SALALE UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

ASSESSMENT OF ACCOUNTING INFORMATION SYSTEM IN BANK

MANAGEMENT ACTIVITIES
(A CASE STUDY ON COMMERCIAL BANK OF ETHIOPIA, IN FICHE
TOWN TULU SELALE BRANCH)

A RESEARCH PAPER SUBMITTED IN PARTIAL

FULFILMENT OF B.A DEGREE IN ACCOUNTING AND FINANCE

BY: KENENISA TOLERA BEGI

ID : EU 0096/12

ADVISOR: ASS.PROFESSOR DABA.G

FEBRUARY, 2024

OROMIA, FITCHE SALALE,ETHIOPIA

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 Acknowledgement
First of all, I would like to acknowledge “the Almighty”, the supreme authority of the universe.
Then, I would like to express my genuine thanks mainly to my advisor. ASS .Professor Daba G
.for his constructive great support, comments, suggestions, encouragement and offering useful
hints until the finalization of this proposal paper.

I want to express my gratitude to Salale University especially head of Accounting and finance
departments and all staff of Accounting and finance departments. Also I would never forget the
shares of my families and friends; they were continuously helping and encouraging me
throughout working this paper.

Finally, I would like to thank those people who helped me in filling out my questionaries‟ and
who were patients with me to gather all the necessary data required to complete this study.

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 Abstract
This study will be conducted on the assessment of the Accounting Information System in
management activities of Commercial Bank of Ethiopia; In Fiche Town Tulu Salale branches.
The main objective of this research will be to assess Accounting information system in bank
management activities of Commercial bank of Ethiopia at branch level. This study will be used
both primary and secondary data. The primary data will be collected by questionnaire; in this
questionnaire close-ended questions are used. The questionnaire will be collected with directly
distribute to employees of Commercial bank of Ethiopia whose daily activities are related to
AIS. Secondary sources of data will be collected from documents such as annual reports,
internets and books. In this study research will be used judgmental non-probability sampling to
select respondents. And also the researchers will be used descriptive method of data analysis.
The findings of this study shows that Commercial Bank of Ethiopia has skilled man power in the
AIS department, there is a problem in delay of communication, the satisfaction of customer
depends up on rendering fast service, reducing time and by keeping confidential data, and bank
has improvement over the past years .Therefore, bank should take an action in order to be
leading bank in the future by strengthening its strong side and by correcting its weak side.

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 ACRONOMY

CBE = Commercial Bank of Ethiopia

ATM = Automatic Teller Machine

HSBC = Hong Kong and Shanghai Banking Corporation

SWIFT = Society for Worldwide Interbank Financial Telecommunication

AIS= Accounting Information System

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 Contents
Acknowledgement ........................................................................................................................... i

Abstract ........................................................................................................................................... ii

ACRONOMY ................................................................................................................................ iii

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

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

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

1.2 Background of the organization ............................................................................................ 1

1.3 Statement of the Problem ...................................................................................................... 2

1.4 Research Question ................................................................................................................. 2

1.5 Objective of the Study ........................................................................................................... 3

1.5.1 General Objectives ......................................................................................................... 3

1.5.2 Specific Objectives ......................................................................................................... 3

1.6 Significance of the Study ...................................................................................................... 3

1.7. Scope of the Study................................................................................................................ 3

1.8 Organization of the paper ...................................................................................................... 3

CHAPTER TWO ............................................................................................................................ 4

LITRATURE REVIEW .................................................................................................................. 4

INTRODUCTION ....................................................................................................................... 4

2.1 Overview of Accounting Information System ...................................................................... 4

2.1.1 Accounting...................................................................................................................... 4

2.1.2 Information ..................................................................................................................... 4

2.1.3 System ............................................................................................................................ 5

2.1.4 Information System ........................................................................................................ 5

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 2.1.5 Accounting Information ................................................................................................. 5

2.1.6 Definition of accounting information system ................................................................. 6

2.1.7 Objectives of Accounting Information system ............................................................... 6

2.3Features of an Accounting Information System ..................................................................... 6

2.4 Components of AIS ............................................................................................................... 7

2.5 The main characteristics of accounting information system ................................................. 8

2.6 Accounting Information Systems Used in Banking .............................................................. 9

2.6.1 General Ledger Systems ................................................................................................. 9

2.6.2 Loan Accounting Applications ....................................................................................... 9

2.7 Importance of Accounting Information Systems .................................................................. 9

2.7.1 Business Transactions .................................................................................................. 10

2.7.2 Accounts Payable ............................................................................................................... 10

2.7.3 Accounts Receivable .......................................................................................................... 10

2.7.4 Financial Statements ..................................................................................................... 10

2.7.5 Year-End Closing ......................................................................................................... 10

2.8 Role of Accounting Information Systems ........................................................................... 10

2.9 CORE CONCEPT OF ACCOUNTING INFORMATION SYSTEMS ............................. 11

CHAPTER THREE ...................................................................................................................... 13

RESEARCH METHODOLOGY.................................................................................................. 13

INTRODUCTION ..................................................................................................................... 13

3.1 The research design ............................................................................................................. 13

3.2.The research Approach........................................................................................................ 13

3.3 Data type and sources .......................................................................................................... 13

3.4 Method of data collection .................................................................................................... 13

3.5 Target population ................................................................................................................ 14

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 3.6 Sample techniques and Sample size .................................................................................... 15

3.7 Method of data analysis and presentation ........................................................................... 15

CHA PTER FOUR ........................................................................................................................ 16

DATA ANALYSIS RESULT, PRESENTATION AND DISCUSSION .................................... 16

4.1 Introduction ......................................................................................................................... 16

4.2 Demographic characteristics of respondents ....................................................................... 16

