Examining The Application Package Of Accounting Software Information Technology Essay Essays

Examining The Application Package Of Accounting Software Information Technology Essay Essays Examining The Application Package Of Accounting Software Information Technology Essay Essay Examining The Application Package Of Accounting Software Information Technology Essay Essay It is a widely researched subject to actuate little concerns to follow IT. There is small research focused specially on the motivation factors for following computerized accounting systems ( CAS ) in little organisation, though there is much survey on the overall acceptance of IT. However, little concern accounting package is an indispensable sub-set of overall little concern IT research. Accounting package was the biggest application bundle used and the powerful factor behind the IT hardware acquisition determination. To look into the motivation factors for following accounting package, it would be practical to foremost reexamine the more comprehensive literature on overall IT acceptance. Hence, this literature reappraisal begins with a treatment of the surveies of general IT acceptance and so reexamine surveies peculiarly focused on accounting package acceptance. 2.1 FACTORS FOR ADOPTION OF IT Thong ( 1999 ) , Harrison, Mykytyn and Riemenschneider ( 1997 ) , Cragg and King ( 1993 ) , Moore and Benbasat ( 1991 ) and Treadgold ( 1990 ) , who have made research about little concern IT acceptance, have now identified a assortment of actuating factors. Thong ( 1999 ) attempted to beef up the myriad of IT acceptance research by developing an integrated theoretical account of information systems acceptance. This theoretical account is a utile model in reexamining the variables that impact on a little concern proprietor s determination to follow IT. Thong classified the factors into four elements: Features of the organisation ; Features of the direction ; Features of the technological invention ; and 4. Features of the concern environment. 2.2 Features of the Organization The features of the organisation are variables that manipulate the determination whether to follow IT or non. Organizational features for case: employee s degree of IT knowledge, concern location, information-intensity, concern size and industry sector has been evaluated in predating research surveies of Fink ( 1999 ) ; Burgess ( 1998 ) ; Wenzler ( 1996 ) ; Attewell ( 1992 ) ; Yap ( 1990 ) ; and Delone ( 1988 ) . In general, the greater the gross revenues turnover are determined by the larger the figure of employees and the more information-intensive the industry, therefore the more likely a little concern will follow IT invention.In add-on, Thong ( 1999 ) states that little concerns tend to endure resource poorness in footings of fiscal competency, offered clip and IT skilled staff to ease invention acceptance. As a consequence, Attewell ( 1992 ) adds that resource poorness raises the obstruction to innovation acceptance in little concern. 2.2.1 Information Intensity Yap ( 1990 ) quoted in Thong ( 1999 ) , that concerns have different information-processing demands in different sectors. Those in more information-intensive sectors are more likely to follow IT than those in less information-intensive sectors. Further, ( Porter and Millar, 1985 ) have reported that greater utilizations of IT in concerns are due to greater information strength. Therefore, greater information strength will take the holder or supervisor of little concern to comprehend IT as a most of import competitory device and as a consequence addition the chance and complexness of using computing machine package. 2.2.2 Business Size Dewar and Dutton ( 1983 ) and Moch and Morse ( 1977 ) quoted in Thong ( 1999 ) , point out that the technological invention literature has found that larger concerns have more capital and substructure to ease to follow computerized accounting system. However, Ein-Dor and Segev ( 1978 ) , specify that little and average concerns face well more barriers, among others, a deficiency of internal information system expertness, restricted pecuniary resources and as such are less likely to follow information systems than big concerns. Auxiliary literature Alpar and Reeves ( 1990 ) quoted in Thong ( 1999 ) disagree that, even among little concerns, the larger the concern, the more able it is able to use people with specialised accomplishments, for illustration, cognition of information systems. Hence, there is a greater chance to travel from manual system and follow the computerized 1. 2.2.3 Industry SEcTOR Some peculiar industries are more suitable to computerise record maintaining than others are discussed by some research workers. These findings are partially supported by the Australian Bureau of Statistics ( ABS ) 1999-2000 study, Business Use of Information Technology. The maximal usage of computing machines was in concerns in the stuff goods, concern services, electricity, gas and H2O supply industries. At the same clip, the minimal computing machine usage was in the private and other services like lodging, coffeehouse, eating houses, conveyance, storage, retail trade and building. Therefore, it is more suited to implement a CAS in industries in which there are more trading traffics and dealing processing so that to ease daily running of the concern. 