W3 W4 W5 W6 W7 W8
Writing chapter (2)
Collecting data for performance measurement
Writing chapter (3)
Writing results
Writing recommendations
Writing references
1.10 Duration and length of the research:
The study will be carried out in Gaza city. The study will start at
26/06/2011 and end at 20/08/2011.
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1.11 Previous study
1Ismail and king (2007), "factors influencing the alignment of accounting information system in small and medium sized
Malaysian manufacturing"
This study aims to know the influential factors of accounting information systems in small and medium-sized enterprises industrial companies in
Malaysian, the study was conducted on 214 companies, it's included a questionnaire distributed to nineteen of the properties of accounting information for each of the needs and capacity to explore the factors affecting the status of accounting information systems.
The study results:
There are several factors that affect the accounting information systems are as follows:

Technology and the level of information technology.

Accounting level and the extent of their knowledge about information technology.

Technical expertise gained from government agencies and accounting firms and internal IT staff and efforts.
This study recommends that:

There is a need to increase and promote the use of information technology.

Enhance accounting capacity and use of information technology.
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2- Huang and liu (2005), "exploration for the relationship between innovation, IT and performance"
This study aims to answer the following questions:

Is there a non-linear relationship between investment in capital and information technology on the performance of the company.

Is the interaction between capital and information technology has a significant impact on the performance of companies and the study conducted on companies operating in Taiwan .
The study found many results:

There is a non-linear relationship between the interaction of investment in capital and corporate performance.

There is a non-linear relationship between the interaction of investment in information technology and corporate performance.

There is a strong influence of the interaction between investment in capital, information technology and corporate performance.
The study recommendations including:
That the increase in investment in capital is not the key factor in improving the performance of companies, but companies must find a good consistency in the use of increased investment in capital and corporate performance.
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3- Jamoos Study (1991), "Review Accounting Systems that Rely on
Computer Use"
This study aims to introduce the information systems of accounting mechanism, the audit process by focusing on the usage of computers as an essential means to implement the audit process.
The study concluded the following results:

Audit process followed by the auditors of the Central Agency for
Financial Control in Syria does not rise to a reasonable level of sophistication in the use of a computer.

The lack of specialized computer-integrated departments in most companies of sample study.

All computers owned by the sample study of companies obsolete technically and do not achieve the economic feasibility of it.

Limited use of computers in the sample study of companies to implement very simple mathematical operations such as charging salaries and wages of employees.
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4- Al-Sarhan Study (1995), " The relationship between technology and organizational structure - a field study in industrial companies Jordanian public shareholding"
The study aims to determine the correlation and the impact of technology on the degree of centralization and formal and complex, As well as to know the interest of Jordanian companies, the impact of technology on the various organizational elements, And specially the humanitarian component.
It also aimed to come up with results that will add to general knowledge in organization theory helps to understand the impact of technology on the organizational structure clearly.
And one of its objectives is the completion of studies conducted in
Jordan on the organizational structure, and its various relationship and its determinants, and that is through the study of the impact of technology as one of the dimensions that may have a significant impact on the organizational structure of industrial companies in the Jordanian public shareholding.
The study concluded the following results:

A relationship between technology and the degree of centralization.

A relationship between technology and the degree of the official.

A relationship between technology and the degree of complexity as a whole.