4.3 .scale of awareness of management about AIS ................................................................... 19

4.4. Human resource problem observed in AIS Department .................................................... 20

4.5. General observed problem in lion international bank ........................................................ 20

4.6 standard service provide by the bank .................................................................................. 21

4.7 contributions of AIS towards customer satisfaction ........................................................... 22

4.8 benefit of AIS to the bank ................................................................................................... 22

4.9. Effect of AIS on the bank ................................................................................................... 23

4.10 Customer comment on AIS ............................................................................................... 24

4.11 Past years‟ experience on AIS ........................................................................................... 24

CHAPTER FIVE .......................................................................................................................... 26

CONCLUSIONS AND RECOMMENDATION ......................................................................... 26

5.1 conclusions .......................................................................................................................... 26

5.2 Recommendation ................................................................................................................. 27

References ..................................................................................................................................... 28

APENDIX ..................................................................................................................................... 29

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 CHAPTER ONE

INTRODUCTION
1.1Background of the study
From time immemorial, Information has always played a prominent role in human life but the
emergence of social progress and the vigorous development in science and technology has
immeasurably increased the role of information in every facet of human endeavor. The rapid
expansion of a mass of diversified information has born the term information and elucidation
ofits most characteristic properties which has led to principal changes in interpretation of the
concept of information (Agbolade ,2011,pp.20-45).

Accounting is the service function that seeks to provide the users with quantitative information.
On the other hand, Accounting Information System (AIS) is an information system that designed
to make the accomplishment of accounting function possible. AIS processes data and
transactions to provide users with the information they need to plan, control, and operate their
businesses. An accounting information system can be a manual system, or a computerized
system using computers. Regardless of type, AIS is designed to collect, enter, process, store, and
report data and information. (Romney, Marshall ,1997, PP.96-109). Accounting Information
System (AIS) as one of the most critical systems in the organization has also changed its way of
capturing, processing, storing and distributing information. Nowadays, more and more digital
and on-line information is utilized in the accounting information systems. Organizations need to
take an action, which put such systems at the forefront, and consider both the system and the
human related factors while managing their accounting information systems. In managing an
organization and implementing an internal control system, the role of accounting information
system (AIS) is crucial (Steinbart, 1997, PP.123-140). The objective was to examine the impact
of AIS on the quality of commercial bank of Ethiopia.

1.2 Background of the organization

The history of the Commercial Bank of Ethiopia (CBE) dates back to the establishment of the
State Bank of Ethiopia in 1942. CBE was legally established as a share company in 1963. In
1974, CBE merged with the privately owned Addis Ababa Bank. Since then, it has been playing
significant roles in the development of the country.

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CBE is the pioneer to introduce modern banking to the country. It has more than 1700 branches
stretched across the country. It is from the leading African bank with assets of 1 trillion Birr as
on June 30th 2021. Plays a catalytic role in the economic progress & development of the country.
The first bank in Ethiopia to introduce ATM service for local users.

Currently, CBE has more than 30 million account holders and the number of Mobile and Internet
Banking users also reached more than 6 million,5000 as of June 30th 2018. Active ATM
cardholders reached more than 4.4 million. As of June 30, 2021, 4100 ATM machine and 11,796
POS machines were available.

It has a strong correspondent relationship with more than 50 renowned foreign banks like
Commerz Bank A.G., Royal Bank of Canada, City Bank, HSBC Bank,... CBE has a SWIFT
bilateral arrangement with more than 700 others banks across the world.

CBE combines a wide capital base with more than 60,000 talented and committed employees.
Pioneer to introduce Western Union Money Transfer Services in Ethiopia early 1990s and
currently working with other 20 money transfer agents like Money Gram, Atlantic International
(Bole), Xpress Money.

1.3 Statement of the Problem

The main purpose of accounting is to provide financial data that uses for decision making. For
instance, business executives and managers need the financial information provided by
accounting system to help them to plan, to control and evaluate business operation. Outsiders
such as bankers, potential investors, labor unions and other also need accounting information.
[Plunkett: 1986, PP.34-48] According to USAID, 2018 accounting information system is useful
if it has a potential for making administrative decision otherwise it misleads the users idea and
also that lead them to decide wrong decisions, and that may be the cause for bankruptcy or loss
of the organization. In Ethiopia organization this problem is visible; they do not utilize AIS as
tool for the administration purpose. Therefore, this research tried to show the role of AIS in
administration purpose in case of CBE.

1.4 Research Question

This research has attempted to address the following questions throughout the studies:
 Did CBE use AIS effectively for administrative decisions?
 What is the role of AIS in CBE administration?
 Dose a knowledge gap exists on the use of AIS between different levels of management?
 Does CBE use AIS effectively to attain its objectives?

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1.5 Objective of the Study

1.5.1 General Objectives

The general objective of this study was to examine the impact of accounting information system
on the administrative quality of commercial bank of Ethiopia.

1.5.2 Specific Objectives

The specific objectives of the research were to:
 To assess whether CBE is using AIS effectively for administrative decisions.
 To analyze the role of AIS in CBE Administration
 To investigate whether knowledge gap exists on the use of AIS between different levels
of management.
 To analyze whether CBE use AIS effectively to attain its objectives

1.6 Significance of the Study

The study findings and recommendation are highly important to the management of the
institution (CBE). It draws their attention to the some of the points were corrective actions
should be taken. Furthermore it will be used as an additional reference material.

1.7. Scope of the Study

The study has focused on the impact AIS on the administration of CBE. Although the bank has
many branches throughout the Salale town the study is restricted on TULU SELALE BRANCH.
Beside the study cannot visualize overall impact of AIS on the organization as whole it‟s mainly
restricted on administration area. The time path of the research was restricted on the fiscal year
of 2014-2015/16 EC.

