CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF STUDY

One of the most effective uses of accounting

information is decision making. Decision making has being

described as a purposeful choosing from a number of

alternative causes of action.

The accounting information 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 information.

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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 information aids in profit making

budgeting and cost control. In a company it is the duty of

the management accountant to see that his company 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 provides many

special reports for management decision making. This

function requires the gathering of both historical and

projected data.

Indeed only a limited number of studies in

international management research have focus on the role

utilization of accounting information in the holistic context

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of decision making strategies processes and preferences

(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.

1.2 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

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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.

What then is the role of accounting information in

Bank of agriculture? Has the role been affective? Does

accounting information control fraud mismanagement and

irregularities? Does accounting information ensure the

efficiency and effectiveness of management? This study is

aimed at providing answers the above questions.

1.3 OBJECTIVES OF THE STUDY

This research is aimed at examining how effective and

efficient management apply accounting information in

making business decision in public sector organizations.

The main objectives of this study are;

1. To identify how accounting information controls

Fraud mismanagement and irregularities.

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2. To determine how useful and effective accounting

information are to decision making in public sector

organization.

3. To determine the relationship between the neglect of

accounting information and decision making in

public sector organizations.

1.4 RESEARCH QUESTION

The purpose of the study is to highlight the use of

accounting information in Bank of agriculture and disclose

the obstacles involved in the demand and supply of

information. This therefore propels the following research

question for this study:

1. How does accounting information control fraud

mismanagement and irregularities?

2. How useful and effective is accounting information to

decision making in public sector organizations?

3. What are the effects of in availability of accounting

information in public sector organizations?

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1.5 RESEARCH HYPOTHESIS

The null hypothesis is the one stated in a no difference

form in effect of one or more independent variables on the

dependent variable and is denoted as Ho. Alternative

hypothesis is the one which predicts a difference and

indicate the expected direction of that difference and is

denoted as H

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. The hypothesis to be tested in this study are

as follows:

H

o

: Accounting information does not control fraud

mismanagement and irregularities.

H

1

: Accounting information controls fraud

mismanagement and irregularities.

H

o

: Accounting information is not effective in decision

making in public sector organizations.

H

1

: Accounting information is effective in decision making

in public sector organizations.

H

o

: There is no relationship between the neglect of

accounting information and decision making in public

sector organizations

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H

1

: There is relationship between the neglect of accounting

information and decision making in public sector

organization.

1.6 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 company.

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

The account manager based on the management plan

(target/standards) will analyze the performance of the

organization and access whether the organization actually

attained the standard set by the management or not if

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there is any variance the management in charge of

accounts will look into it to find out the causes of the

variance and the report to the management based on that

report. The management can make a wise decision that will

take the cause of the variance into consideration. The use of

accounting information is so important that the

management of any organization cannot do without it.

Any organization that does not makes use of

accounting information for their decision making is bound

to be running into difficulties that lead to a setback.

1.7 SCOPE OF THE STUDY

The scope will take into consideration the uses and

effectiveness of accounting information for effective

decision-making.

Decision making exist in every organization for the

purpose of this research the research will be considering

only Bank of agriculture (i.e. taking into consideration

Calabar branch).

Accounting staff and manages of their co-operation will

be interviewed for the purpose of getting relevant useful

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information for decision making also to determine how

effective to use the accounting information for their decision

making. the recommendation and the conclusion will be

based solely on the information gathered.

1.8 LIMITATION 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.

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1.9 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

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Inventory: This is the stock of goods which a firm

posses within a accounting period

Cost centre: This is the smallest of activities of areas of

responsibilities where costs are accumulated.

Profit centre: This is a segment of a business that is

responsible for both its revenue end expenses providing

information for such an entity.

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

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excess as compared with the previous experiences or

with standard.

Decision: Alternative lines of action which are often

irrevocable.

Organization: In organization the managers decide how

best to put together the organizations human and other

resources in other to carry out establishment.

Cost Accounting: This refers to the determination and

control of cost.

General Accounting: This is the overall records keeping

preparation of financial statements and reports and

control at all business activities.

Budgeting: This is the planning of financial aspect of

business operations.

Questionnaire: This is a method of data collection in

which the research questions and questions on other

relevant issues are put down in a systematic manner.

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REFERENCES

Ray garrison (1996) Managerial accounting online articles

Needles et al (1984) the importance of accounting

information on line articles

Carr et al (1994) woutersan and verdaasdonk 2002

accounting information for operation management

Green wood and Hinnings (1996) Role of enterprise system

in radical organizational change.

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