There is no relationship between technology and the degree of geographical variation, that mean the number of geographic locations in which the institution operate is not affected by the extent of approaching the degree of technology-oriented technology for huge production.
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2.1 Introduction
Despite the commonality of subject in the study , the content of AIS courses continues to vary widely from school to school . for example , use their AIS courses to teach accounting student how to use computer
.in the other colleges and universities , the courses focus on business processes and data modeling .
yet other courses emphasize transaction processing and accounting as communication system, and have little to do with the technical aspects of how underling accounting data are processed or stored. Business process and software solution for improving those processes are gaining in importance in today businesses .
The study of accounting information system (AIS) IS, in large part , the study of the application of information technology (IT) to accounting systems .We begin by answering the question (what are accounting information systems?)
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2.2 Accounting Information Systems – Definition
(Kieso and etal, 2009)
An accounting information system is a collection of data and processing procedures that creates needed information for its users.
Let us examine in greater detail what this definition really means. We’ll examine each of the words in the term “ accounting information systems
“ separately.
Accounting
The systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations.
Accounting : consist of three basic activities it identifies , record and communication the economic events of an organization to interested users
.
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Information
Is data that have been organized and processed to provide meaning to a user.
Usually, more information and better information translates into better decisions.

Benefits of the information
–
Reduction of uncertainty
–
Improved decisions
– Improved ability to plan and schedule activities

Characteristics that make information useful
– Relevance
– Reliability
–
Completeness
–
Timeliness
– Understandability
– Verifiability
– Accessibility
Information is provided for both
1External users
2Internal users
First-External users

External users primarily use information that is either :
– MANDATORY INFORMATION—required by a governmental entity
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–
ESSENTIAL INFORMATION—required to conduct business with external parties, such as purchase orders
Second-Internal users

Internal users primarily use discretionary information :
The primary focus in producing this information is ensuring that benefits exceed costs, i.e., the information has positive value.
(Romney, 2008)
System
A system is a set of interrelated component that interact to achieve the goal (Romney, 2008 )
You can break the AIS technology into 3 separate categories:
(Romney, 2008 )
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Input - These are the devices that input the data into the accounting system. Typically, these include standard personal computers or workstations that are running applications. Data can also be input from scanning devices, electronic communication devices for electronic data interchange (EDI) and e-commerce. More recently, many financial systems come "Web-enabled" to allow devices to connect to the Internet.
Process - This includes the basic processing of the data and it is achieved through computer systems ranging from individual personal computers to large-scale company servers. The primary processing model is still the
"double-entry" accounting system that was initially used in the fifteenth century.
Output - Typical output devices include computer displays or monitors, impact and nonimpact printers, and electronic communication devices for
EDI and e-commerce. The output content may encompass all types of financial reports that range from budgets and tax reports to international financial statements.
In the past, most accounting systems consisted of notebooks and ledgers.
With the advent of the computer, those accounting books have been replaced with accounting software programs. The AIS has greatly changed the way accountants perform their jobs and has improved accounting effectiveness and efficiency.
An accounting information system must by definition have a target system. The target system must be related to operations of the business.
Other non-accounting aspects of business operations are covered by information systems such as Human Resources Information System,
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Management Information System, Production Planning/Scheduling
System, Strategic Planning System, and so on.
The target system for an accounting system has to do with the aspects of business operations that have to do with accountability for the assets/liabilities of the enterprise, the determination of the results of operations that ultimately leads to the computation of comprehensive income, and the financial reporting aspects of business operations.
Accounting information systems cover all of the business operations from accounting transaction to sophisticated financial management planning and processing systems.
Financial reporting begins at the operational levels of the organization, where the transaction processing systems capture important business events such as normal production, purchasing, and selling activities.
These events (transactions) are classified and summarized for internal decision making and for external financial reporting.
Cost Accounting Systems are typically used in manufacturing and service businesses. These allow companies to track the costs associated with the production of goods and services. The accounting information systems can alos provide advanced analyses for improved resource allocation and tracking of performance.
Management Accounting Systems are used to allow organizational planning, monitoring, and control for a variety of activities. This allows managerial-level employees to have access to advanced reporting and statistical analysis. The systems can be used to gather information, to develop various scenarios, and to choose an optimal answer among different scenarios. (Romney, 2008 )
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ACCOUNTING AND IT
The information age and the IT that created it are influencing all areas of accounting. the Figure provides an overview of some of these areas and their relationship to each other. This section considers the impact of IT on financial accounting, managerial accounting, auditing, and taxation. (Bagranoff and etal, 2007)
2.4 Financial Accounting
(Kieso and etal, 2009)
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The major objective of financial accounting information systems is to provide relevant information to individuals and groups outside an organization's boundaries e.g., investors, federal and state tax agencies, and creditors. Accountants achieve these informational objectives by preparing such financial statements as income statements, balance sheets, and cash flow statements. Of course, many managers within a company can also use financial reports for planning, decision-making, and control activities.
This Figure is an example of a financial accounting audit trail. The audit trail example in Figure parallels an organization's accounting cycle, which begins with transaction data recorded on source documents and ends with outputting financial statements.
In financial AISs, the processing function also includes posting these entries to general and subsidiary ledger accounts and preparing a trial balance from the general ledger account balances.
(Bagranoff and etal, 2007)
2.5 Real-Time Reporting
Another impact of IT on financial accounting concerns timing.
Financial statements are periodic and most large companies traditionally issue them quarterly, with a comprehensive report produced annually. Because IT now captures transactions, AISs can produce financial statements almost in real time. Of course, some of the adjustments that accountants must make to the records are not done minute-by-minute, but a business can certainly track sales and many of its expenses continually.
(Bagranoff and etal, 2007)
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2.6 Managerial Accounting
The principal objective of managerial accounting is to provide relevant information to a company's managers-i.e., users who are internal to a company or government agency.
The most important features of managerial accounting are :

