The Role of Accounting Information System on the Quality of

Managerial Decision Making in Local Governmental

Organizations: The Case of Jimma Zone, Oromia National
Regional State, Ethiopia

A Thesis Submitted to the School of Graduate Studies of Jimma University in

Partial Fulfilment of the Requirements for the Award of the Master of Science
in Accounting and Finance (M.Sc.).

BY:

GETACHEW ALI KEBIRE

Under the Guidance of

Matewos Kebede (Ph.D.)

And

Mr. Monanol Terfa

JIMMA UNIVERSITY

COLLEGE OF BUSINESS & ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

NOVEMBER 2021

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 JIMMA, ETHIOPIA

CERTIFICATE
This is to certify that the thesis entities “The Role of Accounting Information System on the
Quality of managerial Decision Making in local Governmental organizations: A Case study
of Jimma Zone, Oromia National Regional State, Ethiopia”, Submitted to Jimma University
for the award of the degree of Master of Science in Accounting and Finance (M.Sc.) and is a
record of valuable research work carried out by Mr. Getachew Ali, under our guidance and
supervision

Therefore, we hereby declare that no part of this thesis has been submitted to any other
university or institutions for the award of any degree of diploma.

Main Adviser’s Name Date Signature

Co-Advisor’s Name Date Signature

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 DECLARATION
I hereby declare that this thesis entitled “The Role of Accounting Information System on the
Quality of managerial Decision Making in local Governmental organizations: A Case study
of Jimma Zone, Oromia National Regional State, Ethiopia”, has been carried out by me
under the guidance and supervision of Dr. Matewos Kebede (Asst. prof.) and Mr Monanol
Terfa (M.Sc.).

The thesis is original and has not been submitted for the award of any degree or diploma to
any university or institution.

Researcher’s Name Date Signature

__________________ __ ___________________ ___________________

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 Abstract

Accounting information system is the most important information system widely used in the
managerial decisions and influenced on organization performance. The purpose of this study
is to examine the role of AIS on the quality of managerial decision-making. To achieve the
objective of the study both explanatory and descriptive research designs were adopted. A
Sample of 214 respondents was selected by using multistage sampling technique. The data
was collected through structure questionnaire and interview. Data analysis was made using
descriptive and inferential statistics. Results indicate that the use of AIS has significant effect
on the quality of managerial decision-making. Pearson correlation analysis result showed
that accuracy, timeliness, completeness, accessibility and interpretability of accounting
information were positively correlated to quality of managerial decision-making. Multiple
regression analysis also revealed that 62% of the variation in the quality of managerial
decision-making was explained by five important variable namely accuracy, timeliness,
completeness, accessibility and interpretability. It is recommended that the government is
expected to be able to improve and apply the right policy to overcome the weaknesses in
IBEX system in order to increase resulted information quality and eventually would affect the
quality of managerial decision-making. Furthermore, the study recommended that local
governmental organizations have to computerize their AIS system that is used to generate
accounting and financial reports.

Keywords: AIS, Decision making, IBEX, IS Success model

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 Acknowledgment
First, I would like to greatly express my gratitude to my main advisor Dr. Mathewos Kebede.
(Asso. prof.), and co-advisor Mr Monanol Terfa (MSc), for their invaluable comments,
encouragement, and guidance in accomplishing this thesis and make it successful. Besides, I
extend my gratitude to the respondents of the study for their cooperation with me via
providing necessary data. My thanks also extend to all my friends for all their cooperation in
dealing with me about my study and sharing with me all constructive ideas for the completion
of this thesis. Finally, I am indebted to the material and moral support obtained from my
family.

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Table of Contents
CERTIFICATE ..........................................................................................................................ii

DECLARATION ..................................................................................................................... iii

Abstract ..................................................................................................................................... iv

Acknowledgment ....................................................................................................................... v

List of Tables ............................................................................................................................ ix

List of Figures ............................................................................................................................ x

List of Acronyms ...................................................................................................................... xi

CHAPTER ONE ........................................................................................................................ 1

1.INTRODUCTION .................................................................................................................. 1

1.1.Background of the study .................................................................................................. 1

1.2.Statement of the problem ................................................................................................. 3

1.3.Objective of the study ...................................................................................................... 5

1.3.1.General objective ...................................................................................................... 5

1.3.2.Specific objective ...................................................................................................... 5

1.4.Significance of the study.................................................................................................. 5

1.5.Scope of the study ............................................................................................................ 6

1.6.Limitations of the study ................................................................................................... 6

1.7.Organization of the thesis ................................................................................................ 6

1.8.Definition of Operational Terms ...................................................................................... 6

CHAPTER TWO ....................................................................................................................... 8

2.THEORETICAL AND EMPIRICAL LITERATURE REVIEW........................................... 8

2.1.Theoretical Literature Review ......................................................................................... 8

2.1.1.Accounting Information System ............................................................................... 8

2.1.2.Qualities of Good Accounting Information System ................................................. 9

2.1.3.The role of Accounting Information system ............................................................. 9

2.1.4.The role AIS in governmental organization............................................................ 10

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 2.1.5.Decision making ..................................................................................................... 11

2.1.6.The role AIS in decision making ............................................................................ 11

2.2. Measure of study variables ........................................................................................ 12

2.2.1. Information system success model .................................................................... 12

2.2.2.Information Quality Measures ................................................................................ 13

2.2.3.Measure of Quality of Decision Making ................................................................ 13

2.3.Empirical Literature review ........................................................................................... 14

2.3.1.External Empirical Reviews ................................................................................... 14

2.3.2.Empirical review in Ethiopia .................................................................................. 15

2.4.Research gap and study justification.............................................................................. 18

2.5.Conceptual Framework .................................................................................................. 19

CHAPTER THREE ................................................................................................................. 20

3.RESEARCH DESIGN AND METHODOLOGY ................................................................ 20

3.1.Research Design............................................................................................................. 20

3.2.Research approach ......................................................................................................... 20

3.3.Sources and Type of data ............................................................................................... 21

3.4.Target Population ........................................................................................................... 22

3.5.Sampling techniques and sample size ............................................................................ 22

3.6.Variable Definition and Measurement ........................................................................... 24

3.6.1.Dependent variable ................................................................................................. 24

3.6.2.Independent Variable .............................................................................................. 24

3.7.Methods of Data Analysis and Interpretations............................................................... 25

3.8.Model specification ........................................................................................................ 26

3.9.The Reliability of the questionnaire items ..................................................................... 27

CHAPTER FOUR .................................................................................................................... 28

4.RESULTS AND DISCUSSION ........................................................................................... 28

4.1.Response Rate ................................................................................................................ 28

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 4.2.Demographic Characteristics of Respondents ............................................................... 28

4.3.The Current state of AIS in Governmental organization ............................................... 30

4.3.1.Extent of AIS automation in the selected organization .......................................... 31

4.3.2.Accounting Methods Used ...................................................................................... 31

4.3.3.Competency and qualification of accounting personnel ......................................... 33

4.3.4.Availability of consecutive training for employees ................................................ 34

4.3.5.Adequacy of accounting information produced ...................................................... 35

4.3.6.Managerial use of accounting information for making decision ............................ 36

4.4.Benefits of using IBEX system ...................................................................................... 36

4.5.Challenges of Accounting Information System ............................................................. 38

4.6.Descriptive Statistics ...................................................................................................... 39

4.7.Inferential statistics ........................................................................................................ 40

4.7.1.Correlation Analysis ............................................................................................... 40

4.7.2.Assumptions of multiple regressions Analysis ....................................................... 41

4.7.3.Regression Analysis result and discussion ............................................................. 43

4.8.Discussion of the Findings ............................................................................................. 45

CHAPTER FIVE ..................................................................................................................... 48

5.CONCLUSION AND RECOMMENDATION .................................................................... 48

5.1.Conclusion ..................................................................................................................... 48

5.2.Recommendation ........................................................................................................... 50

REFERENCES ........................................................................................................................ 51

Appendix I ............................................................................................................................... 55

Appendix II .............................................................................................................................. 58

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 List of Tables
Table 3-1: Sample size for each woreda .................................................................................. 23
Table 3-2: How variables will be operated .............................................................................. 25
Table 3-3: Cronbach‟s alpha coefficient of the study items .................................................... 27
Table 4-1: Response Rate ........................................................................................................ 28
Table 4-2: Demographics of respondents ................................................................................ 28
Table 4-3: Extent of AIS automation ....................................................................................... 31
Table 4-4: Skills and Competency of Accountants.................................................................. 33
Table 4-5: Types of Accounting Information produced .......................................................... 35
Table 4-6 Usage of Accounting Information by managers ...................................................... 36
Table 4-8 Summary of descriptive statistics ............................................................................ 39
Table 4-9: Pearson‟s Correlation between Dependent and Independent variables.................. 41
Table 4-10: Multicollinearity test result .................................................................................. 43
Table 4-11 Model Summary .................................................................................................... 44
Table 4-12: ANOVA Result .................................................................................................... 44
Table 4-13: Multiple Regression Result .................................................................................. 45

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 List of Figures
Figure 2-1 Conceptual framework ........................................................................................... 19
Figure 4-1: Computer program used for performing accounting activities ............................. 32
Figure 4-2: Training availability .............................................................................................. 34
Figure 4-3: Benefits of using IBEX system ............................................................................. 37
Figure 4-4: Challenges of Accounting Information system ..................................................... 38

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 List of Acronyms
AIS = Accounting information system

BDA=budget and disbursement account

BIS = budget information system

CAIS=Computerized Accounting Information Systems

IBEX = integrated budgetary and expenditure system

IFMIS= integrated financial management information system

IT = Information Technology

MoFEC= Ministry of Finance and Economic Cooperation

ZoFEC =Zone finance and economic cooperation

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 CHAPTER ONE

1. INTRODUCTION
This chapter offers background information on the research topic, statement of the problem,
research questions, the purpose of the study, and significance of the study. It also contains the
scope of the study, limitations of the study, and organization of the study.

1.1. Background of the study

A system is a set of two or more components that works together to achieve a common goal.
Accounting information system (AIS) is a system that collects, records, stores, and processes
data to produce information for decision makers. It consists of people, procedures and
instructions, data, software, information technology infrastructure, and internal controls and
security measures (Romney et al., 2015). According to Algrari & Ahmed, (2018), AIS is a
formal tool for collecting, organizing, and communicating accounting information about an
organization‟s activities. As defined by Beg (2018), 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 key people in the organization.

An accounting information system is the most vital system to all organizations. According to
Gebremedihin, (2019) effective AIS can add value to an organization by providing accurate
and timely information that can enable manager to make better decisions, secure internal
control systems, simplify and improve financial report generation process. A study done by
Soudani, (2012) found that AIS play an important role in organizational performance as it
facilitates the decision-making process, enhance the quality of accounting information, aid
performance evaluation, internal control, and organization transactions. According to
Onaolapo & Odetayo, (2012) good accounting information system leads to administrative
effectiveness and enhances the quality of financial reports. Further, the study argued that AIS
aids better decision making in an organization.

An accounting information system also play profound role in governmental organizations.

