THE RELEVANCE OF ACCOUNTING INFORMATION TOWARDS EFFECTIVE DECISION MAKING IN AN ORGANIZATION (A STUDY OF ECO-BANK PLC, UYO)

THE RELEVANCE OF ACCOUNTING INFORMATION TOWARDS EFFECTIVE DECISION MAKING IN AN ORGANIZATION (A STUDY OF ECO-BANK PLC, UYO)

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

Accounting is primarily concerned with the method of analyzing the various economic activities or transactions of an enterprise. It is broadly speaking as information gathering system. More specifically, accounting is a discipline that deals with the recording, classifying and summarizing of business transaction and the interpretation of effect of such information on the affairs and activities of an economic unit.

Accounting is a service activity, its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decision, in making reasonable choices among alternative course of action. The relevance of accounting information by any large economic are judgmental and decision to be taken and on time.  The financial accounting information prepared by accountant are of quantitative in nature because it is usually expressed in monetary terms, though non monetary information are also often contained in accounting reports. The method and/or procedure for preparing financial accounting information are based upon definite principle which is usually rules and conventions which have been adopted as a general guide to action by the accounting profession. The principles are formulated in such a way that the practical details of accounting may differ from one company to another.

Historical Background of Eco-Bank of Nigeria

Eco-Bank was found in 1985, when Larson Kolapo was the chairman and Thierry Jonah the managing director, Eco-Bank whose official name is Ecobank Transnational Inc. (ETI), but is also known as Ecobank Transnational, is a Pan African Banking conglomerate, with banking operations in 30 African Countries. It is the leading independent regional banking group in West Africa and Central Africa serving wholesale and retail customers. It also maintains subsidiaries in Eastern African, as well as in southern Africa. ETI has representative offices in Angola, China, Dubai, France, South Africa and the United Kingdom.

ETI is a large financial service provider with offices in 35 countries around the world, and presence in 32 sub-saharan countries, in December 2011, ETI’s customer base was estimated at 8.4 million with 5.9 million (70.2%), location in Nigeria, the continent most populated nation at that time, the group total assests were valued at USS17.2 billion with shareholder’s equity of USS1.459 Billion. ETI’s branch network numbered 1,151, with 1,489 network ATMs, the bank had 23,355 employees in 35 countries in Africa, Asia and Europe, at the end of 2011.

As of December 2011, Ecobank transaction had banking operations in thirty countries in Africa, with representative offices in Angola, Beijing, Dubai even South Africa. Policies debt/equity financial. In familiar extreme case, many antagonists who in their myopic impotence see accounting as selfish stingy individuals, would dismiss the relevance of any information supplied by them. Against the background therefore, this study is design to investigate objectively the relevance of accounting information in corporate decision making and goal achievement using Ecobank of Nigeria as a reference point.

It is the context above that this study is purposed to require into the relevance of accounting information towards effective decision making in an organization using Eco-Bank Nigeria as study company. The owners of and business naturally wishes to run their business as efficiently as possible in order to be able to do this, accounting information are kept. These accounting information enable the owners of the business to make comparisons of the amount of each cost and each expense, it also serves as a guide to business and financial decision. Accounting are responsible for preparing financial accounting information, some of these accountant, industrial and public practice of accounting.

1.2     Statement of the Problem

Most corporate organization may have sound accounting system which enables them not only in their decision making but also in monitoring operating expenses relies on the information content of the financial statement in quite uncertain because they may be managing the business intuitively. Financial accounting information involves technicalities such as quantitative analysis, adequate recording and reporting.

Some organization may unknowingly employ in competent and unskilled manpower prepared may not show a true and fair view of the financial strength. Profitability and future prospects of the organization, some organization have to realize that accounting information is the only medium through which both the management and external users got a clear picture of an organization. They fail to realize and appreciate an accountants analysis in respect of the accounting information generated this, often leads to poor management decision which will have negative effect on the performance of organization.