ACCOUNTING INFORMATION AS A TOOL FOR MANAGEMENT DECISION MAKING IN ORGANIZATION. A CASE STUDY OF ANCHOR INSURANCE COMPANY LIMITED UYO
INTRODUCTION
Virtually every organization requires information for effective management and planning. Information particularly accounting is indispensable to the growth and development of organization, because from planning to the execution, resources required are guided by availability of accounting information, as it provides detail information of budget on the implementation of plan.
Accounting information according to Batty (1974) is the systematic presentation, analysis and evaluation of data regarding the financial position, or statement of account of an organization for future planning. It involves a stream-lined financial data which must include assessment of stock-keeping, financial statement, transaction over period of time, financial report, evaluation of organization financial strength, prospect and recommendation. However, the fact that resources are relatively scarce and limited made managers to programme course of actions and choose options that are cost effective and yet yield the require result. Therefore, taking the above variables in consideration, accounting information aids in effective management and provides background for sound decision-making processes.
The variability of the information from accountant to goal oriented management team of any organization made Akpan (2004) to categorically states that every decision-making process involving systematic planning, organization of facts, adoption of programmes course of actions among the alternatives must as a matter of necessity take into consideration detail information (accounting) at the disposal. With regards to this, Udoidung (2001) notes that in modern managerial practice, sound management decision making requires every bit of accounting information in order to achieve efficiency and effectiveness in the attainment of goals. Basically from this notion, the global best practice in management made accounting information indispensable as this is vital to the appreciation of financial position of business which guided the management decisions regarding debt management, planned expansion of organization, recruitment, acquisition policy, dividend to share holders, and credit worthiness.
The important of the above, lend credence to the fact that, oftentimes, reputation and potentialities of a business or organization are the basis of accessing loan facility. That was why Adame (2006) noted that banks and other financial institutions that are concerned with lending, and risk management required the profit trend, the fixed assets and the liabilities of business before loan is granted, and all these can be studied from the available final account records and decision to make informed choice by management anchored on the accounting information.
Moreover, predicated on the gains of accounting information, organization industrial relations are managed and harmonized by the well articulated design information reports. The employees and union members appreciate more when they are made to know the true position regarding assets and liability of the organization. Here the glamour for enhance remuneration, pension right and various fringe benefit are understandably negotiated given the fact that the organization financial position are not hidden. All these and many others are predicated on the realms of efficient accounting information system, and it is on this note that, the study in considering the imperatives of accounting information to sound decision-making non management in reposition the organization for greater productivity that this research takes a holistic approach to study management practice in Anchor Insurance Company Limited with special regards to accounting information in decision making process.
1.2 STATEMENT OF THE PROBLEM
Basically, accountants, are constrained with the challenges of accessing accurate data for correct and reliable computation, analysis, evaluation and presentation of information needed for sound decision-making by management. This is because, information from budget and audit unit of the organization due to corruption and red tape are difficult to access particularly when it is not authoritatively ordered. Therefore, as a result of this, the realm of compromise and corruption in the accounting system of the complex organization seldomly allowed for objective and result oriented outcome of the information.
However, to lighten the challenges to effective utilization of information, management is confronted with the problems of how accounting information can be used to address topical issues such as staff motivation, productivity, fraud checking and shaddy compromise in the course of transaction, elimination of waste and mismanagement of fund by instituting internal control mechanism. How to adopt the best possible course of actions that are cost effective in the realization of goals even in the challenge of expansion. These required accurate and updated accounting information for management to tackle the challenges.
Thus, in finding solutions to the highlighted problems, the study examines the necessity of using accounting information for effective decision-making in surmounting the highlighted problems in an organization like Anchor Insurance Company Limited.
1.3 OBJECTIVE AND THE PURPOSE OF THE STUDY
In organization, far-reaching decision on the growth and development by management depends on the information gathered. Accounting information which is vital to the sound decision making concerns itself with information on how to lift the veil on future, present and past operation of business transaction.