AIS helps to perform the financial activities of governmental organizations in a timely,
efficient, and reliable manner for example, making payments, settling liabilities, collecting
revenue, buy and selling assets. It aids to maintain systematic, easily accessible accounting

1
and documentary records, which helps to review past transactions and the current financial
status of governmental organizations. Similarly, AIS support governmental organizations in
preparing periodic financial statements, which is base for stewardship and accountability, and
decision-making. Likewise, AIS assists a governmental organization to maintain financial
records that is suitable for budgetary control, internal control, and the needs of auditors.
Furthermore, AIS provides means for effective management of government assets, liabilities,
expenditures, and revenues. It simplifies and improves the provision of accounting
information for decision-makers at various levels in evaluating performance, achievements,
and expenses. According to the institute of chartered accountants of India report (2017)
government accounting system, contributes to a country‟s socio-economic development as its
effects on public financial management and accountability. According to Sari et al., (2016)
government accounting system play a significant role in making better decision and assists
evaluation of government performance. The system aids measure, recording, summarize,
reporting, and interpreting government's different activities, primarily to serve administrative
and legislative body through preparing financial statements that convey the implementation
of the state budget by comparing the estimated figures of expenditures and public resources
with actual resources. It also facilitates the provision of accounting information for decision-
makers in evaluating performance, achievements, and expenses. As stated by Shuhidan &
Nori, (2015) effective implementation of AIS in a public organization contribute to make
better decision, aids internal controls, and supports financial statement preparation in a
standardized format. Abebe et al., (2019) also argued that AIS plays a significant role for a
public organization through facilitating timely submission of quality and adequate financial
reports, uniformity of financial report formats, and accessibility of financial reports for the
concerned body. In developing countries, besides being a tool for government financial
management modernisation, AIS is considered as a weapon against fraud and waste in
governmental organization (ICAI, 2017).

Despite all the advantage, in Ethiopia public financial management especially on accounting
and reporting practices hindered by several problems and leads the budgeted resources to
deficiency (Abebe et al., 2019). Even though the Government of Ethiopia has taken a
number of reforms to overcome the persistent of poor performance in financial management,
the problem has still existed (Wussien, 2017).

Thus, this study was intended to assess whether accounting information system adopted in
governmental organizations are effective in relation to its expected benefits already expressed

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in different literatures and if not what are the challenges particularly in a local governmental
organization in Jimma zone.

1.2. Statement of the problem

How an organization is managed and developed is extremely important, because every wrong
decision comes at a high cost. Therefore, each decision that management brings should base
on the quality of information. For effective and efficient information processing, it is highly
important to have an integrated set of components, called an information system. Undeniably,
a significant role in information processing for effective decision-making belongs to AIS.
There is a general agreement that effective implementation of AIS can improve governance
through providing adequate and high-quality financial information that manager‟s use for
administering their organization effectively, formulating budgets, and managing resources.
Grace, (2008) noted that managements can only make a good decision if they are able to get
correct accounting information from AIS. In a situation where the AIS is unable to provide
correct information: these connections affect the decisions of the management adversely. As
mentioned by Wussien, (2017) the Government of Ethiopia has for a long time been much
concerned over the persistent poor performance in financial management due to lack of
reliable and timely information for decision-making. Likewise, Abebe et al., (2019) noted
that even though the automated IBEX system was operationalized at the federal and regional
levels starting from 2010 onwards, the financial reporting system in Ethiopia showed time
delay, inaccuracy, and inconsistency.

Every country‟s government needs financial resources to carry out the responsibility assigned
by its people. Especially, in public sectors, these financial resources can be raised either
through tax or non-tax instruments. Unless these financial resources are used effectively and
efficiently for the intended purpose, generating all these sources will have their disincentive
effect on the performance of the economy. Sound public financial management is crucial for
efficient and equitable utilization of scarce national resources. In this regard, the role of AIS
is crucial as it helps to set up a system of internal control, thereby enabling managers to
prevent fraud and increase efficiency in an organization. It assists to achieve effective control
over the management of public money. However, as witnessed by Abebe et al., (2019) in
Ethiopia public financial management especially on accounting and reporting practices
hindered by several problems and thereby lead the budgeted resources to deficiency. Further,
the study discovered that the ineffectiveness of accounting systems was the main reason for

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improper, inaccurate and, delayed financial information communication. Thus, to minimize
miss utilization of the scarce resources of the public through wrong and inefficient financial
management and ineffective decisions, it is necessary to examine the current state of AIS in
local governmental organizations in Ethiopia.

Effective AIS is vital to any organization‟s long-run success. Without a means of monitoring
the events that occur within an organization, there would be no way to determine how well
the organization is performing. Currently, the role of accounting information system becomes
more prominent with the growing development of technology and the increase in information
needs. For a successful and effective managerial decision making, it is necessary to provide
accurate, timely and relevant information to decision makers (Hasen et al 2013).

The role and challenges of AIS in governmental organization is not well studied in Africa and
very little research has been done in Ethiopia. Also studies conducted in Ethiopia tends to
focus on business organizations and they failed to show the role and challenges of AIS in
decision making in context of local governmental organizations. In addition, as per the
researcher knowledge, no study appears to have been made on the role of AIS in decision
making in local governmental organizations in Jimma Zone.

Therefore, this study is expected to bring a better understanding of the relationship between
AIS and quality of managerial decision making in local governmental organization in Jimma
zone. Consequently, the study was addressed the following basic questions.

1. What are the current states of accounting information system in local

governmental organization in Jimma zone/oromia region/Ethiopia?
2. Does AIS contribute to quality managerial decision-making in local governmental
organization in Jimma zone/oromia region/Ethiopia?
3. What are the challenges facing associated with the use of AIS in local
governmental organization in Jimma zone/oromia region/Ethiopia?

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 1.3. Objective of the study

1.3.1. General objective

The objective of this study is to examine the role of AIS on the quality of managerial
decisions making.

1.3.2. Specific objective

1) To examine the effect of accuracy of accounting information on the quality of
managerial decision making in local government organizations in Jimma zone/Oromia
region/Ethiopia
2) To access the effect of completeness of accounting information on the quality of
managerial decision making in local government organizations in Jimma zone/Oromia
region/Ethiopia
3) To determine the effect of timeliness of accounting information on the quality of
managerial decision making in local government organizations in Jimma zone/Oromia
region/Ethiopia
4) To examine the effect of accessibility of accounting information on the quality of
managerial decision making in local government organizations in Jimma zone/Oromia
region/Ethiopia
5) To examine the effect of interpretability of accounting information on the quality of
managerial decision making in local government organizations in Jimma zone/Oromia
region/Ethiopia

1.4. Significance of the study

The theoretical contribution of this research lies primarily in the fact that the study sheds light
on the relationship between AIS and quality of managerial decision making, specifically in
the context of local governmental organization in Jimma zone. The study also helpful as it
shows how AIS contribute for efficient & effective management of government organization.
In addition, the outcomes of this study helpful to the concerned parties, including the higher-
level decision-makers in showing the challenges associated with the use of AIS, which helps
them to take corrective measures. Furthermore, the study is expected to add to the existing
literatures on the role and challenges of AIS in local government organization and serve as
basis for current and further researches.

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 1.5. Scope of the study
The purpose of this study was to assess the role of AIS on the quality of managerial decisions
making. The scope of the study was limited geographically to Jimma zone governmental
organizations. In addition, this study did not consider all governmental organization. Rather it
was limited on two purposively selected governmental offices in Jimma zone. These offices
were finance and economic cooperation, and Revenue collection authority office. The reason
why these organizations were chosen is that the activity of the organization directly related
with the subject under study. Further, this study only considers operational control decisions.
An operational control decision is a decision related with the routine tasks of an organization.

1.6. Limitations of the study

The study was carried out in Jimma zone, thus confined to a specific area. In addition, this
study did not consider all of governmental organization in the study area therefore it would
be sound if it includes other governmental organization. Furthermore, the effectiveness of
AIS was measured by only information quality dimension. The result would be fruitful if it
considered other dimensions of AIS success measure such as system quality, support quality.

1.7. Organization of the thesis

This research paper consists of five chapters. The first chapter comprises background of the
study, statement of the problem, research questions, and objective of the study, hypothesis of
the study, significance of the study and scope and limitation of the study. Chapter two
presents literature review with respect to the theoretical perspective and empirical studies on
AIS. Chapter three presents the research approach, target population, sample frame and
sample size, source & method of data collection, methods of data analysis and interpretations,
and finally, the model specification will be discussed. In chapter 4 the result and analysis of
the data will be discussed. In the fifth chapter, conclusion and recommendation were
provided. In the end, references and appendixes were attached.

1.8. Definition of Operational Terms

A decision is simply a conclusion reached after consideration: it occurs when one option is
selected to the exclusion of others.

Decision-Making: is the procedure of reducing the gap between the existing situation and the
desired situation through solving problems and making use of opportunities (Saroj, 2009).

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Operational control decision: is a decision related with the routine tasks of an organization.

Local government: is a system of governance of a town or an area by elected representatives

of the people who live there. It can also mean the organization that is responsible for the
government of a local area and for provision of services (Deus, 2019).

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 CHAPTER TWO

2. THEORETICAL AND EMPIRICAL LITERATURE

REVIEW
This chapter presented a review of literature about the role and challenges of AIS in
decision-making. The first section provides theoretical literature review on AIS and
decision-making and the second section present reviews of empirical literature. The
last section presents the conceptual framework.

2.1. Theoretical Literature Review

2.1.1. Accounting Information System

A system is a combination of two or more components that works together to achieve
a common goal. Accounting information system (AIS) is a system that collects,
records, stores, and processes data to produce information for decision makers. It
comprises people, procedures and instructions, data, software, information technology
infrastructure, and internal controls and security measures (Romney et al., 2015) It is a
formal mechanism for gathering, organizing and communicating accounting
information about an organization‟s activities. It 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 key people in the organization's
environment by effectively supplying information to authorized people in a timely
manner (Beg, 2018). According to Algrari & Ahmed, (2018) AIS is a formal tool for
collecting, organizing and communicating accounting information about an
organization‟s activities. It is a whole of interrelated components that are put together
to collect information or raw data and transform it into financial data for the purpose
of reporting them to decision makers. Therefore, AIS is conceptualized as a network
established in an organization to provide managers with information that assist them
in decision making. It is a set of resources such as people and equipment used to
transform financial data into information. It can also be a group of interrelated
subsystems designed to collect, record, and process data and produce information for
decision maker. It can also be a routine or an automated system designed for gathering
and communicating data for decision making in realizing the overall objectives of an

8
organization. Its fundamental function is acquiring, processing, and communicating
data that is important to the operation of an organization.

2.1.2. Qualities of Good Accounting Information System

Accounting information system should be effective and efficient enough which gives correct
and consistence information on time manner. It is concerned with the provision of accounting
information through the optimum use of resources. A good accounting information system
provides data as and when it requires to the internal and external people related with the
organization. The information provided by good AIS is accurate and complete because AIS
use various accounting software for recording financial transactions. It complying with laws,
regulations and agreements to which user process their subject such as internal policies and
external criteria. Good AIS system maintains confidentiality. It is concerned with the
protection of sensitive accounting information from unauthorized disclosure.