Managerial accounting focuses on providing accounting information for internal parties, such as management, rather than for external investors and creditors.

Managerial accounting information is mostly forward-looking.

Managerial accounting information is not regulated by generally accepted accounting principles, nor is it mandatory to prepare it.

Managerial accounting reports include both nonmonetary and financial data.

Managerial accounting is influenced by many business and non business disciplines, such as economics, behavioral science, and quantitative methods.

Managerial accounting information is flexible and frequently involves non routine reporting . (Kieso and etal, 2009)
2.7 AUDITING
Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria .
( Arens , 2010)
The traditional role of auditing has been to evaluate the accuracy and completeness of a corporation's financial statements. In recent years,
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however, the individuals working in CPA firms would probably argue that they are actually in the assurance business-Le., the business of providing third-party testimony that a client complies with a given statute, law, or similar requirement. Historically, the growth of such assurance services can be traced to a conference of the American Institute of Certified Public Accountants in 1993, which created a Special
Committee on Assurance Services to identify and formalize some other areas (besides financial audits) in which accountants could provide assurance services.
Today, there are several new areas in which auditors now perform assurance work, many involving accounting information systems. One example is to vouch for a client's compliance with the new HIPAA lawse.g., the privacy requirements of the Health Insurance Portability and
Accountability Act. Another example is CPA Trust Services, a set of professional service areas built around a set of common principles and criteria related to the risks and opportunities presented by IT environments. Trust services include online privacy evaluations, security audits, testing the integrity of information processing systems, assessing availability of IT services, and systems confidentiality testing.
In addition to the auditing and assurance businesses mentioned above, many CPA firms also perform management consulting taskse.g., helping clients acquire, install, and use new information systems. (The AIS at Work feature at the end of this chapter describes one such consulting area.) However, the corporate accounting scandals mentioned earlier have led members of the
Securities and Exchange Commission and the u.S. Congress to question whether a CPA firm can conduct an independent audit of
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the same systems it recently assisted a client in installing and using-a concern intensified when audit staff at Arthur Andersen LLP apparently deliberately destroyed auditing papers for the Enron corporation that many believe would have documented such doubts.
Thus, the Sarbanes-Oxley Act of 2002 expressly forbids such potential conflicts of interest by disallowing CPA firms from simultaneously acting as "management consultants" and
"independent auditors" for the same firms. Despite this requirement, however, there are still many areas in which CPA firms provide consulting services to clients. Examples include business valuations, litigation support, systems implementation, personal financial planning, estate planning, strategic planning, health care planning, making financing arrangements, and performing forensic (fraud) investigations.(Kieso and etal, 2009)
2.8 Taxation
Although some individuals complete their income tax returns manually, many others now use computer programs for this task. like spreadsheets, tax preparation software are examples of AlSs that enable users to create and store copies of trial tax returns, examine the consequences of alternate tax strategies, print specific portions of a return, and even transmit complete copies of a state or federal tax return to the appropriate government agency. (Kieso and etal, 2009)
2.9 Accounting information system for (PALTEL CO.)
Corporate information
Palestine Telecommunications Company P.L.C. (PALTEL) is a limited liability public shareholding company registered and incorporated in
Nablus - Palestine on August 2, 1995. PALTEL commenced operations
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on January 1, 1997. PALTEL operates under the Telecommunication
Law No. (3) of 1996 decreed by the Palestinian National Authority
(PNA). PALTEL is engaged in providing, managing, and rendering wire line and wireless services.
The consolidated financial statements of Palestine Telecommunications
Company P.L.C. for the year ended December 31, 2009 were authorized for issuance in accordance with a resolution of the Board of Directors on
March 10, 2010.
Significant accounting policies
The consolidated financial statements have been prepared under the historical cost basis, except for financial assets held for trading and available-for-sale investments that have been measured at fair value. The consolidated financial statements have been presented in Jordanian
Dinars ,and all values except when otherwise indicated, are rounded to the nearest thousand (JD ‘000s).
Statement of compliance
The consolidated financial statements of Palestine Telecommunications
Company Plc. and all its subsidiaries have been prepared in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
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Revenue recognition
Revenues are recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenues are measured at the fair value of the consideration received, excluding discounts. The following specific recognition criteria must also be met before revenue is recognized:
Rendering of services

