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QUALITY AND EFFICACY OF ACCOUNTING

INFORMATION SYSTEM (AIS) IN THE DECISION-MAKING
USING ENTERPRISE RESOURCES PLANNING SYSTEM (ERPS)

In Partial Fulfillment of the Requirements in

ACCRESM
Section Code: 412 & 415

Submitted By:
ANABO, IVAN G.
TAVERA, KRIZZA M.
BSA – 3

Submitted To:
MR. LACABA, CARL
Teacher

September 01, 2021

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Abstract
The adoption of Enterprise Resource Planning Systems (ERPS) has increased
dramatically. As a result of this expansion, empirical evidence of the accounting benefits
of employing those systems is required. The formation of accounting research on ERPS
has opened the door to more research on the quality and efficacy of accounting
information systems (AIS) in decision-making related to ERPS use levels. Alternative
Partial Least Squares approaches are being used in this study (PLS). The findings imply
that the manager's opinions about AIS quality have an impact on the decision-making
process' effectiveness. The extent to which ERPS are used in decision-making can be a
moderating factor in the relationship between managers' perceptions of the quality and
efficacy of accounting information systems (AIS). Finally, there was no difference in
opinions of the quality and efficacy of the accounting information system (AIS) in the
decision-making process on the ERPS's breadth of usage amongst the different
department managers.
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“Quality and Efficacy of Accounting Information System (AIS) in the Decision-making

using Enterprise Resource Planning Systems (ERPS)”

Introduction
According to Investopedia Team (2021), enterprise resource planning system
(ERPS) is a process used by companies to manage and integrate the important parts of
their businesses. Many ERP software applications are important to companies because
they help them implement resource planning by integrating all of the processes needed
to run their companies with a single system. An ERP software system can also integrate
planning, purchasing inventory, sales, marketing, finance, human resources, and more.
They further added that, ERPS allow businesses to quickly access needed information for
clients, vendors, and business partners, contributing to improved customer and
employee satisfaction, quicker response rates, and increased accuracy rates. Associated
costs often decrease as the company operates more efficiently.
Enterprise resource planning (ERP) consists of technologies and systems
companies use to manage and integrate their core business processes. Enterprise resource
planning software offers single system solutions that integrate processes across the
business. Such applications allow for users to interact within a single interface, share
information, and enable cross-functional collaboration.
An accounting information system (AIS) is a structure that a business uses to
collect, store, manage, process, retrieve, and report its financial data so it can be used by
accountants, consultants, business analysts, managers, chief financial officers (CFOs),
auditors, regulators, and tax agencies (Fontinelle, 2021).
With the explosion of the Internet of things (IoT), it's no secret that Internet-fueled
or cloud-based applications are on the rise. As a result, more companies are moving away
from on-site ERP systems to adopt the more agile, cloud-based ERP system, managed
and maintained by the host or vendor. Oracle, widely known in the tech industry, offers
several cloud-based ERP products used by many household brands, such as FedEx, Blue
Cross, and Blue Shield. Also, specially trained accountants work in-depth with AIS to
ensure the highest level of accuracy in a company's financial transactions and record-
keeping, as well as make financial data easily available to those who legitimately need
access to it—all while keeping data intact and secure.
This growth has led to the need to have an empirical evidence about the
accounting benefits from using that systems. Besides the large investment, the use of such
system has opened a great opportunity for research in the accounting field.
It stated that there are only few researches that have explored ERPS in accounting
discipline. The existences of accounting research on ERPS has created an opportunity for
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further research on how the level of the use of ERPS will influence the change in the AIS
process. Does the change lead to a better quality in the AIS outputs, which lead to the
effectiveness of the decision-making process by the managers in different departments?
Based on previous studies, the studies about the quality and efficacy of accounting
information system (AIS) in the decision-making process in relation to the use of the ERPS
have not been specifically studied. Therefore, it is necessary to explore the accounting
point of view about the influence of the use of the ERPS on the AIS quality and
effectiveness in the decision-making process related to the level of the use of the ERPS.
As a result, the following research question is formulated as follows:

• Is the manager’s perception of the AIS quality affects the effectiveness of the
decision-making process in the use of ERPS?
• Is the breadth of the use of ERPS becomes a moderating factor in relation to the
manager’s perception of the AIS quality with the effectiveness of the decision-
making process?
• Are there differences in the managers perceptions of the different departments
regarding the AIS quality and the effectiveness of the decision-making process and
in the breadth of the use of the ERPS?
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Methodology

Research Design
Alternative Partial Least Squares approaches are being used in this study (PLS).
The tiny sample size is the reason for the adoption of PLS. PLS does not presume that the
data should be regularly distributed when estimating complex models with limited
samples. Moreover, the use of PLS is also very appropriate when the conceptual and
measurement models are either well undeveloped or it’s still in the exploratory stage of
the development of the theory (Ghozali, 2011). Similarly, according to Chin (1998), PLS is
specifically useful in analyzing and modeling for a minimal measurement scale and small
sample size. The program used is Visual PLS. Meanwhile, for the purposes of testing the
differences perception the SPSS is used.
Three phases will be used to test hypotheses using PLS. The first step is to confirm
that the model is valid. The criteria used is that any indicator has a factor loading greater
than or equal to 0.50 (Chin, 1998) with a significance level of 0.05. As a result, indications
having a factor loading of less than 0.50 were ruled out of the study. Re-estimate the
model after excluding the indicators with a factor loading of less than 0.50 from the
analysis in the second step. The outer model (measurement model) data are read and the
inner model is analyzed in the third stage (structural model).

Measures
According to Ghozali (2011), the indicators employed in this study are all reflexive,
the measurement model was assessed using the indicators' convergent and discriminant
validity, as well as the block indicator's composite reliability. If the value of the square
root of AVE of each construct was greater than the correlation between the constructs in
the model, then the model has a good discriminant validity (Fornell and Larcker, 1981).
The AVE value should be larger than 0.50. The reliability test, which determines the
degree to which each of the indicators implies a shared construct, examines the internal
consistency of the indicators of a construct. The minimum reliability of variables that
create latent dimensions that can be received is 0.70.
The percentage of variance explained by the value of R-square for the dependent
latent constructs and the number of structural path coefficients were used to evaluate the
Inner model (structural model) defining the link between latent variables. Changes in the
value of R square can be used to assess whether the effect of certain independent latent
variables on the dependent latent variable does have a substantive effect or not (Ghozali,
2011). In addition, the significant value of the calculated structural routes is considered
while hypothesis testing. The value of the Critical Ratio (CR) was employed in this study
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to compute the probability value (p-value). If the Critical Ratio probability value is less
than 5% (t> 1.96), the hypothesis is accepted. The hypothesis is rejected if the likelihood
of the Critical Ratio values is more than 5% (t1.96) (Hair et al., 1998).