2.1.3. The role of Accounting Information system

Effective AIS benefits an organization in several ways. A study by Beg (2018) noted that a
successful accounting information system would lead to the success of the organization in
achieving its objectives but unsuccessful information system could lead to the failure of the
organization in achieving its goals thus inability to grow and survive. A study done by Ladan
Shagari et al., (2017).found that well-designed AIS plays an important role to increased
revenues and the quality of work processes, and save costs of banking services. It also
enables them to achieve their desired goals and improve the quality of task performed. AIS
has contributed for improving operation performance through providing desired service to
customers with efficiency and ensure effective and efficient internal control system of the
organization, aids in making appropriate decision on timely basis and assist in providing
reliable financial statement. According to Onaolapo & Odetayo, (2012) good accounting
information system leads administrative effectiveness and enhance the quality of financial
reports moreover aids better decision making but poor accounting information system
jeopardize administrative effectiveness thus, lead managers malnourished administratively. A
study done by (Fekade, 2017) argued that AIS is an effective decision-making instrument and
aids controlling and coordinating the activities of an organization. Further, the findings of the
study indicated that AIS contribute to the success of an organization through improved
decision-making, improved service, increased sales or improved distribution, market
efficiency and customer welfare. Another study done by Soudani, (2012) found that AIS play

9
an important role to organizational performance as it aids decision-making process,
enhancement of quality of accounting information, facilitate performance evaluation, internal
control and company‟s transactions. In general, management of any organization requires
relevant and reliable information in making operational, procedural and strategic decisions to
perform organizational tasks effective and efficient manner. Reliable and relevant
information can be ensure through proper sorting and documentation, storing, segregation
and accumulation of information with respect to nature of application of those information
and such process can be effectively done if organization implement accounting information
system with the organization. In this regard, the role of AIS is fundamental for the
effectiveness of an organization in realizing their predetermined objective and goals.

2.1.4. The role AIS in governmental organization

Literatures argued that AIS benefits governmental organizations in several ways. According
to the institute of chartered accountants of India report (2017) government accounting
system, contribute for a country‟s socio-economic development through its effect on public
financial management and accountability. The report also noted that effective government
accounting makes it possible to manage the government‟s finances smoothly and provides
audit trails to prevent and detect financial misconduct. Further, the report indicated that in
light of the prevalence and severity of government corruption in many developing countries,
financial integrity assurance is a critically ensured with the help of government accounting
systems. According to (Sari et al., 2016) government accounting system play profound role to
make better decision and evaluation of government performance. The system helps to
measure, record, summarize, report and interpret the government different activities,
primarily to serve administrative and legislative purposes through preparing financial
statement that convey the implementation of the state budget by comparing the estimated
figures of expenditures and public resources with actual resources. It also facilitates the
provision of accounting information for decision makers in evaluating performance,
achievements and expenses. A study by Alim & Siswantoro, (2019) evaluated the role of
effective AIS on the efficiency of financial and accounting tasks in the local government
finance office in Depok City. The results of the study prove that AIS has a positive effect on
the efficiency of budgeting, accounting and reporting, auditing and control functions in local
government finance office. Likewise, The study done by Shuhidan & Nori, 2015) found that
implementation of AIS in public organizations enables the management to improve decision-

10
making, internal controls and financial information as well as aids to produce the financial
reporting and statement on a standardized format and timely basis to the stakeholders.

In general, AIS enable governmental organizations to conduct their financial activities in a

timely and efficient manner. For instance, make payments, settle liabilities, collect sums due,
buy and sell assets etc. AIS support governmental organizations in keeping systematic, easily
accessible accounting and documentary records as evidence of past transactions and current
financial status, so that detailed transactions identified and traced. It facilitates the provision
of periodic financial statements to demonstrate stewardship and accountability. It also enables
to maintain financial records suitable for budgetary control, internal control and needs of
auditors. Further, it aids effective management of government assets, liabilities, expenditures
and revenues.

2.1.5. Decision making

Decision-making is a multistep activity that comprises; identify the problem, collect and
interpret information, evaluate ways to solve the problem, select a solution methodology, and
implement the solution (Romney et al., 2015). An operational control decision is a decision
related with the routine tasks of an organization. The control function ensures that the
activities of the organization conform to the plan. This requires evaluating the operational
results against predetermined standard and, when necessary taking corrective action. These
decisions require with high degree of certainty. In this regard the role of AIS is profound. It
provides manager with the required information which helps to reduce uncertainty. An
operational control decision encompasses three basic activities. These are setting standards,
evaluating performance, and taking corrective action. Standards are predetermined levels of
performance that managers believed attainable. In order to evaluate performance a decision
maker compares the performance against the standard. After comparing the performance to
the standard, the manager takes corrective action whenever appropriate. Therefore this study
considers the role of AIS in operational control decision in governmental organization.

2.1.6. The role AIS in decision making

Most literatures showed that information quality has significant and positive impact on
quality of managerial decision making. The result of study by Hasan et al., (2013) found that
management information system improves information quality and subsequently effects on
managerial decision-making. According to Gebremedihin, (2019) accounting information has
a crucial role on management decisions and organization performance which has been shown

11
to be major force in decision making. The result of the study also proves that the existence
strong positive relationship between accounting information and decisions making in Wolaita
development association. Similarly a study by Pirayesh et al., (2018) found that automated
AIS increases the reliability of information and this in own rotate facilitates the matter of
decision makings by managers. According to Royaee et al., (2012) AIS is one of the most
important information system widely used in the managerial decisions and influenced on
organization performance. A study made by Ovidian (2013) noted that good accounting
information should be available to offer suitable and accurate decision-making that could lead
to maximization of profitability of any organization and utilization of scarce resource
optimally. The study conducted by (Sajady et al., 2012) showed that the implementation of
AIS would lead to improvements in the process of decision making by managers, internal
control and financial reporting quality, and facilitation of the transaction processing
companies.

2.2. Measure of study variables

2.2.1. Information system success model

DeLone and McLean first developed an information system model in 1992. The model offers
framework for measuring the information system success in an organization. (Petter et al.,
2008) identified six determining factor for the success of information system which
comprises system quality, information quality, service quality, use, and user satisfaction.
System quality is the desirable characteristic the information processing system itself, for
instance: user convenience, system flexibility, reliability, easy to learned, and the number of
responses. Information Quality is the characteristics needed by system output, which includes
relevance, understandable, accuracy, conciseness, completeness, timeliness, and usability.
Service Quality is the support quality obtained by system users from the supporting personnel
of information system, for example responsiveness, accuracy, reliability, technical
competence, and empathy of the IT personnel. Use is the degree and how the employee and
customer in using the capability of an information system, for example: the number of uses,
frequency of uses, characteristics of uses, compatibility in uses, width of uses, and purpose of
uses. User satisfaction is the level of satisfaction of user on report, and support services, for
example: the wider use of instrument attribute in measuring information satisfaction.
Therefore, the current study adopts IS success model to the local governmental organization
by focusing only on one quality measures which is information quality and links AIS

12
information quality to decision making quality. While system quality described through
descriptive statistics.

2.2.2. Information Quality Measures

Information Quality is the desirable characteristics of accounting information system outputs.
Information quality measures the ability of a system to provide timely, accurate, relevant, and
complete output to a user for effective decision-making. Quality of information has effect on
managerial decision-making (Ladan Shagari et al., 2017). As stated by Hasan et al., (2013)
that information to be helpful, it must include the following characteristics. it should be
accurate, contain all the details required in a form that is short enough, presented in the same
format, relevant to the purpose for which it is required, available quickly and timely to
support information needs, appropriate amount of information, easy to access, and easy to
understand. Likewise, Romney et al., (2015) identified seven characteristics of useful
information. These characteristics are relevant, reliable, understandable, timely, complete,
verifiable and accessible. There are many measures for information quality and the measures
differ from one researcher to another. Fitriati et al., (2020) has measured information quality
with four variables: completeness, relevance, timeliness, and accuracy. A study made by
Gamayuni (2019), measure information quality with seven variables: relevance, accuracy
completeness, timeliness, broad scope, aggregation and Integration. The common measures
of information quality adopted by previous researcher include accuracy, completeness,
relevance, timeliness, accessibility, and understandability.

Thus, this study measure information quality with accuracy, timeliness, completeness,
accessibility and interpretability that enables users for making better decision in achieving
their organizational goal.

2.2.3. Measure of Quality of Decision Making

Managerial Decision Making is selecting alternative from among set of alternatives to solve
the particular problem (Djamasbi et al., 2010). The quality of decision making variable is
composed of items such as a perceived increase in the quality of decisions and reduction of
the time required for decision-making (Petter et al., 2008). Quality of decision making
measured by items such as reduces the time of my decision-making, helps me to better
manage the budget for activities, helps me to better allocate resources, helps me to better
monitor activities, and improves the quality of my decisions (Caniëls & Bakens, 2012).

13
 2.3. Empirical Literature review

2.3.1. External Empirical Reviews

There are a number studies were done in the area of accounting information system and its
impact on decision-making, financial performance and organizational effectiveness. Al
Qatananeh (2004) has done a study to identify and analyze the role of accounting information
system to provide quality accounting information to meet the managerial requirements in
Jordanian manufacturing companies. The result of the study showed that there exist strong
and positive relationship between accounting information system component and quality of
information received.

Hunton (2002) studied the relationship between computerized accounting information system
and organizational effectiveness. The study found that there is strong relationship between
accounting information system and organizational effectiveness, which means the use of
accounting information, will lead to organizational effectiveness.

Azize (2016) examined the impact of accounting information system on firms‟ performance
in small and medium sized enterprises in Kayseri, Turkey. In order to conduct his research he
gathered the data by interviewing 60 firms in organized industrial zone and analyzed the data
by using least squares method. The result of this study shows that there is positive and
statistical significant relation between the use of AIS and educational status of managers. In
addition, a positive relation identified between the use of AIS and growth (sale, customer and
revenue).

Another study done by (Kabiru & Rufai, 2014) found that the use of accounting information
is crucial in simplifying issues and in the provision of quality information in the Nigerian
banking industry. The study also argued that the use of AIS also leads to the timely and
accurate production of reports, as customers have limitless access to banking service through
the aids of internet banking. Their study aimed to find out the impact of information system
on the Nigeria banking sector in which both primary and secondary data were used and
analysis of variance was adopted in testing the hypothesis. Judgmental sampling method was
adopted to obtain a representative sample of the population. The result found that accounting
information system improves banks performance through reducing operational cost and by
facilitating transactions among customers within the same or different network.

14
Likewise a study done by Sajady et al., (2012) examine the effectiveness of accounting
information systems on finance managers listed companies at Tehran stock exchange showed
that implementation of accounting information system at these companies result the
enhancement of managers decision making process, internal controls and quality of financial
reports and facilitated the process of the company's transactions.