2.3 Characteristics of Management Thong ( 1999 ) points out that in big concerns, group squads are normally involved in the IT decision-making procedure. However, this is in differentiation to little concerns where the owner-manager is by and large the IT determination shaper. Therefore, Rizzoni ( 1991 ) indicates that in little concerns, the features of the owner-manager are critical in finding the concern s attack to IT. Thong ( 1999 ) emphasized that the three major features of owner- director which are of import to IT acceptance are: Degree of IT instruction and accounting cognition. Computer self-efficacy, and Innovativeness. 2.3.1 Degree of IT Education and Accounting KNOWLEDGE In position of the fact that directors have illumination cognition about accounting or seeing as they do non cognize how to fix histories and fiscal statements, they by and large prefer to contract out their accounting work to public accounting houses. In add-on, in several states and in several concerns, directors neither considered the accounting capable by any agencies nor the accounting topic in the secondary degree or third degree. Consequently, Lees ( 1987 ) , DeLone ( 1988 ) and Neidleman ( 1979 ) quoted in Thong ( 1999 ) , specify that the owners are non alert of the significance and the utility of accounting information over and above the advantages of utilizing computing machines to do effortless accounting plants. Therefore, it still exists an involuntariness to use computing machine package for the ground that concern procedure outsourcing decreases the deficiency of accounting perceptive of proprietors. Consequently, there would be a larger possibility to implement a CAS , if directors have been educated about the accounting cognition or if they could be learned about the advantages of computing machine know-how to bring forth rapid and precise accounting information. 2.3.2 Computer self-efficacy Self-efficacy is the belief that one has the capableness to execute a peculiar behaviour that is widening the societal cognitive theory. Compeau and Higgins ( 1995 ) described computing machine self-efficacy as a opinion of one s capableness to utilize a computing machine . Delone ( 1988 ) and Raymond ( 1988 ) province that little concerns proprietors or directors who have commenced computing machine preparation and possess computing machine self-efficacy are more apt to implement IT. The cardinal leader for invention is the owner-manager and little concerns frequently can non afford the luxury of experts to steer them towards the invention acceptance and diffusion procedure. Therefore, it is of import for the owner-manager to hold computing machine self-efficacy. It is posited here that, to the grade that the owner-manager feels comfy and confident with the information engineering, here construed as the owner-manager s computing machine self-efficacy, advanced information enginee ring will be adopted. On the other manus, Gableand Raman ( 1992 ) discovered that directors in rather a batch of houses are less alarmed or have no thought of the likely wage ensuing from the usage of computing machines in accounting as they do non possess computing machine cognition. Hence, directors would be willing to follow such computing machine engineering to treat accounting informations and bring forth appropriate and consistent fiscal studies on clip, if they could be learnt about the favorable effects ensuing by following accounting package bundle. 2.3.3 INNOVATIVENESS Invention is defined as a alteration made in the traditional manner of making things. In this model, invention means the development of changing the manner of fixing fiscal studies from manual system to accept accounting package bundle as a device for entering and treating accounting minutess and fiscal studies. Thong ( 1999 ) states that the owner-manager is the 1 who is in charge for the running of the company in little and average concerns. As a consequence, the features of owner-manager are indispensable in finding the invention attitude given that they are the chief determination shaper. Kirton ( 1976 ) quoted in Thong ( 1999 ) , contends that everyone is located on a continuum runing from an ability to make things better to an ability to make things otherwise. The owner-manager will seek solutions that have already been tried and understood, if the latter is non a modernizer. In contrast, Kirton, ( 1984 ) indicates that the proprietor or director who wants to introduce will fav or solutions that have non been attempted and are therefore risky. However, Thong ( 1999 ) suggests that there is non anything that other associates of the concern can make to utilize computing machines for accounting plants if the owner-manager has non the self-control to introduce. 