Importance of Accounting in Business Organization


Importance of Accounting in Business Organization and information in Nigeria cannot be over emphasized and as such required this case study.

The Universally, it is well known fact that the management and control of public fund determine the success of all governmental activities and it is also at the heart of government administration hence the need for an acceptable accounting system that will comprehensively after solution to the accounting problem of the government and society.The management and control of public fund are governed by the finance (control and management) act of 1988. this was as a result of the constitutional amendment of 1957 which in settee  subsection 154A to E into section 154 which deals with the operation of the consolidated revenues fund. The principles of this act forms the base of finance act which had s slight change in the 1976 and 1989 constitution. Furthermore government accounting is regulated by section 129, 148 of the constitution laws enacted by government. In power, the fiancé (control and management act of 1958 and by decrees and acts which were promulgated into laws.

The federal ministry of finance performs the duty of management and control of public fund, which is directly the peculiar responsibility of the treasury now referred to as the office of the Accountant General. The treasury functions and duties are streamlined to asset of guide where expenditure and receipts for the year hence, no receipt or expenditure are transferred to the next accounting period.

The rules and regulation governing the accounting practices (management and control public funds) are contained in the financial regulation treasury accounting manual and treasury circulars

According to this financial regulation (FR 519) the provision stated that “Before making any payment at sub accounting office will satisfy immensely so far as he is in a position to do so that

a.    The expenditure has been authorized by warrant and the voucher correctly classified in accordance with the estimates.

b.    The information furnished on the voucher is correct in all particulars, the certificates on the voucher signed by the proper officer

c.    All proper deductions from salaries or pension accounting of contribution repayment of advances or other liabilities have been duly made.
These basic functions are services rendered by the treasury.

The treasury as a custodian of public fund is responsible for providing a retailed of all public and that federal ministry/Department being part of the treasury is also vested with same responsibility.
However, the treasury is faced with number of problems that tend to under the effectiveness of accounting system.
The following problems are therefore identified with a view to finding this solution so that credible accounting system will re-sure.

a.    Inadequate staying
b.    Inadequate method of revenue collection and control
c.    Delay in the preparation  of final account  monthly transcript
d.    Delay in the preparation of bank reconciliation statement
e.    Late remittance cash transfers
Consequently, this research work is intend to find solution to these problems that militate against the efficient and effective implementation of accounting systems in the government treasury.

Reference to the numerous problems facing the treasury in the quest to have an effective accounting system in pursuance of nations building this work is aimed at ascertaining the importance and significance of this government accounting system an identify causes of this ineffectiveness.

More so, this study is aimed at analyzing the following
a.    The role and responsibility of the accountant general office in ensuring this, an effective accounting system and proper accountability for public funds
b.    The importance of accounting principles on the government and the public in general with regards to its effectiveness.
c.    The extent of compliance with financial regularities and treasury circulars on disbursement of fund by persons or authorities entrusted with such responsibility determining the extent and damage which fraud misappropriation and embezzlement of such public fund have caused and persisted in the organization.
d.    Funding solution by not any minimizing but eliminating such bad practices completely.
e.    The cause of delay or absolute neglect in the implementation of the accounting principles, rules and regulation.
f.    Investigate to what extent under staying or inexperience and unskilled stay have contributed to poor output of the treasury.

This study covers the responsibilities and duties of federal ministry/department and implementation of the accounting principles rules and regulation for effective and efficient performance . the duties includes the compliance to the treasury requirement, the enforcement of the rules and regulation. In the financial regulation so as to always produce proper and credible account of public fund. The importance and effectiveness of this accounting system to the organization and finally the shortcoming of the accounting system on organization of any.

The greatest constraint the research has is time factor which made impossible for the researcher to carry out more study under area or division of the treasury

The following terms used in the study should be taken to mean the following
ACCOUNTING: Accounting can be defined as the recording and analysis of economic transaction and monetary terms and forecasting of future activities as part of management information system this highlighting the use of accounting in planning.
TREASURY: This is a government office that deals with a country’s public money.
FUND: This also can be seen as any amount of money set apart for some special purpose.
ORGANIZATION: Organization is a large organized group of people such as a business company.

