Effects of Financial Accounting Reporting on Managerial Decision-Making
Chapter One
Objective Of The Study
The research work covers the effect of financial accounting reporting on managerial decision-making. The studies have the following objectives:
- To know whether the various ways of presenting financial accounting reporting have any effect on managerial decision-making in the company.
- To examine the attitude of management in the allocation of resources which often leads to the achievement of profit maximization objectives.
- To determine the level at which management recruits trained and professional personnel which leads to quality decision making.
CHAPTER TWO
LITERATURE REVIEW
CONCEPTUAL REVIEW
Accounting information is the key component in most, if not all, management decisions of an enterprise. Every year, business decisions worth billions of dollars are made. What is missing in most decisions is the quality component.
WHAT IS ACCOUNTING?
Mbanefo, (1997) defines accounting as a measurement and communication system to provide economic and social information about an identifiable entity to permit users to make informed judgements and decisions leading to an optimum allocation of resources and the accomplishment of the organizations objectives.
According to Fess and Niswonger, accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.
The purpose is to help people that use this information to make more informed decisions.
WHAT IS ACCOUNTING INFORMATION SYSTEM?
According to Wikipedia, AIS is a system of collecting, storing and processing financial and accounting data that are used by decision makers.
According to Lallo and Selamat (2014) and saira et al. (2010), they define AIS as a system that processes data and transactions to provide users with information they need in order to plan, control and operate businesss.
WHAT IS ACCOUNTING INFORMATION?
According to Wikipedia, Accounting information is the data that have been processed properly to give a full meaning and can be used in ongoing operations and future decision-making.
Accounting information: all quantitative and non-quantitative information that concern with the economic events that are processed and reported by information system in the financial statements that presented to external and internal users.
WHAT ARE FINANCIAL STATEMENTS?
Financial statement according to J. AOhison (1999) was defined as a written report that summarizes the financial status of an organization for a stated period of time. It includes an income statement and balance sheet or statement of the financial position describing the flow of resources, profit and loss and the distribution or retention of profit.
WHAT IS DECISION?
Decision: is the way to move your business to achieve all tasks and goals and the management must put useful factors and options, and determine their importance and priority in right way.
CHAPTER THREE
RESEARCH METHODOLOGY
This chapter describes the statistical methods used in analyzing the data obtained during the course of this study and the relevant interpretation for the statistical output, and this interpretation was used to determine the nature of relationship that exist between the dependent and independent variables. The variables considered by this study are accounting information and management decision making process. which were represented by qualitative characteristics of accounting information.
This chapter comprises of the research design, study variable, population of the study, sampling techniques, sample size, sources of data, method of data collection, study variables, method of data analysis and model specification.
RESEARCH DESIGN
A research design is a plan, structure and strategy of investigation so conceived as to obtain answers to research questions or problems (Kerlinger 1986). The research designs used for this study are survey research design and cross sectional research design. According to Sekaran & Bougie (2011) descriptive study is undertaken in order to ascertain and be able to describe the characteristics of the variable of interest in a situation. The survey research design was used because the study involved the distribution of questionnaire to some selected respondents in the companies considered by the study, while, the cross sectional design was used.
Population Of The Study
This is the set of people or entities to which findings are to be generalized. In determination of the effects of accounting information on management decision making, the study focused on the 204 employees working with Nigeria Bottling Company PLC. Details of the company selected are available under the Sample Size/Sample Technique section below;
CHAPTER FOUR
FINDINGS, PRESENTATION AND DISCUSSION
This chapter presents the analysis of answers to the questions in the questionnaires administered to the respondents. The use of table and charts will be adopted to clearly show the responses obtained in each question of the questionnaires and the research hypothesis from chapter one will be used to test hypothesis guiding the study through the use of percentages and fit of the model, Analysis of Variance (ANOVA) and Regression of Coefficients.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
INTRODUCTION
The chapter gives a summary with major findings aligned to the objectives. A conclusion on the relationship between the study variables was deduced in line with the objectives. Suggestions for recommendations and area for further studies.
SUMMARY
The study general objective was to study the effect of accounting information on decision making in Nigeria Bottling Company PLC.
The first objective was to study is to determine whether the various ways of presenting financial accounting reporting have any effect on managerial decision making in NBC PLC. Results indicated that reliability was important in determining decision making in Nigeria Bottling Company PLC. This was supported by majority of the respondents who strongly agreed that that information generated from accounting systems displayed an element of completeness, Accounting information are verifiable and this is key in the decision making process and agreed that financial information was faithfully represented.
According to correlation results, there was a strong, positive and statistically significant association between reliability and decision making. There is also a positive relationship between reliability and decision making in Nigeria Bottling Company PLC according to the regression results.