1.8 Organization of the paper

The study will be comprised four chapters. The first chapter will deal with the introduction; this
includes the background, statement of the problem, objectives of the study, significance of the
study, methodology scope and limitations of the study. The second chapter describes the existing
relevant literature. The third chapter will focus on data presentation and analysis. The final
chapter will be about conclusion and recommendation of the whole chapters.

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 CHAPTER TWO

LITRATURE REVIEW
INTRODUCTION
This chapter contains different literature reviews and researches analyzing the previous works of
different scholars and will create a standing point for the research. The part contains imperial
reviews, accounting and information growth process and history, characteristics of accounting
information system and different phenomena‟s by different scholars.

2.1 Overview of Accounting Information System

Before writing the definition of AIS, it is better to look the meaning of each word.

2.1.1 Accounting
Accounting is a systematic process of identifying, recording, measuring, classifying, verifying,
summarizing, interpreting and communicating financial information. It reveals profit or loss for a
given period, and the value and nature of a firm‟s assets, liabilities and owners equity.

Accounting provides information on the

 Resources available to a firm,

 The means employed to financial those resources, and
 The results achieved through their use.
Accounting is the “language of business” because it is used in keeping track of business finances
and its continued profitability. Without accounting, a business owner would not know what
money was coming in or going out, or how to plan for the future (Warren Reeve Duchac, 23rd
edition).

2.1.2 Information
Information is processed data that is used to make decisions, resolve conflicts, and/or reduce
uncertainty. It is a business resources like other resources of raw materials, capital and labor,

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information; needs to be appropriately managed is vital to the survival of contemporary
businesses (James A. Hall, 2nd edition).

2.1.3 System
System is a set of detailed methods, procedures and routines created to carry out a specific
activity, perform a duty, or solve a problem. It is an organized, purposeful structure that consists
of interrelated and interdependent elements (components, entities, factors, members, parts etc).
These elements continually influence one another (directly or indirectly) to maintain their
activity and the existence of the system, in order to achieve the goal of the system.

A system is called a subsystem when it is viewed as a component of a larger system.

A subsystem is considered a system when it is the focus of attention. Examples of system;

Biological cell, human body (James A. Hall, 2nd edition).

2.1.4 Information System

An information system (IS) is any organized system for the collection, organization, storage and
communication of information. More specifically, it is the study of complementary networks that
people and organizations use to collect, filter, process, create, and distribute data. An information
system (IS) is a group of components that interact to produce information.

Information system is an academic study of systems with a specific reference to information and
the complementary networks of hardware and software that people and organizations use to
collect, filter, process, create and distribute data (James A. Hall, 2nd edition).

The goal of an information system is to support

 The stewardship function of management

 Management decision making
 The firm‟s day-to-day operations.

2.1.5 Accounting Information

Accounting entails recording, classifying and summarizing of business transactions. Accounting
information is economic information, as it relates to financial or economic activities of a
business organization. There are so many people using the accounting information for so many
diverse purposes, thus, the purpose of financial statements is to cater for the needs of the users

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that could lead them to make better financial decisions. The users may be classified into internal
and external users.

Internal users or primary users of accounting information include: management, employees and
owners. External users or secondary users of accounting information include: creditors,
investors, customers, tax authorities and regulatory authorities (Marshall B. Romney, 2009).

2.1.6 Definition of accounting information system

Accounting information system is a system of collection, recording storing and processing of
financial and accounting data into information that is used for decision making. Accounting
information system is generally a computer-based method for tracking accounting activity in
conjunction with information technology resources. The result of statistical reports can be used
internally by management and externally by other interested parties including investors, creditors
and tax authorities. (Marshall, 2012)

2.1.7 Objectives of Accounting Information system

An accounting information system provides accurate and timely financial information for
internal management purposes. While those systems can include paper manuals and ledgers,
most systems in today's business environment are built upon accounting software programs or
applications. These systems provide financial or operational reports for business owners to make
decisions. An accounting information system can also integrate and fulfill departmental and
company-wide objectives. (William, 2010)

2.3Features of an Accounting Information System

One of the features of AIS is the flow of information. It is illustrated here by the use of a
pyramid with management on the top, middle and operations management below those
operations personnel representing the base for the flow of information. Information concerning
the performance o. f the company drifts upward to all levels of management through the
personnel. The top management is responsible to the shareholders or owners of the company for
the information they receive. Contributing to this information about the performance of the
company are customers and suppliers, with whom the operations personnel have day-to-day
contact with the use of this information the top management filters down information on the
company's budget and instructions on how to change or improve the day-to-day interactions with
the customers and suppliers. Information from suppliers and customers is known as external

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information flows. Those from personnel to management and management to personnel are
known as internal information flows.
Processing Transactions
Another feature of AIS is processing of transactions. AIS process two different types of
transactions. The first type of transaction is the financial transaction which is any transaction
monetary in nature that affects the assets or equities of a business organization. The second type
of transaction is nonfinancial transaction is a decision that, while it is not measured monetarily,
can affect the overall accounting health of the company. For example, if the company decides to
change suppliers due to a substantial rise in prices from a current supplier, the immediate effect
is not financial in nature until the first order is placed. (James, 2011)

2.4 Components of AIS

AIS generally consist of six main parts. These are people, procedures and instructions, data, soft
ware, IT infrastructure and internal control.

People The people in AIS are simply the system users, professionals who may need use an
organization‟s AIS include accountants, consultants, business analysts, managers, chief financial
officers and auditors.