Historical development of book – keeping and accounting could be traced to 1494 when new method or recording transformation followed this new system of Book – Keeping was developed by an Italian Monk Luca Pacido

Many scholars disciples o this Eduucationist Monk have traced and record the historical development of his innovation from their various historical and physiological background Okafor (1995:2). And from then onwards further innovations have been introduced into the accounting system. As a result to the dimension has been made or added to the book-keeping and accounting system in the needed requirement for periodic financial statement needed to know the result of business investment by the entrepreneurs and the general public.

Okafor (1993:3). At the all levels of government emphasis is economic growth. Wally all resources energy and society attention have been divided towards the training and development of government accountant who stand as the catalyst development of private or commercial accounting many economy.

That is why in Nigeria, efforts have been made in training government accounting officers in such institution such as the Administrative staff college of Nigeria (ASCON). University of Lagos and the treasury schools were established. More so, there are other private bodies like Institute of Chartered Accountant of Nigeria (ICAN) and the National Accountant  of Nigeria (NAN) being professional bodies that regulates the practice and qualification in accountancy profession in Nigeria. It is pertinent to know here that government accounting and public socio-economic units or commercial organization.

More so, private qualified practitioner had just in early part of this decade introduced the subject of government accounting into their examination curricular. And in pursuance of better accountability all levels efforts should be made to cultivate fully the necessity for adequate accounting records to be kept by government and other commercial organization.

Government has created arenas for conventional training of accounting officers that my wish or desire to work in the civil service hence Oshian (1992: 123) states “The death of text and adequate references works in the area of government accounting does not help matters and this need to be improved. Urgently.

Accounting in general sense may be regarded as a process in which transaction and event in an operating entity are recorded for the purpose of accumulating and providing financial information essential to the good conduct of the activities of such an entity Ohisani (1002:122)
Accounting has also be defined variously as a service activity, a descriptive and analytical discipline and an information system. Nwobodo Okafor (1995:1). As a service activity, it provided interested parties with both qualitative and quantitative financial information that help them to take decisions on the deployment and use of resources for business and non-business entity in an economy.

And as a descriptive and analytical discipline, it identifies mass of event and transaction of entity by providing measurement classification of data summarize these data to relatively small highly significant and inter related items that when properly assembled and reported describes the financial condition and result of operation of such an entity

Consequently, as an information system, it collects and communicates economic information about business and non-business organization to wider variety of persons and organization whose action and decision are related to the activity being communicated.

With regards to government accounting system may be defined as a system of  analyzing the financial transaction of the government into head and subhead recording of financial transaction. In the cash and rate book, classifying, summarizing, reporting and interpreting the financial system of the government

Jtos (1992), furthermore, it is necessary to state here the purpose of government accounting which is to demonstrate the details of government transaction and their conformity with established rules to give evidence of accountability for the stewardship of the government resources and to provide useful information for the good control and efficient management and control of government operations.

From the above analysis, one can easily conclude that government accounting system is quite  different from other forms of accounting such as national income accounting, commercial or private sector accounting but that not withstanding all other forms of accounting make use of the accounting tools and skills of technical book keeping. However, even though there are basic differences regarding the concept and approach in their accounting procedure. They share the same principles and practice. Furthermore government accounting system operates on cash bases opposed to the accrual basis used in the commercial accounting system .

