GroupB2 - Draft Chapter 1-3 - 2018 PDF

EFFECT OF THE USE OF ACCOUNTING INFORMATION SYSTEMS
ON IMPROVING VALUE CHAIN OF MSMEs IN THE FOOD

INDUSTRY IN LIPA CITY, BATANGAS
Preliminary Draft Chapter 1, 2 and 3

Presented to the Faculty of the
College of Business, Economics, Accountancy and Management
De La Salle Lipa
In Partial Fulfillment
of the Requirements for the Degree
BACHELOR OF SCIENCE IN ACCOUNTANCY
Group # B2 Members Contribution

Baya, Cledina Marie C. 33.33%
Custodio, Marjorie Z. 33.33%
Tiquis, Gellie O. 33.33%
Total 100.00 %
Group Grade for Written Report ______%

STUDENT RESEARCH
ACCOUNTANCY DEPARTMENT
CHAPTER I
INTRODUCTION
Information provided by a company’s accounting system is considered to have the
most impact on the company’s economic and managerial decisions. Regardless of the
industry the business belongs to, accounting information is vital to their operations. For
one, the global food industry, growing at least 5% per year (Plant and Food Research,
n.d.), naturally needs to upgrade their accounting information system to maximize its
benefits to the company’s business activities. Thus, it is with great significance that there
be an understanding as to how the use of accounting information system affects the
business activities, represented by the value of chain, of micro, small and medium
enterprises in the food industry in Lipa City, Batangas.
Background of the study
According to a survey conducted by Philippine Statistics Authority (PSA), as of
2016, 99.57% of all businesses in the Philippines are MSMEs, and of all business
industries, Accommodation and Food Service Activities rank second which consists
about 13.13% of the total population. Through these figures, it can be deduced that
MSMEs have become a vital part of the economy. In fact, Ismael (2009) cited that the
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flexibility and responsiveness of MSMEs to adapt to changing demands is a key
component of a country’s economic growth strategy.
To gain an advantage and face the challenge of market survival, acquiring
accurate, relevant and timely information has become a necessity to arrive at an
appropriate decision. This information can be provided through an accounting
information system (AIS). AIS provides an orderly method of gathering and organizing
information about the various business transactions so it may be used as an aid to
management in operating the business. It also provides benchmarking and monitoring
information which helps the company to identify, evaluate, and implement the
appropriate strategy and to improve performance.
With information provided by AIS, managers are able to make decisions that
ultimately affect the value chain of the enterprise. As introduced by Michael Porter on his
1985 book “Competitive Advantage”, value chain is the set of carried out activities that
create added-value to an end-product. These activities are in pursuant of the choices that
the management makes, based on the available information produced by their
organization’s AIS.
Essentially, AIS may dictate whether the company is able to effectively provide
its services to their customers or not, and whether it manages its resources to maximize
profit and minimize the cost. With quality decisions, this would eventually lead to the
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sustainability and profitability of the enterprise, or under unfortunate circumstances, it
would lead the company to its loss, or worse, dissolution.
Statement of Research Problem
Generally, the researchers directed this study towards determining the effect of
the use of AIS on the value chain of MSMEs in the food industry. Specifically, the
researchers explored the following interrogatives:
1. What is the profile of the micro, small and medium food enterprise respondents
of this study?
2. What is the nature of the relationship between the basic components of the AIS
and the quality of information needed for the improvement of the entity’s value
chain?
3. What is the effect of the use of AIS on improving product quality,
cost-reduction, efficiency, communication and decision making?
Objectives of the Study
The research is generally directed towards determining the effect of the use of AIS
on the improvement of the value chain of MSMEs in the food industry. Specifically, the
researchers focused on the following objectives:
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1. to determine the profile of the small-medium enterprise respondents of this
study.
2. to assess the nature of relationship between the basic components of AIS to the
quality of information needed to improve a business’ value chain.
3. to evaluate the effect of the use of AIS on improving product quality,
cost-reduction, efficiency, communication and decision making.
Research Framework
Conceptual Framework
This study is primarily based on Qatanami and Hezabr’s (2015) study entitled
“The Effect of Using Accounting Information Systems to Improve the Value Chain in
Business Organizations - Empirical Study.” In their research, they determined that there
is a deficiency in the basic components of AIS in public shareholding industrial
companies in the Kingdom of Bahrain, which led to the decline of the quality of
information needed to improve the business organization’s value chain.
In order to reach such conclusions, they formulated the study model below:
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Figure 1: Variables of Qatanami and Hezabr’s (2015) study
As illustrated above, the researchers have identified two relationships between
their independent and dependent variables. First, they determined how the basic
components of the implementation of accounting systems affects the quality of
accounting information. Based on the study, the basic components of AIS include the
accounting program and systems in itself, suitable hardware, user’s educational
qualification, work procedures, internal control, training and continuous educational
