BENEFIT OF GOOD ACCOUNTING SYSTEM IN ORGANIZATION

BENEFIT OF GOOD ACCOUNTING SYSTEM IN ORGANIZATION

CHAPTER ONE: INTRODUCTION

1. Backgroundto the study

 One of the most effective benefits ofaccounting system is decision making. Decision making has being described as apurposeful choosing from a number of alternative causes of action. Theaccounting information or system provides managers with the necessaryinformation they need. In this case, it is the accountants that provide theinformation with which the management uses for its decision making. Managementscan only come up with a good decision if they are able to get correctaccounting information from the accountant. In a situation where the accountantdoes not provide correct information: this is bond to affect the decisionmaking of the management adversely.

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

Accounting system aids in profit making, budgeting and costcontrol. In an organization, it is the duty of the management accountant to seethat the organization keeps good records and prepare proper financialregulations. Management accountants also need to keep up with the latestdevelopment in the use of computers and in the computer system design. Accountantsprovide many special reports for management, decision making. This functionrequires the gathering of both historical and projected data. (Carr etal 1994;woutersan and Verdaasdonk 2002).

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

1. Statementof the Problem

Thecentral concern of management is decision. In making a sound decision themanagement needs some valuable and accurate information from the accountant.The accountantis at the services of the management by providing the management with thenecessary information which they need for decision making. In recent times, itwas observed that cases of mismanagement, fraud and irregularities prevail inthe organization. Several problems accounts for the need for accurateaccounting information among such problems are malfunctioning and wrong decision making by managersin the management of risks arising from the portfolios, high occurrence offactors that may result to high incidence of losses instead of expected profitswhere proper accounting information on portfolio management is not on hand, inabilityof managers to strike a balance between risk and investment, the negativeeffects which is seen on the low profits derived from the portfolios. It isagainst this background that this study tries to examine the impact oaccounting information in Nigeria public sector.

1. ResearchQuestions

The purposeof the study is to highlight the benefit of accounting system in anorganization. This therefore propels the following research question for thisstudy:

1. Howdoes accounting system help in fraud control, mismanagement and irregularities?
2. Howuseful and effective is accounting systems to decision making in organizations?
3. Whatare the benefits of accounting system in an organization?

1. Objectivesof the study

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

Thespecific objectives of this study are;

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

1. Statementof Hypotheses

The following are the hypothesis which this researchtries to test:

Ho: Accounting system does notcontrol fraud, mismanagement and irregularities.

H1: Accounting system controls fraud,mismanagement and irregularities.

Ho: Accounting system is noteffective in decision making in public sector organizations.

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

1. Significanceof the study

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

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

This work will also be of much help to the government in findingout measures to apply in order to curb or reduce the high incidence of lossesand risks in an organization in other to increase the national income andoutput of the economy.

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

1. Scopeof the study

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

1. Limitationsof the study

Timefactor: This wasone of the major problems I encountered in the course of the study since thedata collected was partly by personal interviews and persons to be interviewedhad limited time to attend to me. Also the researcher has to allocate part ofher time to class room work one and other activities.

Finance: Another factor thatlimited the scope of the study was the financial cost which consisted mostly oftravelling expenses, cost of materials to be used for the study, cost ofinputting the information collected into the computer, cost of diskette, costof printing the hard copies and binding of the report. This consisted tolimitation of my study.

1. Definitionof Terms

Decisionmaking: This isa process of choosing specific cause of action from among many possiblealternatives. Determine ways and means for accomplishing the line of actiondecided upon is also a part of the decision making process.

Accounting: This means the act ofrecording, 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 andinterpreting the result thereof.

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

Accounting information: Those processed information relatingto accounting.

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

Planning: The use ofinformation supplied by accountants in making decision by which managementformulate objectives for future business of the firm

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

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

Organization: In organization the managers decide how best to puttogether the organizations human and other resources in other to carry outestablishment.

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