European Journal of Scientific Research ISSN 1450-216X / 1450-202X Vol. 103 No 4 June, 2013, pp.598-609 http://www.europeanjournalofscientificresearch.com
An Assessment of Account Service Quality from the Customer Perspective Ferah Yıldız Accounting Department, University of Adiyaman Altınşehir Mh. Adiyaman, Turkey E-mail:
[email protected] Tel: +90 -532 – 6884653; Fax: +90 – 262 3311212 Güler Dinçel Business Department, University of Kocaeli Marshall Campus, Hereke, Kocaeli, Turkey E-mail:
[email protected] Ahmet Yanık Accounting Department, University of Kocaeli Anitpark Campus, Izmit, Kocaeli, Turkey E –mail:
[email protected] Abstract Service quality of businesses has gained importance for the maintenance of their operations in an increasingly competitive environment. In this context, quality of the service provided by accounting professionals is important for taxpayers receiving the service. Businesses present the most descriptive information about themselves to the related parties through accounting services. Provision of easily accessible, comparable, accurate and comprehensive information to the related parties is associated with service quality of accounting service providers. Purpose of this study is to show how businesses operating in Kocaeli, Turkey, perceive the quality of service they receive, using five dimensions of the scale developed by Parasuraman. As a result of this study, there is a statistically significant relation between the change of accountants by taxpayers and the service quality dimensions including reliability, readiness, confidence and empathy whereas there is no significant difference with the dimension of physical characteristics. Moreover, there appears to be a statistically significant difference between pysical penalties received by taxpayers for the failure of accountants and overall service quality and its dimensions of physical characteristics, reliability, readiness, confidence and empathy. Keywords: SERVEQUAL, accounting service, quality of accounting service, perception of quality of accounting service
1. Introduction In recent years, the world has gone into a process of transformation from the era of informatics to that of information (Iksan, 2004; Thomas and Kleiner, 1995). In this process, information has become more import. Information, not being a physical asset like money, is not included in data banks or software
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programs (Drucker, 1993). Information is different from data and information; however, many people do not know that information is intuitively more comprehensive, deeper and richer than data or informatics. Data include raw facts and transform into informatics when organized, and meaningful informatics constitute information (Yahya and Goh, 2002). Businesses need to manage their intellectual assets in order to maintain competition and their existence in the information society. Information management is related to the development and utilization of information resources (Davenport et al, 1998). The accounting system is also one of the instruments used in the management of information. Businesses establish an accounting system for providing information to their internal and external stakeholders (Walker, 2006). Accounting system of a business serves for all the units in the business. Accounting department is the primary information resource for especially managers and other employees (Walker, 2006). Information relating to processes and results of business activities, and financial reports are delivered to the parties through accounting services. Smooth and reliable delivery of financial reports depends on proper establishment of the accounting system used by businesses. Businesses need accounting information in important areas including performance measurement, investment decisions and product concept definition. After all, accounting and accounting services are important as well as legal obligations for businesses to achieve their goals (Walker, 2006).
2. Accounting Service Business output of accounting field comes out as a service. In general terms, service is an intangible product for satisfying consumer needs (Kuriloff et al, 1993). Service is to carry on business for others (Gotsch and Stanley, 1998). Service is a process/collection of processes, which is not continuous but intangible, ensures immediate interaction between customer and service personnel and/or service provider's physical resources or goods and/or systems, and is provided as solutions to the problems of service demander (Grönroos, 2000). Service is an activity that is not physical, presented with human activity and cannot be stocked up (Zeithaml et al, 1985) while the demand for service varies hourly, daily and seasonally, and therefore ensuring a supply-demand balance is a difficult task (Yaprakli, 2010). Accounting services are completely associated with the entire business, and actively involved in each business activity. Quality of each department in a business is supported by quality of the account service. As a management and support function, accounting has many internal and external clients. These may include employees, other departments in the business, auditors, managers, owners, customers, vendors, contractors, creditors, state, regulatory agencies, tax authorities and planners. Accounting service is of key value for businesses seeking or not seeking profit (Borthick and Clark, 1990; Wilkinson, 1998). Accounting is an integrated service system that drives production and other activities in a business in order to transform economic data including raw materials and supplies, staff, instruments and funds into financial information, and provides internal/external clients with relevant information. Indeed, the combination of or interaction between human being, technology and techniques ensures that a business is managed effectively through accounting knowledge (Bhatt, 2001; Thomas and Kleiner, 1995). Law 3568 on Public Practice Accountancy, Certified Public Accountancy and Sworn-in Certified Public Accountancy dated 13.06.1989 was put into force with the Official Gazette no. 20194 for the purpose of ensuring proper and reliable functioning of business activities and transactions; inspecting and assessing results of activities based on the applicable legislation; and presenting them in a fair way to the use of public authorities. The law was amended with law no. 5786 published on the official gazette no. 26648 dated 26.07.2008, which changed its title as the “Law on Certified Public Accountancy and Sworn-in Certified Public Accountancy”. The amendment defined the professionals as Certified Public Accountants (SMMM) and Sworn-in Certified Public Accountants (YMM) (Law no. 3568).