Procedure
Testing the measurement models that were verified using convergent validity and
discriminant validity for the block of indicators is the first stage in the PLS analysis. The
reliability of each indicator, the composite's reliability, and the averaged Variance
Extracted can all be used to assess convergent validity (AVE). The Visual PLS 1.04bi
application is used to check the data's validity and reliability. The validity and reliability
of all items were determined based on the testing findings, and the questionnaire was
pronounced valid and reliable.
The next step is to evaluate the discriminant validity. The first cross-loading test
reveals that the total value of each indicator's factor loading is greater than the
measurement of the other constructs. The findings of this study show that any latent
construct can predict block measurement better than other blocks, implying that the
research model measurement has strong discriminant validity. The comparison value
square root of average variance extracted (AVE) of each construct is compared to the
correlations between the constructs in the model in the second evaluation.
Following the testing of the measurement model (outer model), the structural
model is tested. The purpose of this test is to determine the link between the constructs
suggested in this research hypothesis. Visual PLS provided two forms of information on
how well the projected structural model and postulated links performed. The first piece
of information gleaned from the R square value is a goodness-of-fit model test to explain
variation in the proportion of the overall construct of the model.
As a result, the Accounting Information Systems Quality (AISQ) and the variable
breadth have an impact on the effectiveness of decision-making. Using ERP Systems
(ERPC) has a moderating influence on Accounting Information Systems Quality (AISQ)
and Decision-Making Effectiveness (EDM). The increased use of ERP systems will have
a greater impact on the quality of the relationship between the Accounting Information
Systems Decision Making and the efficacy of the Accounting Information Systems
Decision Making. This means that the effectiveness of the manager's decision-making will
be influenced by the quality of the accounting information system.
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Results
Significant findings imply that the use of ERPS, namely the functional and
geographic scopes, has a moderating effect on the relationship between the quality of the
accounting information system and the effectiveness of decision-making. It demonstrates
that ERPS can integrate all data to provide information that aids firm management in
making decisions. The accuracy of accounting information systems is particularly
indicative of their quality, followed by the simplicity of use of the system, continuous
monitoring of decisions and activities, information timeliness, and the efficacy of display
formats.
The correctness of the accounting information system demonstrates that the
company's system can provide data in line with the requirements, allowing it to be used
in successful decision-making. This signifies that information has been delivered in a way
that can be simply interpreted and understood, resulting in greater dissemination of
knowledge about parts or functions. The effectiveness of the decision-making process as
described is achieved specifically by increasing the decision-making process, as well as
the availability of high-level enterprise data integration, accuracy and ease of accessing
data on the company's accounting information system, the timeliness of corporate data
access, and improving the quality of corporate financial reporting.
The results of this study also support the research of Spathis and Constantinides
(2003) and Sajady et al. (2008), namely that the use of the ERPS is useful in enhancing the
flexibility to produce information, improve the quality of corporate financial reporting,
effective decisions making, and maintaining the data more easily. In particular, Sajadi et
al. (2008) concluded that the use of information technology can affect the effectiveness of
the accounting information systems. Significant results on the effectiveness of the
decision-making models also support the study of Bahrami and Jordan (2009) about an
improvement in the decision-making process both at a strategic and operational level.
Also, it showed no difference in the perception of the quality of the accounting
information systems and the effectiveness of the decision-making between the different
functional managers.
From the research questions formulate above, as a result, we find out that:

• AIS quality has positive direct effect on effectiveness of decision-making process

• More extensive the use of the ERPS mediates the positive direct effect of Manager’s
perception of the AIS quality on effectiveness of decision-making process
• There are no differences on manager of different department perceptions
regarding the AIS quality and effectiveness of decision-making process in the
breadth of the use of the ERPS.
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Discussion
The following were the three goals of this study: First, determine whether the
manager's opinion of the accounting information system's quality has an impact on the
decision-making process' effectiveness. Second, determine whether the breadth of ERPS
use can operate as a moderating factor in the relationship between managers' perceptions
of accounting information system quality and decision-making process efficacy. Third,
determine whether there are any changes in managers' perceptions of the quality of
accounting information systems and the effectiveness of the decision-making process in
the breadth of ERPS use.
The breadth of ERPS use can be measured using the capability idea given
by Karimi et al. as the outcomes of testing the outer model (2007), the large diversity of
systems that use functional or geographic systems demonstrates the extent of utilization.
As a result, the concept of information system capabilities can be applied to future
information system research. In this study, the quality of the accounting information
system was measured using the Information Systems (IS) Success theory. User
satisfaction in processing tasks, storing, and disseminating information that can be used
for decision making can be used to evaluate the accounting information system's efficacy.
As a result, the idea of Information Systems (IS) Success can be used to accounting
information systems literature, particularly in data processing and information usage as
a result of information system implementation.
This study used a survey method, additional detailed information regarding the
respondents' perceptions was not acquired. Other methodologies will need to be used in
future study to get a more thorough picture of the overall advantages from different
levels of ERPS use. Finally, future study will need to account for changes in the time it
takes to analyze the success of decisions made as a result of the adoption of ERPS.
Furthermore, information on the advantages of accounting has been linked to an increase
in the firm's performance.
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References

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https://www.investopedia.com/terms/e/erp.asp
Fontinelle, A. (2021), Introduction to Accounting Information Systems (AIS)
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information-systems.asp
Alzoubi, A. (2011). The Effectiveness of the Accounting Information System Under the
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