2.4 Features of the Technological Invention The determination to implement Information Technology is dependent on the features of the technological invention itself as they are besides a critical determiner. Rogers ( 1983 ) defined diffusion as the procedure by which an invention is communicated through certain channels overtime among the members of a societal systems . Rogers uses the footings engineering and invention synonymously, but explains that engineering is a design for instrumental action that reduces the uncertainness in the cause-effect relationships involved in a coveted result . There are five, potentially relevant, features of invention noted by Rogers ( 1983 ) which are potentially valuable in explicating the consequences of our research. Complexity: how hard technological invention is perceived as easy or hard to understand and utilize ; Compatibility: how technological invention must be consistent with the bing values, past experiences and demands of possible adoptive parents, for case bring forthing speedy studies as expeditiously and efficaciously ; Relative advantage: how much technological invention must be perceived as better or worse to be compared to its predecessor system ; Trialability: is the grade to which an invention may be experimented with by possible users on a limited footing ; Observability: how much clip it takes for the consequences of technological invention to go seeable and maximize net income. It has been noticed, over the past decennary that the induction of powerful, economical personal computers jointly with available accounting package, have enhanced and raised the barriers to IT modernisation. Thong ( 1999 ) confirms that, this has shown the manner to a encouragement in the acceptance of IT in the accounting field of little concerns. 2.5 Features of the Business Environment Business environment encompasses all those factors that affect a company s operations, and includes clients, rivals, stakeholders, providers, industry tendencies ( accounting house and comptrollers ) , ordinances, other authorities activities, societal and economic factors and technological development. 2.5.1 Accounting house Oran ( 1988 ) and Shannon ( 1986 ) indicate that many little concern owner-managers are non alert of the excess services supplied by comptrollers. Additionally, until a job does non originate, owner-manager will non discourse with comptrollers ( Holmes 1987 ) . Furthermore, ASCPA ( 1992 ) and Breen et Al. ( 1994 ) maintained in their research that an external comptroller used up much of his clip on an act in conformity with accounting pattern and accounting criterions, therefore he can assist a concern to get and set into pattern the accounting package in the concern accounting rhythm. Gorton ( 1999 ) found that concerns that were late start-up were more apt to travel toward an external comptroller for suggestion than more grown-up organisations. Besides, Wenzler ( 1996 ) states that comptrollers are exceptionally placed to supply accounting package advice and support to their clients. Such proposal shows to be efficient and effectual for concerns to choose for accounting package. There are close relationships between little and medium concern proprietors and comptroller, seeing as rather a few little and average concerns contract out their operation dealing entering and describing to external accounting houses. In add-on, Davis ( 1997 ) noted that little and average concerns depend a batch on accounting houses as their most faithful concern advisers. Accounting houses have more familiarity about their clients and their clients concern. They know what their aims are, and can set frontward attacks to assist in achieving those aims. For this ground, as recommended by Yap et Al. ( 1992 ) , accounting houses can well act upon CAS acceptance among little and average concerns and besides their engagement may besides lend to the accomplishment of computerized accounting execution. However, to cut down mistakes and set a halt to fraud, it is indispensable for comptrollers to be cognizant of the impact of doing usage of of computing machines on the accounting processs and controls that are premeditated. Furthermore, computing machines can non replace the sentiment and penetration of educated comptrollers but the computerized accounting package can ease the undertakings by automatizing much of the mundane clerking procedures in the manual accounting systems ( e.g. poster, test balance readying ) . Furthermore, computing machine package allows the comptroller to foreground more on how to continue with the accounting entries and techniques on fiscal studies. Last but non least, more of the comptroller s difficult work can be paying attending on back uping direction in sing the impact of funding, puting and runing determinations on fiscal statements and other steps of public presentation by using accounting package. 