IMPLICATION OF ACCOUNTING INFORMATION ON DECISION MAKING AMONG SECONDARY SCHOOL OWNERS IN ADO –EKITI
Background to the Study
One of the most important uses of Accounting Information is decision-making. Decision making has been described as a purposeful choosing form a number of alternatives cause of action (Anyanwu, 2009).
The need for a decision arises among secondary school because a manager or proprietor is faced with a problem and alternative causes of action are available, any one of them which might provide a satisfactory solution to that problem. In deciding which alternative to choose the manager will regret all the information which is relevant to the decision he wants to take.
Nsofor, (2009) agreed that accounting information provides secondary school owners with the necessary information they need. In this case, it is the accountants that provide the information with which the management uses for their decision making. This signifies that for any decision to be taken in a school or any organization, it gives the work of both the accountants and the managers. According to Imanfidon (2004), management 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 bound to affect the decision making of the management of the school adversely (Uwa, 2011).
Accounting information refers to report or relevant financial information regarding the economic activities of an organization or unit to users (Reger, 2012). Accounting information developed as far back as 4500 B.C where stewardship accounting information, they were able to plan their stock and wealth. All that was done was the keeping of records of wages, taxes, due of trade by barter and early 19th century when the Greeks and Romans developed a better ad systematic book keeping technique to the present day when machines are used in the accounting process. Accounting has since received remarkable improvement with the increase in the demand, for information in planning and decision-making result from changing environment has always brought about changes in accounting. Information made of what is accepted as accounting today would not have been recognized as such 50years ago changing social attitudes combined with development in information technology, quantitative methods and behavioral sciences has affected radically the environment in which accounting operates today.
The question now is, how will school owners know the school is embarking on a favorable decision or unfavorable one. The answer to this question is based on the management and the accounting information.
Management and accounting information have been defined by various authors, According to the committee of Technology of America Institute of certified public Accountants founded in 1961, Accounting is the act of recording, classifying and summarizing in a systematic manner and terms of money, transactions and events which have in part, a financial character and interpreting the result thereof.
According to New Encyclopedia Britannica vol.13, the purpose of accounting is to provide information about the economic affairs of an organization. This information may be used in a number of ways by the organization’s managers to help them plan and control the organization by owners and legislative or regulatory bodies to them appraise the organization’s performance and make decision as to help them decide on how much time or money to devote to the school, by government bodies to determine how much tax the school must pay.
Accounting provides information for all these purpose through the maintenance of the files of data and the preparation of various kinds of reports. Most accountant information is historical that is, the accountant observes the things that the school does, records their effect and prepares reports summarizing what has been recorded. (New Encyclopedia Britannica Vol.13).
Iwarere (2008) affirmed that most accounting data and reports are generated solely or mainly for school bursars or accountant. Preparation of these data and reports is the focus of managerial accounting which consists of three broad functions.
- Cost finding
- Budgeting planning and performance reporting
- Cost and profit analysis
These points will be explained in the next chapter. Management is the group of people in business who have over all responsibility for achieving the company’s goals of low cost, creating new and improved products, increasing the number of jobs available, improving the environment and accomplishing many other social tasks. To achieve any of these goals, of course the school must be successful.
Success and survival in a tough, competitive business environment requires that management concentrates much of its efforts on two major goals profitability and liquidity. Profitability is the ability to make enough profit to attract and hold investment capital. Liquidity means having enough funds on hand to pay depts. Or when they fail due or supposed to, (Awe, 2005).
Managers must constantly decide what to do, how to do it and whether the results match the original plans. Successful school owners consistently make the right decisions based on timely and valid information. Many of this information are based on the flow of accounting data and their analysis (Agbaje, 2006).
Management is one of the most important users of accounting information because it to provide management with relevant and useful information e.g. the managers may ask: what was the company’s net income during the past quarter? Is the return to owners adequate? According to most recent surveys, most top school owners have background in accounting and finance than in any other field. The essence of using accounting information is to enable managers or proprietors make wise decision. It is also used (accounting information) to set up system of internal control to increase efficiency and prevent fraud in the school (Olaoye, 2009).
Accounting information aids in profit planning, budgeting and cost control. In a school it is the duty of the bursar or school accountant to see that the school keeps good records, prepares proper financial regulations. accountants also need to keep up with the latest development in the use of computers and in computer systems design.
Accountants provide many special reports for management decision-making. This function requires the gathering of both historical and projected data. It is important for accountants to present the financial implication of alternative courses of action so that the best course of action can be selected. Examples of these special reports are evaluations of proposed new students, analysis of alternative plan, sites of a proposed advertising campaign, a long-term financial plan, and a recommendation that a student’s number, school fees paid are been dropped. Believed and Needles (2008). Some of the ways by which accounting information can be drawn are:
- General accounting
- Cost accounting
- Tax accounting
- Information system design
- Internal Auditing
All these points are to be discussed fully in the next chapter.