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The Regulation on Procedures and Principles of Certified Public Accountants and Sworn-in Certified Public Accountants sets out the fields of activity for the Certified Public Accountants and Sworn-in Certified Public Accountants as following (Law no 3568, 2008): Keep the accounts, organize balance sheet, income table and bills, and conduct similar activities for entities and businesses belonging to real and legal persons pursuant to generally accepted accounting principles and applicable legislations, Establish and develop accounting systems for entities and businesses belonging to real and legal persons; organize business administration, accounting, finance, financial legislation practices; or providing consulting services in these areas, Within the abovementioned areas, based on the evidences, conduct inspections, analyses and audits, present written opinion on financial statements and bills, issue reports and similar documents, and conduct arbitration, expertise and so on. Furthermore, the law makes it obligatory for professionals to attend in career development and training seminars held by the Union and chambers in order to continue their professional activities. Almost all businesses operating in Turkey are under the authority of certified public accountants. For the purpose of serving to businesses in an accurate, fair and timely manner, it is extremely important to measure service quality of accounting professionals for defining customer satisfaction and loyalty (Banar and Ekergil, 2010). When providing accounting services, the following matters come to the forefront among others (Yanik et al, 2012): First, the main factor for defining how accounting services are provided is not the demand by businesses but laws, regulations and other governing legal sanctions. Majority of the accounting services are undeferable and non-stockable. Best provision of accounting services depends on professional knowledge, experience and expertise of the service provider. Any setback in accounting services typically results in a physical sanction. The main resource in accounting services is reliable information and documents acquired generally from past data. The information and documents on which accounting services are presented are physical but not abstract. Since accounting services influence many other disciplines, a more technology-based working environment in addition to the labor-based environment is observed. When providing accounting services, there are several services to be provided routinely on behalf of the client as required by law and regulations. Continuity is essential in accounting services. Many services do not come to an end after a while, but must be performed continually. Quality of the accounting services is only determined once the service is provided. During service provision, one cannot generally mention about quality. Those who receive accounting services expect accounting professionals to identify, interpret and express necessary information for them, and use information and communication technologies effectively (Basar; 2005; Kısakürek and Pekcan, 2005).
3. Studies on Service Quality In two independent studies conducted respectively by Sultan and Furrer in 2000, cultural background of clients was analyzed in terms of its impact on perceptions and expectations (Sultan and Simpson, 2000; Furrer et al, 2000). In addition, other researchers adopted different methods in their studies. They developed a framework in which service dimensions were analyzed on behavioral basis, and observed, in a different cultural framework, how customer satisfaction affected these dimensions (Winsted, 1997; Becker et al, 1999).
