ACCOUNTING INFORMATION AND PERFORMANCE OF FINANCIAL INSTITUTIONS IN THE 21ST CENTURY BUSINESS ENVIRONMENT IN NIGERIA

ACCOUNTING INFORMATION AND PERFORMANCE OF FINANCIAL INSTITUTIONS IN THE 21ST CENTURY BUSINESS ENVIRONMENT IN NIGERIA

---

BACKGROUND OF STUDY

Accounting is, at its core, a measurement and communication process that is utilized to report on the activity of organizations seeking both profit and non-profit seeking outcomes. In a nutshell, it refers to the academic discipline that focuses on the process of summarizing, documenting, analyzing, and interpreting economic events and other financial operations. Accountants are the ones responsible for carrying out this process. They provide management with the pertinent information that is required for effective and efficient decision making. This helps contribute to the quest for means of surmounting problems that are inherent in a dynamic and volatile socio-economic and political setting. "intelligence given-knowledge" is how the Chambers 20th Century Dictionary describes the meaning of "information." The accounting profession is dynamic and there is always a need for an accountant to continually update his or her knowledge of accounting portfolios. This is because sound decisions involving the allocation of scarce resources (land, labor, and capital) cannot be made without first having access to accurate information. Accounting information is useful because it can be used to anticipate the financial repercussions of any potential course of action. In order to operate or make decisions, an organization requires access to quantitative information. For the purpose of providing financial statements to external users, I to plan the organization's activities and operations in both the short run and the long run, (ii) to control the result of its own operations, and (iii) to provide management information, management utilizes the most effective information system that is currently available.

The American Accounting Association defined accounting in 1966 as "the process of identifying, measuring, and communicating economic information to permit users of the information to make informed judgements and decisions." Accounting is "the art of recording, classifying, and summarizing an event which is at least in part of a financial character and interpreting the result thereof," according to a second definition that is widely accepted. This definition was provided by the American Institute of Certified Public Accountants in 1970.

The above definition places a focus on the use of accounting information for the purpose of analyzing the outcomes of both previous and ongoing operations and determining how best to proceed with future activities. The majority of the information relates to finances, and it is almost always expressed in monetary terms. It is the process by which an organization's profitability and solvency can be measured, as well as the periodic information that is required as a basis for making business decisions and appropriate control, which will enable the management to steer the organization in a profitable and solvent direction. The accounting information is prepared and presented in the form of financial statements in accordance with the accounting standard issued by the Nigerian Accounting Standard Board Act (2003). These financial statements are the means of communicating to management and interested outsiders a succinct picture of the profitability and financial position of the business. The preparation and presentation of accounting information may take a variety of forms, such as the profit and loss account, the balance sheet, the income statement, and so on.

As a result, accounting may be broken down into the following three categories: I financial accounting, (ii) cost accounting, and (iii) management accounting. According to Leopold (1982), financial accounting "is concerned with providing information on the financial operations of the organization for the benefit of both internal and external users." This definition can be found in the book by the same name. In addition to this, it entails the categorization and recording of an entity's monetary transactions in accordance with the established concepts, principles, accounting standard, and legal requirement, as well as the presentation of a view of those translations both during and after an accounting period.

On the other hand, cost accounting produces information on the costs that are incurred by an organization in the process of operating the organization so that it may meet the goals on which it was set up.

Lastly, management accounting, as defined by Calvin (1982), "is concerned with providing information to management for the purpose of planning or provision of information needed at all levels." These reports are used internally by management as well as creditors. According to Stamford (1978), accounting information has been used as "a tool for management decision making" because it serves as "a historical record of contractual obligations between the outsiders with the end product in the form of financial statements to report the financial status of an organization at a point in time." This is because accounting information functions as "a historical record of contractual obligations between the outsiders with the end product in the form of financial statements to report the financial status of an organization at a point in time."