programs for users, and company’s policies related to employee’s responsibilities and
authorities.
Second, they determined the effect of the use of accounting system on improving
the value chain of the business organization. The authors cited Michael Porter’s concept
of the value chain, which first appeared in 1985.
According to Porter, a value chain is a system used for the evaluation of all of the
organization’s activities which contributes to an increase in their competitive advantages.
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Porter also classified the value chain into two types of activities — primary activities and
support activities, which is illustrated in the figure below.
Figure 2: Value chain according to Porter (1985)
As Porter discussed, primary activities include those that are directly related to the
production process. This includes inbound logistics, operations, outbound logistics,
marketing and sales, and services. Meanwhile, supporting activities are secondary
activities but are equally essential in promoting organizational efficiency and
effectiveness. This includes activities related to infrastructure, human resource,
technology development, and procurement.
Given these discussions and analysis, the researchers of the said study, were able
to identify the weaknesses in the implementation of the AIS in the study’s locale that
needed to be emphasized in order to improve business organization’s value chain.
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Operational Framework
Adapting Qatanami and Hezabr’s (2015) methodologies, this study focuses on the
relationship between the use of AIS, specifically evaluating its basic components, to the
quality of accounting information, and the relationship of AIS to the respondents’ value
chain. This is illustrated by the diagram below:
Figure 3. Operational Framework
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On the first relationship that was evaluated, the researchers determined the basic
components of AIS, which includes the accounting program, hardware, educational
qualification, work procedures, internal control, training and company policies, as the
independent variable. The quality of accounting information and reports was determined
to be the dependent variable.
On the other hand, the second relationship represents the effect of the use of AIS
in its totality, without specific reference to individual components, to the improvement of
the value chain of the MSMEs. Similar to the adapted study, the research evaluated the
improvement on value chain by assessing the quality of products and services, reduction
in production and additional costs, contributions to efficiency, effectiveness of
communication, adequacy and effectiveness of the supply chain, contributions to internal
control structure, and rationalization of administrative decisions.
With the variables identified, this study will then determine whether the use of
AIS has an effect on the information quality and on the improvement of the value chain
of a business organization.
Hypothesis
Aligned with the research focus of the study, the following hypothesis will be tested:
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Ho1: There is no significant relationship between the basic components of AIS on the
quality level of accounting information necessary to improve the value chain of
MSMEs in the food industry in Lipa City, Batangas.
Ho2: The use of AIS does not have a significant effect on the level of improvement of the
value chain of MSMEs in the food industry in Lipa City, Batangas.
Significance of the Study
Generally, this study will provide significant information to proprietors of
MSMEs, as it determines how the effective use AIS affects information quality, which is
needed to improve the value chain of the business. Specifically, this will be beneficial to
the following:
For owners of MSMEs in the food industry, results of this study will help them
assess their own business in terms of AIS usage, quality of information and reports, and
value chain effectiveness, leading to more informed and objective decisions.
Furthermore, as this study illustrates how AIS affects their value chain, business owners
may use this as the basis of their decision as to whether they should improve their usage
of AIS, specifically evaluating based on the basic components previously identified.
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For employees of MSMEs in the food industry, this study will serve as a guide as
to how they can improve their operations under each activity in the value chain, as they
maximize the functions of their AIS.
For future researchers, as the number of MSMEs continue to grow and as
technology continues to advance, this study could be used as a conceptual framework on
studies related to the impact of AIS to a business’ value chain.
Scope and Limitations
This study focuses on determining the relationship between the use of AIS of
MSMEs to the improvements on the business’ value chain. AIS is evaluated based on
implementation of the system in relation to its basic components, which include the
accounting program, hardware, educational qualifications, work procedures, internal
control, training, and company policies. On the other hand, improvements on value chain
is assessed based on the quality and type of products and services, reduction of
production and additional costs, improvement of efficiency and communication,
adequacy and effectiveness of supply chain, improvement of internal control, and
rationalization and support of administrative decisions.
The subjects of the study are micro, small and medium food enterprises in Lipa
City, Batangas. However, this study will not provide any distinction between micro,
small and medium enterprises, as MSMEs will be considered as one unit for the purpose
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of this research. Food establishments that are branches of a larger enterprise do not form