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Higgins and Ferguson (1991) analyzed practicability of the dimensions of service quality on the accounting services, and suggested practical methods for accounting companies to improve their quality of service (Higgins and Ferguson, 1999). Armstrong and Smith (1996) investigated marketing factors influencing customer choice of accounting companies, and the relation between these marketing factors and quality of service perceived by customers. This study suggested that the accounting companies choose customers based on three factors including internal physical factors such as compensation and physical opportunities; internal abstract factors such as corporate reputation, employee quality and experiences of companies; and external factors including a friend's opinion and employees' attitude. Van der Walt, Scott and Woodside (1994) investigated criteria of taxpayers in New Zealand for choosing auditing companies, and classified them as irrelevant and relevant taxpayers. Keng and Liu (1998) showed why businesses chose to purchase service from 5 top auditing companies in Singapore, Japan, Europe and USA; and if they would like to continue working with these companies. Authors of this study used a revised version of SERVQUAL scale, developed by Parasuraman to show the difference between performance of auditing companies and expectations of taxpayers. Baba (2009) suggested a series of factors that are responsible for the quality of accounting practices and required for effectiveness of the service provided by accountants. Iselin (1996) claimed that the accounting knowledge affected decisions through variables of information loading, data loading and uncertainty. Marton and Scott (2007) conducted a study in order to develop and test a method for measuring service quality of auditing companies, and then assess the impact of customers receiving an additional service on the service quality. The study showed that there is no meaningful relation between increasing service quality and returning customers whereas it is related with current customers' recommendation of the auditing company they receive service from, to prospects, and there is a poor relation with the auditing company's desire to keep current customers. Sumritsakun (2012) showed that the quality of accounting practices increased effectiveness of accounting information through accuracy and timeliness of information, and that the value of accounting activities to the business improves effectivenes of accounting information through timeliness of accounting. Fetene and Inanga(2013) conducted a study is to identify the challenges faced by OMO Micro Finance Institution in satisfying customers by delivering quality service. The study showed that in the five service quality dimensions OMO failed to deliver the expected service to its customers. Also, it has scored over negative five for each dimension and the overall average gap score is found to be 5.57.
4. Developing Hypotheses Quality is a very complex concept that is hard to understand, has dimensions that cannot be distinguished easily (Parasuraman et al, 1985). Although the phenomenon of quality became a current issue with the industrial revolution, it emerged with the beginning of production by humans. Initial recordings related to the quality are traced back to 2150 B.C. The Code of Hammurabi (1795-1750 B.C.) (230) states it as “If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death”. The punishment imposed on the manufacturer because quality conditions are not met clearly shows the emphasis to be placed on quality. Quality consists of features that fulfil conditions of goods or services according to the needs customers for customer satisfaction (Juran, 1998). According to the definition from American National Standards Insitute (ANSI), which is also accepted by International Standards Organization and American Society for Quality Control (ASQC), quality is the collection of characteristics for goods or services to meet specified needs. Customers cannot clearly define quality,
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but express quality issues through certain complaints. Success in business life depends on growth, survival in the competitive environment, and understanding and exercising the quality (Montgamery, 1997). Quality covers the entire business process, and accounting services are closely associated with each component of this entirety. One of the vital components of quality is customer needs. Thus, the service quality is closely related with customer satisfaction (Kumar et al, 2008; Wei and Ramalu, 2011; Zineldin, 2006). In contemporary competition environment, customer satisfaction is substantially related to overal service quality of companies, which is accepted as an important strategy (Pradise, 1991). Among the studies conducted for service quality, the service quality modeling by Parasuraman et al. (1985, 1988) is remarkable. The study suggested that service quality could be measured with functional quality dimensions including authenticity, reliability, readiness, confidence and empathy. This model is defined as the gaps of service quality, and addresses expectations of customers from the service until service providers offer service. Accordingly, the first gap is the inability of service providers to know what customers expect from the service; second, service providers are unaware of what customers expect from the service; third is the service features and conduct of service; fourth is the conduct of service; and fifth is about the service provided for customers and how they perceive it (Parasuraman and Zeithaml, 1985; 1988). With the elimination of international restrictions, countries, especially the developing ones where service industry is the dominant power in employment market, have to keep pace with harsh competition conditions. Therefore, improving the service quality is vital in service industry (Lin, 2007). The service received by taxpayers from their accountants is important for themselves as well as for 3rd parties the government and businesses are related to. Businesses learn through accounting information how much they make profit or loss; how much profit will be distributed to partners; if a product will be manufactured, or if manufacturing will continue; and what taxes the government will impose on the business. Therefore, reliability and significance of information obtained from accounting services is proportional to the quality of accounting service. It is important for accountants to know how their customers perceive the service they provide, in order to understand what they will pay attention to ensure their customers' loyalty and gain new taxpayers. When taxpayers receive service from accountants who do not duly perform their duties, they can face with physical sanctions due to negligence of the accountant. For example, according to the activity report of Revenue Administration, 3,462,338 taxpayers were inspected in 2011, which led to TRY 128,094,973 of irregularity fine imposed on taxpayers (Revenue Administration, 2011). Businesses in Turkey receive accounting services from certified public accountants. The businesses purchasing service from accountants expect timely, accurate and fair information from them. Purpose of this study is based on these expectations, and the analysis was made on the businesses operating in Kocaeli and keeping the accounts on the basis of balance sheet, in order to understand how they perceive the service they purchase from accounting professionals, and which of the dimensions of SERVQUAL generated by Parasuman affected them more. Service quality perception of the taxpayers was evaluated on the basis of two criteria. These include the number of accountants that the taxpayer changed in the past, and physical penalties imposed on the taxpayer for the failure of their accountant. For the purpose of determining if there is a difference between the number of accountants the taxpayer changed and their service quality perceptions, the study addressed the service quality and its dimensions to make up the following hypotheses. H1: There is a relation between the number of accountants the taxpayers changed and their perception of service quality. H1a: There is a relation between the number of accountants the taxpayers changed and their perception "Physical Characteristics".