A study done by Onaolapo & Odetayo, (2012)examine the effect of accounting information
system on organizational effectiveness on selected construction companies in Ibadan,
Nigeria. The result of the study showed that, accounting information system has a positive
and significant effect on organizational effectiveness. Furthermore, this study also argued that
accounting information system leads to good financial reports and lead to better decision-
making. To arrive to this finding, the researchers adopted purposive sampling technique to
select ten personnel from each of the selected companies as sample of the study. A hypothesis
formulated and both descriptive and inferential statistical tools applied to analyze the data.

2.3.2. Empirical review in Ethiopia

Gebremedihin, (2019) has done a study on “The Impact of Accounting Information System in
Decision Making Process, in local non-governmental organization in Ethiopia”. Based on a
primary data collected through semi-structured questioner and interview, the researcher
assessed the relationship between accounting information system and effective decision
making and the challenges facing related to the application of accounting information system.
The findings of the study showed that AIS has significant and positive relationship with
decisions making in Wolaita development association and its effectiveness could lead to
better decision-making by managers, more effective internal control systems, improvement of
the quality of financial reports and facilitating financial transaction processes.

(Amosha, 2017) conducted study on “The Effectiveness of Computerized Accounting

Information Systems (CAIS) in measuring and controlling economic activities of Ethiopian
Industrial Inputs Development Enterprise (EIIDE).The study focused on the effectiveness,
benefits and the challenges associated with the use of these computerised accounting
information systems in EIIDE. The result of the study showed that CAIS moderately helped
the EIIDE to improve internal controlling systems and the reliability of financial reports of
the Enterprise. However, the study revealed that the EIIDE did not get the necessary benefits
that it has to get from CAIS. The challenges that prohibit the enterprise to acquire the
necessary benefits of CAIS were unavailability of adequate information technology

15
infrastructures, strong internal controlling system, competent and skilled human personnel
and incompleteness of the system with the necessary accounting modules.

Tilahun, (2018) examines the determinants of adoption of computerized accounting

information system by hospitals in Addis Ababa, Ethiopia. The study examined the effect of
cost-benefit perception, perceived ease of use, human resource, firm size and management
commitment on computerized accounting information system adoption. The study found that
adoption of computerized accounting information system was significantly affected by
perceived ease of use, human resource and management commitment. Furthermore, the study
found cost-benefit perception and firm size were insignificantly to adoption of computerized
accounting information system.

Manaye, (2016) did his study on the effect of Accounting Information System practice in the
collection of value added tax a case study on Wolaita Sodo and Tercha Town tax revenue
authorities in SNNPR, Ethiopia. The result of the study revealed that the authority did not
create adequate awareness on the application of AIS to VAT payers and employees. The
employees did not have necessary and updated skill on the application of AIS. The result of
the study found that Wolaita sodo and Tercha town, tax revenue authority office were also
not much realized the importance of awareness creation on purposes and benefits of AIS.

Gosawork fikadu & Tsegrda, (2014) have done a survey study on “Accounting Information
System and Its impact on Administration; The case of commercial bank of Ethiopia.” The
main objective of the study was to examine the impact of AIS on the administrative quality of
commercial bank of Ethiopia. To fulfill this objective primary data used. A primary data
collected through questionnaires and interview. They have identified that the major problems
that hinder the application of AIS knowledge gap on the use of AIS between different levels
of management.

Habiba et al., (2019) have done a study on “Computerized Accounting Information System
Adoption among small and medium enterprises in Addis Ababa, Ethiopia.” The purpose of
the study was to examine the extent of the automation of accounting information system
among small and medium enterprises (SMEs) in Addis Ababa, Ethiopia and to determine its
influencing factors. Using a questionnaire survey, data collected from 300 sample firms. A
finding shows the CAIS adoption levels among SMEs varied. Furthermore, the findings
depicted significant and insignificant adoption factors. Out of six proposed factor assessed,
firm size and financial readiness under organization context were significant. However, the

16
rest four factors: perceived benefit of CAIS for better financial statement and reports
preparation and perceived benefit of CAIS for better decision making under technology
context, and external pressure under environmental context found to be insignificant.

Legesse, (2009) has done a study on “Impacts of Accounting Information on Management‟s

Decision-Making Profit-Oriented Vs. Not-for-Profit Organizations.” The main purpose of the
study was to assess the impact of accounting information in management decision making in
both profit-oriented and not-for-profit organizations. To evoke the impact of accounting
information on management decision making, questionnaires distributed to purposively
selected, general managers, financial managers, marketing managers, production managers
and accountants who thought influenced by the information. The results of the study showed
that majority of managers influenced by the accounting information to the relevant range. In
addition, the dedication of managers in incorporating accounting information in their
decision-making found to be weak. The reason for this fact is that managers are not as such
comfortable to make decisions with the type of information produced. They have doubts on
the competency of accountants. It found that accounting information is widely used in
business organizations especially in manufacturing organization as compared to not-for-profit
organizations.

Fekade, (2017) conducted a study on the impact of AIS on Organizational Performance a

case study on Pharmaceutical Fund and Supply Agency. The main objective of the study was
to examine the impact of Accounting Information Systems on the organizational performance
of the Pharmaceutical Fund Supply Agency (PFSA) in Ethiopia related to inventory
management, customer welfare, operating cost and financial statements. Based on random
selected central and branch PFSA staffs, the finding of the study showed that accounting
information systems has a positive and significant impact on inventory management,
financial statement, customer welfare, organizational performance and has a negative
relationship with operating cost. The researcher concluded that accounting information
system has a significant and positive impact on organizational performance.

Hailu, (2017) has done a study on “Assessment of Accounting System in Public Enterprises:
A Case of Ethiopian Electric Utility.” This study aims to assess the accounting system in
public enterprises in the case of Ethiopian electric utility by studying the financial recording
and reporting of accounting systems in the company. Based on a sample size of 86, it found
that accounting system is a great importance to the company in which it helps in facilitating

17
management decision making, internal controls, quality of the financial report, and it
facilitates the company‟s transaction.

2.4. Research gap and study justification

To the knowledge of the researcher only Legesse, (2009) and Gebremedihin, (2019)which
tries to identify the role of AIS in decision making in Ethiopia. In addition to this, both
studies focus on non-governmental organization. Therefore, there is no any single study done
by previous researchers on the role of AIS in decision making specifically in governmental
organization as a whole and hence, the lack of sufficient research was initiated this study.
Therefore, this study seeks to fill the gap by providing information about the role and
challenges of AIS in Jimma zone local governmental organization, Oromia regional state
Ethiopia. Effective AIS is vital to any organization‟s long-run success. Without a means of
monitoring the events that occur within organization, there would be no way to determine
how well the organization is performing. Currently, the role of information systems becomes
more prominent with the growing development of technology and increasing in information
needs. Therefore, this study brings better understanding on the role and challenges of
accounting information system in governmental organization. This helps governmental
organizations for effective utilization of the capability of AIS in achieving the desired
objectives and goals of their organization.

18
 2.5. Conceptual Framework
The researcher developed the following conceptual framework, based on the hypotheses that
developed from the empirical evidence. The quality of accounting information was measured
against its dimension that includes accuracy, timeliness, completeness, accessibility and
interpretability.

Independent variables Dependent variable

Accounting information quality

Accuracy,
Timeliness, Quality of
Completeness
Accessibility managerial
Interpretability decision-making

Source: Researcher own development

Figure 2-1 Conceptual framework

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 CHAPTER THREE

3. RESEARCH DESIGN AND METHODOLOGY

In this chapter presents the research design, target population, sample frame, sample size,
sources of data, data collection techniques, method of data analysis & presentation were
discussed. Finally, model specification, variable description, measurements and the expected
result of the dependent variables were discussed.

3.1. Research Design

According to, Saunders and Philip (2012), a research design was general plan of how you
would go about answering your research questions. It would contain clear objectives derived
from your research questions specify the sources from which you intend to collect data, how
you propose to collect and analyze them. It composes of series of prior decisions that take
together provide a master plan for executing a research project.

Research design is the specification of procedures for collecting and analyzing the data
necessary to help solve the problem at hand and it incorporates the approach utilized to
examine the effect of main variables on dependent variables, the type of data used and the
techniques employed to collect the data, the sampling mechanism including sample size, the
methods used to manage and analyse the data, and the process of constructing the empirical
model with identification and measurement of its components, measurement, and selection of
variables, expected relations between the dependent and independent variables. To achieve
the objective of the study the study used both explanatory and descriptive type of research
design. The explanatory type of research design helps to identify and evaluate the causal
relationships between dependent variable (quality of managerial decision-making) and
independent variables (AIS information quality). The descriptive type of research design also
helps in assessing and describing the current state and challenges of AIS in local
governmental organizations.

3.2. Research approach

In this study, a mixed research approach were adopted which involves the use of both
qualitative and quantitative research approaches in a single study. The quantitative approach
concerned with the generation of data in quantitative form, which can subject to rigorous
quantitative analysis (Kotari, 2004), while qualitative approach involves the collection of data

20
in a qualitative form that only simple descriptive analysis are performed. The reason why
mixed approach was used is that it can help to have rich insights into various phenomena of
interests that cannot be, fully understood using only a qualitative or a quantitative method
(Venkatesh et al., 2013); since it addresses the constraints imposed in using only one
approach to gather data and permits to statistically analyze the scientific data. Furthermore, it
enhances the integrity of findings by allowing to compares the results from the quantitative
and qualitative analyses to determine if the two databases yield similar or dissimilar results.

3.3. Sources and Type of data

In this study, the researcher used cross-sectional data. In line with the objective of the study,
the researcher used both primary and secondary data sources. Primary data were collected
from employees of finance and economic cooperation and Revenue collection authority
offices of the sample woreda. Secondary data were collected from existing documents in the
offices. For this study, the researcher employed semi-structured questionnaires and Likert
scaling questionnaires. To collect the relevant data self-administrated questionnaires have
been distributed to target respondents. Likert scaling is a summated rating scale that consists
of a series of statements related with dependent and independent variables of the study.
Scores of individual items were summated to produce a complete score for the respondent.
Concerning dependent and independent variables, respondents were asked to indicate their
level of agreement on a five-point Likert scale, as follows: 1= Strongly disagree; 2 =
Disagree; 3 = Neutral; 4 = Agree; 5 = Strongly agree. The Likert scale is used because; the
Likert scale can make data collection easy and improve the accuracy of data. Moreover, the
respondents will not bored in writing a long sentence and enable them to fill with enthusiasm.
Additionally, the researchers conducted interviews with the manager of the offices to collect
relevant qualitative data. Furthermore, Secondary data gathered from the published and
unpublished like manuals, magazines, and annual reports, etc.

21
 3.4. Target Population
The study conducted in Jimma Zone local governmental organizations. For this study two
local governmental organizations purposively chosen. The selected organizations were
financial and economic cooperation and revenue collection authority. The above mentioned
local governmental organizations were chosen purposively because of their frequent use of
the accounting information system and expected to have the relevant study data. Therefore,
the target populations for the present study were employees of the above-mentioned
organization in Jimma zone sample woreda.