However, on the likely effects of making informed decision, the necessity of how accounting information is use to perform the function of advisory roll to all the problem that control costs or profitability of businesses is the aim this study. To achieve this, the following objectives are as follows:
- To find out whether company (Anchor Insurance makes use of accounting information in its decision making to boost staff productivity.
- To find out if accounting record kept by company conform with the minimal standard of accounting principle requirement.
- To find out if accounting information is relevant to the company’s goals and objective.
- To make recommendation necessary for using accounting information as an index for advancing the course of effective management in cooperate organisation.
1.4 RESEARCH QUESTION
- How do accounting information help in cost and budgetary control in ensuring efficiency and effectiveness in the management of Anchor Insurance Limited?
- How are information from accounting system be use to raise staff morale in the scope of business expansion and charges in the company. (Anchor Insurance)
iii. What measures should be taken to check fraud and compromise during auditing.
1.5 THE SIGNIFICANCE OF THE STUDY
The study “Accounting Information a tool for management decision-making is meant to investigate the relevant of accounting information in determining effecting cost control for the attainment of organisation goal.
Importantly, the study is significant to the extent that the outcome would broaden the scope of accounting as a discipline and equally serve as a source of information or input for further researches, where student in accountancy would avail themselves with outcome. The result of the findings would provide another source of information for accounting managers to adopt in making sound and informed decision in effective realization of organisation goals.
1.6 THE SCOPE AND LIMITATION OF STUDY
The study primarily focus on the information (accounting) system to the realization of effectiveness and efficiency in organisation particularly Anchor Insurance Company Limited. The study is limited to staff of the company as they are the channel of accessing information.
1.7 ASSUMPTION
For the study to achieve the aim and objective the researcher outline the following assumption:
- It is expected that the respondents will co-operate with the researcher by accepting to complete and return the questionnaires within time schedule.
- That atleast 80% of the distributed questionnaire would be promptly completed and returned.
- That the questionnaires questions were made valid and consisted.
- That the sampling procedure were not bias.
Accounting Policies: Are those basic rules principles conditions and procedures adopted in preparing and presenting financial statement. Judgment is required in the choice of accounting policies, which use appropriate to the circumstance of an enterprise and are best suited to present financial position.
Accounting Information: is the data that are found in financial statement.
Accounting Period: it refers to the time span usually one year covered the financial statement.
Accounting: is a discipline which provides financial and other information essential to the conduct and evaluation of the activities of any organisation.
Accounting: is a person whose profession is to keep and examine business account” and also said to be one who basically deals with the recording, planning and control of financial transaction whether income or expenditure.
Accounting: Is a statement of dealing expressed in words and figures according to bookkeeping form.
Balance Sheet: is a classified summary showing the balance remaining in the ledger after the presentation of the profit and loss account (Etukudo, 1975). It shows the assets, liabilities and proprietor’s interest at a point, in time Cashine and Lerner (1991) define a balance sheet as “a statement showing the asset, liabilities and capital of a business entity at a specific date” it is called a statement of financial position or statement of financial condition.
Bookkeeping: According to Etukudo (1975) Bookkeeping is the art of keeping business transaction in such a manner that a financial position of business can be ascertained at any time.
Budget: Hornby (1977) define budget as “an estimate of the future income and expenditure. It is also defined by NASB (1984) “as a financial or quantitative statement prepared and approved prior to a defined period of time, for the policy to be pursued during that period for the purpose of attaining a giving objective it may be income expenditure and the employment of capitals.
Profit and Loss Accounts or Income Statement: This shows the net profit or loss, which is difference between the gross profit plans any other income and the total expenses. The resultant balance, which may be a profit or loss is transferred to the capital account (Etukudo, 1995).
Note of Account: It usually form an integral part of financial statement and provide details on supplementary information is respect of items disclosed in the balance sheet and the profit and loss account (Weilgeband, 1973).
Cost Accounting: The application of costing and cost accounting principles, for the purpose of classifying analyzing recording, standardizing, forecasting, interpreting and recommending the data for the purpose of cost control aiding
