CHAPTER ONE
INTRODUCTION
In recent years the advancement in
information system modules all over the world has made business organizations
to exert resources in this area if they are to compete favourably among their
local and foreign counterparts. Gone were the days when business organizations
were simply required to make profit, survive and provide a fair return to
investors’ on their interest. The modern business organizations find itself in
the atmosphere of global uncertainties, cut throat competition locally and
internationally and unprecedented change in the economy. Hence, a great demand
is often placed on the managers of these organizations to make pragmatic and informed
decisions if the organization is to move forward as the success or otherwise of
any
organization is often a function of the
sum of the decisions taken in the past. However, the quality of decisions taken
by managers rests upon the substance and accuracy of information provided by
systems available to them. An accounting system is one of the most effective decision
making tools of management as it provides an orderly method of gathering and
organizing information about the various business transactions so that it may
be used as an aid to management in operating the business (Copeland and
Dascher, 1978). Accounting information
also may help managers understand their
tasks more clearly and reduce uncertainty before making their decisions (Chong,
1996). Thus, Accounting Information system is vital to all organizations and
perhaps, every organization either profit or non- profit oriented need to
maintain an Accounting Information System as no organization is exempted from
decision making in their operations. Accounting system, in recent times, has
tended to be a system of information that does not stop at limits of data and
financial information, but also it includes data and descriptive and
quantitative information which is useful in decision making for users distinct
with plurality and diversity. Such users include current and potential
investors, lenders, suppliers, creditors, customers, governments and the public
in addition to the administration, which is its responsibility to prepare the
accounting programs and displaying it, that information must be
capable of achieving the goal that it
has been prepared for. Hence the role of Accounting Information System for
effective decision making cannot be over emphasized. It is noteworthy to say
here that Accounting Information System derives its source from accounting
data.
Accounting Information Systems produce
results which enhances decision making. Hence, it can safely be concluded that
Accounting Information System is not an end in itself but a means to an end
i.e. decision making to improve corporate performance. Accounting Information
System produces detailed and comprehensible accounting information which are
invaluable basis for decision making.
At independence, Nigeria joined the committee
of nation with the hope for a better tomorrow. We were able to feed ourselves
and were of course almost self-sufficient. Subsequently our hopes seemed
unattainable. We seem to be going deeper and deeper into the woods. The
consensus is that it has been bad for Nigeria.
Due to the adverse economic condition prevailing in the country many
businesses have closed, shops and even financial institutions are being
declared distressed at alarming rate. Businesses that are yet to be submerged
or that want to stay afloat employ all kind of strategies. Some increase price,
adopt promotional tools, engage in aggressive marketing etc. whereas others
goes for an odd combination of activities and even undergo different kind of
small business to survive. Any business
or individual that wants to survive must make the right decision. The era of
mile of thumb is gone; employing it is a sure way to fail absurdly. The price of any conceivable item from garri
and bread to radio and book not to mention petrol has been soaring in geometric proportions over the year. The
economy is truly in distress. These compounds and complicates intricate are the
problem of the organization vis-à-vis effective planning and decision making
processes. Other factors such as stagflation, taxation, economic and political
problem are the major problem which affects information and decision making.
The future orientation is what most company and bank get from making accounting
decision .the computation and interpretation of analytical ratios from
financial statement enable bank to determine their operation trends and provide
a basis for management decision making. Other users of financial analysis are
used in making financial decision and achieving the goal of sustainability
determines compliance with regulatory requirements. Financial analysis is an
investment that has positive return in the future on how decision will be made,
how to manage the finances to achieve the strategic goals of the institution
through decision making.
Many
people think that accounting as a highly technical field which can be
understood only by professional accountants actually nearly everyone practices
accounting in one form or the other. In modern times, management require a wide
variety of information to successfully accomplish its aim and objectives. This
information is mainly determined by the element of uncertainty about the future
and lack of knowledge about the present. Some of these decisions are of
strategic importance having a large impact on the business, others are routine
operating decision. Therefore accounting information is based on laws and
regulations governing the handling of accounting report contained in the
financial reports of organisation.
Making the right decision depends on the
possession of appropriate, accurate and up to date information provided and
presented in a meaningful way. This study set out to examine the contribution
of sound accounting system in providing the management with financial and other
information basis for dealing with decision problems that arises from their
organizational operations.
Basically,
the nature of manufacturing business compels it to carry out a great deal of
book-keeping records based on accounting principles and information provided
with the perpetual increase in the number of consumer of manufactured products,
it has become necessary to devise a systematic mean in handling the resultant
book-keeping and accounting activities.
A lot criticism has always been made about the service of the organization,
consumers complain of low quality product while employers complain of lack of
promotion inadequate salaries, lack of training etc. Furthermore, the major challenge facing every
financial institution\ business, organization of today is market relevance.
On-going fundament at changes in the global politics, economy and emerging
competitions particularly challenges proper and adequate contemporal accounting
information for management decision making. The company itself tries to
coordinate all these challenge effectively and efficiently so as to minimize
any anticipated and unanticipated pitfalls. If a sound and effective accounting
system is applied property by the manufacturing organization, the difference
will be clear.
Improper attention to the accounting
system and handling of accounting information has given birth to the under
mentioned problems.
- Poor
planning
- Result to poor decision making
- Poor
organization and control of business activities and unsatisfactory service to
its customers.
- Poor decision making in administrative
activities of the organization
1.3 RESEARCH QUESTIONS
THE ROLE OF SOUND ACCOUNTING SYSTEM IN THE IMPROVEMENT OF ORGANIZATIONAL PERFORMANCE AND MANAGEMENT