part of the subjects of the study since this research specifically targets locally owned
MSMEs.
Moreover, the duration to which the business has already been operational and the
AIS has been implemented will not be one of the variables to this study. To ensure that
this study still remains relevant, despite such limitation, this study will not include
businesses who operated for less than three (3) years, as prior literature have indicated
that the benefits of AIS may only be realized after such period, at the least.
Another limitation is that much of the evidence relied on are from one individual
within each enterprise. Due to the nature of the data gathered it is not always possible to
triangulate between sources and the integrity of the data gathered relies on the
truthfulness of participants.
Respondents’ discretion, time and financial constraints, and fortuitous events will
also be considered by the researchers. As such, the researchers plan to fully comply and
rely on what had been disclosed by the respondents and take into account some personal
limitations.
Operational Definition
Specified below are the concepts and terminologies that were thoroughly used and
considered. The terms specified may have been defined differently from the various
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literatures utilized in relation to the study, but for the purpose of the operationalizing the
concepts in the study, the following terms will be construed as follows:
AIS. Accounting Information System is a system that processes the business’
operational activities. The term extends not only to the program or software but
also to other components such as the hardware, staff, internal control, etc.
Food industry. This industry consists of providers of processed food, either for dine-in
or to-go, which includes but not limited to bake shops, restaurants, eateries, food
carts and caterers.
Information quality. This refers to the assessment of the verifiability, completeness,
understandability and timeliness of accounting information which contributes to
improvements on the value chain of the business.
MSMEs. It is the group of enterprises that consists of micro, small and medium
business characterized by capital size. It consists of entities with total equity of
not more than P100 million, or total assets of not more than P350 million or total
liabilities of not more than P250 million. For the purpose of this study, MSMEs
should include only those that have operated for not less than three years.
Value chain. It is composed of all the activities necessary for the continuous operation
of the company, which includes all activities in administration, human resource
and finance, and production, and all other departments.
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CHAPTER II
REVIEW OF RELATED LITERATURE
This chapter summarizes references in support of the study. The discussion
includes references to books and published researches. The researchers also used
electronic sources in order to have an extensive review of a wide range of related
searches as well as to efficiently gather information. The discussion was done in a way
that complements and supports the researchers’ conduct of their study.
Accounting information system
Yang, Africano, and Gaza (2011) describes information system as a man-made
system that consists of an integrated set of computer-based and manual components
established to collect, store, and manage data to provide output information to users. An
information system serves two important functions within an organization: it mirrors and
monitors actions in the operations system by processing, recording, and reporting
business events, and it supports managerial activities, including management decision
making.
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Hall (2008) enumerates four general subsystems under AIS, which includes
transaction processing system, general ledger or financial reporting system, fixed asset
system and management reporting system. Transaction processing system supports daily
business operations through recording of the bulk of every transaction. General ledger or
financial reporting system produces traditional financial statements such as statement of
financial performance, statement of financial position, statement of changes in equity,
statement of cash flows, and other reports required by law. Fixed asset system monitors
acquisition, maintenance and disposal of fixed assets. Managing reporting system
provides management and other internal users with information required for
decision-making.
In this context, Qatanami and Hezabr (2015) defined AIS, not merely as the
computer software, but also in consideration of other essential components of the system.
He cited the hardware used to operate the system, user of the system, internal control and
communication among users as contributing factors to the improvement of AIS as a
whole.
Providing a different context to AIS — relating it specifically to the computer
software, one of the components defined above, Lopez (2014) cited Philippine Institute
for Development Studies (PIDS) that said high interest rates, short repayment period
offered by financial institutions and lack of acceptable collateral are some of the reasons
why MSMEs have poor access to advanced AIS. This is also supported by Rogers (2003)
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who said that most MSME owners do not find investing in a more advanced AIS
appealing since they consider AIS as too uncertain, which may lead to loss in their
already limited finances. Because of the presence of such conditions, differences in the
AIS among MSME in the same industry still exists.
In the end, despite the latter authors definition of AIS as simply relating to the
accounting software, it still remains that the software is one of the basic components that
will be discussed in this study, and that the existence of a computer software for