The second objective was to examine the attitude of management in the allocation of resources which often leads to achievement of profit maximization objective in Nigeria Bottling Company PLC. Results indicated that comparability was important in determining decision making in public benefit organizations in NBC PLC. This was supported by majority of the respondents who strongly agreed that Accounting periods are comparable, Accounting information make it easy for users to choose between alternatives, Users are able to compare financial reports and help users to derive meaningful conclusions, financial information made it easier for users to choose between alternatives, and that users of financial information were able to compare financial reports generated in different periods.
According to correlation results, there was a strong and positive association between the comparability and decision making and this was statistically significant. There is also existence of a positive relationship between comparability and decision making according to regression results.
Conclusions
From the study findings, it can be concluded that accounting information reliability as a characteristic on accounting information used by management in decision making in NBC PLC was verifiable, financial information was faithfully represented and had an element of completeness. It can further be concluded that accounting information in NBC PLC Enugu state was characterized by reliability and this reliability was a key predictor of decision making in NBC PLC.
It can also be concluded that accounting information comparability as a characteristic depended on whether financial statements of one accounting period are comparable to another, whether financial information made it easier for users to choose between alternatives and whether the Users of accounting information are able to compare financial reports generated in different periods. Further, accounting information in NBC PLC Enugu state had adequate comparability characteristics and this comparability was a key determinant of decision making in NBC PLC.
Recommendations
Through this study the researcher recommended the following specific task as a way of insuring that accounting information is important in management to make decisions.
- From the study findings, the researcher recommends that the management puts in measures to improve both quantitative and qualitative characteristics of financial statements so that they are easily comparable to other industries.
- All systems have to be computerized and modern speed system network should be established so that the information could reach the accounting department on time. The management should also train its workers on the accounting package for quick and efficient accounting records
- The management should ensure that all staff in the administrative and finance department is well trained. Sufficient funds should be set aside to provide for staff training in order to Increase their skills in comparing financial reports. The staff in accounting department must be a holder of any professional degree such as Advanced Diploma, Degree, Masters and Certified Public Accountant (CPA).
- Qualified and capable personnel should be employed for accounting information preparation and presentation.
- Monitoring and control actions should be enhanced in the decision making process on specific decisions according to the stipulated processes associated so that desired goals are achieved in improving the functionality and performance of the organization.
- The researcher recommends that there should be a clear methodology designed on how decisions should be undertaken in an attempt to address any concern in the organization.
REFERENCES
- Amedu, (2012). The Contribution of Financial Statement Investment Decision making, a case study in Nigeria.
- Amina Haji Nkuhi, (2015). The role of financial statements in investment decision making a case study in Tanga port authorit.
- Atrill, P. & McLaney, E., (2009). Management Accounting for Decision Makers. 6th Edition. Harlow: Pearson Education.
- Babbie Earl R., (2004). The practice of social research. 10th edition. Thomson/wadsworth.
- Collier, P., (2003). Accounting for Managers: Interpreting Accounting Information for Decision-Making. Chichester: John Wiley & Sons.
- Courtney JF, (2001). Decision-making and knowledge management in inquiring organizations: Toward a new decision-making paradigm for DSS, Decision Support Systems, 31, pp. 17–38.
- Demski J. S., (2008). Managerial Uses of Accounting Information, Springer Science-Business Media, LLC
- Drury, C. (2001). Management accounting for business decisions (2th ed). Cencgage Learning Business Press.
- Drury, C., (2000). Management & Cost Accounting, 5th edition, London: Thompson Business Press.
- Drury, C., (2008). Describes the decision-making process.
- Drury, C., (2008). Management and Cost Accounting, 7th Edition. London: Cengage Learning.
- Eierle, B., Wolfgang Sch., (2013). The role of management as a user of accounting information: implications for standard setting. Journal of Accounting and Management Information Systems, available online at ideas.repec.org/…ami/journl/v12y2013i2p155189.html.
- Emma Butterfield, (2016). Managerial Decision-making and Management Accounting Information a case study in Helsinki.
- Faith gacheru, (2015). Effect Of Financial Accounting Information Quality On Decision Making: A Survey Of Public Benefit Organizations In Nairobi County, Kenya.
- Fleming, I. McKinstry, S. (2005). Accounting for Business Management, 2nd edition, London: International Thomson Business Press.
- Gupta, (2004). Management Theory and Practice. New Delhi: Sultan Chand & Sons.
- Hafij, Jamil and Syeda (2014). what role accounting information has in making strategic decisions in industrial businesses in Bangladesh.
- IASB. (2003). International Financial Reporting Standards (IFRS) London, UK.
- Islam Mohammed Olwan, (2011). Using Accounting Information in Decision Making a case study in Gaza.
- James Anselem, (2012). The Contribution Of Financial Statements On Decision Making In An Organization: A Case Study Of Public Service Pensions Fund (Pspf) Tanzania.
- Kanani agripina, R. (2016). Impact of Accounting Information on Management Decision Making Process A Case of Sumve Hospital in Kwimba District in Mwanza Region.