BENEFIT OF GOOD ACCOUNTING SYSTEM IN ORGANIZATION

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BENEFIT OF GOOD ACCOUNTING SYSTEM IN ORGANIZATION

CHAPTER ONE: INTRODUCTION

1. Background to the study

 One of the most effective benefits of accounting system is decision making. Decision making has being described as a purposeful choosing from a number of alternative causes of action. The accounting information or system provides managers with the necessary information they need. In this case, it is the accountants that provide the information with which the management uses for its decision making. Managements can only come up with a good decision if they are able to get correct accounting information from the accountant. In a situation where the accountant does not provide correct information: this is bond to affect the decision making of the management adversely.

The question now is, how business executive know the company is embarking on a favorable decision or unfavorable one. The answer to this question is based on the management and the accounting system. According to Ray (1996), most top level business executives have background in accounting and finance than in any other field. The essence of using accounting information is to enable managers make wise decision. It is also used (accounting information) to set up system of internal control to increase efficiency and prevent fraud in companies.

Accounting system aids in profit making, budgeting and cost control. In an organization, it is the duty of the management accountant to see that the organization keeps good records and prepare proper financial regulations. Management accountants also need to keep up with the latest development in the use of computers and in the computer system design. Accountants provide many special reports for management, decision making. This function requires the gathering of both historical and projected data. (Carr etal 1994; woutersan and Verdaasdonk 2002).

Green wood and Hinings (1996) there is evidence which reveal the influence of accounting information in decision making process. it emphasize the important of a holistic context and which led to the integration of other institutional influence and multiple logics. It is in this context that the research wishes to evaluate the effectiveness and uses of accounting information for decision making in public sector. In summary, accounting information is primarily concerned with data gathering from internal and external sources analyzing, processing, interpreting and communicating the result (information) for use within the organization so that management can make more effective plan, decisions and control operations.

1. Statement of the Problem

The central concern of management is decision. In making a sound decision the management needs some valuable and accurate information from the accountant. The accountant is at the services of the management by providing the management with the necessary information which they need for decision making. In recent times, it was observed that cases of mismanagement, fraud and irregularities prevail in the organization. Several problems accounts for the need for accurate accounting information among such problems are malfunctioning and wrong decision making by managers in the management of risks arising from the portfolios, high occurrence of factors that may result to high incidence of losses instead of expected profits where proper accounting information on portfolio management is not on hand, inability of managers to strike a balance between risk and investment, the negative effects which is seen on the low profits derived from the portfolios. It is against this background that this study tries to examine the impact o accounting information in Nigeria public sector.

1. Research Questions

The purpose of the study is to highlight the benefit of accounting system in an organization. This therefore propels the following research question for this study:

1. How does accounting system help in fraud control, mismanagement and irregularities?
2. How useful and effective is accounting systems to decision making in organizations?
3. What are the benefits of accounting system in an organization?

1. Objectives of the study

This research is aimed at examining the benefit of accounting system in organization.

The specific objectives of this study are;

1.  To identify how accounting system help in fraud controls, mismanagement and irregularities.
2. To determine how useful and effective accounting system to decision making in an organization.
3. To examine the benefits of accounting system in an organization.

1. Statement of Hypotheses

The following are the hypothesis which this research tries to test:

Ho: Accounting system does not control fraud, mismanagement and irregularities.

H1: Accounting system controls fraud, mismanagement and irregularities.

Ho: Accounting system is not effective in decision making in public sector organizations.

H1: Accounting system is effective in decision making in public sector organizations.

1. Significance of the study

Accounting information is very important in the life of any business. It is based on this information that the management will be able to make wise decisions. The accountants present the accounting information in such a way as to assist management in policy and decision making in the day to day operations of the organization.

Based on the information produced, the management will have the benefits on using it to plan and control their current and future operations. Based on it also they will come up with their management decision and information of long term plans. The information also will help the management report historical information to outsiders

This work will also be of much help to the government in finding out measures to apply in order to curb or reduce the high incidence of losses and risks in an organization in other to increase the national income and output of the economy.

Finally, this work will be of immense help to students, researchers and scholars as it will open a new area of study for further research and also form a basis for view of related literature.

1. Scope of the study

This research work will specifically focus attention on the benefit of accounting system in an organization.

1. Limitations of the study

Time factor: This was one of the major problems I encountered in the course of the study since the data collected was partly by personal interviews and persons to be interviewed had limited time to attend to me. Also the researcher has to allocate part of her time to class room work one and other activities.

Finance: Another factor that limited the scope of the study was the financial cost which consisted mostly of travelling expenses, cost of materials to be used for the study, cost of inputting the information collected into the computer, cost of diskette, cost of printing the hard copies and binding of the report. This consisted to limitation of my study.

1. Definition of Terms

Decision making: This is a process of choosing specific cause of action from among many possible alternatives. Determine ways and means for accomplishing the line of action decided upon is also a part of the decision making process.

Accounting: This means the act of recording, classifying and summarizing in a significant manner and in terms of money, transaction and events which are in part at least of a financial character and interpreting the result thereof.

Information: Data that has been processed to produce meaning relating to a field.

Accounting information: Those processed information relating to accounting.

Management: This is a group in a business who have overall responsibility for achieving the company’s goals

Planning: The use of information supplied by accountants in making decision by which management formulate objectives for future business of the firm

Control and Coordination: A process of ensuring that the cause of actions is maintained and that the desire aims are achieved. This is done through the use of budgets and actual data.

Cost Decision: This is the application of and cost of principles, methods and techniques in the ascertainment of cost and analysis of savings and or excess as compared with the previous experiences or with standard.

Organization: In organization the managers decide how best to put together the organizations human and other resources in other to carry out establishment.

General Accounting: This is the overall records keeping preparation of financial statements and reports and control at all business activities.

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