THE EXTENT OF RELIANCE ON FINANCIAL ACCOUNTING INFORMATION FOR EFFECTIVE BUSINESS AND FINANCIAL DECISION IN CORPORATE ORGANIZATION

1.1 Introduction

The reliance of financial 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. Accountants are responsible for preparing financial accounting information. Some of these accountants exercise their profession as the employees of Commercial Industrial and public practice of accountancy. The financial accounting Information prepared by accountants are of quantitative nature because it is usually expressed in monetary terms, through non monetary information are also often contained in accounting reports.

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, Limitation of the study and Definition of terms.

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1.2 Background of Study

Financial accounting information therefore, is the information derived from the financial accounting report. The essence of this information is for management and other users to make decisions. Therefore, the accuracy of decision making depends on the effective and efficient design of management information system. The accounting concerned prepares the financial accounting information in such a way that will enable users to derive maximum information for their use.

Decision making itself can be described as the art or science of choosing among possible managerial actions, the art or science of decision making enable management of a business to choose from among a range of already analyzed and evaluated alternative. Two classes of decision makers can be identified in respect of the use of financial accounting information. These are the external users and the internal users. Management represents and the internal users include creditors, shareholders, government agencies, trade unions e.t.c. Managers are the major users of financial accounting information need this information to plan.

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.

The various diversities of business information help the business organization in different ways. Information from external to internal for example: from customers to the firm helps the firm to increase or decrease its productions, how and when to render certain services to its customers. Information from internal to external help potential customers to know the existence of such a business organization and also to advocate their income towards the product (goods and services) of such business organization also in an organization like a limited liability company, information on financial position is made available to the public, thus can motivate potential inventors to invest into such a company if such financial statement create a positive impact on the potential customers, this can also retain other investor in the organization. Government also uses the financial statement of an organization to allocate resources available into such organization and also rate such organization appropriately in terms of taxation.

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to determine the Extent of Reliance on Financial Accounting Information for Effective Business and Financial Decision in Corporate Organization.

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1.3 Statement of Problems

Investigation revealed that most corporate organizations may have sound accounting system which enable them not only in their decision making but also in monitoring operating expenses rules on the information content of the financial statement is quite uncertain because they may be managing the business Intuitively.

Financial accounting information involves technicalities such as quantitative analysis, adequate recording reporting etc. Some organization may unknowingly employ Incompetent and unskilled manpower and as such the financial accounting information prepared may not show a true and fair view of the financial strength, profitability and future prospects of the organization.

Some organizations have to realize that accounting information is the only medium through which both the management and external users get a clear picture of an organization. They fail to realized, appreciate an accountants analysis in respect of the accounting information generated, this often leads to poor management decisions which will have negative effects on the performance of organization.

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1.4 Aim and Objectives of Study

The aim of the study is to determine the Extent of Reliance on Financial Accounting Information for Effective Business and Financial Decision in Corporate Organization. In achieving this aim, the following specific objectives were laid out as follows:

1. To ascertain whether there is a direct relationship between financial accounting information and the decision make in the bank;
2. To identify the factors which may constrain or promote the effective use of financial accounting information;
3. To analyze the impact of and roles of financial accounting in Access Bank Plc; and
4. To ascertain whether there is a nexus between the performance of First Bank of Nigerian and effective use of financial accounting information.

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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:

• Are there factors which may constrain or promote the effective use of financial accounting information?
• Is there direct relationship between the performance of First Bank of Nigerian and effective use of financial accounting information?
• Is there any nexus between financial accounting information and the decision make in the bank?
• How reliable is the level of information in financial statement?
• What is the impact of and roles of financial accounting in Access Bank Plc?

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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: Financial accounting information has not contributed to effective decision making in the bank
• H1: Financial accounting information has contributed to effective decision making in Access Bank Plc

Hypothesis Two

• H0: The information content of annual statement in the bank is not effective
• H1: The information content of annual financial Statement of the bank is effective

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1.7 Significance of Study

Business organization exists to provide goods and services and in return provide rewards to its Owners. These two needs are linked to each other in the sense that profitable organizations are those that normally receives more resources from their customers in exchange of goods and services.

Some business organizations are non-profit oriented. However, Irrespective of the types of organization therefore always have accounting information regarding the value / normally in monetary terms, of the resources used in generating the required product and / or services used in generating the required product and / or services on the one hand and on the other, a fairly accurate measurement of income or profit or value of benefits earned from the disposal of their products and or services.

The study provide insight into the nature and roles of financial accounting information, as well as management needs for accounting information which may be said to resolve around the purpose of planning and controlling the affairs of an organisation making policy decisions and making choices among a number alternative options under circumstance which may be unexpected.

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

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1.8 Scope of Study

The scope of the research is focused on the Extent of Reliance on Financial Accounting Information for Effective Business and Financial Decision in Corporate Organization using Access Bank Plc as a case study.

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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. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this research work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. 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).
4. Lack of Initial Cooperation from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.

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1.10 Definition of Terms

Financial Accounting:

Financial accounting is concerned with the recording of transactions for a business enterprise or other economic units and the periodic preparation of various reports from such records.

Information:

These can be said to be facts needed or received by a person, or group of persons which is or will be useful to them.

Management:

Management can be defined as the rational selection of courses of action to optimize the inter-relationship of a material and money for the survival and growth of the organization. It can also be regarded as the process of getting things done through people.

Business Information:

It entails facts or details about the activities of an organization.

Business Organization:

It is a firm or company engaging in activities of making, buying, selling or supplying goods and services for money and to make profit.

Decision Making:

It is the choice or judgment that an organization makes or the process of choosing an option or options from many alternatives.