Procedures and Instructions The procedures and instructions of AIS are the methods it uses for
collecting, storing, retrieving and processing data. These methods will be both manual and
automated and the data can come from both internal sources (example employees) and external
sources (example customers, on line orders). Procedures and instructions will be coded in to AIS
soft ware. They should also be coded into employees through documentation and training
procedures and instructions must be followed consistently to be effective.

Data The data contained in AIS as all the financial information pertinent to the organizations
business practice. Any business data that impacts the company‟s finance should go into depend
on the nature of the business but, it may consists of the following:

 Sales order
 Customer billing statements
 Sales analysis reports
 Tax information etc

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Software; The software components of AIS is the computer programs used store, retrieve,
process and analyze the company‟s financial data. The key components of effective AIS soft
ware are quality, reliability and security. Managers relay on the information out puts to make
decisions for the company and they need high quality information to make sound decision.

Information technology infrastructure; is just a fancy name for the hard ware used to operate
the AIS. Most of these hard ware items are things a business would need to have any way; they
include personal computers, servers and printers.

Internal controls; the internal control of AIS are the security measures it contains to protect
sensitive data. AIS must have internal control to protect against unauthorized computer access
and to limit access to authorized users which includes some users inside the company (Marshal
B. Romney, 2009).

2.5 The main characteristics of accounting information system

Understandability
this implies the expression with clarity of accounting information in such a way that it will be
understandable to users who are generally assumed to have a reasonable knowledge of business
and economic activities. (Barry 1994)

Relevance

This implies that the accounting information system to be useful must assist a user form confirm
or maybe revise a view usually in the context of making a decision. It reduces uncertainty by
helping you predict what will happen or confirm what already has happened. (Barry 1994)

Consistency
this implies consistent treatment of similar items and application of accounting policies. (Barry
1994)

Comparability
this implies that the ability for users to be able to compare similar companies in the same
industry group and to make comparisons of performance over time. Much of the work that goes
into setting accounting standards is based around the need for comparability. (Barry 1994)

Reliability
this implies that the accounting information that is presented is truthful, accurate, complete
(nothing significant missed out) and capable of being verified. (Barry 1994)

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Objectivity
This implies that accounting information is prepared and reported in a "neutral" way. In other
words, it is not biased towards a particular user group or vested interest. (Barry 1994)

Completeness

This implies that the accounting information it does not leave out which is anything that is
important. (Barry, 1994)

2.6 Accounting Information Systems Used in Banking

Writer

Banks have Different components to comprise a bank accounting information system. Bank
systems are classified as "hybrid" systems, which provide basic accounting operations, bank
information systems, decision support software and offline banking products implemented and
initiated on intra-office networks to serve customers. Bank accounting systems are in under state
and federal regulatory agencies to ensure the accuracy and integrity of bank accounting systems.
(Richard, 2011)

2.6.1 General Ledger Systems

The general ledger is at the core of account processing and information systems in banking. The
general ledger is the record accessed to perform account transactions. It records every
transaction, which interfaces with a designation of accounts. A bank general ledger can be
slightly different from modern industry general ledgers because of certain compliance rules set
by the Federal Reserve Bank (FRB) and the Federal Deposit Insurance Corporation (FDIC).
Banking general ledger systems operate on mid-range software, which can be turnkey software
out of the box software customized for banking industry applications. (Richard, 2011)

2.6.2 Loan Accounting Applications

Banks make the majority of their money through loans and investments. Through loan
accounting software and bank personnel can process the forms and paperwork needed to make a
decision on a customer's credit standing. The managerial side of a loan accounting application is
managers can access the data to examine the bank loan portfolio, generate compliance checks for
auditors and track loan loss reserve accounts. Loan origination software can interface with an
accounting information system through most PC-based systems. (Richard, 2011)

2.7 Importance of Accounting Information Systems

Information system is designed to keep records of a business in an efficient accounting
information system is typically a computerized accounting program that keeps record in
accounting manner. The company information entered into the system, the system tracks and
organizes the accounting information. The accounting information system also used to provide
detailed information about the company, including financial statements. (Vernon, 2013)

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2.7.1 Business Transactions
An accounting information system is designed to record all transactions of a business. An
accounting clerk enters all business transactions into the program and the transactions
automatically are posted to the corresponding accounts. This is important because any time
information is needed it can found on the computer and it‟s organized. (Vernon, 2013)

2.7.2 Accounts Payable

An accounting information system allows for easier payments made on accounts payable. Many
systems are designed to pay all bills due with a click of a button. A date is selected and checks
are automatically made out for all bills due. Most systems allow a clerk to unselect certain bills if
a company is not ready to pay a specific bill. (Vernon, 2013)

2.7.3 Accounts Receivable

This type of system also allows for easier billing. Information is recorded on the system and a
clerk chooses when to print bills. This is done daily, weekly or monthly, depending on the
business. The system generates all bills efficiently and easily for the clerk.(Vernon 2013)

2.7.4 Financial Statements

An accounting information system generates all financial reports without the clerk calculating
anything. The dates for the reports are entered into the system and the computer generates reports
for that specific period. This comes in handy when a report from a different period is needed
immediately. The system has the capability of producing reports for any period that the
information was recorded for. (Vernon, 2013)

2.7.5 Year-End Closing

Year-end closing is often a tedious process for an accountant. An unadjusted trial balance is
created, adjusting entries are made and recorded, an adjusted trial balance is calculated, closing
entries are made, and, finally, a post-closing trial balance is generated. (Vernon, 2013)

2.8 Role of Accounting Information Systems

According to Patrick (2014), Accounting Information Systems is a subset of a company‟s total
Management Information Systems. Companies use the management information system (MIS) to
aid their business decisions and ensure profitable business operations.