processing accounting information defines an advantage over those who still employ a
manual system, purely dependent on man’s skills and intellect.
Information Quality
Several studies (Xu, n.d., Wongsim and Gao, 2011) have expressed the
importance of information quality to decision-making activities conducted by managers.
Wongsim and Gao defined information quality as the capability of data to be fit for use.
Thus, as noted by Xu (n..d.), Bovee (2004) and Redman (2008), good information quality
can lead to success while poor information quality can lead to the failure of the business
since the quality of information used may have adverse effects on the decision making,
Information quality problems can impact on the operations of the organization through
increased costs and lower worker job-satisfaction, while increasing customer
dissatisfaction
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According to Lee, Strong et. al. (2002), the growth of data warehouses has
increased the need for quality data in order for organizations to perform well, obtain
competitive advantage, and survive in today’s global economy. Thus, data management is
important to support and develop different departments in corporations by enabling work
processes of all sorts, as well as decision-making.
In the end, the basic principle which relates to information quality is represented
by the statement “garbage in-garbage out” (“Garbage in-garbage out”, n.d.). It was
observed that good inputs generally result in good outputs. “Garbage in” can be classified
into two types — problem of type and problem of quality. Problem of type occurs when
the wrong information is inputted into the system while the latter occurs when the right
information is inputted but with defects. With this in mind, apart from improving system
(i.e. computer software), the other components of AIS should also be emphasized to
minimize, or totally eliminate the input of garbage.
Value Chain
According to Janicot, Mignon and Walliser (2016), various activities performed
by suppliers, companies, and distributors results in the value of a product, which is the
amount that customers are willing to pay to obtain the product represented by the value.
Porter observes that “Every company is a collection of activities that are
performed to design, produce, market, deliver and support its product. All these activities
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can be represented using value chain.” These activities are then classified to two based
on their value-added contribution to the product. The two groups are: (1) primary
activities - activities that directly contribute to the physical production and sale of the
product, and (2) support activities - activities that support the primary activities and form
the infrastructure of the business. There are 5 primary activities in the value chain and 4
categories under support activities.
The five primary activities are as follows:
1. Inbound logistics activities - consists of receiving, storing and distributing
the materials used to perform the services it offers or create the products it
sells.
2. Operations activities - consists of production of inputs into final products
or services
3. Outbound logistics activities - consists of distribution of finished products
or services to customers
4. Marketing and sales activities - consists of encouragement and support to
customers to buy the company’s products or avail the company’s services
5. Service activities - consists of post-sale support to customers
On the other hand, the four support activities in the value chain are:
1. Firm infrastructure - includes accounting, finance, legal and general
administration activities that allow an organization to function
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2. Human resources activities - includes recruiting, hiring, training, and
providing employee benefits and compensation
3. Technology activities - includes improving a product or service
4. Purchasing activities - includes procurement of raw materials, supplies and
machinery and the buildings used to carry out the primary activities
Another study that defined value chain was the study conducted by Crain and
Abraham (2008). This study defined value chain in two ways in which they referred to as
“internal” and “external” value chains. Internal value chain is defined within the
company to describe the various value-added stages from purchasing materials to
distributing, selling and eventually servicing the final product. On the other hand,
external value chain described the value-added stages of the production of a product from
raw-material to its final product.
Effect of AIS on information quality
The study conducted by Ou, Zhao and Zhou (2018) states that the quality of
accounting information not only relates to the interests of investors and stable
development of capital market, but also effects to the effective social resources
allocation. These researchers assert that the implementation of an integrated information
system has a certain relevance with the improvement of accounting information quality.
This is due to the strong technical support these systems provide in the basis processes of
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accounting such as accounting information collection, processing, transferring and
reporting.
DeLone and McLean asserts that information quality is the output the information
system produces, which can be in the form of reports or online screens (As cited by
Makau, Charles and Bonuke, 2017). Thus, a good quality AIS will naturally produce
good quality information which can result to good decision making, provided that they
are used with diligence.
In fact, Gunasekaran and Ngai (2004) noted that lack of supportive and
compatible Information Systems (IS) infrastructure (i.e., low IS infrastructure capability)
can lead to a variety of integration and operation problems that inhibit the organizations