In summary, accounting information is primarily concerned with data gathering form internal and external sources analyzing, processing, interpreting and communicating the result (information) for use within the organization so that school management can make more effective plan, decisions and control operations.
According to Owojori, (2006), accounting information is used for the following information needs: Planning information, Operational control information, organizing directly and decision-making.
Statement of the Problem
The central concern of management is decision. In making a sound decision, the management needs some valuable and accurate information from the accountant. The bursars or accountant of the school is at the services of the school management by providing the school management with the necessary information which they need for decision making.
However, management acquisition and utilization of accounting information has always been faced with problems and they are;
- Provision of sometimes inaccurate, inefficient and unreliable accounting information by the management accountants.
- Management not making adequate use of the accounting information provided by the management accountant even when the information produced is on time and accurate.
- The inability of the management accountant to produce the information, timely and the information not being available at the time of decision-making.
- Inability of the secondary school owners to interpret and understand information provided by the bursars or
- Even when the managers have all the accounting information which they need, they do not always make the right decision, this is a result of management override of policies, that is, management neglecting the accounting information and going ahead to come up with any decision or policy of the choice or giving accounting its rightful place in decision- making.
The information technology requirement of the school owners used as a case study are still behind schedule, most of their operations are still done manually, this also affect the accuracy and timeliness of their report information which can thereby affect the decision-making of the school management.
Purpose of the Study
This research is aimed at examining the implication of accounting information on decision making among secondary school owners in Ado –Ekiti
The specific objectives of this study are:
- Ascertain the roles played by accurate and quantitative accounting information in decision-making of school owners
- Establish the type of decision management make based on the accounting information at their proposal
- To look into the extent to which manager (s) neglect the use of accounting information in their decision making activities.
- Make suggestions for their improvement in the provision and utilization of accounting information for efficient and effective decision-making in the school
The purpose of the study is to highlight the use of accounting information in among secondary school owners in Ado-Ekiti and to disclose the obstacles involved in the demand and supply of information which in the research question.
- Has the proper use of accounting information helped the management in making efficient and effective decision in the school?
- Is there significant implication of the use of accounting information as an aid to management decision making among secondary school owners.
Significance of the Study
Accounting information is very important in the life of any business or school organization. It is based on this information that the management will be able to make wise decisions. The accountants or bursars in the school 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 school.
Based on the information produced, the management will have the benefits of 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 school and access whether the school 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 in any management organization is inevitable. Any organization that does not make use of accounting information for their decision making is bound to be running into difficulties and might be out of business.
The Scope of the Study
The research study is limited to the implication of accounting information on decision making among secondary school owners in Ado-Ekiti. Attention will be directed to only relevant accounting information that will be useful for effective decision-making.
The accounting staff, bursars and school owners will be interviewed for the purpose of getting relevant useful accounting information for decision making, also to determine how effective to use the accounting information for their decision making. The recommendation and the conclusion will be based solely on the information gathered from the schools.
Limitation of the Study
The researcher is limited to school owners, school bursars and accountant. The use of journals was used in gathering facts and information.
The limitation encountered was in the area of gaining access to the school, but adequate information was given by staff of the schools through the use of questionnaire.
There was other constraint such financial constriat and staff not willing to give information
Definition of Terms
Decision Making: This is a process of choosing specific cause of action form 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 is the act of recording classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results 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 of people in a business who have overall responsibility for achieving the company’s goals.
Planning: The use of information supplied by accountants in making decision by which management formulate objectives ad chooses a pattern of action I order to achieve those objectives for future business of the firm.
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 budget and actual data.
Cost Decision: This is the application of accounting and cost 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 line of actions which are often irrevocable.
Organization: In organizing the managers decide how best to put together the organizations human and other resources in other to carryout establishment.
Information System: This is a system used to collect, record, store and process information for decision makers. Like, forms, records, flow charts, manuals, control and reports.
REVIEW OF RELATED LITERATURE
The purpose of this review is to understand the implication of accounting information on decision making among secondary school owners in Ado –Ekiti. The review of related literature will be discussed under the following sub-heading:
- The Concept of Accounting Information System
- Uses and Users of Accounting Information
- Nature of Accounting Information
- Source of Accounting Information
- Importance of Accounting Information
- Accounting Information System In Secondary School
- Characteristics of Accounting Information
- Problems Encountered By Secondary School owners in the use of their Accounting Information System
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