History

The classic AIS included paper ledgers that contained all financial transaction of a company.
With the growth of technology over the past several decades, accounting software has replaced
the old paper system. (Patrick, 2014)

Features

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Accounting information system software has two main features: financial transaction recording
and financial information reporting. After accountants input financial transactions into the AIS,
reports can be generated to review this information. (Patrick, 2014)

Considerations

Company management must decide how large the AIS will be and what type of information must
be collected. Information may be recorded electronically, bypassing human input and allowing
managers quicker access to select information. (Patrick, 2014)

Benefits

Many accounting information system programs are web or server based, allowing managers to
gather and review financial information from multiple locations at one time. Centralized
reporting can shorten turnaround time for implementing changes in business operations. (Patrick,
2014)

Warning

Failing to review the information collected and reported may hamper the effectiveness of the
AIS. Ineffective AIS programs create a “garbage in, garbage out” environment, causing delays
for management decisions. (Patrick, 2104)

2.9 CORE CONCEPT OF ACCOUNTING INFORMATION SYSTEMS

Accounting Information System (AIS) courses plays a great role for the employment
opportunities available within the discipline. Career opportunities abound for those with a solid
foundation in AIS, including traditional accounting vocations in financial and managerial
accounting, as well as careers in consulting and information systems auditing and security.
(George, 2012)

Traditional Accounting
Certainly a number of traditional accounting jobs are also available to those who choose to major
in accounting information systems. After all, what accounting system is not also an accounting
information system? Because now a day‟s technology plays s a strong role in accounting, AIS
majors enjoy for the advantage of understanding both traditional accounting concepts and
information systems concepts. Recognizing the importance knowledge of accountants about
information systems, the AICPA recently developed a new designation: Certified Information
Technology Professional (CITP), which accountants can earn with business experience and by
passing an examination. (George, 2012)

Systems Consulting
A consultant is an outside expert who helps an organization solve problems or provides
Technical expertise on an issue. Systems consultants provide help with issues concerning

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Information system, for example, by helping an organization design a new information System to
select computer hardware or software, or reengineering business processes so that they operate
more effectively. One of the most important assets a consultant brings to his or her job is an
objective View of the client organization and its processes and goals. (Marshal, 2012)

EMPIRICAL REVIEW
According to Wondimu(2015) investigated about assessment of accounting information system
in banking managment activities (A case study on commercial bank of ethiopia, Debre markos
branch).the objective of the study is to evaluate the level of banking managment activities in
accounting information system, which is implemented in commercial bank of ethiopia.the study
results to reduce the low level of awareness of accounting information system by employees as
well as managment staf of the bank, to reduce shortage of network connection, to reduce lack of
human resource in accounting information system department.the study a main recommendation
is for commercial bank of ethiopia to increase the accounting information system.

RESEARCH GAP
The previous researcher was not investigate does necessary training given to employees how to
practice AIS. but in this study it investigates does necessary training given to employees how to
practice AIS.

The previous researcher was not investigate what will be the prospects of AIS in banking
managment activities. But in thi study it investigates what will be the prospects of AIS in
banking managment activities.

The previous researcher was used purposive simple random sampling method from probability
sampling method.But in this study uses judgmental sampling method,because it enables us to
freely select any respondents by considering that the respondants will fit the question or not as a
result.

The previous researcher was used mixed (qualitative and quantitative) research approach. But in
this study use quantitative research approac

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 CHAPTER THREE

RESEARCH METHODOLOGY
INTRODUCTION
The research methodology is a key part of scientific research. Since it gives detail information
about; how the research will be design, source of data, methods of data collection, target
population, sampling techniques and sample size, and methods of data processing and data
analysis. (Yemane, 2010).

3.1 The research design

This study will use descriptive type of research design .The reason for using descriptive type of
research design is: it identify present condition of banking activities, it point to present needs and
it is easy to describe what the study can perform.

3.2.The research Approach

The study will use quantitative research approaches in which the researcher collect, analyze and
interpret data use quantitative data. quantitative reaserch approach use for measure and test
research question and for understanding data collection response and reports data in amount and
levels in numbers.

3.3 Data type and sources

In order to get sufficient and relevant information for these study researchers will use both
primary and secondary sources of data. Primary sources are original sources from which the
researcher directly collects data that have not been previously collect. Secondary sources are
sources containing data which has collect and compile for another purpose.

3.4 Method of data collection

The primary data will be collect through questionnaire from the target population of Commercial
bank of Ethiopia, Tulu selale branches. In this questionnaire the study will use close end
questions to collect relevant information for the study and most convenient to collect relate
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information from the respondents.The secondary source of data will be collect from action plan,
annual reports, rules and regulations of the organization and also from pertinent materials
including other write materials from library.

3.5 Target population

The target Population of this Study are bank manager and employees of commercial bank of
Ethiopia, Tulu selale branches who are engage in Accounting Information System relate
activities.

The technique which will be used in drawing the sample is stratified sampling method.
Researchers will use stratified random sampling to obtain a sample population that best
represents the entire population being studied. stratified random sampling ensures that the
resulting sample will be distributed in the same way as the population in terms of the stratifying
criterion and its advantages include minimizing sample selection bias and ensuring certain
segments of the population are not overrepresented or underrepresented (Bryman & Bell 2011)

To determine the size of the sample in the two strata „s, this study will use Taro Yamane's (1967)
simplified formula according to Yamane, for any sample given the estimated population
proportion of 0.1 and 95% confidence level, the sample size is given by:

( )

Where n is the sample size,

N = is the total population size, and

e = is the level of precision or sampling error = (0.05)

( )

Thus sample size for this study was 10 employees

14
3.6 Sample techniques and Sample size
The researcher will be used judgmental sampling techniques.Because to collect essential
data, it enables us to freely select any respondents by considering that the respondent will fit
the question or not. As a result, my sample size from the target population is 20 employees
and bank manager in the branch.