2.5.2 Competition Ives A ; Learmonth ( 1984 ) and Link A ; Bozeman ( 1991 ) quoted in Thong ( 1999 ) confirmed that it is normally assumed that competition will heighten the possibility of invention acceptance. Ettlie ( 1983 ) and Ettlie A ; Bridges ( 1982 ) quoted in Thong ( 1999 ) besides point that competition leads to environmental insecurity and increases both the demand for and the rate of invention acceptance. Porter and Millar ( 1985 ) advise that, concerns will be able to vie in three ways by following IT: IT can make competitory advantage by cut downing costs or increasing distinction. IT can alter the industry construction and, in making so, change the regulations of competition. IT generates new concerns by making derived demands from new merchandises, frequently within bing operations of the concern. 2.5.3 External Agents Small concern s clients were a considerable ground for implementing IT, more than the force per unit area of rivals suggested by Wenzler ( 1996 ) . Fortunately, Public Practice Accountants are in a superior place to supply systems analysis, design, execution, and support advice to their clients as many little concerns are in deficiency of resources to follow CAS. Furthermore, the debut of the Goods and Services Tax ( GST ) was an external influence on little concern owner-managers determinations to follow a CAS. Many little concerns would hold taken advantage of Government inducements to assist with the passage costs of the GST. Many little concerns computerized their accounting systems following the debut of the GST because accounting for the GST utilizing manual records proved to be excessively complicated ( Lief 2000 ) . Since the debut of the GST, it has been shown that many little concerns agree that the costs involved were normally: offset by better record-keeping and attendant better concern direction. The general consensus was that the move to computerise records was really positive for the little concern sector overall . 2.6 Barriers FOR ADOPTION OF IT Computerized accounting implies that the lone thing that employees do is inputting and entering minutess into the computing machine, which so processes the other stairss of the accounting rhythm automatically or by a petition. Davis and Olson ( 1985 ) defined Information System acceptance as utilizing computing machine hardware and package applications to back up operations, direction, and determination devising in the concern. In this survey, computerized accounting is defined as utilizing computing machine package applications to back up accounting operations. However, many little concerns are cautious about the consequence computing machine may hold in their house. When a CAS is installed, if there is a bad option of hardware or package, or deficient planning, this may take to obscureness and may hold terrible long-run effects. Some grounds invariably mentioned in literature to explicate why little houses that had non yet adopted IT, identified the three chief barriers to IT acqui sition. 2.6.1 Lack of computing machine accomplishments and cognition Stanworth and Gray ( 1992 ) and Marlow ( 1998 ) reported that drains on clip and money characterize of import restrictions. Computer engineering infuses concerns both big and little ; the demand for employees with equal IT cognition is serious. There are two accomplishable solutions to this quandary. First, it is the employment of devoted IT staff. However, this is can be outer the budget of the little association and is expensive. Second, IT preparation is another pick. Conversely, this besides appears to be dearly-won. The classs for little houses, professional patterns where clients are to be paid on a clip footing, clip used up when set abouting preparation is considered by many owner-managers to be a loss of income as all these have proved to be expensive. Consequently, many little and average endeavors struggle frontward with what cognition exists inside the organisation. The little organic structure of survey stressing upon the result of preparation in little houses is contrad ictory. Delone ( 1988 ) , probe of critical procedure factors, stated that the degree of computing machine preparation was non connected with IT success ( measured as the impact of IT on the organisation and computing machine usage ) . On the other manus, Montazemi ( 1988 ) stated that there is a favorable relationship between degrees of preparation and steps of the impact of IT. Where workers were disappointed with the degrees of preparation available, he noticed their computing machine literacy, end-user fulfilment and blessing of IT was poorer than their better-trained opposite numbers. In add-on, Igbaria et Al. ( 1997 ) accounted that preparation besides is utile for little organisations. Their research demonstrates developing to be decidedly related with the evident effectivity of IT and to utilize it without trouble. On the footing of their decisions, Igbaria et Al. declare that persons with no sufficient preparation are apt to confront problems while utilizing the system. Since they are fighting, they may in fact see that the system is excessively stiff to use and that the public presentation wages of pattern are offset by the difficult work of using it and eventually go hesitant to follow the engineering, t herefore get the better ofing the intent of set uping the new engineering. 