The degree to which accounting information can be used as a "tool for management decision making" will be understood after the test that will be carried out as part of this research. This is despite the fact that the relevance of accounting information to the efficient management decision making of many organizations is still not fully appreciated.

1.2 STATEMENT OF PROBLEM

Management that consistently makes poor decisions will never be successful in accomplishing the goals and objectives they have set for itself. The misconception held by many managers that they are able to run their businesses effectively without the assistance of the information supplied by their accountants is an economic contributor to the collapse of many businesses, including banks. Therefore, managers will not be able to make effective decisions or management decisions if they do not adhere to the information that is offered by their accountants in the appropriate manner. Accounting information provides answers to queries such as

I To what extent may the disclosures of accounting information be trusted to be accurate and complete?

(ii) Has the financial information been produced in accordance with the Generally Accepted Accounting Principle (GAAP)?

(iii) Does the management feel satisfied with the use of accounting information as a tool for decision making?

1.3 OBJECTIVES OF THE STUDY

The overall aim of this study is to critically examine accounting information and performance of financial institutions in the 21st century business environment in Nigeria. Hence, the study will be channeled to the following specific objectives;

1. Determine if accounting information is needful for effective management decision-making.
2. Determine the extent to which the management of the organisation under review have used the accounting information.
3. Determine whether accounting information as a tool for decision making satisfy the management.
4. Ascertain whether accounting information have contributed to the profitability of the organization.

1.4 RESEARCH QUESTION

The study will be guided by the following questions;

1. Is accounting information needful for effective management decision-making in the organization?
2. To what extent does the management of the organisation utilize accounting information?
3. Does accounting information as a tool for decision making satisfy the management?
4. Has accounting information contributed to the profitability of the organization?

1.5 RESEARCH HYPOTHESES

The study will validate the following statement;

H01: Accounting information as a tool for decision making does not satisfy the management.

H02: Accounting information have not contributed to the profitability of the organization.

1.6 SIGNIFICANCE OF STUDY

The purpose of this study is to determine whether or not there is a correlation between the accounting information that is provided by the accounting department (the accountants) and the decision that is made as a result of that information by the users of the information, most notably the management of organizations.

These groups will benefit from the research namely;

The organization under study

Business Managers

Future researchers, and

The researcher personally.

1.7 SCOPE OF STUDY

The research work will cover certain aspect of accounting systems operational in an organization and types of reports prepared for decision making. The relationship that exist between accounting information and management decision making will be examined and some related literature in the field of the study will be reviewed and incorporated. The study will also be limited to the importance of each branch of accounting and the type of information they prepare, usefulness of each of the information prepared by individual segment of the branches of accounting, examples financial accounting section, management accounting section and cost accounting section. This study will comprise some selected branches of First Bank in Aba, Abia State.

1.8 LIMITATION

The project is limited by many factors which posed as snags or obstacles to the smooth compilation of the work. It is important that users of the work note the limitations in the course of carrying out the work. The significant problems faced include the following;

ECONOMIC TREND

The global economic meltdown, which apparently affected the Nigerian economy ate deep into the Banking sector of the economy destroying the shares value of all financial institutions in the Country and resulted in poor performance. This has a psychological impact on the respondents.

FINANCE

The economic turndown coupled with inflation has increasingly raised the cost of materials. This led to the devaluation of Naira affecting every aspect of the Nigerian economy. The impact of this on the study is enormous limiting visits to the respondents and qualitative materials for carrying the study.

TIME

Time is another limiting factor which acted as a snag to the completion of the project, though lengthy period was given for the submission of the work but considering the academic pressure coupled with the writing of the project made things not too really easy for the research.

NON-DISCLOSURE

There are some vital as well as important information which the Bank refused to disclose for security reasons. Incomplete and lack of availability of records, which was considered to be very useful, were referred to as confidential.

However, time and financial constraints are the most impactful limitation to the study. Finally, despite all limitations and constraints, the research contained the necessary relevant resource material and to- date data obtained, analysed and provided in the work.