3.5. Sampling techniques and sample size

The study used a multistage sampling technique. First, Jimma zone was selected purposively
due to the fact that its proximity to the researcher and based on researcher„s knowledge of the
area. In Jimma zone there are twenty one woreda, which were designed in to four clusters for
its administrative purpose. These clusters are categorized into west cluster which contains six
woreda (Gomma, Agaro, Gera, Gumay Sentema and sigimo), central cluster which contains
five woreda (Mana, Dedo, Mencho, Shabe Sombo, and Seka chokorsa), Limu cluster which
contains five woreda (Limu kosa, Limu saka, Chora Botor, Nono Benja and Botor Tolay),
and East cluster which contains five woreda (Kersa, Sokoru, Omo Nada, Tiro Afeta and Omo
Beyem). In the second stage, out of the four clusters, two woreda were randomly selected
form each clusters using simple random sampling technique. The randomly selected woreda
were Gomma and Gumay (From west cluster), Dedo and Shabe Sombo (From Central
cluster), Limu kosa and Limmu seka (From Limu cluster), and Kersa and sokoru (East
cluster). In the third stage the selection of two local governmental offices were done
purposively from the sample woredas according to their activities and functions related to the
objective of the study and expected to answer the research question. Accordingly the targeted
organizations of the study were finance and economic cooperation, and revenue collection
authority office. Based on figures from Jimma Zone public service and human resource
development office (PSHRD, 2021) there are a total of 461 financial workers are found in the
target offices of the sample woredas. Thus, the sample frame of the targeted population is
461. In final stage the researcher determined sample size by using formula provided by
Yamane, (1967) to calculate sample sizes of finite population, which is used to determine the
sample size for this study. Thus, this formula was used to determine the sample size, at
e=0.05.

22
The sample size was determined by the following formula.

Where: n is the required sample size, N is the population size and e is the precision error.

n= 214.17

The next step is to determine the size of the sample to be taken from each woreda by using a
proportionate method which is shown in the below table

Table 3-1: Sample size for each woreda

Sample Woreda Population of financial workers Sample size

Gumay 48 22
Gomma 68 32
Deedoo 58 27
Shabe Sombo 48 22
Limmu kosa 63 29
Limmu Seka 52 24
Kersa 60 28
Sekoru 64 30
Total 461 214
Source own survey, 2021

In addition, interview with office manager of the selected organization were done to get detail
information about the subject under study. These interviews were rich sources of data on
people‟s experience, opinions and information relevant to the objectives of the study.

23
 3.6. Variable Definition and Measurement

3.6.1. Dependent variable

This is the outcome or criterion variable caused by the variation in the independent variable.
The dependent variable that is used in this study is quality of managerial decision-making.
Managerial decision-making is all about the right choice of an alternative course action.
Quality of managerial decision making was measured by items include: reduces the time of
decision-making, helps to better manage the budget for activities, helps to better allocate
resources, help to better monitor activities, and improves the quality of my decisions (Caniëls
& Bakens, 2012).

3.6.2. Independent Variable

The independent variable is the variable that result variation on dependent variable in either a
positive or a negative way. The independent variable in this study is AIS output. The quality
of information from AIS measured against its attributes or dimensions, such as accuracy,
timeliness, completeness, accessibility, and interpretability.

Accuracy is concerned with the correctness/error free of the output produced by the system.
Accurate information enables a decision maker to make effective decisions. On the contrary,
if the information is inaccurate or incorrect, it leads to lack of precision in the decisions
made.

Completeness measures the extent to which the output is relevant and satisfies the needs of
the user(s).

Timeliness measures the extent to which the information is available at the right time when
needed by the user(s).

Accessibility measures the availability of data and ability to obtain or retrieve when needed
by managers. Accessibility of information quality measures the medium of communication
rather than the data itself.

Interpretability refers to the degree to which information output is in appropriate languages,

symbols, and units; the definitions are clear and adhere to technical aspects.

24
After review of the related literature and after analysing the relationship between dependent
variables and independent variables the researcher developed the following relationship or
research hypotheses:

H1. Accuracy of information has a significant and positive effect on quality of managerial
decision-making.
H2. Timeliness of information has a significant and positive effect on quality of managerial
decision-making.
H3. Completeness of information has a significant and positive effect on quality of
managerial decision-making.
H4. Accessibility of information has a significant and positive effect on quality of managerial
decision-making.
H5. Interpretability of information has a significant and positive effect on quality of
managerial decision-making

Table 3-2: How variables will be operated

Variables Symbols Measurement of scale

Quality of managerial decision Making QMDM Likert questionnaire
Accuracy Accu Likert questionnaire
Timeliness Time Likert questionnaire
Completeness Comp Likert questionnaire
Accessibility Access Likert questionnaire
Interpretability Inter Likert questionnaire

3.7. Methods of Data Analysis and Interpretations

In this study, the researcher used both qualitative and quantitative methods to accomplish the
objective of the study. The data collected by various instruments were thoroughly checked
and examined to ensure their correctness. Then the data transfer in to appropriate format,
coded and enter into a computer. Key variables were cross-tabulated and analyzed by using
statistical tool SPSS computer program version 20. The results were presented in absolute
figures and percentages, using tables, charts and graphs. Pearson‟s correlation analysis was
conducted to see the relationship between the independent variables (Accuracy, Timeliness,
Completeness, Accessibility and Interpretability) and dependent variable (Quality of

25
managerial decision making). Multiple regression analysis was performed to explore the
actual contribution of each selected independent variable to dependent variable.

The analysis involves six variables, one dependent and the remaining five were independent.
The independent variables were quality of accounting information output reported by the
respondents with a five-point Likert scale, as follows: 1= Strongly disagree; 2 = Disagree; 3 =
Neutral; 4 = Agree; 5 = Strongly agree. Finally, the researcher analysed the collected data
using SPSS version 20 and the result were presented in the form of tables, and bar graphs. In
addition to this, the data interpreted to provide detailed conclusions and recommendations
regarding the effect of independent variables on the dependent variables.

3.8. Model specification

In this study, multiple regression model was used. Multiple regression models can be used to
address a variety of research questions. It can tell you how well a set of variables is able to
predict a particular outcome.

The model specification is given as follows:

Y=β0+β1x1+β2x2+β3x3+β4x4+β5x5+μ

Y=Quality of managerial Decision Making (Outcome variable)

x1= Accuracy

x2= Timeliness

x3=Completeness

x4 Accessibility

x5 =Interpretability

μ = error term in the model (represents all other factors affecting the dependent
variable other than the independent variables in the study).

26
 3.9. The Reliability of the questionnaire items
In this study, Cronbach‟s alpha was adopted to test the reliability of the items included in the
questionnaire. Hair et al., (2010) suggested that coefficients of Cronbach‟s alpha result
greater than 0.70 are considered reliable indicators of the constructs under study. Thus, the
current study was tested 20 questions to check the reliability of the questioner. As presented
below table all variables are above the minimum requirement of 0.70.

Table 3-3: Cronbach’s alpha coefficient of the study items

Variables Cronbach's Alpha N of Items

Accuracy .764 3
Timeliness .836 3
Completeness .720 3
Accessibility .778 3
Interpretability .740

QMDM .800 5
Source: survey 2021

27
 CHAPTER FOUR

4. RESULTS AND DISCUSSION

This chapter presented the empirical findings and results of the descriptive and inferential
analysis. The chapter is organized as the following sub-headings; response rate, demographic
characteristics of respondents, the current state of AIS in governmental organization, benefit
of AIS and its challenges for effective utilization of the system in local governmental
organization and correlation and multiple regression analysis were presented and discussed.

4.1. Response Rate

The entire number of questionnaires that were administered was two hundred fourteen (214).
From that, one hundred eighty seven (187) questionnaires were properly filled and returned.
This represented overall successful response rate is 87%. The remaining 13% fail to fill the
questionnaires properly and some of them failed to return. As Babbie (2004) argued that
response rates of 50% are acceptable to analyse and publish, 60% is good and 70% is very
good. Thus, the achieved response rate was more than 70%, which implied that the response
rate was very good. The response rate is presented in table 4.1.

Table 4-1: Response Rate

Response Frequency Percent

Successful 187 87

Unsuccessful 27 13

Total 214 100

Source: Survey, 2021

4.2. Demographic Characteristics of Respondents

The demographic data gathered comprises gender, age, educational level, Respective office,
work position, and work experience. The demographic information allowed us to have a
better understanding of the respondents and the topic.
Table 4-2: Demographics of respondents

28
Variables Frequency Percent

Male 114 61
Gender Female 73 39
Total 187 100
21-30 78 41.7
31-40 86 46
Age 41-50 23 12.3
Total 187 100
TVET/Diploma 30 16
Educational level Degree 145 77.6
Masters and above 12 6.4
Total 187 100
Finance 129 69
Respective office Revenue 58 31
Total 187 100

Accountant 82 43.3
Auditor 40 21.4
Office Manager 14 7.5
Work Position Finance officer 9 4.8
Purchaser 17 9.1
Revenue collector 26 13.9
Total 187 100
1-5 year 37 19.8
6-10year 79 42.2
11-15years 44 23.5
Work experience
16-20 years 26 13.9
Above 20 years 1 0.5
Total 187 100

Source: Survey, 2021

Demographic information provides data about study participants and it is essential for the
determination of whether the individuals in a particular study are a representative sample of
the target population and testing fitness of the respondent in answering the questions for
generalization purposes.

The gender distribution is one of the descriptive data that shows what ratio has each gender.
As described in the Table 4-2 out of 187 responses from both sample organization, 61% (114)

29
of respondents were male and the rest 39% (73) of respondents were female. This figure
shows that the gender composition of respondents has no such a big gap between those two
genders and this is an indication that both were well represented in this study.

The age distribution of respondents is dominated by the age group from 30-40 with the
highest percentage (46%) followed by the age group 21-30 and age group 41-50 with 41.7%
and 12.3% respectively. This indicates that majority of the respondents were at their maturity
stage and therefore able to answer research questions responsibly.

The study tries to find educational background of the respondents. From the study findings,
most of the respondents as shown by 77.6 % of the respondents had degree certificates and
16% indicated that they held diploma certificates, and the remaining 6.4% indicated to have
reached above degree level. This shows that most of respondents have adequate educational
background and they were in a position to respond to research questions with ease.

As far as the working position of study respondents concerned, about 43.3%, 21.4%, 13.9%,
9.1%, 7.5% and 4.8% of them were accountant, auditor revenue collector, purchaser, office
manager and finance officer respectively. This indicates that the randomly distributed
questionnaire is reached to all of respondent‟s position. Finally, the working experience of
the respondent was assessed, as the study finding revealed the majority of the respondents, in
which case 79 (42.2%) have served six to ten years followed by 44(23%) have served from
eleven to fifteen years. The remaining respondents, 37(19.8%) and 26(14.4%) have served
from one to five and above fifteen years respectively.

Concerning the composition of study participants about 69% of the respondents were from
finance and economic cooperation office employees and the remaining 31% of respondents
were from Revenue collection authority office. This indicates that the majority of study
respondents were taken from finance and economic cooperation office.

4.3. The Current state of AIS in Governmental organization

Under this section, the current state of accounting information system of the selected
governmental organizations discussed. The data gathered include extent of AIS automation,
accounting method used, competency of accounting personnel, availability of consecutive
trainings, adequacy of accounting information produced, management commitment in
accommodating accounting information in their decision. The information allowed the
researcher to have a well understanding of the current state of AIS in the selected offices.