Revenues from wire line, wireless, and data services are recognized when the outcome of the transaction can be estimated reliably, by reference to the stage of completion of the transaction.

Revenues from media and IT services are recognized when the outcome of the transaction can be estimated reliably, by reference to the stage of completion of the transaction according to the progress reports.

Revenues from prepaid cellular phone and payphone cards are recorded as deferred revenues and are recognized based on the units used.
Sale of goods
Revenues from sale of cellular phone sets and other electrical equipment are recognized when the Significant risks and rewards of ownership of the goods have passed to the buyer.
Interest income
Interest revenue is recognized as the interest accrues using the effective interest method ,under which the rate used exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
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Dividends
Dividend revenue is recognized when the right to receive the dividend is established.
Expenses recognition
Expenses are recognized when incurred based on the accrual basis of accounting.
Finance costs
Finance costs are recognized as the interest accrues using the effective interest method.
Income tax
The Group provides for income taxes in accordance with the Palestinian
Income Tax Law and IAS 12 which requires recognizing the temporary differences ,at the date of financial statements between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes , as deferred taxes. Such temporary differences might result in recognizing deferred tax assets .However, the Group’s management elected not to recognize such deferred taxes due to uncertainty of benefiting from their future outcomes.
Income tax expense represents the accrued income tax which is calculated based on the Group’s taxable income. Taxable income may differ from accounting income as the later includes non-taxable income or nondeductible expenses. Such income/expenses might be taxable/deductible in the following years.
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Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. Land is not depreciated.
Depreciation is calculated on a straight line basis over the estimated useful lives of the assets
Materials and inventories
Materials are stated at cost while inventories are stated at the lower of cost or net realizable value using the weighted average method. Costs are those amounts incurred in bringing each product to its present location and condition.
The carrying values of materials are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the materials are written down to their recoverable amount.
Foreign currencies
Transactions denominated in currencies other than Jordanian Dinar (JD), occurring during the year, are translated to JD using the exchange rate at the date of the transaction. Monetary assets and liabilities, which are denominated in foreign currencies are translated into JD using the rate of exchange at the reporting date. Gains or losses arising from exchange differences are reflected in the consolidated income statement.
The assets and liabilities of subsidiaries with functional currencies other than Jordanian Dinars are translated into the presentation currency of the
Group at the rate of exchange ruling at the reporting date and, their
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income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are recorded as a separate component of the consolidated statement of changes in equity.
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3.1 Introduction
All high-performance organizations, whether public or private, are, and must be, interested in developing effective performance measurement and performance management systems, since it is only through such systems that they can remain high-performance.
In organizations Performance appraisals system reflect employee performance is a difficult task. Performance appraisal systems are not generic or easily passed from one company to another. Performance measures quantitatively tell us something important about our products, services, and the processes that produce them. They are a tool to help us understand, manage, and improve what our organizations do.
Performance measurement is the “heart and soul” of the performancebased management process. Flowing from the organizational mission and the strategic planning process, it provides the data that will be collected, analyzed, reported, and ultimately used to make sound business decisions.
The PBM adapted the Performance Measurement Process Model into a performance-based management process model and used this model to structure The Performance-Based Management Handbook .
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3.2 Effective performance system
Developing an appraisal system that accurately reflects employee performance is a difficult task. Performance appraisal systems are not generic or easily passed from one company to another; their design and administration must be tailor-made to match employee and organizational characteristics and qualities.
Performance appraisals are most commonly undertaken to let an employee know how his/her performance compares with the supervisor’s expectations and to identify areas that require training or development.
Employees have a legitimate need to know how their performance is viewed. At a basic level, without adequate communication between the employee and the supervisor, undesirable work habits may be formed or good work habits may be modified. Lack of such communication may be viewed by the employee as approval of their current work habits and performance.
All high-performance organizations, whether public or private, are, and must be, interested in developing and deploying effective performance measurement and performance management systems, since it is only through such systems that they can remain high-performance organizations.(Henderson, 2005)
3.3 Organizational and employee objectives
One of the first steps in developing an effective performance evaluation system is to determine the organization’s objectives. These are then translated into departmental and then individual position objectives – working with employees to agree their personal performance targets. This