1.9 DEFINITION OF TERMS

Accounting

This is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information.

Information

This is a complete set of processed data that has a meaning.

Accounting information

These are processed data used by an organization to make financial decision.

Financial Accounting

It is the process of collecting, classifying, recording, summarizing and communicating data in respect of event, which can be expressed in terms of money for the purpose of making decisions.

Accountant

This is a professional whose job is to prepare and keep the books of account of an organization.

Management Accounting

This is a process of allocating resources by planning, organizing, controlling and directing for the purpose of producing desired output.

Management

This means a group of decision makers or managers in an organization who see to the smooth running of the affairs of the business.

Assets

These are the economic resources of the business that can usefully be expressed in monetary terms. Assets may be in form of land, building and equipment which have readily identifiable physical features.

Liabilities

These are the debts or obligations of the company in which the company must pay in money or services at some time in future. They therefore, represent creditors’ claims on the firm’s assets.

Balance sheet

This is a financial statement that shows the financial position of a firm at a specific date, usually at the close of the last day in the month of an accounting period. It represents the listing of a firm’s assets, liabilities and owner’s equity on a given date.

1.10 Organization Of The Study

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.

Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature.

Chapter three deals on the research design and methodology adopted in the study.

Chapter four concentrate on the data collection and analysis and presentation of finding.

Chapter five gives summary, conclusion, and recommendations made of the study.

BUY THIS TOPIC ON WHATSAPP

Related Project Materials

AWARENESS AND READINESS TO ADOPT GREEN COMPUTING PRACTICES AMONG EDUCATIONAL TECHNOLOGY STAKEHOLDERS IN NORTH-CENTRAL NIGERIA

ABSTRACT

The use of computer and its accessories in our daily activities, in spite of its usefulness have caused a lot of hazards to huma...

Read more

AN INVESTIGATION OF THE PHYSIOCHEMICAL PROPERTIES IN SACHET WATER IN ABA

​​​​​​​BACKGROUND OF STUDY

Water is a liquid that has no taste, no smell, no color, and is completely transparent. It is...

Read more

EXAMINATION ON THE DIFFICULTY AREAS IN SENIOR SECONDARY SCHOOL BIOLOGY CURRICULUM

ABSTRACT

This study identified difficult topics in senior secondary school biology curriculum. Biology...

Read more

EARLY CHILDHOOD EDUCATION'S INFLUENCE ON EXECUTIVE FUNCTION DEVELOPMENT

ABSTRACT: Early childhood education's influence on executive function...

Read more

CURBING MALPRACTICE IN EXAMINATION; THE ANTIDOTE FOR A SANE SOCIETY

ABSTRACT

This study was carried out to examine the curbing of malpractice in examination; the...

Read more

PERCEPTION AND ATTITUDE OF MEN TOWARDS INFERTILITY AMONG INDIVIDUALS IN THE COMMUNITY

Background Of The Study

Reproduction is known as an essential human desire so that infertility may caus...

Read more

THE ROLE OF BUDGETING IN PUBLIC SECTOR MANAGEMENT

THE ROLE OF BUDGETING IN PUBLIC SECTOR MANAGEMENT

The objectives of this research are to: (1) analyze the role of budgeting in public sec...

Read more

A CRITICAL INVESTIGATION OF LEADERSHIP IN NIGERIA CIVIL SERVICE: A THEORETICAL REVIEW

Background of the study

Leadership is one concept that has emerged in productive connections between co...

Read more

INNOVATIONS IN PROMOTING LIFELONG LEARNING HABITS AMONG VOCATIONAL EDUCATORS

Abstract: Innovations in promoting lifelong learning habits among vocational educators are...

Read more

THE INFLUENCE OF RADIO ON THE PROMOTION OF ENTREPRENEURSHIP AMONG MASS COMMUNICATION STUDENTS

 Abstract

This study is on the influence of radio on the promotion of entrepreneurship among mass communication stu...

Read more