3.7 Method of data analysis and presentation

The collect data will be analyze by using descriptive analysis method according to
percentage, table, and frequency to interpret the data collect from the sample.

15
 CHA PTER FOUR

DATA ANALYSIS RESULT, PRESENTATION AND DISCUSSION

4.1 Introduction
This chapter concentrates on a brief decapitation of lion international bank AIS contribution
effective administration in bank and its challenges. Data analysis and interpretation is also in
cloud in this chapter based on the data collected from document of commercial bank of Ethiopia
and primary data collected by questionnaire and by with staff and with finance officer whose day
to day activity mainly concerned with accounting processing and uses it directly in the
management activity‟s so that conclusion cold be drown based on the findings. Questionnaires
were distributed to 10 of employee‟s commercial bank of Ethiopia who has direct work
relationship in the management and finance department and all respondents are complemented
and submitted the questionnaire

4.2 Demographic characteristics of respondents

Table 4.2.1 gender of employee
Factor Frequency Percent (%)
Gender Male 6 60%
Female 4 40%
Total 10 100%
(Source: Questionnaire, 2024)
The above table shows us that most of the respondents (60%) are male and (40%) are female
respondents. It implies that most of commercial bank of Ethiopia employees are male.

16
Table 4.2.2 Age of the respondents
Age No of the respondent Percentage
Below 18-21years 0 0
22-35years 7 80%
36-45years 2 20%
Above 46 years 0 0%
Total 10 100%
Sources, questionnaires 2024
As indicated from the above table, 8(80%) of the respondents fall between the age of 22-35
years and 2(20%) of the respondents are found in the age 36-45 years. most of the employees in
the organization are between 22-35 years. This indicates that the commercial bank of Ethiopia
have productive group of employees.
Table 4.2.3 marital status of the respondents
Marital status No of the respondents Percentage
Married 6 60%
Un married 3 30%
Divorced 1 10%
Widowed 0 0%
Total 10 100%
Source, questionnaires 2024
As shown the above table (60%) of the respondents were married, 3(30%) of the respondents
were unmarried and the remaining 1(10%) of the respondents were divorced. From this
information the researcher concludes most of the workers are married

17
Table 4.2.4 back ground of respondents
No Questionnaire Respondent Percentage (%)
1 Education background No
Diploma 1 10%
First degree 9 90%
Above first degree 0 0%
Total 10 100%
2 Position
Supervisor 1 10%
Junior officer 1 10%
customer
Clark customer 6 60%
officer
Manager 1 10%
Auditor 0 0%

Senior accountant 1 10%

TOTAL 10 100%

3 Service year

Below 5-year 8 80%

5-10 Year 2 20%
Total 10 100%
Source: Questionnaire; 2024
The education background distributions of the respondent shows that all of the respondents have
education qualification of diploma and above, the position shared by respondent constitutes 10%
of respondents are manager and 60% of clerk. There is also a single junior officer and senior
accountant each of them constitutes 10%. As far as the distribution of service year of the
respondent are concerned 80% of employees are below 5year of service and 20% of employees

18
are above 5 year. The staff of the bank has maximum level of education background this implies
that the bank can provide and maintained quality information system

4.3 .scale of awareness of management about AIS

Table 3.3 scale of awareness of management about AIS
Question Respondents Percentage
At the scale of 0-5 rate the
capability of management
commercial bank of Ethiopia
about the awareness of AIS?

0=no awareness
total awareness

Partial awareness

0=no awareness 0 0.00

Partial awareness 6 70
Total awareness 4 30
Other 0 0.00

Total 10 100

(Source: Questionnaire, 2024)

As a research one can realized the value of accounting information in the process of
administrations is so great. Thus from table 3.3 the majority or 60% of the respondents have
partial awareness and40%of the respondents have total awareness about accounting information
system. In order to be effective as well as efficient in the engagement at least the majority of the
respondents have fully aware of accounting information system and to do this commercial bank
of Ethiopia must do to upgrade his employees about AIS knowledge.

19
4.4. Human resource problem observed in AIS Department
Table 4.4 human resource problem department AIS department
Question
Is there shortage man power in Respondents percentage
AIS processing department No
Yes 6 60
No 4 40
Others, in what area 0 0.00
Total 10 100
(Source: Questionnaire, 2024)
From table 3.4 the researcher noticed that 60% percent of the respondents agree that there is
shortage of man power in AIS process department and also 30% of the respondents who replies
that there is no human resource problem in AIS. According to the above the bank has not enough
human resource to use AIS and this leads bank ineffective and the bank must improve this.

4.5. General observed problem in lion international bank

Table 4.5 general observe problem/possible problems observed in lion international bank
Question Respondents
What is the possible problem No Percentage
observed in commercial bank
of Ethiopia
Delay in process 3 30
Data redundancy 1 10
Delay on communication 4 40
In consistency 2 20

Total 10 100
(Source: Questionnaire, 2024)

20
According to the questionnaire 40% of the respondent agreed that among the possible problem
observed in the bank communication delay is the major one. The bank should use more recent
software to make its service faster and free of delay in communication. Among the respondent
30% agreed delay in process they belief that when processing data‟s sometimes a networking
problem that makes the data processing to delay it mainly happen when the bank serve member
of customers at the same time. There is also 20%of respondents who believe in about data
inconsistency and the remaining 10%of of respondents agreed data redundancy is the as a
problem observed in the bank. Therefore the bank should minimize the above problems to be
effective

4.6 standard service provide by the bank

Table 4.6 standard service provide by the bank through the aid of AIS, over past years
Question Respondent
How do you rate the standard No Percentage
service provider in the bank
through the aid of AIS over
the past years
Have improved 5 50

Have little improvement 2 30

Have not charged 0 0.00
Have deteriorated 0 0.00
Do not know 1 20
Total 10 100
(Source: Questionnaire, 2024)
Based on the data 30% of the respondents know standard service that the bank offer through the
aid of accounting information system have shown little improvement and 60% of the respondent
understand that over the past year there has been an improvement in the service provide through
the help of accounting information system on the hand the research also get 10% of respondent
who say do not know the standard service in the bank through the aid of AIS over the past years.

