Role of Accounting Information System on Financial Reporting Quality of Private companies: Evidence from Selected Flour Factories, in Central Ethiopia Region

Abstract Accounting information system is the most important information system widely used in the role of Producing Quality Report and improving the organization’s financial performance. The purpose of this study is to examine the role of AIS on the Financial Reporting quality. To achieve the objective of the study both explanatory and descriptive research designs were adopted. A Sample of 188 respondents was selected by using purposive sampling technique. The data was collected from186respondents through the five scaled-Likert type of questionnaire. Data analysis was made using descriptive and inferential statistics. Results indicate that the use of AIS has significant effect on the quality of financial Reporting. Multiple linear regression analysis also revealed that 63% of the variation in the Financial Reporting quality FRQ was explained by four important variables namely Automation of AIS, Integrated AIS Module, Data Security and Internal Control. It is recommended that the concerned bodies are expected to improve implementing procedures of AIS through application of the valuable strategies to overcome the lack of awareness and poor utilization of AIS infrastructures in order to increase the resulted financial reporting quality. Furthermore, the study recommended that both private companies and local governmental organizations should better to work together, to computerize their AIS system that is used to generate accounting and financial reports.