Impact Of Accounting Information System In A Manufacturing Company
(A Case Study Of Anammco Ltd)
Implementing an effective accounting information system (AIS) in a manufacturing company can significantly enhance operational efficiency and decision-making processes. By integrating financial data with production and inventory management systems, Accounting Information System provides real-time insights into cost structures, inventory levels, and production cycles. This enables management to optimize resource allocation, streamline production processes, and identify cost-saving opportunities. Moreover, Accounting Information System facilitates accurate financial reporting, ensuring compliance with regulatory requirements and enhancing transparency for stakeholders. With improved data accuracy and accessibility, decision-makers can make informed strategic decisions, ultimately driving profitability and sustainable growth in the competitive manufacturing landscape.
Accounting generally involves the process of identifying, measuring and communicating economic information to permit informed judgment and decisions by users of the information, in order words, accounting is concerned with providing information, which will help decision makers to make good decision. To enhance credibility and reliability of the information for decision making process established concepts, principle, standards and legal requirement are study followed in order to translate physical fact into money values and ensures that all types of report are integrated and prepared on consistent basis.
The information provided by financial statements, cash flow analysis, variance analysis, managerial costing goes along way in planning, organizing decision making and control.
Title page ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vi
List of table vii
Table of contents viii
CHAPTER ONE
Introduction 1
1.1 Background of the study 1
1.2 Statement of problem 4
1.3 Objectives of the study 4
1.4 Scope of the study 5
1.5 Research questions 5
1.6 Significance of the study 6
CHAPTER TWO
Review of Related Literature 8
2.1 Concept of accounting information 8
2.2 Nature and objective of accounting 10
2.3 The value of information 11
2.4 Characteristics of accounting information 12
2.5 Uses of accounting information 13
2.6 Kinds of accounting information 16
2.7 Summary of related literature review 27
CHAPTER THREE
Methodology 28
3.1 Research design 28
3.2 Area of the study 28
3.3 Population of the study 28
3.4 Sample and sampling procedure 29
3.5 Instrument for data collection 30
3.6 Questionnaire administration and retrieval 30
3.7 Method of data analysis 30
CHAPTER FOUR
Presentation, analysis and interpretation of data 32
4.0 Preamble 32
CHAPTER FIVE
Summary, Findings, Recommendation and Conclusion 42
5.1 Summary of findings 42
5.2 Discussion of findings 42
5.3 Conclusion 44
5.4 Implication of the study 45
5.5 Recommendations 45
5.6 Suggestions for further study 46
5.7 Limitation of the study 47
Reference 48
Appendix 50
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria like every other nation in the world at independence has strived and has continued to find away of feeding ourselves. Of course, were almost self-sufficient and hope for better tomorrow, but his hope seem to be drawing into deep ocean. The simple belief and consensus is that it ahs been badly for Nigeria.
Due to the adverse economic conditions prevailing in the country, many business outfits have closed down and even financial institutions are being declared distressed at alarming rate. Business that are yet to be submerged or that want to stay a float employ all kinds of strategies. Some increases prices, adopt promotional tools, engage in aggressive marketing etc whereas others go for an odd combination of activities and even subterranean ones to survive.
Any business or individual that wants to survive must make the right decision. This is determined by the accounting information system of such business or firm. The era of mile of thumb is gone; employing it is a sure way to failure.
The Anambra Motor Manufacturing Company have from on set strive to continue finding away of feeding itself, this could be seen in the historical background of ANAMMCO.
Anambra Motor Manufacturing Company was incorporated on January 17 1977. The foundation stone was laid on the 12th May, 1978. The official commissioning of the plant was in July 8th 1980. Their production range include; MBO 131; MBO 809, MBO 371; LK 3224; MB Refrigeration Truck; MB MCV – 200 (28 Seat bus); MB 1834; MB 2638; MB 1820; 6 x 2 Crane Truck; MB L 608D; L/LK 1414, 1991; MB L 911; 1960; MB 312, 1952; Road Haulage; MBO 1721; MBL 800; MBO 800; MB 2031 S; MBO 1418; MBO 400; MBL 1418 (Water tanker); Actros 1953; LS 2638 6x 4 (Wheel drive); MBO Transit liner; MBO 400 RSD; MB 2031S 36 Actros; MBL 711; Hyundai country, MB Fire Tender; MBO 400 RSD; MBO 1520; MBO 1271.
Also, including in their production range are five fighter vehicle (FFV), Ambulance, mobile clinics vehicle, refuse disposal vehicles and vehicle refurbishment.
This company also have training facilities / opportunities for their staff and distributors, dealers and fleet owners.
Anambra Motor Manufacturing company (ANAMMCO) was established under the regime of the them military head of state, General Olusegun Obasanjo.
It is a limited company which is a partnership between the federal government of Nigeria and German Benz of Germany with 40% shareholding by the foreign Mercedes Benz of Germany, 35% shareholding by the federal government of Nigeria and the balance of 25% owned by the state government among which Enugu state is one and other individual Nigerians
In its first year, the company produced about 4,352 units of various truck models.
This achievement was 58% of its installed annual capacity, which was 7,500 vehicles within the first five years, the plant had produced what had put on additional 14,609 Mercedes Benz vehicles into the Nigerian market.
They also manufactured heavy duty trucks such as LS 1924, Ls 3224, models and light duty Buses such as 911, L1414, MBO 1414 (Federal Mass transit) MBO 809 formerly MBO 608 etc which has greatly enhanced the mass transit policy of the federal, state and local government.
