Mater Dei College

High School Department

2nd Semester, A.Y. 2020-2021
English for Academic and Professional Purposes

The Effect of Information Technology on Accounting System’s Conformity

with Business Environment: A Case Study In
Banking Sector Company
Lina Klovienė and Edita Gimzauskiene

Abstract. The purpose is to present a case study demonstrating the role

of information technology (IT) in conformity between the accounting
systems and the business environments. Using a case study approach
this paper provides empirical evidence offering a more effective
accounting system and its continual improvements for organizations
operating in different business environments. The study found that more
effective use of accounting systems could be ensured by identifying an
external environment of an organization and its reaction as an internal
environment. This paper highlights the differences between the use of
accounting systems in static/dynamic external environments and the
simplistic/absorption internal reaction of an organization. The study adds
to the existing literature by undertaking a relatively holistic view of the IT
that influence the effective use of accounting system, which may form a
starting point for the effective decision-making process.

Keywords. Accounting System, Information Technology, Business

Environment, Conformity
1 Introduction

Changing requirements of information for modern managers have

stimulated the development of measures and methods which promote progress
and inform the perspectives and opportunities for current and future
performance. Today, organizations are confronting unprecedented radical
changes to which they must adapt to survive and prosper. According to this
aspect, organizations try to find new methods, alternatives and systems in order
to get more useful, actual and timely information in a very fast-changing
environment (Kloviene and Gimzauskiene, 2014). On the other hand, it is
important to notice that the purposeful and reasonable usage of the accounting
system and its information influence the opportunity to choose an appropriate
structure and features of an accounting system. It is difficult to use the
accounting system effectively if organizations are not able to identify the IT
instruments which allow them to estimate and support the decision-making
process. Gradually, the accounting system could become software and
instruction for its usage only and organizations will be forced to look for new
opportunities and resources, thereby ensuring their fast reaction, decision
making and adequate performance. To fill this gap, this paper seeks to answer
the following research question: what is the role of information technology on the
conformity between the accounting systems and business environments?

2 Methods

A case study was performed in a Lithuanian organization disclosing

relations between the business environment and the accounting system of the
organization. The choice of organization for a case study was determined by
such kind of criteria: (1) expediency of analyses because selected organization
implements and uses different performance measurement and accounting
methods; (2) changes in strategy implementation process show importance of
conformity analyses; (3) limited studies in the case of conformity between
performance measurement and business environment in service-sector
companies. Assessment of business environment and accounting system was
performed using interview method. Respondents were chosen from different
management levels. Respondents of lower management level also top manager
were interviewed using a structured questionnaire.

3 Results

The dimension of the external and internal environment was indicated

according to the highest averages. The objective opinion was checked with a
quantitative interview and also according to the mission, values and artifacts of
an organization. Resuming results could be stated that dominating the external
environment of an organization is a dynamic and dominating reaction of the
organization (internal environment) is absorption (Fig. 2). The correlation (0.411)
between these two types of environments was indicated.

According to the case study, it could be stated that IT in an analyzed

organization can help to adapt and react to a business environment. The reaction
process could be ensured by changes in the internal systems of an organization
supported by the implementation of new information technologies in
organizations. An accounting system is one of them and could be improved by
the deeper application of accounting information. Hence, information
technologies used and implemented in the accounting system of an organization
could help to adapt to changes in the business environment. In this aspect, it
could be stated that information technology could help to improve the functions of
accounting systems in an organization when it is not compatible with a business
environment.

4 Discussion/Conclusion

According to literature analyses, it could be stated that information

technology affects the accounting process in several ways. First, the accounting
methods and knowledge of the business and industry has increased to ensure
reliability and relevance of documents, reports and data. Second, the accountant
has to better understand the flow of transactions and related control activities to
ensure the validity and reliability of the information. According to research results,
the requirement for identification, analyses and verification of possible
alternatives for solving unconformity problems of the accounting system with the
business environment is found. According to results managers of organizations
could easier recognize the possible direction of correction, estimate possibilities
of their application. An aspect of mentioned development could be implemented
by integration with informational technologies. The level of influence of the
business environment on the accounting system should be compatible with the
level of adaptation to the business environment and information technology could
help to ensure this process. Information technology helps to ensure conformity
between the accounting systems and the business environments. When the
accounting system is not providing useful information for the decision-making
process, information technology could be the tool for the conformity process.

References

Klovienė, L. & Gimzauskiene, E. (2015, December). The Effect of

Information Technology on Accounting System’s Conformity with Business
Environment: A Case Study In Banking Sector Company. Lithuania, Kaunas
University of Technology. Retrieved from:
[Link]
_Technology_on_Accounting_System's_Conformity_with_Business_Environment
_A_Case_Study_In_Banking_Sector_Company, (2021, February 14)