THE EFFECT OF ACCOUNTING INFORMATION SYSTEM ON FINANCIAL PERFORMANCE OF PRIVATE COMPANIES IN MWANZA CITY
Many companies do not use an Accounting Information system (AIS) despite its advantages. As a result, it increases the frequency of delays in the preparation of financial reports and misreporting of financial statements. The main objective of this study was to examine the effect of AISs on private companies’ Financial Performance (FP) to show the companies the importance of AIS. This study used a quantitative research design method. Data was collected from 113 sampled employees of private companies in Mwanza city. A simple random sampling method was used in sample selection, questionnaires were used in data collection, and data were analyzed using Statistical Package for Social Science (SPSS Version 21.0). The researcher ran descriptive statistics and inferential analysis using the software. This study found that AIS variables, including system infrastructure, user involvement, and internal control, have positive and significant effects on FP in private companies. This is because Beta coefficients indicated that system infrastructure contributes to FP by 16.0% at a significance level of 0.004, user involvement contributes to FP by 43.2% at a significance level of 0.000. In comparison, internal control contributes to FP by 46.2% at a significance level of 0.000. The study strongly recommends that private companies install AIS and ensure that the system infrastructure is properly maintained, users are involved through training and workshops to enhance their skills on system usage, and AIS should always be used in internal control.
Keywords: AIS, System infrastructure, User involvement, Internal control, and Financial Performance