ROLE OF ACCOUNTING INFORMATION SYSTEM ON THE FINANCIAL PERFORMANCE OF FINANCIAL INSTITUTIONS IN RWANDA. CASE STUDY: BANK OF KIGALI PLC HEADQUATER BRANCH PERIOD: 2021- 2023

Abstract

This dissertation investigates the role of the Accounting Information System (AIS) on the performance of financial institutions in Rwanda, with a specific focus on the Bank of Kigali Plc Headquarters Branch during the period from 2021 to 2023. The study aims to analyze how effectively the AIS is implemented in the Bank of Kigali and evaluate its impact on the bank's financial performance. Accounting Information System is widely used at Bank of Kigali Plc. The majority (80%) of respondents use the AIS all the time ("Always"), which suggests that it is a critical tool for their work. Another 53.3% use it "Sometimes," and 33.3% use it "Frequently," indicating that while usage is consistent, there is some variability in how often the system is utilized. Only a small fraction (20%) rarely use the system, and no respondents reported never using it. The 100% frequency and percentage across all categories suggest that the bank's AIS is versatile and incorporates various data processing strategies to enhance efficiency and effectiveness in managing financial data. From the interviewee 100 % of respondent said that there is Manual Process model in Bank of Kigali, 100 % of respondent said Bank of Kigali Plc use Database Process Model and other 100% said there is flat-file process model in Bank of Kigali PLC/main branch. The fact that this document type has a 100% frequency indicates its critical role in ensuring that the AIS is functioning correctly and that financial data is accurate and reliable. Operating Profit increased steadily, from 43.60% in 2021 to 47.32% in 2022, and then to a remarkable 3225.69% in 2023. This indicates a strong improvement in the bank's profitability from its core operations. Profit Before Income Tax followed a similar trend, increasing from 43.50% in 2021 to 47.26% in 2022, and then soaring to 589.64% in 2023. The deposit from customers of Bank of Kigali has increased by 10.33% in 2022 and 27.82% in 2023. This is to mean that the customers‟ deposits have increased from 974,494,626 to 1,075,188,572Rwf in year 2022, from 1,075,188,572 to 1,374,342,881in 2023. Return on Equity (ROE) ratio of Bank of Kigali for the years 2021 to 2023. In 2021, Bank of Kigali had a net profit of 51,894,970 Rwf and total equity of 285,700,114 Rwf, resulting in an ROE of 18.16%. This means that for every 100 Rwf of equity, Bank of Kigali generated 18.16 Rwf in profit. The researcher recommended that Bank of Kigali /main branch should minimize its total debits. So as to avoid the risk of interest to be paid accordingly and Bank of Kigali should minimize always improves its portfolio management to earn more operating income.