30
 4.3.1. Extent of AIS automation in the selected organization
The study was intended to compare the selected offices based on the degree of their AIS
automation. As we can see from the Table 4-3 below, about 116 (90%) of respondents from
FEC office replied that their AIS is fully computerized and the remaining 13(10%) replied
that their system is not fully automated. In contrast the majority of respondents 35(60%) from
revenue collection authority offices replied that their AIS is not automated and the remaining
23(40%) replied that their system is computerized. From this, we can conclude that AIS of
governmental organization in Jimma is not fully computerized and in terms of the degree of
AIS automation, FEC office better than revenue collection authority office. The information
on the extent of AIS automation in the selected office was summarized in Table 4-3 below.

Table 4-3: Extent of AIS automation

Respective office Is your accounting information system are computerized?

Yes Yes, No, I don‟t No, they are Total
partially think so not
Finance and economic
58 58 1 12 129
cooperation office
Revenue authority office 11 12 12 23 58
Source: Survey, 2021

4.3.2. Accounting Methods Used

The study sought to access the computer program used for performing accounting activities
in the selected organization. Study this issue is important because it helps the researcher to
know the accounting method used in the selected organization which have direct impact on
the quality of accounting information produced for users in making decisions.

31
 70.00% 65.80%

60.00% 55.60%

50.00%

40.00%
Finance
30.00% 25.10% Revenue

20.00% 15%
9.60%
10.00% 4.30%
0% 0%
0.00%
IBEX Peachtree Excel IFMIS

Source: Survey, 2021

Figure 4-1: Computer program used for performing accounting activities

As showed in the above Figure 4-1, the finding of this study revealed that the respondents use
different computer software/program for accomplishing their accounting activities in their
office. From that majority of the respondent, 80.7% of the total respondents said that “we use
Microsoft excel”, 75.4% of the total respondents said that „„we use Integrated budget and
expenditure (IBEX) system‟‟ and about 19.3% of them use peach tree accounting software in
their organization. As we can easily understand from the Figure 4-1 above, there is disparity
in terms of the computer program used in the selected offices. Out of the total (129) in FEC
office about 123(95.34) of them witnessed that they use IBEX system for recording and
summarizing their accounting activities whereas the majority of revenue authority office
employees 47(81%) said they use Microsoft excel computer program for recording and
summarizing of accounting activities. The use of Peachtree software in both offices is limited
for individual purpose. As the physical observation made by researcher during data collection
some project finance officer use the Peachtree software. The reason why as the managers of
some organization said the government rule does not allow the use of Peachtree accounting
software in governmental organization.

As per the interview made with managers of finance and economic cooperation office stated
that they frequently use IBEX system in their organization and the system work using server
system and also there is assigned individual working on IBEX system that are capable to
perform the integrated automated system. However, as some managers of FEC office said

32
that currently their organization is working to change the current IBEX system to IFMIS. The
reason as replied by managers is due to the limitation of the current system; “the system does
not allow integration with zone related office as a result there was a delay in submission of
financial report to the concerned body”. Further, the higher government requirement to adopt
the new system and the new system is expected to overcome the limitations of IBEX and
enhance transparency in budget utilization for governmental organizations were the reason
mentioned by managers.

On the other hand, some managers of revenue collection authority office said that they are not
currently installed IBEX system in their office rather they perform their accounting activities
using Microsoft excel computer program. In addition, as the information obtained during
interview, for purpose of preparing financial statement they use IBEX system with the help of
FEC office IBEX expert. The reason for not adopting the IBEX system as some managers of
the offices replied the system that is installed in FEC office did not integrated with their
office. In addition, as the observation by researcher during data collection, most of their
accounting recordings were performed manually in this office.

4.3.3. Competency and qualification of accounting personnel

Whenever accounting reports are prepared by accountants their competency and qualification
is essential for meaningful and accurate information generation. To deliver such valuable
information, accounting staffs are expected to be qualified and competent enough. This study
found that most of the managers who use the accounting information have doubts on the
competency of the accounting staffs.
Table 4-4: Skills and Competency of Accountants

Qualification of Respondents Group

accounting Office Finance Purchaser Accountant Auditor Revenue
personnel manager officer collector
Our accountants are
4(28.5%) 6(66.7%) 6(35.29%) 46(56.09%) 16(40%) 10(40%)
highly competent
Their skills
10(71.5%) 3(33.3%) 11(64.7%) 36(43.90%) 24(60%) 15(60%)
satisfactory
They are not
0 0 0 0 0 0
competent enough
Total 14(100%) 9(100%) 17(100%) 82(100%) 40(100%) 25(100%)
Source: Survey, 2021

33
As showed in the above Table 4-4, above more than half of study participants 99(52.9%)
believed that the accounting personnel averagely qualified and competent. This indicates that
they perceived in one or another reasons their office accountants are not skilled enough to
provide the required accounting information. Especially office managers have a strong doubt
since 71.5 percent of them said that their accounting personnel‟s competency is adequate.
Opposite to this view, from 82 accountants who filled the questionnaire, 46(56.09%)
accountants said that the accounting personnel are qualified and competent enough. whereas
the remaining 36(43.9%) accountants agreed with the managers, that is, the accountants‟
skills are at medium level.

4.3.4. Availability of consecutive training for employees

Availability of consecutive on job and off job trainings expected to upgrade the skill and
qualification of financial workers. This in turn affects the quality of information they produce
for decision makers and the decision makers have confidence on the quality of information
they expected and rely on the information for making organizational decisions. AS a result,
the study was assessed whether the selected organization provides consecutive trainings for
employees and the response of respondents were summarized with the Figure 4-2 below.

Source: Survey, 2021

Figure 4-2: Training availability

The study finding as presented in the above Figure 4-2 depicted that the majority (65.2%) of
respondents witnessed their organization did not provide them on job consecutive trainings.
In contrast, about 34.8% of respondents replied their organization provides them continuous
training. From the figure, we can say that the majority of the financial workers in the selected
governmental organization did not get continuous on job trainings.

34
 4.3.5. Adequacy of accounting information produced
The accounting information produced by accounting information system department to be
relevant it must meet the information requirements of users thereby enhances the quality of
decisions. The study found the following results on whether AIS of the selected organization
produce all types „of decision relevant information for decision makers.

Table 4-5: Types of Accounting Information produced

Respondents Group
Accounting information Office Finance Purchaser Accountant Auditor Revenue
produced manager officer collector
All type of accounting
5(36%) 3(33%) 12(71%) 60(73%) 23(58%) 8(32%)
information produced
The information produced
does not encompass all 9(64%) 6(67%) 5(29%) 22(27%) 15(38%) 12(48%)
required reports

The information contained

0 0 0 0 2(4%) 4(16%)
only few types of reports

We do not know 0 0 0 0 0 1(4%)

Source: Survey, 2021

The study findings as presented in the above Table 4-5 revealed that five (36%) of managers
who filled the questionnaire seemed be happy with the information produced by accountants.
Whereas nine (64%) managers indicated that, the report is not that much full. On the other
hand, 60(73%) accountants who filled the questionnaire thought that they produce all types of
the accounting information that are important to make decision and only 22(27%)
accountants have doubts up on the information they produce. This implies that there is miss
understanding between managements and accountants as to the adequacy of information
produced. What is full and complete from the accountants‟ perspective is not comprehensive
from management‟s point of view.

35
 4.3.6. Managerial use of accounting information for making decision
To make better decision, managers need to know every summarized activities of their office.
In this regard, accounting information is one of the information that is required.

Table 4-6 Usage of Accounting Information by managers

Information use by Respondents Group

managers Office Finance Purchaser Accountant Auditor Revenue
manager officer collector
Managers always use the
information to make 5(36%) 3(33%) 4(24%) 25(30%) 10(25%) 5(20%)
decision
Managers sometimes use
9(64%) 4(45%) 13(76%) 49(60%) 24(60%) 15(60%)
the information
Managers do not use the
information for making - 2(22%) - 8(10%) 6(15) 5(20%)
decision
Total 14(100%) 9(100%) 17(100%) 82(100%) 40(100%) 25(100%)

Source: Survey, 2021

As we can see from the above, Table 4-6 the commitment of managers in using accounting
information in decision was assessed. The finding of the study showed that the manager use
the accounting information occasionally and not on a regular basis. It is found that perception
regarding management reliance on accounting information for making decision is not volatile
among different groups. The basic reason to this similar view as some office managers of the
selected offices said during interview, on one hand is that the information produced does not
suit management‟s needs of information. On the other hand, it is because some managers are
not committed to accommodate the accounting information in their decision.

4.4. Benefits of using IBEX system

Integrated budget and expenditure system (IBEX) benefit governmental organization in
several ways. Based on literature review, eight potential benefits were identified and the
respondents were asked to indicate the benefits that their organization obtained from using
IBEX system and the respondents were allowed to fill multiple answers whenever necessary.
Accordingly, the result of the survey was presented as follow.

36
 Figure 4-3: Benefits of using IBEX system

According to the finding of this study respondent who uses IBEX system replied that they get
multiple benefit from the system. Nearly all of them (97.7%) argued that IBEX system
provides them high quality information. The availability of high quality information in an
information system is essential, because it helps a manager to make better decision and
enhances managerial work performance. In contrast, information system that provides users
with inaccurate and incomplete information has adverse impact on its usefulness and leads
inefficiency of managerial work.

The second most ranked benefit of IBEX is its contribution on periodic financial statement
generation. About 89.8% of respondents replied that IBEX system facilitates and improves
financial report generation process of an organization. The use of IBEX in financial statement
preparation reduces the time they spent, the expense they incur and arithmetic errors in
financial report than when they prepare manually. As a result, the financial report shows the
true and accurate position of their organization. This in turn enables managers to make
informed decision and thereby improve their work performance.

Regarding time and cost saving about 89.1% of respondents argued that implementation of
IBEX system allowed the organization to reduce its various cost and save human energy.
Similarly, it is also supported by interview response as IBEX system has contribution in
simplifying the complexity of the transaction process thereby contribute to a significant time
and cost saving. This leads to managerial efficiency in local governmental organizations.

About 85,2% of the respondents replied that their organization IBEX system also improve the
quality of managerial decision making through provision of high quality information which
37
reduces uncertainty thereby leads to better managerial decision and this in turn enhance
managerial efficiency.

On the same figure the next benefit ranked by respondents were the system allows to manage
task effectively, provide adequate security measure, maintain proper documentation were the
benefit that governmental organization acquired from using IBEX system in the sample
organization as 72.7%, 70.3% and 57% of respondents agreed on the role, respectively.

As the interview response of managers reveals that the main contributions of installing IBEX
for their organizations are timely submission of quality and adequate financial reports,
provides adequate security measure which prevents error and fraud thereby leads to better
decision making. According to their thought, they achieved greater managerial efficiency in
financial operations and reporting procedures when using IBEX applications. The system also
allows them to establish the controls they need to eliminate misuse of financial resources.
The control measures also offer the historical evidence of performance, which helps to
regulate the current and future activities of the organization. Therefore, the researchers
conclude that IBEX system has profound role in generating timely and well organized
financial report and enhance managerial efficiency in local governmental organizations.