21
4.7 contributions of AIS towards customer satisfaction
Table 4.7 contributions of AIS towards customer satisfaction
Question Respondents
In what way does AIS contribute to the No Percentage
satisfaction of customers
By keeping confidential data 2 20
Reducing time 2 20
Rendering fast service 6 60
Did not increase customer satisfaction 0 0.00
Others 0 0.00

Total 10 100
(Source: Questionnaire, 2024)
From the above table, the researcher understands that greater than half of the respondents agreed
on AIS contribute to customer satisfaction in a way that it renders fast service know. 60% 0f
respondents believes rendering fast service is the only way that AIS contribute to the
satisfactions of the customer and 20%of the respondents understand that for the satisfaction of
customers AIS contribute by reducing time that customer spent by staying and waiting for
service . Others in for those AIS give customer satisfaction by keeping confidential data i.e.20%.
The remaining is no contribution towards the satisfaction of customer. So the bank increases
rendering fast service, keeping confidential data and reducing time for the satisfaction of
customer.

4.8 benefit of AIS to the bank

Table 4.8 benefits of AIS to the bank
Question Respondents
In what way AIS add value to your bank. You can No Percentage
circle tick more than one choice

22
Improve your quality and reduce cost of service 2 20
It improves efficiency 1 10
It improves decision making 2 20
It improves chain of communication 2 20
It adds value stated above 3 30

Total 10 100
(Source: Questionnaire, 2024)
In this question the respondents applied that AIS plays an essential role in a variety of tasks in
the management of commercial bank of Ethiopia to extent 20% % of the respondents agreed that
AIS to the bank in away listed in the above table improving quality and reduce the cost of service
10% of respondents agreed on that AIS improve efficiency for the bank. In case of decision
making also 20% respondent replay as AIS have benefit to the bank, there are also respondents
that agree that AIS improve chain of communication (it constituent 20%). Almost 70 % of
respondent said that to ensure safety of customer‟s confidential data AIS of the helps to maintain
each customer‟s confidential data in separated file and fillies did not expose to any Third party
without permit lion of the customers and 30% of the respondents replied that customers
confidence data are kept in secret separately from their account and in need the Bank can refer it
at any time

4.9. Effect of AIS on the bank

Table 4.9 effect of AIS on the bank
Question Respondents
How AIS administration of your bank is No Percentage
change /affects your income in the last
year
Increase income 6 60
Decrease income 0 0.00
Not changed its income 2 10
Not sure 2 30

23
Total 10 100
(Source: Questionnaire, 2024)
As it can observed on the table above 60% of the respondents said that AIS helped the bank to
increase its income while 20% of the respondents said that AIS do not sure about change income
of the bank there is also 20% respondent who replay AIS do not changes in income of the bank.
As shown in the above table the effect is good for the bank so the bank improve the use of AIS.

4.10 Customer comment on AIS

Table 4.10 customer comments on AIS
Question Respondent
Do you request the customer No Percentage
for comment on your service
banked by AIS?
Yes 6 60
No 4 40
Total 10 100
(Source: Questionnaire, 2024)
According to 60% respondents the bank requests customer for comment about service of the
bank by AIS. Only 4 respondents which constituent 40% from the whole said as the bank do not
give chance for comment to customers for comment about banking service baked by AIS .for
respondent who says „‟yes‟‟ it is very good and the bank should initiate all customers to give
comment on AIS in the future to improve his service .

4.11 Past years’ experience on AIS

Table 4.11 past years’ experience on AIS
Question Respondents
In your experience of being No percentage
user of AIS during the last
years has been
Very positive 3 30
Positive 6 60
Okay 1 10

24
Negative 0 0.00

Total 10 100

(Source: Questionnaire, 2024)

The respondents who account about 30% of agreed with the quality of AIS provide them very
positively in past years about more than half of the respondents 60% are to safe extent satisfied
and they said it has been positive that being users of AIS over that last year‟s and there is one
respondent who say okay, therefore have to continue the use of AIS for the future experience.

25
 CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATION

5.1 conclusions
Accounting information system is the most important tool to implement effective administration
system and the entire activities of a given organization. Its ultimate goal is to make the
administration of the organization more effective so as to improve the effectiveness of employee
and to provide routine and non- routine information which is used for decision making and also
to attract customers. Asked on the analysis carried out in previous chapter the following
conclusion are drown
 The standard of service of the bank has improved through the use of accounting
information system
 The accounting information system has improved the bank customer relation by
rendering effective service over the past few years and also it contribute to the
satisfaction of the customer by rendering fast service
 Using accounting information systems add value to the bank in money ways such as
improving Quality of financial statement decision making
 There is problem of delay in communication which directly affects banking transaction to
be performed ineffectively.
 commercial bank of Ethiopia has not enough human resource to use AIS and this leads
the bank ineffective.
 Over the past year there has been an improvement in the service provide through the help
of accounting information system.
 Service backed by AIS helped commercial bank of Ethiopia to increase its income
 AIS helps to maintain each customer‟s confidential data in separated file and fillies did
not expose to any Third party without permit commercial bank of Ethiopia customers.
 The staff of the bank has medium level of education background.