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allows the employee to know “up front” the standards by which his/her performance will be evaluated.
This process involves clarifying the job role, job description and responsibilities – explaining how the role and responsibilities contribute to wider goals, why individual and team performance is important and just what is expected within the current planning period. Objectives developed in this way should be reflective of the organizational goals and provide linkages between employee and organizational performance.
Within a given department some (and in some cases, many) objectives will be shared within a team or standardized across a number of similar employees. However, it is important to ensure that, where necessary, an individual focus is maintained : within any group of employees performing the same job function there may be wide gaps in experience and technical knowledge. In order to keep each individual employee motivated and committed to performing at his/her best, some objectives need to be customized to allow for continued growth. A significant portion of an employee’s performance should be based on these jointly supervisor and employee developed objectives.(Kellogg,2007)
It is important that the process ensures that employees understand how their personal job performance contributes to the overall performance of the company. This direct linkage helps to create team working and shared responsibility. Team effort stems from shared objectives reflecting organizational goals and clarification and understanding of the roles and responsibilities of each member. Within such a framework, performance appraisal has higher acceptability. Although (at least some of the) performance objectives should be individual and agreed between
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employee and supervisor, this does not mean that they should be easy to attain.
Once an individual rater has been through the necessary training, periodic refresher courses will be required to help the rater maintain necessary skills in performance assessment. Raters involved in the appraisal process should also be evaluated on how they conduct performance appraisals.
This will help to make sure that evaluations are performed in a similar and consistent manner throughout the organization. (Evans,2004)
3.4 Conducting the performance appraisal
In many systems, the front-line supervisor is responsible for conducting the performance review. However, a multiple rater system should be considered. Multiple rater systems provide a form of “triangulation’ that results in ratings in which employees and managers have greater confidence. It may also be necessary to restrict the number of employees rated by any one individual. (Edwards,2003)
With large spans of control, several supervisors may work with an individual employee. The input from all supervisors about the employee’s performance is required to complete a thorough performance review.
Multiple rater systems can be computerized to allow statistical analysis to identify bias – this can be particularly important where an organization is keen to avoid real or perceived bias with respect to race, gender or age.
Another advantage of multiple rating systems is that they can shift the supervisor’s role from that of judge to performance coach. An individual supervisor will no longer be responsible for a single employee’s review.
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Some multiple rater systems go as far as involving the use of subordinates in the evaluation process.
This is especially effective in a work environment which is selfgoverning. Subordinate evaluations have generally shown to be more accurate than supervisors in truly reflecting employee performance. This system of evaluation allows employees to participate in the decisions that affect them directly. As part of the overall process, employee selfappraisals should be encouraged. This helps the employee to be less defensive and passive in the appraisal review. (Goff and Longenecker,
2006)
Self-appraisals can lead to self-improvement. The employee’s self appraisal can also be helpful for the supervisor in opening a communication link and allowing for comparison of performance results.
Self-appraisals give the supervisor helpful insight as to how the employee views his/her performance. Generally speaking people will be at least as tough on themselves as the formal rater. A proper process of employee and supervisor (or multiple rater) review can help employees agree on areas for development and how the organization can help.
(Gates,2006 )
3.5 Legal issues
While the basic intent of developing an effective performance appraisal system is to make a company more productive, profitable and to let employees know their level of performance, there are also legal reasons for developing an effective performance appraisal system. Failure to conduct appraisal “properly” (failing to maintain adequate records, for
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example) may result in employees (or their trades unions) taking legal action.
Where an employee handbook makes reference to performance appraisal or review, they must be carried out to acceptable levels of details. Many states have recognized statements in employee handbooks as implied contracts of employment. If an employer states annual performance reviews will be conducted and then fails to do so, the employer could find him/herself liable for breach of an implied promise. Employers must ensure, therefore, that they adhere to their commitments to conduct such reviews.
It is extremely important that all strengths and weakness be clearly documented in the performance review and follow up action on unsatisfactory performance pursued. This is especially important in the case of termination of an unsatisfactory employee. (Nobile, 2004)
3.6 The Performance-Based Management Handbook
The PBM adapted the Performance Measurement Process Model into a performance-based management process model and used this model to structure The Performance-Based Management Handbook. The PBM
Performance-Based Management Process/Handbook Model is shown in
Figure PBM below. Topics covered by each volume are listed after the figure.
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Establishing and Maintaining a Performance-Based Management
Program
An Introduction to Performance-Based Management