4.5. Challenges of Accounting Information System

Figure 4-4: Challenges of Accounting Information system

To understand the major problem facing the organization in connection to IBEX system, they
were asked to confirm if they face the above-mentioned problems. Therefore, as the finding
of this study 93% respondent was blame as the system lack integration with other related
organization; which reduce the contribution of the system, about 85% of respondent complain

38
about employees skill gap on running the system, about 78% of respondents replied that there
is lack of trained IBEX expert which reduce the contribution of IBEX system. The rest 77%,
33% and 23% of respondents said that IBEX contribution is restricted due inadequacy of
support from IT personnel, interruption of internet, and lack of computer infrastructure in the
organization, respectively.

It is also supported by interview response like power interruption, virus corrupt, skill gaps
and connection accesses are some of the challenges in running IBEX system. Therefore, the
researcher concludes that the above-mentioned challenges limit the effective utilization of
IBEX system and reduces the expected benefits of the system in local governmental
organizations. Therefore, to solve these problems it is advisable if the concerned bodies work
on this issue.

4.6. Descriptive Statistics

This part presents the descriptive statistics of the dependent and independent variables used
in this study. The dependent variable used in this study was quality of managerial decision
making, whereas independent variables AIS information quality as measured by Accuracy,
Timeliness, Completeness, Accessibility and Interpretability. Accordingly, the next Table 4-7
presents the mean, maximum, minimum, standard deviation, and the number of observations.

Table 4-7 Summary of descriptive statistics

Summary of Descriptive Statistics

Mean Std. Deviation N
QMDM 3.7112 .65158 187
Timeliness 3.3904 .81082 187
Interpretability 3.2602 .77213 187
Accuracy 3.4599 .70670 187
Completeness 3.3298 .78668 187
Accessibility 3.3369 .75806 187
Source: Survey, 2021

The above Table 4-7 presents the summaries of descriptive statistics of the dependent and
independent variables of the study. As displayed in the above table, the variable Timeliness
has 3.3904 and 0.81082 mean and standard deviation respectively. Concerning the variable
Accuracy it has 3.4599 and 0.70670 mean and standard deviation, Completeness has 3.3298
mean and 0.78668 of standard deviation, Interpretability has 3.2602 mean and 0.77213 also
Accessibility has 3.3369 mean and 0.75806 of standard deviation. The dependent variable
39
quality managerial decision making has 3.7112 and 0.65158 mean and standard deviation
respectively.

4.7. Inferential statistics

Under this section, the correlation analysis, Assumptions of multiple regression analysis, and
the result of linear regression analysis were discussed.

4.7.1. Correlation Analysis

A correlation analysis was implemented to determine if there were any relationships between
the independent variables and the dependent variable. To analyse data Pearson‟s correlation
analysis used. Pearson correlation matrix is a technique used for testing multicollinearity of
explanatory variables. As noted by Gujarati (2004), correlation analysis was performed to
show the direction and strength of relationship between two or more variables. In the Pearson
correlation matrix, the values of the correlation coefficient range between -1 and +1. A
correlation coefficient of +1 indicates that the existence of perfect positive relation; while a
correlation coefficient of -1 indicates as two or more variables have perfect negative relation.
A correlation coefficient of 0, on the other hand, indicates that there is no linear relationship
between two variables (Babulo and Hassen,2005). Besides, as noted by Brooks (2008), zero
correlation among explanatory variables is not evident in any practical work.

40
 Table 4-8: Pearson‟s Correlation between Dependent and Independent variables

Correlations
QMDM Accu Time Comp Access Inter
Pearson Correlation 1
QMDM
Sig. (2-tailed)
Pearson Correlation .638** 1
Accu
Sig. (2-tailed) .000
Pearson Correlation .644** .466** 1
Time
Sig. (2-tailed) .000 .000
Pearson Correlation .529** .352** .351** 1
Comp
Sig. (2-tailed) .000 .000 .000
Pearson Correlation .360** .281** .259** .715** 1
Access
Sig. (2-tailed) .000 .000 .000 .000
Pearson Correlation .236** .168* .234** .199** .169* 1
Inter
Sig. (2-tailed) .001 .021 .001 .006 .021
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
Source: SPSS result 2021

Note, QMDM= Quality managerial decision making, Accu=Accuracy, Time=Timeliness,

Comp=Completeness, Access=Accessibility, Inter= Interpretability

As noted by (Pallant, 2005), multicollinearity exists when the independent variables are
highly correlated (r > 0.9). As it is displayed in the correlation matrix shown in the above
table, all the correlation coefficients among the variables are less than 0.9, which indicates
multicollinearity is not evidenced. To sum up, besides the descriptive statistics, correlation
analysis is performed for an explanatory variable to detect the multicollinearity problem in
the regression model. In this case, there is no multicollinearity problem between variables.
Therefore, the explanatory variables were found the major influencing variables of quality
managerial decision making. This in turn improved the reliability of regression analysis.
However, in order to reach such conclusion, this need to be supported by regression results
after the appropriate model is applied.

4.7.2. Assumptions of multiple regressions Analysis

Multiple regressions can be used to address a variety of research questions. It can tell you
how well a set of variables is able to predict a particular outcome (Pallant, 2005). In our case,
the researcher interested in exploring how well a set of subscales on an information quality
test is able to predict the quality of managerial decision-making. Multiple regression provides

41
us with information about the model as a whole, and the relative contribution of each of the
variables that make up the model.

4.7.2.1 Sample size test

A sample needs to be a representative of the characteristics of the population. With a small

sample size, we may obtain a result that cannot be generalized to the target population. If
results do not generalize to other samples, then they are of little scientific value. Most
researchers prefer to use Tabachnick et al. (2007) formula for checking the adequacy of
sample size requirements for multiple regressions. These authors considered the number of
independent variables that researchers wish to use: N > 50 + 8m (where N = sample size and
m = the number of independent variables). In our case, the numbers of independent variables
are five and the sample size is 214. Putting these values into the formula, 214 > (50+8*5).
Then we have; 214>90. Therefore, the assumption on sample size requirements was seen by
the researcher before analyses.

4.7.2.2 Multicollinearity Test

Multicollinearity test made to assess the existence of exact linear association among some or
all explanatory variables in the regression model. Whenever independent variables are multi
collinear, there is overlapping or sharing of predictive power. Consequently, the regression
coefficients of the independent variables will be undetermined and their standard errors
become immeasurable (Gujarati, 2004). The multicollinearity problem makes significant
variables insignificant by increasing the p-value since the increased p-value decrease the
statistical significant value. According to Gujarati (2004), multicollinearity problem is solved
by reducing highly correlated variables. Then, the result offers more significant variables than
before. To test the existence of the multicollinearity problem, VIF (Variance Inflation Factor)
is adopted. As a rule of thumb for Multicollinearity, the test of the model states a variable
whose values are larger than 10 or whose 1/VIF value is less than 0.1 indicates the possible
problem of multicollinearity.

Accordingly, as highlighted in the below table, there is no value greater than 10, all values of
the Variance Inflation Factors are less than 2.229 and all values of 1/VIF are greater than
0.449. This shows that the regression model in this study does not detect Multicollinearity
problems and there is no multicollinearity.

42
 Table 4-9: Multicollinearity test result

a
Coefficients
Model Collinearity Statistics
Tolerance VIF
Accu .740 1.351
Time .726 1.376
1 Comp .449 2.229
Access .487 2.054
Inter .927 1.079
a. Dependent Variable: QMDM
Source: Survey, 2021

4.7.2.3 Outliers, Normality, Linearity test.

The presence of outliers can be detected from the Scatterplot. In the Scatterplot of the
standardised residuals, the residuals were found roughly rectangular distributed, with most of
the scores concentrated in the centre. This would indicate no major deviations from
normality. As noted by Tabachnick and Fidell (2001), cases with Cook‟s Distance values
larger than 1 are a potential problem outliers. In our case the maximum value for Cook‟s
Distance is 0.101, suggesting no major problems.

4.7.3. Regression Analysis result and discussion

After checking the assumptions of multiple regression model, multiple regression analysis
was performed to know how much of the variance in the dependent variable (quality of
managerial decision making) is explained by the model (which includes the variables of
quality of accounting information).

Before displaying the result, the overall goodness of the model described by a combination of
both F-statistics and R squared value (Gujarati, 2009). R-squared value measures how well
the regression model explains the actual variations in the dependent variable.

All the five explanatory variables used in the regression analysis model had a significant
positive effect on the quality of managerial decision making. The value of R-square was
0.623 which indicates that 62 percent of the variation in the quality of managerial decision
making could be accounted for by the combined effect of these five independent variables,(
accuracy, timeliness, completeness, accessibility and interpretability) and the other 38 percent

43
remained unexplained. The adjusted R2 for the model is 0.613, which indicates only a slight
overestimation with the model.

Table 4-10 Model Summary

Model Summary
Model R R Square Adjusted R Std. Error Change Statistics
Square of the R Square F Change df1 df2 Sig. F
Estimate Change Change
1 .789a .623 .613 .40551 .623 59.842 5 181 .000
a. Predictors: (Constant), Accuracy, Timeliness, Completeness, Accessibility
Interpretability,
b. Dependent Variable: QMDM
Source: Survey, 2021

There is a rule of thumb, which can be used to determine the R2 value as follows:

0.1 = Poor Fit 0.11 to 0.30 = Modest Fit 0.31 to 0.50 = Moderately Fit and

Greater than 0.50 Strong Fit (Muijs, 2004).

Therefore, in this study R2 accounts for 0.623, which is greater than 0.50 and then the model
is strongly fit for predicting the dependent variable quality of managerial decision making.
Furthermore, the above regression model was well fitted to the data since F ratio =59.842, P
= 0.000 was found to be statistically significant.

Table 4-11: ANOVA Result

ANOVAa
Model Sum of Df Mean Square F Sig.
Squares
Regression 49.203 5 9.841 59.842 .000b
1 Residual 29.764 181 .164
Total 78.966 186
a. Dependent Variable: QMDM
b. Predictors: Accuracy, Timeliness, Completeness, Accessibility, Interpretability,
Source: Survey, 2021

44
Anova result in the above Table 4-11 showed that, there is significant relationship between
the independent variables (Accuracy, Timeliness, Completeness, Accessibility and
Interpretability) and dependent variable (quality of managerial decision-making).

Table 4-12: Multiple Regression Result

a
Coefficients
Model Unstandardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) .719 .200 3.590 .000
Accu .339 .049 .368 6.941 .000
Timel .300 .043 .373 6.964 .000
1
Comp .266 .059 .310 4.550 .000
Access .056 .054 .068 1.035 .302
Inter .031 .040 .036 .764 .446
a. Dependent Variable: QMDM
Source: Survey, 2021

The result of the test showed that out of five variables, three of them accuracy (β = 0.368,
p<0.001), timeliness (β = .373, p < 0.001), and completeness (β=0.31, p<0.001) were
significant and positively related with quality of managerial decision-making. However,
accessibility and interpretability of AIS on the quality of managerial decision-making were
found insignificant. Thus, these results confirm hypotheses H1, H2, and H3 proposed that
Accuracy, timeliness and completeness of AIS have significant and positively effect on the
quality of managerial decision making in governmental organizations.