from effectively improving quality of information. With this, the implementation of AIS
should have taken into consideration the nature of the business organization.
Effect of AIS usage on value chain
Marcella and Illingworth (2012) state that the effective use of information are
beneficial to any organization, regardless of its size, as it reduces administrative costs,
increase the effective collaboration with external parties and improve customer service
through greater efficiency.
Wang and Huynh (2013) and Agnes (2011) enlisted the values provided by
accounting information systems which includes, but are not limited to:
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1. Better cost-effectiveness relating to the planning of business processes.
2. Better cost-effectiveness relating to the organizing of business processes.
3. Better cost-effectiveness relating to the controlling of business processes.
4. Better cost-effectiveness relating to the leading of business processes.
5. Enhanced timeous processing of financial information for decision making.
6. Enhanced timeous analyzing of financial information for decision making.
7. Enhanced accuracy of financial information for decision making.
8. Allow for a ‘bigger picture’ overview of business processes.
9. Better access to critical performance indicator(s) information for decision making.
10. Enhanced processing of large volumes of information with great precision.
11. Enhanced analyzing of large volumes of information with great speed.
Despite the costs incurred to establish these accounting information systems,
accounting information systems still add value to the organization. Hall (2008) mentioned
that accounting information systems may contribute to the improvement of information
management and knowledge management lessening the transaction costs to be incurred
by the organization while increasing the speed and reliability of transactions due to stable
information source.
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Literature Synthesis
In a growing industry such as those in the food service business, it is imperative
that they remain competitive through putting into order the best decisions. As explained
by various authors, management decisions are primarily influenced by information
provided by their AIS. Thus, an AIS of good quality will generally produce good outputs
which will be of more benefit to the organization, especially in their aim to maximize the
actualization of financial gain.
While various researches attempted to discuss evidences of the relationship of
accounting information to the value chain or the system of operations of the business,
none of the researchers have proven that the same relevance is present in MSMEs which
are considerably of different nature than large corporations.
Most researches also focused on the impact of technology on AIS however little
comparison has been made to define the impact of AIS, as a whole to the operations of
the business. This study does not focus on a specific component of AIS but it considers
the effects of the quality of individual components on the quality of information, along
with its consequences to the value chain of business.
Moreover, although this study is a replication of the methodologies of another
study, this research aims to localize the setting to Lipa City, Batangas and specifying a
developing industry in the city — the food service industry.
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CHAPTER III
RESEARCH METHOD
This chapter presents the methodological procedures of the research. This
includes the research design, respondents, locale of the study, research tool and
instrument used. Procedures on data gathering and data analysis and interpretation are
also covered in this chapter.
Research Design
With this study, the researchers used two research designs namely: descriptive
and causal. Descriptive research design, as depicted by Kowalczyk, D. (n.d.) is the type
of study that portrays the participants in an accurate level. This approach will be
appropriate in evaluating the basic components, information, use of AIS and the value
chain of the enterprise, currently. Causal research design, on the other hand, concerns
itself with the understanding of which among the given variables are characterized as
dependent or independent, as well as with the determining of the nature of the
relationship between such causal variables and the corresponding effect inferred, as cited
by Fluid Surveys University (n.d.). This approach will then be the key in identifying the
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causality of the assessed basic components of AIS to information quality, as well as the
use of AIS to the improvement of value chain.
In terms of data sourcing, the information, qualitative in nature, that will be
gathered will primarily be coming from a survey questionnaire to be adapted from the
published article of Dr. Khaled M. Qatanani and Dr. Abdulqawi A. Hezabr for the
European Journal of Accounting Auditing and Finance Research in the United Kingdom.
The research will also contain other types of sources such as news articles, theses,
reviews and other research papers to further enhance the accuracy and reliability of the
study.
Respondents of the Study
Respondents of this study include business owners or managers of MSMEs in the
food industry in Lipa City, Batangas. Although this research does not limit the
respondents in terms of age, gender, marital status and highest degree of education, the
owner or manager must have served in the business for not less than three (3) years.
The proponents of this study opted for responses from any person handling the
accounting matters of the business, regardless of whether the respondent is the owner,
manager, staff or outsourced personnel of the business.
Moreover, only business operating for three (3) years and above may take part in
this study, as according to Hamilton and Asundi (2008), the benefits of AIS may be