2.6.2 Lack of Time Niederman et Al. ( 1991 ) and Galliers et Al. ( 1994 ) province that analysis carry out in big concerns have invariably revealed information systems ( IS ) planning to be one of the top precedences of information systems and concern directors for clip direction. However, Fidler et Al. ( 1993 ) and Dou- kidis et Al, ( 1994 ) study that bing survey puts frontward that little organisations are melting to prosecute the theoretical account set by their larger opposite numbers and remain, in footings of modern direction pattern, in the dark ages. Whilst it is recognized by Malone ( 1985 ) and Cragg ( 1990 ) that the official planning techniques of big concerns are non basically suited for little concerns as probe recommends that little houses that have adopted more formal be aftering systems come across lesser IS jobs. Regardless of such consequences, Cragg and King ( 1993 ) study happening `few formal planning and control activities associated with the computing machine, or for that affair, with the concern as a whole . Where planning does take topographic point it has a inclination to be assumed on an unexpected, job footing ; merely an action of the owner-manager ; informal, periodic and closed ; and prejudiced earnestly by advice from external beginnings with less accomplishments and experience than the owner-manager. While Doukidis et Al. ( 1996 ) suggests, although IT is by and large linked with a systematic attack to direction and decision-making and its debut requires careful planning, much little concern direction public presentation is based on short-run, informal, ad hoc lines. Furthermore, McMahon ( 2001 ) survey mentioned that it truly develops direction in little houses and frees up clip by utilizing a computerized record maintaining system. However, John Breen and Nick Sciulli ( 2002 ) initiated that concern operators are likely to hold complexness happening clip to set into operation a CAS as they lack the clip to analyze and or implement a computing machine package bundle. For that ground, it may hold a positive consequence on the concern taken as a whole and may ease to happen the clip to follow CAS, if owner-managers could hold the needed direction and fiscal accomplishments. Besides, Proudlock et Al ( 1999 ) research observed that some concerns proprietors did non hold adequate clip to turn up and get peculiar accounting package that satisfy their concern necessities, and they did non hold clip to put up the accounting package and to enter the everyday concern traffics. This is why they did non follow Information Technology in the fiscal accounting system. 2.6.3 fiscal resources Iacovou et Al. ( 1995 ) finds that little and average endeavors need a changeless supply of sufficient fiscal resources for a booming acceptance of CAS. The fiscal resources are looked-for to confront the installing costs, care, and other current disbursals that might harvest up during the whole class of the system operation. However, Iacovou et Al. ( 2005 ) , Quayle ( 2002 ) and Riquelme ( 2002 ) added that non all little and average endeavors have adequate fiscal resources needed to back up the acceptance of CAS and as such fiscal restriction becomes the barrier to CAS. Head ( 2000 ) confirmed that: ..small concern calls hapless when it comes to purchasing computing machines. This shows that it is really dearly-won and hard when switching from manual system to computerise system. Besides, due to dearly-won investing, many little concern directors were unwilling to utilize computing machine package in the accounting system as mentioned by Head ( 2000 ) research survey. However, Doukidis et Al. ( 1994 ) and Proudlock et Al. ( 1998 ) province that adviser aid comes at an elevated monetary value, frequently excessively high for the little concern. Consequently, many little organisation proprietors prefer to obtain advice from neighbouring houses and support houses every bit good as less formal beginnings of advice such as immediate household, friends and familiarities, who fundamentally have small or no apprehension of the concern. In the same manner, Delone ( 1988 ) and Gable ( 1991 ) affirmed that IT advisers may non ever be the answer. Although they are familiar with the application of IT in concern, they barely of all time are cognizant of the specific demands of single concerns in the same deepness as the owner-manager. 2.7 Decision This overview of past research surveies has clearly demonstrated the standards which influenced the factors for the acceptance of information engineering in the accounting profession for some little and average concerns. However, these past surveies have lifted a problematic issue in the literature. Consequently, no contrasts are made between concerns that use a computerized accounting system. This appraisal would be practical in the grounds for utilizing or non utilizing computerized records, over and above what factors would carry more concerns to follow IT irrespective of their dimensions. Furthermore, harmonizing to the literature, all of the above features influence the proprietor or director s determination to implement IT in the accounting field to a changing extent depending on the economic system and industry in which the concern operates. .