They have grown from manufacturing company to a maintenance and repair (Services) company. They company operates line function with the Board of Directors assisted by the Deputy Managing Director. The managing director reports to the board. There are four divisions (financial, personnel, technical and marketing) headed by a general manager who reports to the managing director
The divisions are further divided into departments headed by functional heads like financial/accounting manager. Departments are further broken down to groups, groups to sections and sections to operations.
1.2 STATEMENT OF PROBLEM
The price of any conceivable item from garri and bread to radio and book not to mention petroleum products has been soaring in geometric proportions over the years. The economy is truly in dire starts. These compounds and implicates intricately the problems of organization vis-à-vis effective planning and decision making processes. Other factors such as stagflation, taxation, economic and political.
1.3 OBJECTIVES OF THE STUDY
The objectives of this study are:
(a) To find how gross inefficiently and non-application of sound professional principles could be eliminated to enhance growth.
(b) to encourage the investors to invest more by granting their return on anticipated investment.
(c) To ensure efficient production via cost immunization by plugging leakages.
(d) To ensure maintenance of high level of technical know-how, capital and efficient management of information at ANAMMCO.
1.4 SCOPE OF THE STUDY
In this research study, it is the intension of the researcher to concentrate more on financial accounting and cost accounting.
Financial accounting is that part of accounting standards and legal requirements. Management accounting is the provision of information required by the management for such purpose as:
(a) Polices formulation
(b) Planning and controlling the activities of the enterprise.
(c) Decision taking on alternative courses of action.
(d) Disclosure to those external to the entity (Shareholder and others)
(e) Disclosure to employees.
(f) Safe guarding assets.
1.5 RESEARCH QUESTIONS
The following research questions are formulated and tested in this study:
1. To what extent does the accounting information adopted by the manufacturing company has a positive impact in the growth of the company?
2. To what extent had the account departments’ accounting information system helped the management in decision making?
3. What machinery have or is required by the accounting department that could be of help to determine whether the information being related to the management is positive?
4. What measure and mediums does the department take to ensure that the information form the accounts department is not irregular?
5. To what extent does the management have easy assets to account department without necessary calling for try me on proper in other words is the manufacturing company ANAMMCO Computerized?
1.6 SIGNIFICANCE OF THE STUDY
Firstly, this study will help to make the firm know exactly where to improve on the accounting information system of the company.
Secondly, it will enhance the company through our recommendation, why the account department should be updated in the area of accounting information for easy decision making.
Finally, it will proffer solution; enhance efficiency on the necessity of engaging professional with information technological experience to man such a sensitive department of the company.
Impact Of Accounting Information System In A Manufacturing Company:
An Accounting Information System (AIS) plays a crucial role in the operations of a manufacturing company. It integrates various financial and operational processes to facilitate the collection, processing, and reporting of financial and non-financial data. The impact of an effective Accounting Information System on a manufacturing company can be significant and wide-ranging:
- Financial Data Management: Accounting Information System helps in efficiently recording financial transactions related to inventory, production, sales, and expenses. It ensures accuracy and reliability of financial data, which is essential for making informed business decisions.
- Inventory Management: Manufacturing companies often deal with complex inventory systems. Accounting Information System assists in tracking inventory levels, reorder points, and managing raw materials, work-in-progress, and finished goods. This helps in optimizing inventory levels, reducing carrying costs, and minimizing stockouts.
- Cost Control and Analysis: Accounting Information System provides tools for tracking production costs, including direct materials, direct labor, and overhead costs. This allows companies to accurately determine the cost of goods manufactured and analyze cost variances to identify areas for cost reduction and process improvement.
- Process Optimization: Accounting Information System offers insights into production processes, cycle times, and resource allocation. This data helps in identifying bottlenecks, inefficiencies, and opportunities for process optimization, ultimately enhancing overall operational efficiency.
- Budgeting and Forecasting: An effective Accounting Information System assists in creating budgets and forecasts based on historical data and performance metrics. It enables manufacturers to set realistic financial targets and monitor their progress toward achieving them.
- Decision Making: Reliable and timely financial information provided by an Accounting Information System supports managerial decision-making. Whether it’s expanding production capacity, introducing new products, or altering pricing strategies, decision-makers can rely on accurate data to assess potential outcomes.
- Compliance and Reporting: Manufacturing companies must adhere to various financial reporting standards and regulations. Accounting Information System ensures compliance by generating accurate financial statements and facilitating timely reporting to regulatory authorities, shareholders, and other stakeholders.
- Risk Management: Accounting Information System helps in identifying financial and operational risks, allowing management to take proactive measures to mitigate them. This could include fraud detection, internal control assessments, and monitoring of unusual financial activities.
- Integration with Other Systems: Manufacturing companies often use other software systems, such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). An integrated Accounting Information System can seamlessly share data with these systems, leading to better coordination and streamlined processes.
- Auditing and Internal Controls: Accounting Information System enhances the effectiveness of internal controls by tracking user activities, maintaining an audit trail, and ensuring data integrity. This is crucial for preventing fraud and unauthorized access to sensitive financial information.
- Performance Evaluation: Accounting Information System generates key performance indicators (KPIs) that help measure the company’s financial health, operational efficiency, and overall performance. These metrics aid in evaluating the success of strategies and initiatives.
In summary, the impact of an Accounting Information System in a manufacturing company is profound. It empowers the company to make informed decisions, streamline processes, optimize costs, maintain compliance, and ultimately improve its overall financial and operational performance. The efficient management of financial data and integration with other systems create a foundation for sustained growth and success in the manufacturing industry.