THE ROLE OF ACCOUNTING IN NATIONAL DEVELOPMENT A FOCUS ON A DEVELOPING ECONOMY SUCH AS NIGERIA

CHAPTER ONE

1.1  BACKGROUND OF THE STUDY.

The basic economic problem that confronts an underdeveloped or a developing  country and especially the newly independent ones is how to attain within a relatively short period, a notable increase in the rate of economic growth which is envisaged will bring it to the level of perpetual real income comparable to those of more admired economics of the world. In order to attain this oval, the country would have to ;

1. provide those basic government services especially in education, public health, and transport. These services will serve as fertile soil to advancing the nation’s economy.

2. Stimulate a higher rate of capital formation in production facilities either in government or private sectors. The first accomplishment requires transportation on needed factors or resources to the governmental; sector of the economy for the production of those services or facilities required by the entire populace. The second accomplishment required the transfer of resources to capital formation either strictly in the private sector or through the governmental sector.

These resources may come from

a.  outside the control

b.  present use for consumption

c. present use in the production of the capital or types regarded as not contributing to economic growth.

d. Idle or partially idle resources primarily manpower. The above four sources of varying opportunity growth and it actually does it only by transfer existing resources to the appropriate quarter and profitable application of these to production attains within that relatively short period a level of standard of living comparable to those of other more advanced countries of the world. Accounting comes in as a tool that measures the profitability/viability of a project with an economic system. Glanlier (1976) defines accounting as the systematic collection, summarization, and analysis and reporting of data in a form suitable and under stable to prospective users. Generally, it involves some other related disciplines as budgetary control taxation, cost and management accounting, financial management, auditing, and quantitative techniques. Since development project entails projection into the future, it is essential that public officers ; and employees in the private sector appreciate the need a transaction and necessary statistics as to enable the proper ; evaluation of past. Records with what obtains presently in order to reasonably project into the future.
Some of the practical ways in which accounting can be and is known to have been used not only for decision making but also important to achieve desired results include.

1.   Economic planning

2.   Capital formation

3.   Accountability

4.   Taxation

5.   Accounting for social purposes.

Accounting records provide information that may be used within the business and which may be relied on by businessmen while making an investment decision.  The problem with most potential investors in the developing nations is they are mostly illiterates and therefore required the services of an accountant and financial analyst to help access possible areas of investment. Budget implementation is another vital area where accounting knowledge is essential. Most budgets are stated in accounting formula and their implementation will require that knowledge that will enable officials to read the budget as it affects their sector and even reflects on how other sectoral outlay may affect them.  It is due to the perennial lags in our civil service that the researcher decided to carry out an investigation into what is likely lags in the wheel program or growth of the civil service and thereby the nation.  The private sector employees are also caught in these lapses but however, there seems to be more commitment on their part due to obvious reasons of ownership and direct supervision by entrepreneurs.  The proper functioning of the financial system of a company determines to a good extent the viability of her economic structure.  That is why the researcher decided to show sets of accounts viz (profit and loss acco9unt and value-added statement) from unpetrol Nigeria PLC Annual Report and Account 1999. These financial statements help users of such statements ascertain the viability of the company and it is prepared by Chartered Accountant.

1.2  PURPOSE OF THE STUDY

-The purpose of this project is aimed at identifying.

-The role of an accountant in planning

– The role of an accountant in government accounting.

– The role of an accountant in controlling public expenditure.

– The duties of an accountant in management and control of public concerns.

1.3  SIGNIFICANCE OF THE STUDY

The study which is an attempt to diagnose  the accounting system in a developing economy is of immense importance to; Future Researchers/The Researcher;

This will serve as a secondary data to future researchers who intend to carry on research on accounting role in Nation Development.  It will also help students in the school of financial studies in having an in-depth knowledge of control accounting. It will enable the researcher to know more about the role of an accountant in government accounting and where there are lapsed or breakdown in management and control of public concerns, appropriate suggestions are made to the management.

1.4 STATEMENT OF THE PROBLEM.

The problem of this research as contained in the introduction is whether the accountant has a major role to play in national development.

 

1.5  Hypothesis formulation.

For the purpose of direction and  charity of issues raised in this study, the hypothesis formulated are;

a. The accountant has a major role to play in national development

b. The accountant has no major role to play in national development.

1.6 SCOPE AND LIMITATIONS OF THE STUDY.

This project will cover some vital aspects of an accountant’s role in government accounting and control of public expenditure analysis and interpretations of financial statements, budgetary control, management and control of public concerns in developing the economy.  It will also show a company’s financial statement prepared by an accountant.  In carrying out this research, some obvious limiting factors are encountered. There are reviewed below.

-Time fact; The time available to carry out this research and compiling of its report is rather very short.  In fact, one has to attend lectures as well as face the research work thereby, the attention required for this work had to be impaired.

-The attitude of the people; The uncooperative attitude of the people interviewed was very demoralizing.

-Most of the people were unwilling to give out necessary answers for the effective completion of this work because of fear of victimization.

1.7 Definition of terms.

Accounting; the American accounting association committee define accounting as ‘ The process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information.

PRIVATE COMPANY; J. C. Odike in managerial economics for Nigerian Polytechnics II(2200) is a limited liability company owned by a minimum of 2 shareholders and previously a maximum of 50 persons but now in Nigeria, a maximum of 100. The inabilities of shareholders are limited to just their shares in the company (paid up and unpaid) if the business goes bankrupt.

BUDGET; A budget according to the chartered institute of accountants is ‘ a plan quantified in monetary term, prepared and approved prior to a defined period of time, usually showing planned to inform to be generated and or expenditure to be incurred during that period and the capital to be employed to attain a given objective’

INTERNAL CONTROL; According to Horngren (1982), INTERNAL control is the set of accounting and administrative controls and practices that helps ensure that approved and appropriate decisions are made in an organization.

PUBLIC COMPANY J. C. ODIKE in managerial economics for Nigerian polytechnics II (200) is a limited liability corporate body with the previous minimum of shareholders but now in Nigeria a minimum of 2 since the 1990 companies and Allied matters Decree (CAMD) there is no minimum of shareholders.

BUDGETARY CONTROL;  According to Haper  (1974), budgetary control can be defined as the establishment of the budget relating the responsibilities of executives to the requirements of a policy, and continuous comparison of actual with budgeted.

 

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