Step 1: Define Organizational Mission and Strategic Performance
Objectives

Step 2: Establish an Integrated Performance Measurement System

Step 3: Establish Accountability for Performance

Step 4: Establish a System/Process for Collecting Data to Assess
Performance
 • Step 5: Establish a System/Process for Analyzing, Reviewing, and Reporting Performance Data

Step 6: Establish a System/Process for Using Performance
Information to Drive Improvement
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
Maintaining a Performance-Based Management Program
Establishing an Integrated Performance Measurement System

Understanding Performance Measurement

Establishing an Integrated Performance Measurement System

Choosing a Performance Measurement Framework

Developing Performance Measures—Getting Organized

Developing Performance Measures—Sample Approaches

Maintaining an Integrated Performance Measurement System
Establishing Accountability for Performance

The Concept of Accountability

Establishing Accountability for Performance

Accountability Tools
Collecting Data to Assess Performance

Determining Data Needs

Components of a Data Collection Plan

Data Collection Considerations

Data Collection Methods

Suggestions for Measuring R&D Activities
Analyzing, Reviewing, and Reporting Performance Data

Introduction to Data Analysis

Training Your Organization in Analysis Skills

Generating Useful Information - Step 1: Question Review

Generating Useful Information - Step 2: Data Collection and
Organization
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
Generating Useful Information - Step 3: Data Analysis