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realized after 3-6 operational years. For this reason, the researchers deemed business
operating for less than three years unqualified to represent the population of MSMEs in
the food industry that implement AIS.
Also, MSMEs pertained to in this study are those with total equity of not more
than P100,000,000 or P350,000,000 worth of assets and P250,000,000 liabilities, and
businesses involved in the food industry. This study limited the identified businesses that
belong to its operational scope through including seven subgroups for that manner
namely: bakeshops, coffee/tea shops, eateries, fast snacks, lechon retailers and restaurant.
This is in assurance that the subjects of the study possess a value chain with more
identifiable value-added activities in their conduct of business. Based on the information
from Lipa City local government, there are 697 registered enterprises that qualify as
MSMEs with reference to the previously stipulated definition.
Sampling Design and Methods
The study used proportionate sampling, a sampling used when the population is
composed of several subgroups that are vastly different in number, in order to generate
the relevant sample size based on the population of the respondents. From the list of
MSMEs obtained from the LGU of Lipa City, a stratified random sampling method was
also utilized to determine the respondents. There are 7 strata that forms the whole
population.
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Locale of the Study
This study is conducted in the city of Lipa, which is a first class city in the
province of Batangas, consisting of 72 barangays (Department of the Interior and Local
Government [DILG], n.d.).
Apart from the local affinity of the researchers to Lipa City, the city was decided
to be the focus of the study since food businesses consist of a growing industry in Lipa
City. In fact, trends of customer arrival annually reaches 69.80% (De Luna, A. & Meñez,
N., 2014), which is significantly due to tourist destinations located in the city, such as the
Our Lady of Mount Carmel Church and San Sebastian Cathedral.
Research Tool and Instrument
This study’s primary data gathering instrument will be a survey questionnaire that
will be distributed to its respondents. The researchers adopted Qatanani and Hezabr’s
(2015) survey questionnaire which collected information about the personal
characteristics of employees in financial department of the public shareholding industrial
companies, the relationship between the basic components of accounting systems and the
level of the quality of information needed to improve the value chain of the business and
the effect of the use of accounting systems to improve the value chain of the business
organizations. Said questionnaire makes use of Likert scale to collect information.
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The instrument used in this research is outlined below:
Section A: Personal Information
1. Trade name of company
2. Educational qualification in relation to accounting/auditing (Diploma,
Bachelors, Masters, Doctorate)
3. Age
4. Years of experience in accounting/auditing
5. Term of employment
Section B: Relationship between the basic components of accounting
systems and the level of the quality of information needed to improve the
value chain of the business
1. Accounting program and systems
2. Hardware
3. Educational qualification
4. Work procedures
5. Internal control
6. Training and continuous education programs
7. Company policies on employees’ responsibilities and authorities
Section C: Effect of use of accounting systems to improve value chain
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1. Improve quality and type of products and services
2. Reduce production and additional costs
3. Improve efficiency
4. Improve communication channels
5. Reduce cost of sales and sales expenses
6. Improve internal control structure and internal auditing
7. Support administrative decisions
Data Gathering Procedure
The researchers performed the following procedures in the conduct of the study:
1. The researchers secured a copy of the list of food establishments from Lipa City
local government unit (LGU).
2. After finalizing the list of food establishments by deleting entities which cannot
be classified under MSMEs, the researchers verified information through personal
inquiry and visitation of the sites.
3. Survey questionnaires were personally delivered to the target respondents.
Questionnaires were retrieved not more than two (2) days since they were given.
4. Data gathered were tabulated for data analysis and interpretation.
Data Analysis and Interpretation
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In order to assess and answer the hypotheses presented in the study, the data
obtained from the respondents were analyzed and summarized using the measures of
central tendency and measures of dispersion, and the results were described by finding
the arithmetic mean and standard deviation.
The researchers adopted the Likert Quintet measure to determine the degree of
relative importance of each item in the questionnaire. The responses on the Likert Quintet
measure are analyzed based on the total arithmetic mean and standard deviation of each
Likert-type questions.
The researchers also used the t-Test to check the hypothesis of the study. The
t-Test is an inferential statistics used to determine whether there is significant difference
between the means of two groups. With the assumption that a normal distribution exists
on the dependent variable, the researchers are willing to accept 5% level of probability on
the outcome (Del Siegle, n.d.)
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BIBLIOGRAPHY
Agnes, A., 2011. Computerised accounting systems and financial reporting: A case of
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Appendix A. Questionnaire
Section A: Personal Information
Trade name of company: _________________________ No. of years in operation: ____