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H1b: There is a relation between the number of accountants the taxpayers changed and their perception "Reliability". H1c: There is a relation between the number of accountants the taxpayers changed and their perception "Readiness". H1d: There is a relation between the number of accountants the taxpayers changed and their perception "Confidence". H1e: There is a relation between the number of accountants the taxpayers changed and their perception "Empathy". For the purpose of determining if there is a difference between physical penalties imposed on the taxpayers due the failure of their accountant and their service quality perceptions, the study addressed the service quality and its dimensions to make up the following hypotheses. H2: There is relation between physical penalties imposed on the taxpayers due to the failure of their accountant and their perception of service quality. H2a: There is relation between physical penalties imposed on the taxpayers due to the failure of their accountant and their perception of "Physical Characteristics". H2b: There is relation between physical penalties imposed on the taxpayers due to the failure of their accountant and their perception of "Reliability". H2c: There is relation between physical penalties imposed on the taxpayers due to the failure of their accountant and their perception of "Readiness". H2d: There is relation between physical penalties imposed on the taxpayers due to the failure of their accountant and their perception of "Confidence". H2e: There is relation between physical penalties imposed on the taxpayers due to the failure of their accountant and their perception of "Empathy". 4.1. Scope and Method of Study The study covers the corporate taxpayer businesses operating in Kocaeli and keeping the accounts on balance sheet basis. Those businesses that operate in Kocaeli but employ their internal certified public accountants are excluded. There are 15,010 corporate taxpayers operating in Kocaeli (including towns). A total of 1950 surveys were randomly conducted on 435 of 3347 businesses registered to Tepecik tax office, 311 of 2393 registered to Alemdar, 117 of 899 registered to Korfez, 503 of 3876 registered to Derince, 390 of 3006 registered to Ilyasbey, 88 of 677 registered to Ulucinar, 32 of 243 registered to Golcuk, 62 of 479 registered to Karamursel, and 12 of 90 registered to Kandira. The study used the method of survey in person with owners or managers with financial knowledge of the business; 697 of these surveys were excluded from the study for different reasons while 1253 were evaluated. The survey consisted of two parts, first of which was related to demographics while the second included questions of SERVQUAL developed by Parasuraman, Zeithaml and Berry (1998). Consisting of 5 dimensions and 22 expressions, the SERVQUAL scale measures service quality in 5 dimensions including physical aspects, reliability, readiness, confidence and empathy. The study used 5 point likert scale ranging from "strongly agree" to "strongly disagree", and the survey data were analyzed using IBM SPSS STATISTICS 20. 4.2. Sampling Information Table 1 shows demographic information obtained in the study.