Generating Useful Information - Step 4: Data Presentation
Using Performance Information to Drive Improvement

Using Performance Information to Drive Improvement

Benchmarking

Reengineering

Continuous Improvement

Process Improvement
Performance measurement is the “heart and soul” of the performancebased management process. Flowing from the organizational mission and the strategic planning process, it provides the data that will be collected, analyzed, reported, and ultimately used to make sound business decisions.
It directs the business function by justifying budgetary expenditures, documenting progress towards established objectives, identifying areas of both strength and weakness, providing an on-going assessment of the current “organizational climate,” and driving business improvement.
In a nutshell, performance measurement supports organizational existence. Performance measurement systems succeed when the organization’s strategy and performance measures are in alignment and when senior managers convey the organization’s mission, vision, values and strategic direction to employees and external stakeholders. The performance measures give life to the mission, vision, and strategy by providing a focus that lets each employee know how they contribute to the success of the company and its stakeholders’ measurable expectations.
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Integration places performance measures where they are the most effective: integrated with the strategic, business activity. It makes it possible for the measures to be effective agents for change. If the measures quantify results of the activity, one only need compare the measured data with the desired goals to know if actions are needed. In other words, the measures should carry the message. (Crane, 2001)
3.7 What Is Performance Measurement?
In Performance Measurement and Evaluation: Definitions and
Relationships, the U.S. General Accounting Office (GAO) provides the following definition:
Performance measurement is the ongoing monitoring and reporting of program accomplishments, particularly progress towards reestablished goals. It is typically conducted by program or agency management.
Performance measures may address the type or level of program activities conducted (process), the direct products and services delivered by a program (outputs), and/or the results of those products and services
(outcomes). A “program” may be any activity, project, function, or policy that has an identifiable purpose or set of objectives.(Sahl, 2007)
3.8 What Are Performance Measures?
Performance measures quantitatively tell us something important about our products, services, and the processes that produce them. They are a tool to help us understand, manage, and improve what our organizations do. Effective performance measures can let us know:
• How well we are doing,
• If we are meeting our goals,
• If our customers are satisfied,
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• If our processes are in statistical control,
• If and where improvements are necessary.
They provide us with the information necessary to make intelligent decisions about what we do. A performance measure is composed of a number and a unit of measure. The number gives us a magnitude and the unit gives the number a meaning.
Performance measures are always tied to a goal or an objective (the target). Performance measures can be represented by single-dimensional units like hours, meters, nanoseconds, dollars, number of reports, number of errors, number of certified employees, length of time to design hardware, etc. They can show the variation in a process or deviation from design specifications. Single-dimensional units of measure usually represent very basic and fundamental measures of some process or product.
According to (Sahl, 2007) , performance measures should be expressed in units of measure that are the most meaningful to those who must use or make decisions based on those measures. Most performance measures can be grouped into one of the following six general categories. However, certain organizations may develop their own categories as appropriate depending on the organization’s mission:
1.
Effectiveness: A process characteristic indicating the degree to which the process output (work product) conforms to requirements.
(Are we doing the right things?)
2.
Efficiency: A process characteristic indicating the degree to which the process produces the required output at minimum resource cost.
(Are we doing things right?)
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3. Quality: The degree to which a product or service meets customer requirements and expectations.
4. Timeliness: Measures whether a unit of work was done correctly and on time. Criteria must be established to define what constitutes timeliness for a given unit of work. The criterion is usually based on customer requirements.
5. Productivity: The value added by the process divided by the value of the labor and capital consumed.
6. Safety: Measures the overall health of the organization and the working environment of its employees.
3.9 Performance Measurement Terminology
Performance measurement terminology is tricky. For example, some people equate performance measures and performance indicators as being one and the same. Others look at the two as being entirely different. Or some use goals, objectives, and targets interchangeably, while others do not. Then there’s the statutory definitions, the agency definitions, and those used in the private sector.
The object for you is to pick the terminology that best fits your organization and your performance measurement system and to ensure that all players are in alignment with and using that terminology. In other words, before you start, everyone needs to be on the same page and speaking the same language. (Gates, 2006)
3.10 Conclusion
Developing an effective performance appraisal system requires strong commitment from top management: if the system does not provide the
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linkage between employee performance and organizational goals, it is bound to be less than completely effective.
To build linkages employees must have individualized objectives and performance criteria which allow them to relate directly to the organization. Objectives should be developed jointly between the supervisor and the employee. Once the objectives are determined, appraisals should be performed frequently to help build the direct communication link. Support documentation for performance should be maintained by both the employee and supervisor in order for the appraisal process to be conducted in a productive manner.
Organizations operating in this time of continual change and global competition cannot afford unmotivated and uncommitted employees. An effective system of performance appraisal is a major component of an organization that allows every employee to feel that his/her contribution has contributed to the success of the organization and a desire to add to that success.
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Results
1.
accounting information systems Output have the ability to meet and satisfy the needs of the viewers activity of the bank of information and this is attributed to the adoption of corporate accounting systems based on information and communication technology as an integral part of the structure of the company. which was instrumental in the ability of these systems to produce output that characterized by precision, reliability and periodic and regularity.
2.
The important role of accounting information systems to activate the activities of the company through:

Integration of accounting information systems with subinformation systems applied in the company to integrate and coordinate between the tasks , functions and different sections of the company, which increases the effectiveness of activities.

Provide accounting information systems integrated with other subsystems to get the needs of the beneficiaries of various information, and thus contributing to reduce the time and effort.

Achieve accounting information systems for the company in the proper flow of data and information between departments and branches of the company at the appropriate time and form.
3.
The important role of accounting information systems to achieve the control and administrative control of the company through:

These systems can monitor and keep up with the implementation of plans and policies in the company and follow-up and report on the efficiency and effectiveness.
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
In addition to securing control system to the degree of confidence required in the financial reports prepared that represent the outputs of these systems, as well as providing the information required for compliance and instructions enabling the administration to stand on the reality of the situation and take appropriate measures in order to achieve the highest degree of efficiency of the service in the company.

These systems provide adequate protection for the assets and records of the company.

Accounting information systems provide the required information about the company's commitment to the laws and instructions issued by the regulatory bodies, which let the administration and regulatory bodies to stand on the reality of the situation and take appropriate action.
4.
There is an important role for accounting information systems in reducing the risks to the company and contribute to the management through:

Accounting information systems applied Contribute to find the information network long-term that generate a constant flow of information about the activities of the company.
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Recommendations
1.
Need to develop accounting information systems to produce information in the company where the criteria are based International
Accounting Standards (IAS) and International Financial Reporting
(IFRS), which earns accounting information systems output in the company more credibility and justice not only in the local level but globally.
2.
Consider the process of development of accounting information systems is an ongoing process in the company did not stop at the completion of specific stages and that because of the continued development of information technologies and multiple applications.
3.
Continuous training of human resources in the company, particularly in the areas of informatics.
4.
Adoption of corporate for accounting information systems as an essential element of the company and to consider the outputs of these systems are an important source from the company's resources ,which supports control procedures and provides confidence in the various reports that provides, which makes it imperative to the company to
Exploit it for efficiency and effectiveness.
5.
Insurance the services, human resources and organizational requirements to supplement the information systems in the company and thus achieve the integration and coordination between the systems of accounting information and other information systems applied in
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the company, which increases the efficiency of the information produced by these systems and support the information network within the company, and assist in the ongoing assessment of the risks of the company.
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Evans, E.M. (2004), “Designing and effective performance management system”,
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Gates, A. (2006), “The smartest way to give a performance review”, Working
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Romney M. B. (2008) , “Accounting Information Systems", (11th .edn.) Prentice Hall
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