Location of business: ____________________________
Name of respondent (optional): _____________________________________ Age: ____

Position in the company: _____________________________ Term of employment: ____
Educational qualification: __________________________________________________
Years of experience in accounting or auditing: ___
Section B: Relationship between the basic components of accounting systems and the
level of the quality of information
Evaluate the degree of your agreement with the following criteria for assessing
accounting information systems.
Key: 1 = Strongly Disagree; 2 = Disagree; 3 = Neutral; 4 = Agree; 5 = Strongly Agree

Statement 1 2 3 4 5
1. The company uses efficient accounting programs and systems

which contribute to improving the quality of accounting
information and reports.
2. The company provides the suitable hardware that is required to

operate the accounting programs and software which contributes
to improving the quality of accounting information and reports.
3. The employees in the company’s finance department have the

competent level of educational qualification to perform the work
which contributes to improving the quality of accounting
information and reports.
4. The work procedures in the accounting system are clear and

defined so as to facilitate their application and contributes to
improving the quality of accounting information and reports.
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STUDENT RESEARCH
5. The accounting systems includes internal control which

reduces the cases of fraud in the accounting data which
contributes to improving the quality of accounting information
and reports.
6. The company’s management is concerned with training and

continuous education programs for employees in the finance
department which increase their level of qualification and in turn
contributes to improving the quality of accounting information
and reports.
7. The company’s policies include specific and clear

responsibilities and authorities for all employees in the finance
department which contributes to improving the quality of
accounting information and reports.
Section C: Effect of the use of accounting systems to improve the value chain of the
business.
Evaluate the degree of your agreement with the following criteria for assessing
organizational effectiveness.
Key: 1 = Strongly Disagree; 2 = Disagree; 3 = Neutral; 4 = Agree; 5 = Strongly Agree