4.8. Discussion of the Findings

Based on the finding of this study the researcher developed the following discussion:

As shown in Table 4-12 Multiple Regression Model, accuracy of accounting information has
significant positive impact on the quality of managerial decision making at a P < 0.01 level of
significance. This implies that the more accurate information provided by AIS to managers,
the more the managers to make better decision. The coefficient 0.368 shows that the one unit
increase of accuracy of accounting information will causes 36.8% increase in the quality of
managerial decision making in local governmental organizations. In this case, the null
hypothesis (Accuracy of accounting information has no significant effect on the quality of

45
managerial decision-making) was rejected and the alternative hypothesis accuracy of
accounting information has a significant and positive effect on the quality of managerial
decision-making was accepted.

Timeliness (X2) has a beta value 0.373 with a significance value of 0,000. The significance
value is smaller than 0.05, then null hypothesis is rejected and alternative hypothesis is
accepted, which means that the more quickly the information obtained from AIS will increase
the quality of managerial decision making. The coefficient 0.373 values shows that a one-unit
increase in the timeliness of accounting information will cause 37.3% increase in the quality
of managerial decision making in local governmental organizations.
Completeness (X3) shows a beta value of 0.31 with a significance value of 0,000. The
significance value is smaller than 0.05, then null hypothesis is rejected and alternative
hypothesis is accepted, which means that the higher the comprehensiveness of accounting
information obtained from AIS, the more the quality of managerial decision making. The
coefficient 0.31 shows that the one unit increase of completeness of accounting information
will also causes 31% increase in the quality of managerial decision making in local
governmental organization.
Thus, it can be concluded that the quality of managerial decision-making is influenced by the
Accounting Information Quality. Having accurate and complete accounting information and
information quickly available, allows managers make better decision. The availability of high
quality information in an information system is essential, because it assists a user in making
sound decision and thereby improves managerial work performance. In contrast, information
system that provides users with inaccurate and incomplete information has adverse impact on
its usefulness. Hence, the study concludes that accuracy, timeliness and completeness of the
AIS information play an important role on the quality of managerial decision-making.

In the context of the local governmental organization, the study suggested that the accuracy,
timeliness, and completeness of the output produced by the system are important determinant
variables that determine the quality of managerial decision-making. Users of AIS require the
information produced by the system to be correct, unambiguous, and meaningful. The
information must also be provided at the right time to the managers or users for an effective
decision-making. Information not only must be accurate and timely but also be complete
because the lack of complete information may result in incorrect and untimely decision
making from the management.

46
47
 CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

This chapter presents a summary of the major findings of the study and the suggested
recommendations. The study sought to investigate the role and challenges of Accounting
Information System in Decision Making in local governmental organization: The Case study
in Jimma Zone local governmental organization, Oromia Regional State, Ethiopia. Both
descriptive and inferential statistics were adopted to analyse data generated through a cross-
sectional study.

5.1. Conclusion
The finding of the study revealed that governmental organizations in Jimma zone are
currently using IBEX system for performing their accounting functions. The study also found
that AIS is not fully automated in local governmental organization and relatively finance and
economic cooperation office better than revenue collection authority office in terms of the
degree of their AIS automation. More than half of study participants 99(52.9%) believed that
the accounting personnel in their organizations are averagely qualified and competent. This
implies that managers and employees perceived that in one or another reason their office
accountants are not skilled enough to provide the required accounting information. The
majority (65.2%) of the study respondents complain that their organization did not provide
them on job consecutive trainings. The finding of the study also showed that manages of local
governmental organization use the accounting information occasionally not on a regular basis
for making decision.

The analysis of the study proves that accuracy, timeliness and completeness of accounting
information have significant positive influence on the quality of managerial decision-making.
The study concludes that AIS improve the quality of managerial decision making through
provision of accurate, timely and complete information.

A significant improvement in quality of decision-making in terms of reduced time in making

decision, better management of budget for activities, better allocation of resources, better
monitoring activities, and improved and simplified report generation process can be obtained
by improving the quality of the AIS information output.

48
IBEX system has contributed for governmental organization in generating timely and well-
organized financial report and there by enhance managerial efficiency in local governmental
organization. However, the study found that lack of integration of the system, power
interruption, virus corrupt, employ skill gaps, lack trained IBEX expert and connection
accesses were some of the challenges in using IBEX system and reduce the contribution of
the system.

49
 5.2. Recommendation
Based on the findings of the descriptive analysis, regression analysis, and conclusion the
following recommendations were forwarded.

 It is necessary for the accountant to have an adequate practical and professional

experience that qualified them to provide the required accounting information through
a training process.
 It is necessary for the accounting information to have a high accuracy, timeliness and
complete because this affects the quality of managerial decision-making.
 It is recommended to increase utilization of AIS in local governmental organization
by ensuring all accounting activities are computerized and integrated if possible.
 Government is expected to be able to improve and apply the right policy to overcome
the weaknesses in IBEX system in order to increase resulted information quality and
eventually would affect the quality of managerial decision-making.

50
 REFERENCES
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accounting and reporting practice: evidence from Mizan-Tepi University, Bench Maji,
Kaffa and Sheka Zone (finance and budget sections).

Algrari, A. Y., & Ahmed, M. R. M. (2018). The impact of Accounting Information Systems‟
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 Appendix I
Jimma University
Business and Economics College
Semi-structured Questionnaire

Dear Respondents: I am post graduate (Master) student in Department of Accounting and Finance at
Jimma University. I am carrying out a study on the topic: The role and challenges of Accounting
Information System in Decision Making in Governmental Offices in Jimma Zone. The purpose of this
questionnaire is only to collect relevant data to complete this research work. Therefore, you are, kindly
requested to fill the questionnaire in order to give necessary information. Your response will be kept
confidential and used only for academic purpose.

Part A: Give your Background Information in the space provided

District: __________________________ Job Position: ____________________________

Your office: __________________________ Working Experience: ____________________________
Age: __________________________
Gender: __________________________
Education level: __________________________

Part B: Give your opinion to the following questions based on your experience in your
organization by putting tick mark (√) on the appropriate choice(s). You can select more than one
choice whenever necessary.
1. What kinds of accounting method your organization use to record and analyze financial data?
( ) Peachtree accounting ( ) Microsoft excel
( ) IBEX ( ) IFMIS
Other specify_____________________________________________________
2. Is your organization accounting department structured in such a way that it can produce relevant
information?
( ) Yes, absolutely ( ) I am not sure
( ) Yes, to some extent ( ) No, I don‟t think so
3. Do you think that the accounting personnel are qualified and competent enough to produce the
required accounting information?
( ) Yes, they are ( ) Average ( ) No, they are not
4. Is management concerned with training and continuing education programs for employees?
( ) Yes ( ) No
5. Does your organization produce all sorts of accounting information that are important for making
decision?
( ) Yes ( ) Not that much ( ) I don‟t know ( ) No
6. Do managers in your organization rely on the accounting information for their decision?
( ) Yes, always ( ) Yes, sometimes
( ) Never ( ) I don‟t know

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7. How do you evaluate the management‟s commitment to accommodate the accounting
information in their decision making process? ( ) Excellent ( ) Very Good
( ) Good ( ) Fair ( ) Weak ( ) highly weak
8. Do you think your organization undervalued the accounting information in its decision making
process? ( ) Yes, frequently ( ) Never before
( ) Yes, sometimes ( ) I don‟t know
9. Is your accounting information systems are computerized/ automated?
( ) Yes ( ) Yes, partially ( ) No, I don‟t think so ( ) No, they are not
10. Are all working departments of your organization interrelated so that the information processed
by one unit represents all?
( ) Yes, all departments ( ) Yes, few departments ( ) No, I don‟t think so ( ) No, they nt
11. What benefit have you obtained from usage of AIS in your organization?
( ) provides high quality information ( ) allow integration b/n department
( ) issue high quality periodic report ( ) contributed to internal controls
( ) significant time and costs saving ( ) allow to manage tasks effectively
( ) improved decision making ( ) provides adequate security measure
( ) maintain proper documentation
Others,_________________________

12. The followings are statements regarding challenges you faced in connection to usage of IBEX
system in your organization; indicate the factors you experienced by putting tick mark (√) on the
appropriate choice(s)?

( ) Lack of system integration ( ) Power and internet interruption

( ) Lack of IBEX expert ( ) lack of computer infrastructure
( ) Employees skill gap ( ) inadequate support from IT personnel
( ) Others,_______________________________________________

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 Part C: Please indicate the extent of your agreement with each of the following statement by
circling the appropriate option using the scale below. Please note that AIS stands for
Accounting Information System 1= strongly disagree, 2= Disagree, 3 = Neutral,
4 = Agree, 5 = strongly agree

Information Quality
Time1 Our AIS provides me the necessary information in a timely manner. 1 2 3 4 5
Time2 The information from our AIS improves the quality of my work. 1 2 3 4 5
Time3 Our AIS help to generate required information quickly 1 2 3 4 5
Accu1 Information provided by our AIS is accurate, free of errors. 1 2 3 4 5
Accu2 Information produced by our AIS reflects the real condition. 1 2 3 4 5
Accu3 Our AIS provides correct data to prepare financial statement 1 2 3 4 5
Inter1 Information provided by our AIS is easy to read and understand. 1 2 3 4 5
Inter2 Our AIS provide me information in appropriate format. 1 2 3 4 5
Inter3 The inputs of AIS are presented in an easy and clear manner 1 2 3 4 5
Comp1 Our AIS provide sufficient information related to my tasks. 1 2 3 4 5
Comp2 Information provided by our AIS meets and fits our needs. 1 2 3 4 5
Comp3 Our AIS provides me comprehensive information to complete my tasks. 1 2 3 4 5
Access1 I get information from our AIS whenever I need 1 2 3 4 5
Access2 I can easily store information and retrieve information from our AIS 1 2 3 4 5
Access3 Our AIS is fully automated or computerized 1 2 3 4 5

No AIS in Decision Making Likert Scale

D1 The use of AIS helps to reduces the time of decision making 1 2 3 4 5
D2 The use of AIS helps to better manage the budget for activities 1 2 3 4 5
D3 The use of AIS helps to better allocate resources 1 2 3 4 5
D4 The use of AIS helps to better monitor activities 1 2 3 4 5
D5 The use of AIS facilitate financial transaction processes 1 2 3 4 5

THANK FOR YOU TIME!!!

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 Appendix II
INTERVIEW GUIDE

1. Which accounting system does your organisation use?

2. What are the benefits your organization obtains from the use of AIS?

3. Has the accounting information system adopted in your organization helps in improvement
of managerial efficiency?

4. Does the manager in your organization always use the accounting information in their
decision making process?

5. What is the relationship between accounting information systems and decision making in
your organisation?

6. What are the challenges facing in relation to the use of accounting information system in
your organisation?

7. Is there any measures taken by your organisation to overcome challenges faced related
with usage of accounting information system?

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