26
5.2 Recommendation
Based on the finding and conclusion of the study the following recommendation is forwarded.
 Lion international bank administration must offer training for staff to ensure and develop
their knowledge of AIS this enable the staff of the bank to make service reliable and
effective.
 The bank must maintained un independent AIS department separately this has advantages
for example based on frequent report that AIS department provide the administration of
the bank can take measure also independent provide the administration of the bank can
take measure and also independent AIS department can help the bank to provide reliable
financial statement for external users.
 To avoid delays in communication the bank must consolidate or networking all the
activities of the bank for effective bank system.
 In order to be effective as well as efficient in the engagement at least the majority of the
employees have fully aware of accounting information system and to do this lion bank
must do to upgrade his employees about AIS knowledge.
 The bank must render fast service, keeping confidential data and reducing time that
customer spent by staying and waiting for service ,when the bank do this the amount and
satisfied customers are increased and also the bank profit also increases.
 LIB bank should initiate all customers to give comment on his service backed by AIS in
order to improve his service in the future and to be leading bank in the domestic by
increasing his strong side and correcting his weak side.
 LIB bank has not enough human resource to use AIS and this leads bank ineffective so
the bank must improve it by hiring employees who have profession in accounting
information system in order to make advanced decision and satisfy the needs of
customers.

27
 References

1. Abinet Gizaw, (2007), Impact of AIS on poverty reduction in Ethiopia, 2nd edition,
Aster Nega printing plc, Addis Ababa.
2. Barry Edward, (2002), Accounting information system, 8th edition, Galax printing,
Calfornia.
3. George Bonder,(1998), Accounting information system,1st edition, HP printing Llc,
Indonesia.
4. Habtom Hagos, (2014), assessment of financial institutions performance, unpublished
material, senior essay, Axum University.
5. Harrinson and horringren, (1992), the role of AIS in modern economy, 3rd edition, Jamaica
printing, Venice.
6. James Hall, (2009), Accounting information system, 7th edition, Alpha printing plc, U.S.A.
7. Marshal Romney, (2011),Modern Accounting information system, 9th edition, GLX printing,
Arizona.
8. McGraw Hill,(1982) Accounting information system,1st edition, SMART printing, Australia.
9. Paul John Steinhart, (2013), Accounting information system, 9th edition, printing plc
unknown, Arizona.
10. Richard Davis, (2014), Accounting information system, 10th edition, USA.
11. Trewin John, (1998), the factors affecting effectiveness of AIS, 5th edition, Sky Hartfort
press, UK.
12. Vernon Richard,(2013), accounting information system, 8th edition, Washington D.C.
13.William Sanjo, (1995), Accounting information system, 2nd edition, west view press,
London.
14. Yemane G/medhin, (2010), Impact of micro finance on poverty reduction in Tigray region,
Thesis, Axum University.

28
 APENDIX
SELALE UNVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
Dear respondents
The objectives of this study is to assess the Accounting Information System (AIS) in commercial
bank of Ethiopia Selale branch. The study is going to be used for the requirement of senior essay
in partial fulfillment of BA degree in Accounting and Finance. These inspire to conduct a
research on this specific area of the study in these branches . Quality and success of this study
depends on your kind and genuine information. All information you provide will be used for
academic purpose only. I would like to thank you in advance for your cooperation in filling this
questionnaire.

INSTRUCTION
No need of write your name. write your response in the space provided and use tick mark
on the box it will be appropriate and if you add more explanation you can write .
PART ONE: GENERAL INFORMATION
1. Your gender?
A. Male
B. Female
2. Your age
3. Your marital status
Unmarried married Divorced Widowed
4. What is your education level?
A. Primary school
B. Certificate
C. Diploma
D. First degree
E. Post graduate
Other………………………..
5. Your position in the organization?

29
 A. Supervisor
B. Junior officer customer
C. Clark/customer service officer
D. Manager
E. Auditor
F. Senior accountant
6. Service year?
A. Below 5 year
B. 5-10 year
C. Above 10 year
7. On scale of 0-5 rate the capacity of management of commercial bank of Ethiopia about the
awareness of AIS 0 1 2 3 4 5?
A. 0=no awareness
B. 5=total awareness
C. Partial awareness
8. Is t-here a strong of manpower in AIS processing department?
A. Yes
B. No
9. From question number four your answer is NO, specify the reason;
……………………………………………………………..
…………………………………………………
10. What are the possible problems observed in Lion international bank?
A. Daily in process
B. Data redundancy
C. Daily communication
D. In consistency
11. How do you rate the standard service provide in the bank through the aid of AIS over the
past years?
A. Have improved
B. Have deteriorated
C. Do not known

30
 D. Have not changed
12. In what way does AIS contribute for the satisfaction of customers?
A. By keeping confidential data
B. Reducing time
C. Rendering fast service
D. Did not increase satisfaction of customers
Other specify…………………………………………….
13. In what way AIS add value to your bank? You can tick or circle more than
One choice
A. It improves quality and reducing the cost the product or service
B. It improves efficiency
C. It improves decision making
D. It improves the chain of communication
E. It adds all value stated above
Other place specify ……………..
14. How AIS administration of your bank is changes/affect your bank income in the last years?
A. Increased income`
B. Not sure
C. Not changed
D. Decreased its income
E. Others specify……………………..
15. Do you request the customer for comment on your service backed by AIS?
A. Yes
B. No
16. From question number four your answer is NO, specify the reason;
…………………………………………………………………………
17. In your experience of being a user of AIS during the last years has been?
A. Very positive
B. Positive
C. Okay
D. Negative

31
 E. Other place specify…………………………………………………
18. Among the following AIS which one is used by commercial bank of Ethiopia
A. Core banking
B. Electronic Data Processing (EDP)

32