Abstract
The need for effective financial decision making, guidance and direction to a profitable and solvent course often inform the choice and reliance on the accounting information. Source to accounting information includes suitably fashioned accounting system which can enable an organization to identify and gather accounting data, process them into accounting information for users. Decision making is a complex phenomenon and requires an appropriate platform. Thus, this paper reviews the role of accounting information in decision making of public sector x-raying areas of decision making where accounting techniques are kept in aberration thereby undermining the imperative of accounting information. This write-up concludes that accounting information is an indispensable tool in decision making and should be taken up seriously
CHAPTER ONE
INTRODUCTION
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. 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 provide 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 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
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. 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 OBJECTIVE 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;
- To identify how accounting information controls Fraud, mismanagement and irregularities.
- To determine how useful and effective accounting information are to decision making in public sector organization.
- 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:
- How does accounting information control fraud, mismanagement and irregularities?
- How useful and effective is accounting information to decision making in public sector organizations?
- What are the effects of in availability of accounting information in public sector organizations?
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 indicates the expected direction of that difference and is denoted as H1. The hypothesis to be tested in this study is as follows:
Ho: Accounting information does not control fraud, mismanagement and irregularities.
H1: Accounting information controls fraud, mismanagement and irregularities.
Ho: Accounting information is not effective in decision making in public sector organizations.
H2: Accounting information is effective in decision making in public sector organizations.
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 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 AND LIMITATION OF THE STUDY
The scope of the study covers the effectiveness and uses of accounting information for decision making in public organization. The researcher encounters some constrain which limited the scope of the study;
- a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
- b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
- c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities
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 has overall responsibility for achieving the company’s goals
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.
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.
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.
THE EFFECTIVENESS AND USES OF ACCOUNTING INFORMATION FOR DECISION MAKING IN PUBLIC ORGANIZATION