Ferah Yıldız, Güler Dinçel and Ahmet Yanık
604 Table 1:
Demographics Frequency
Sex
Marital Status
Age
Income
Operating Period
%
Male
925
73.8
Female Total Married Single Total 22-29 30-39 40-49 50-59 60-+ Total 1000 and lower 1001-1499 1500-1999 2000-2499 2500-2599 3000-+ Total 1-5 6-10 11-15 16-20 21-25 26-+ Total
328 1253 853 400 1253 311 453 244 182 63 1253
26.2 100 68.1 31.9 100 24.8 36.2 19.5 14.5 5 100
143
11.4
243 225 183 234 225 1253 360 396 234 98 89 76 1253
19.4 18 14.6 18.7 18 100 28.7 31.6 18.7 7.8 7.1 6.1 100
Education
Duration of Working with Accountant
Number of Accountants Changed Physical Penalty
Sector
Frequency
%
423
33.8
517 174 119 20 1253 320 578 189 68 51 47
41.3 13.9 9.5 1.6 100 25.5 46.1 15.1 5.4 4.1 3.8
Total
1253
100
No Yes Total Yes No Total
163 602 1253 313 940 1253 667 483 103 1253
13 48 100 25 75 100 53.2 38.5 8.2 100
Primary+Secondary School High School Associate Degree Undergraduate Graduate Total 6 Months 6-10 Years 11-15 Years 16-20 Years 21-25 Years 26 and higher
Trade Service Industry Total
Table 1 shows that 73% of participants were male, 41% was high school graduate, 36.2% was between 30-39 years old, %31.6% has been operating for 6-10 years, and 46.1% has been working with the same accountant for 6-10 years. Only 13% of the participating businesses has never changed their accountants, 48% changed 1, 26.7% changed 2, and 25% received physical penalty due to the failure of their accountant. 53.2% of the businesses operate in trade, 38.5% in service, and 8.2% in industrial sectors. 4.3. Reliability and Factor Analysis For the purpose of defining the factor structure of variables, varimax conversion factor analysis was conducted and results are given in Table 2. The service quality scale KMO=0.894 is meaningful at the level of Bartlett test 0.000 while describing 0.59 of total variance with 5 dimensions. It was determined that Factor 1 consisted of expressions containing physical characteristics, the alpha value was 0.855, describing 14.046% of total variance. It was seen that the reliability dimension of service quality was included in Factor 2, the alpha value was 0.863, describing 13.392% of total variance. It was seen that the readiness dimension of service quality was included in Factor 3, the alpha value was 0.844, describing 12.081% of total variance. It was determined that the confidence dimension was included in Factor 4, the alpha value was 0.801, describing 11.460% of total variance. It was determined that the empathy dimension was included in Factor 5, the alpha value was 0.801, describing 7.854% of total variance.
An Assessment of Account Service Quality from the Customer Perspective Table 2:
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Factor Analysis of Service Quality Dimensions
Service Quality Dimensions Physical Characteristics Reliability Readiness Confidence Empathy
Described Variance %
Accumulated %
Alpha
14.046 13.392 12.081 11.460 7.854
14.046 27.438 39.518 50.978 58.832
0.855 0.863 0.844 0.801 0.801
4.4. Findings A t test analysis was conducted for the corporate taxpayers in Kocaeli keeping the accounts on balance sheet basis, in order to understand if there is any statistical difference between the change of accountants and their perceptions of service quality and service quality dimensions, and the results are given in Table 3. Table 3:
Analysis of the change of accountants by taxpayers and their perception of service quality and service quality dimensions
H1 There is a relation between the number of accountants the taxpayers changed and their perception of service quality. Accountant change
No Yes H1: There is a relation between the number of accountants the taxpayers changed and their perception of "Physical Characteristics". Accountant change No Yes H1b: There is a relation between the number of accountants the taxpayers changed and their perception "Reliability". Accountant change No Yes H1 c: There is a relation between the number of accountants the taxpayers changed and their perception "Readiness". Accountant change No Yes H1d: There is a relation between the number of accountants the taxpayers changed and their perception "Confidence". Accountant change No Yes H1e: There is a relation between the number of accountants the taxpayers changed and their perception "Empathy". Accountant change No Yes
N
X
163 1090
4.2574 4.0942
Standar d Deviatio n ,62318 ,54642
163 1090
4.1641 4.0942
,74140 ,71405
1.642 1.597
1251 209.460
0.101 0.112
163 1090
4.4086 4.2380
,69862 ,60240
3.300 2.958
1251 199.660
0.001 0.003
163 1090
4.2991 4.1181
,72321 ,67665
3.156 3.004
1251 206.662
0.002 0.003
163 1090
4.2607 4.1406
,65461 ,65425
2.186 2.186
1251 213.306
0.029 0.030
163 1090
4.1448 3.9176
,74379 ,74321
3.639 3.637
1251 213.280
0.000 0.000
t
Degree of Freedom
P
3.488 3.165
1251 200.997
0.001 0.002
p
