1.1 Background of the Study
Accounting is the language of business that can tell with reasonable accuracy the degree of success an organization has achieved in approaching its financial goal of profit. Accounting system can be defined as records, procedures, and equipment that routinely deal with the events affecting the financial performance and position of the organization, (Horngren and Foster, 1975). The accounting system entails repetitive voluminous transactions which generally fall into cash disbursement, cash receipts, purchases and sales, services including employee payroll.
Accounting information also provides financial information entailing ones business to the internal and external users, which include managers, investors and many more. These may referred to as a means to an end, with the ending being the decision that is helped by the availability of accounting information (Arneld & Hope, 2009). The making of decision, as everyone knows from personal experience is a burdensome task (Wada, 2006). In most cases indecision is as disastrous as making a wrong one, therefore a plan of action is indispensable. Management is constantly confronted with the problem of alternative decision making especially knowing that resources are alternatively scarce and limited.
Corporate planning can be defined as the process of using systematic criteria and rigorous investigation to formulate, implement and control strategy and formally document organizational expectations (Higgins and Vincze, 1993; Mintzberg, 1994; Pearce and Robinson, 1994). Corporate Planning is a process by which we can envision the future and develop the necessary procedures and operations to influence and achieve that future. As in many other fields, corporate planning professionals often cloak their work in pseudo-scientific jargon designed to glorify their work and create client dependence. In reality, corporate planning processes are neither scientific nor complex. With modest, front-end assistance and the occasional services of an outside facilitator, organizations like manufacturing companies can develop and manage an on-going and accounting and effective planning program. Corporate planning consists of a set of underlying processes that are intended to create or manipulate a situation to create a more favorable outcome for a company. This is quite different from traditional tactical planning that is more defensive based and depends on the move of competition to drive the company’s move. In business, corporate planning provides overall direction for specific units such as financial focuses, projects, human resources and marketing.
Corporate planning may be conducive to productivity improvement when there is consensus about mission and when most work procedures depend on technical or technological considerations.
It is therefore significant that good accounting information and corporate planning be made obtainable proper and accurate corporate decision making, maximization of profitability and optimal utilization of scarce resources.
Accounting information is not only necessary for assessment of the past and keeping the present on course; it is useful in planning the future of the enterprise. According to Mbanefo (1997), planning may conventionally be call budget/budgeting targets, which give meaning and direction to operations of the organization within a defined period. At the end of the budget period the external results are compared with budgeted performance and discrepancies (variance) are analyzed for purposes of 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 plans and objectives of various parts. The budget ensures that the plans and objectives of the parts are in 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 which serve as benchmarks for valuation of subsequent performance. Management uses both financial and non-financial information to make effective decisions that would help achieve the goals and objectives of the organization (Melisssa Bushman, 2007). Financial information used by management accountants include sale growth, profits, return on capital employed and market shares, non-market shares, non-financial information include customer satisfaction level, production quality, performance of competing products and customer loyalty. Decision making is however, the choosing of alternative courses of action using cognitive processes. Making decision is necessary when there is no one clear course of action to follow. Accounting systems can aid decision making by providing information relevant to the decision and to the decision makers. Accounting systems provides a check for the validity through the process of auditing and accountability (Gray et al., 2006). Effective and efficient accounting information plays a central role in management decision making.
1.2 Statement of the Problem
Generally, the use of accounting information is indispensable for decision making in any business organization. The problem however lies in the quality and validity of the information, that is, if it‘s timely, adequate and clear. According to the report of the Joint Auditor‘s First Bank Annual Report and Account (2000/2001 page 30) falsified accounting information was the reason for many failed banks in Nigeria. The major purpose of the use of accounting information is to maximize risk, failure and uncertainties and also stay ahead of competitors. Notwithstanding the immense benefit of use of accounting information, it is generally acknowledged that most unqualified accountants generate inaccurate information and so result in failure of organizations to achieve desired goal. There are cases of managers refusing the use of accounting information because of their inability to interpret such data, thereby making the organization to remain at status quo ante‘. These problems largely contribute to the failure of the use of accounting information in business with the result that inaccurate decisions are made to the detriment of the organization. It is against these backdrops that this study is being conducted
1.3 Objective of the Study
The main objective of this research study is to examine Accounting Information and corporate planning selected companies in Rivers State. However, the specific objectives of the study are to:
1. To examine whether accounting information enhance corporate planning in manufacturing companies in Rivers state.
2. To ascertained the types of accounting systems available in manufacturing companies.
3. To evaluate whether accounting information affect the performance of manufacturing companies in Rivers State
4. To ascertained the problems that hinder the utilization of accounting systems
1.4 Research Questions
The study is poised towards providing answers to the following research questions:
1. Does accounting information enhance corporate planning in manufacturing companies in River state?
2. What types of accounting systems available in manufacturing companies?
3. Does accounting information affect the performance of manufacturing companies in Rivers State?
4. What are they problems that hinder the utilization of accounting systems in manufacturing companies?
1.5 RESEARCH HYPOTHESES
H0: Accounting information does not enhance corporate planning in manufacturing companies in River state.
H1: Accounting information enhances corporate planning in manufacturing companies in River state.
H0: Accounting information does not affect the performance of manufacturing companies in Rivers State.
H1: Accounting information do affects the performance of manufacturing companies in Rivers State.
1.6 SCOPE OF THE STUDY
The study concerns with the accounting information and corporate planning have on manufacturing companies in River state with a particular reference to Explosive and Plastic Company Limited, New China Rubber & Plastic Footwear Industry Limited and Nexans Kabelmetal Nigeria Plc in Rivers state
1.7 LIMITATION OF THE STUDY
The limitation of this study was inability of management to divulge certain information which they consider sensitive and fear of publication which might be detrimental to their operation.
Also, the outright inability of some respondents to complete and return the questionnaire to the researcher is one of the limitations of the study. Another limitation to the study was traffic congestion for the researcher to meet them in their offices and for possible return of the questionnaire.
Finally, the researcher observed the non-cooperative attitude of some workers of the company to make information available.