Statement 1 2 3 4 5
1. The accounting systems applied by the company contribute in

improving the quality and type of products and services.

reducing production and additional costs.

improving efficiency by adopting efficient systems for
production, storage, etc.

knowledge sharing through improved communication channels
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STUDENT RESEARCH
between all users of the accounting system.

improving the adequacy and effectiveness of the supply chain by
reducing cost of sales and sales expenses.

improving the internal control structure and internal auditing.

the rationalization and support of administrative decisions.
DE LA SALLE LIPA

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EFFECT OF THE USE OF ACCOUNTING INFORMATION SYSTEMS

ON IMPROVING VALUE CHAIN OF MSMEs IN THE FOOD

Preliminary Draft Chapter 1, 2 and 3

Group # B2 Members Contribution

Group Grade for Written Report ______%

Information provided by a company’s accounting system is considered to have the

be an understanding as to how the use of accounting information system affects the

enterprises in the food industry in Lipa City, Batangas.

Background of the study

According to a survey conducted by Philippine Statistics Authority (PSA), as of

flexibility and responsiveness of MSMEs to adapt to changing demands is a key

component of a country’s economic growth strategy.

To gain an advantage and face the challenge of market survival, acquiring

accurate, relevant and timely information has become a necessity to arrive at an

appropriate decision. This information can be provided through an accounting

information about the various business transactions so it may be used as an aid to

management in operating the business. It also provides benchmarking and monitoring

appropriate strategy and to improve performance.

the management makes, based on the available information produced by their

sustainability and profitability of the enterprise, or under unfortunate circumstances, it

would lead the company to its loss, or worse, dissolution.

Statement of Research Problem

researchers explored the following interrogatives:

3. What is the effect of the use of AIS on improving product quality,

cost-reduction, efficiency, communication and decision making?

Objectives of the Study

researchers focused on the following objectives:

1. to determine the profile of the small-medium enterprise respondents of this

quality of information needed to improve a business’ value chain.

3. to evaluate the effect of the use of AIS on improving product quality,

cost-reduction, efficiency, communication and decision making.

is a deficiency in the basic components of AIS in public shareholding industrial

information needed to improve the business organization’s value chain.

Figure 1: Variables of Qatanami and Hezabr’s (2015) study

As illustrated above, the researchers have identified two relationships between

components of the implementation of accounting systems affects the quality of

accounting program and systems in itself, suitable hardware, user’s educational

qualification, work procedures, internal control, training and continuous educational

of the value chain, which first appeared in 1985.

organization’s activities which contributes to an increase in their competitive advantages.

support activities, which is illustrated in the figure below.

Figure 2: Value chain according to Porter (1985)

production process. This includes inbound logistics, operations, outbound logistics,

activities but are equally essential in promoting organizational efficiency and

effectiveness. This includes activities related to infrastructure, human resource,

technology development, and procurement.

needed to be emphasized in order to improve business organization’s value chain.

chain. This is illustrated by the diagram below:

Figure 3. Operational Framework

components of AIS, which includes the accounting program, hardware, educational

to be the dependent variable.

in its totality, without specific reference to individual components, to the improvement of

in production and additional costs, contributions to efficiency, effectiveness of

communication, adequacy and effectiveness of the supply chain, contributions to internal

control structure, and rationalization of administrative decisions.

quality level of accounting information necessary to improve the value chain of

MSMEs in the food industry in Lipa City, Batangas.

value chain of MSMEs in the food industry in Lipa City, Batangas.

Significance of the Study

Generally, this study will provide significant information to proprietors of

value chain effectiveness, leading to more informed and objective decisions.

of AIS, specifically evaluating based on the basic components previously identified.

maximize the functions of their AIS.