The Impact of Ais for Decision Making Free Essay Example

1. Introduction

For numerous the company system generates mental effect of computer and programs in truth, the time has much broader applicability. Some system are naturally taking place which other are artificial. Natural system ranges from the atom a system of electron and neutron to the universe. A system series of Galaxies, gaze and plants. All life forms plants and animals are example of natural system. Synthetic systems are man made those systems included everything form clock to submarines and social system, to details system.

So info system is possession of formal treatments by which data are collected, processed in to details and distributes to users.

Because of the globalization of financial market through out the world generally triggered by advances in computer system innovation allow the transmission or real-time information on security price and other key info in numerous places. Within this context the important of marketing efficient monetary decision has increased which assist in the complexity and the continues growth of details system for making financial choice.

Accounting details system is a part of info system that created to transform accounting data in to information which is utilized to make quality decision. These accounting info system are computer based system that the company depend on it in order to stay competitive and in order to enhance the internal processes.

Info is simply as much as resources as plant and equipment. Performance, which is important to remaining competitive, can be increased through better accounting information system. So accounting as a details system determines collect, processes and communicate financial information about an entity to a variety of people.

The accounting info system courses fit in to both the accounting and details system. This make the accounting info system focus on understanding how the accounting system work.

The internal accounting system an important component of a firm’s information system includes operating and capital budget data on the cost of each product and current inventory and periodic financial report. Accounting information system provides information to help in making decision about the organization. This information is like a map of an organization. So organization most develop an effective and well organized accounting information system that reflect a positive impact on decision making other wise it reflect a poor decision making. Generally, the study tries to investigate the impact of accounting information system.

2. Organizational Background

The new economic policy introduced in November, 1991 caused the culmination of the command economic heralding the establishment of a market oriented one. This policy change created an opportunity and a conductive environment for the emergence of private financial institution aimed at the bringing a meaningful economic role in the development effort of the country, Ethiopia. One of the motives and the responsibility of this financial institution are to address about its services for the potential customers by increasing its market share and profitability.

Dashen bank is a privately owned company established as per the intent of the new policy and the Ethiopia investment code. It come in to existence on sep, 20 1995 as a share company with an authorized and subscribed capital of Birr 50 million in accordance with the “licensing and supervision of banking business proclamation number 841994,” of Ethiopia to undertake commercial banking activate. the bank obtained it’s license normal business activities on the first of Jan, 1996 it operates through out it’s head office in Addis Ababa.

In the current competitive business environment Dashen bank is trying to lead banking business by offering unique and efficient services. The bank caters for the public through state-of-the-art computer technology so as to maintain reliability, efficiency and modernity which are the hallmark and the banks distinguishing features.

Currently, the bank renders four major services in all of its branches namely, Credit facility, Saving Scheme, Internal banking and fund transfer. More over, the bank is providing the customer Master card and Visa cards. The major four services, 1. the bank provide credit facility to its customers of the credit lines offered included, term loan, letter of overdraft facilitate, merchandise loans and personal loans. 2. The other service the bank renders is saving deposit, demand deposit, youth saving deposit and time/fixed deposit. 3. The bank also renders international banking services like; opening letter of credit for importers, handling of incoming lCs for exporters. Purchase of out ward bills purchasing and selling of foreign currency denominated notes, receiving and transferring foreign currency payment by swift and handling incoming and outgoing international letters of guarantee. 4. Furthermore, the bank is currently offering fund transfer. The bank provides both domestic fund transfer all over the country and international fund transfer, rendered in cooperation with western union.

Dashen bank has established account maintenance relationship with thirteen correspondent banks. Overall banking relationship in SWIFT has expanded to 109 banks in 55 Cities and 44 Countries.

Area Bank Network

Dashen bank has 32 area banks spreading over 16 major towns in Ethiopia and of 16 convenient sites in Addis Ababa. The Area Banks Network is designed to facilitate the business transactions of its customers.

Wide Area Network

Dashen bank, enhancing its commitment to it’s vision, mission and values and upholding its logo to reach the height of banking profession, adopts form time to time state-of-the-art technological features, which are already, established on firm grounds. In this regard, all area banks are interconnected with wide area network, with a view to enabling them operate on their accounts from any one of its city and up country area banks. (Dashen Bank bulleting, Sep, 2003)

Dashen bank is the first bank in Ethiopia to appointed a principal member of visa and will deploy AIC software to issue cards and authorize route and switch both ATM and Post transaction while meeting processing requirement for EMV (Euro pay, Master card and Visa) smart card transactions ACI’s flagship software.

The significance accounting policies adopted by the bank are summarized here under.

Accounting Convention: – are under historical cost convection. Interest income and Expenses: – are accounted for on the accrual bases, however no interest is accounted for unpaid due loans and advances. Other Incomes: – is accounted for at the time of completion of related banking transactions. Convention of Foreign Currencies: – foreign currencies dominated transaction is converted into birr at the prevailing rate of exchange and realized foreign exchange gain or losses are reflected in the profit and loss account and Year end balances of foreign currencies on hand and with correspondent bank are converted into birr at mean of the buying and selling rates ruling at the balance sheet one.

Provision for doubtful debts: – The provision is maintained at a level adequate to cover possible losses. Management determines the adequacy of the provision based upon reviews of the national bank of Ethiopia. Fixed Asset: – Fixed asset are stated at cost, and net of depreciation are, ← Building is depreciated based on the straight live method at a rate of 5% of per annum. ← Furniture and fixtures office and other equipment, motor vehicles are at rate of 20% per annum and computer hardware at rate 25% per annum, depreciate based on the declining balance method.

In general, Dashen banks Sc. Will lead the banking industry in Ethiopia by offering unique and efficient services.

3. Statement of the Problem

The developments in accounting information system have a tremendous impact on informed accounting decisions. Accounting in a computerized and networked environment is still at its nasty stage in Ethiopia. Dashen bank S.Co is showing good progress in the area. The bank use on ACI technology on the new solution in order to use a master card and visa cards in Ethiopia the bank has also introduced the new system to use ATM and internet banking in order to enable customer share the infrastructure online. The role of accounting information system in banking activity is extremely important in the orientation of bank management.

Banks generate extremely useful accounting information for both internal and external users and also accounting information system holds its own benefit like transaction process, decision making reporting and the incorporation of information into its products and services. The most serious problem with accounting information system appears to occur when manager attempt to use accounting information that is develop for external reporting. This result a difficulties in identifying relevant information for decision making. A Well designed and computerized accounting information system has it own impact on both customers and bank management. In general the aim of this study is in order to asses the impact of accounting information system for decision making.