THE EFFECTIVENESS AND USES OF ACCOUNTING INFORMATION FOR DECISION MAKING IN PUBLIC SECTOR ORGANIZATION

1.1 Introduction

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.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.

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1.2 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. Management is frequently faced with the problems of making alternative decisions faced with fact that resources are relatively scarce and limited compared to human wants. management does not only seek to ascertain cost at various stages in the process of providing a product or services, but also to make proper and accurate decisions at all levels on the modern organization. This process is facilitated by utilization of adequate and accurate accounting information policies.

Chris M. Madu (1999) without doubt decision making is one of the highest forms of human and hence management activity. The development of a business and the activity of its potentials very much depend on the existence of entrepreneurs with the present skills, capital and professional advice. These include accurate accounting information provided by accountants and their planning and other decision process. Despite the provision and utilization of accounting information, managers found it difficult to plan accurately. Consequently, results have on most cases been away from decision barget. This can be attributed to inadequate and inappropriate use of 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. 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 et al 1994; woutersen 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 importance 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.

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Effectiveness and Uses of Accounting Information for Decision Making in Public Sector Organization.

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1.3 Statement of Problems

Investigation reveals the problems of the Effectiveness and Uses of Accounting Information for Decision Making in Public Sector Organization research work which entails that;

1. The ability of mangers to interpret accurate accounting data made available to them may less to a deviation from the form’s normal course of goal attainment.
2. The level off qualification of the accounting staff if not adequate will pose a serious problem on the quality of accounting information supplies as it may likely be inadequate.
3. Lack of job experience may also affect the quality of information passed into management to ensure it work affectively.
4. The poor and improper utilization accounting information, there may be difficult in acquiring relevant accounting information needed by the management of a form for decision making needs on the other hand, if this information is gotten, it may not be properly utilized for the purpose for which it was acquired.
5. The new and improved technology on large scale, forms without the complimentary expertise in its operations are likely to reduce the usefulness of the accounting information supplied.

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1.4 Aim and Objectives of Study

The aim of the study is to scrutinize the Effectiveness and Uses of Accounting Information for Decision Making in Public Sector Organization. In achieving this aim, the following specific objectives were laid out as follows:

1. To identify how accounting information controls Fraud, mismanagement and irregularities.
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.

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1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• 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?

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1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: Accounting information does not control fraud, mismanagement and irregularities.
• H1: Accounting information controls fraud, mismanagement and irregularities.

Hypothesis Two

• H0: Accounting information is not effective in decision making in public sector organizations.
• H1: Accounting information is effective in decision making in public sector organizations.

Hypothesis Three

• H0: There is no relationship between the neglect of accounting information and decision making in public sector organizations
• H1: There is relationship between the neglect of accounting information and decision making in public sector organization.

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1.7 Significance of 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.

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1.8 Scope of Study

The study focuses on the Effectiveness and Uses of Accounting Information for Decision Making in Public Sector Organization in Nigeria.

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1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research material: availability of research material is a major setback to the scope of the study.
3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

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1.10 Definition of Terms

1. Planning: The use of information by accountants in making decisions by which management formulates objectives and choose a pattern of action in order to objectives for the future business of the firm.
2. Controlling and Co-Ordinating: A process of ensuring that the causes of actions are maintained and that the desired aims are achieved. This is done, through the use of budget and actual data.
3. Costing Decision: This is the application of accounting and costing principles, method and techniques in the ascertainment of cost analysis of experiences or with standard.