PROPER ACCOUNTING INFORMATION AS A TOOL FOR MANAGEMENT DECISION – MAKING A CASE STUDY OF ALO ALUMINUM
The main objective of this researcher work is to find out by investigation and analysis how the services of accountants assist in the effective financial management in private and public organization.
For some time now, cases of frauds, embezzlement and inadequate of accounting system which have led many establishment to liquidation and as such became necessary that a research be undertaken to find out a permanent solutions to the problem.
In chapter one efforts were made to defined and evaluate the system of accounting and the need why knowledge of accounting is necessary to everybody be it a business man, a civil servant, even a house wife.
Chapter two reviewed some related literatures in the field of the research work.
Chapter three treated the research methodology, design, anew of study, populations of the study, sampling and sampling procedures, instrument for data collection and courses method of data analysis. In chapter four, the data collected were presented and the analysis of results given in such a way far better understanding.
Finally, in Chapter five a discussion of the findings and the implications were made. By and large, it was established that proper accounting information plays a vital role towards the effective financial management in Alo-Aluminium.
1.1 Background to the Study
Accounting information is the language of business as it is the basic tool for recording,reporting and evaluating economic events and transactions that affect business enterprises. It processes all documents of a business financial performance from payroll, cost, capital
expenditure and other obligations to sale revenue and owners‘ equity. It provides financial
information about ones business to the internal and external users, such as managers, investorsand others. It is sometimes referred to as a means to an end, with the ending being the decisionthat is helped by the availability of accounting information (Arneld & Hope, 2009). The makingof decision, as everyone knows from personal experience is a burdensome task (Wada, 2006). Inmost cases indecision is as disastrous as making a wrong one, therefore a plan of action isindispensable. Management is constantly confronted with the problem of alternative decisionmaking especially knowing that resources are alternatively scarce and limited. It is therefore pertinent that good accounting information be made available for proper and accurate decisionmaking, maximization of profitability and optimal utilization of scarce resources. Accountinginformation is not only necessary for evaluation of the past and keeping the present on course; itis useful in planning the future of the enterprise. According to Mbanefo (1997), planning mayconventionally be call budget/budgeting targets, which give meaning and direction to operationsof the organization within a defined period. At the end of the budget period the external resultsare compared with budgeted performance and discrepancies (variance) are analyzed for purposesof exposing the causes so as to prevent re-occurrence. Budgeting uncovers potential bottlenecks before they occur, coordinates the activities
of the entire organization by integrating the plansand objectives of various parts. The budget ensures that the plans and objectives of the parts arein consistency with the broad goals of the organization. It compels managers to think ahead before formalizing their planning efforts and finally provides defined goals and objectives whichserve as benchmarks for evaluation of subsequent performance.