Government accounting system is the same and followed the same procedure in every government department/ministry, parastatals, cooperation and all government owned business and this is done in accordance with laid down rules and regulation as contained in the financial regulation (FR)

The supreme legal instrument or documentary authority is the constitution of federal Republic of Nigeria which set out the general finance work, and control of public accounting. Some of these financial matters are regulated by low promulgated by most government in power from time to time when the need arises.
These laws include

a.    The federal (control and management) Act 1958 which governs the management and operation of all public funds and regulated the according format used in preparation of government account.
b.    The Audit Act 1958 which spells out the duties and power of the Auditor general.
c.    The annual appropriation Act or Decree which use the legislative act for incurring liabilities for specified purpose.
The financial regulation stands as the regulation and guide principles on accounting method, which contains a number of method and has uniformity in the recording and application of financial transaction in any government establishment which also aid in achieving efficiency and accountability of public fund.

Notwithstanding, that at times the interpretation of these rules makes the advancement of this good difficult and that is why many authors especially Oshani remarked (1992:5) have that “The civil service being a complex and large organization requires set standard in order to ensure uniformity and conformity to establishment financial regulation.

The direct implication and united consequences is that more often than not accounting officer responded for affecting, operating or interpreting the provision of the financial regulation (FR)  encounter problems of conflict when interpreting some provision of this rule and these officer are often accused of an inhuman approval  to their work for the government accounting system, to achieve its objectives, adequate attention must be paid to areas of staff development and constant review of these accounting rules as contained in the financial regulation. Give this condition the out come is certainly going to be increased productivity in the system or organization
More so, the application of these rules and regulation should be back with accounting instrument such as treasury and financial circulars and instrument such as treasury and finance circulars and instrumented such as treasury and finance circulars and instrument such as treasury and finance circular letters which are meant and used for amending the existing provision of the (FR) federal Regulation by way of introducing new policies and guidelines

Goal organizational structure does not by itself produce good performance just as a good constitution does not guarantee great president or good laws in a moral society but a poor organizational structure makes good performance impossible no matter how good are the individuals manager.
The same applies to institution arrangement just like the civil service administration where accountability is the watch word with regards to the financial regulation for proper management and the control of accounting system for efficiency.

And this can be achieved only through good internal control and proper management information the purpose here is to minimize or eradicate waste, fraud, dishonesty, embezzlement and misappropriation of public fund.
Financial control which is part of financial management has a dual pasture by nature first it has the control function which is part of the total function of system it performs and secondly, the control finction which serves each phase of the system Oshisani (1992:35)

Financial control ensure that resources are obtained economically and used efficiently and effectively in order to accomplish the desire goods in every organization. This financial accounting system is inspired by two institutions, the internal audits and the external audit

External Audit is the control system operating independently of an organization and focuses on accountability and good stewardship and to achieve this, external audit and public account committee (PAC) are the tools employed. Auditing is concerned with the examination of accounting records of all government financial operation to ensure strict compliance with the statutes, rules and regulations. Which stands to ensure that all movies approved and allocation to every service are judiciously used and applied for the purpose intended, otherwise adequate explanation are sought.

Furthermore, public accounts committee is appointed by the legislative or the federal executive council and their function is to review accounts prepared by the accountant general of the federation and also the service of Auditor General on the those account (PAC) Decree of 1987 Decree 18

On the other hand, internal Audit implies the whole control system established by the organization management in performing its functions in a proper and efficient way safeguard its assets secure as for as possible, the accuracy and reliability of its record promote operational efficiency and encourage adherence to policies Oshiani (1992: 31). It is pertinent to state here that financial control is divided into four as follows

a.    Control technique
b.    Internal check
c.    Supervision and checking
d.    Resolution of Audit queries.
These segment resolves around the accounting system to ensure that all financial transaction and events are accurately recorded in the system.

The treasury is duty bound to keep all necessary books of accounts, all records and all receipts and payment vouchers of all federal ministries/Department under its control and also reports the annual statement of accounts for the Accountant General of the federation. All accounts kept by the federal ministries are rendered to the treasury for inclusive units final account and it act as control and check measure to the accounting unit.
More so, the treasury, through its inspective division conduct regular inspection of all accounting activities of all federal ministries/Department to ensure efficiency of accounts which has to conform with the approved regulation and procedures.

Financial regulation (FR) chapter 3 deals extensively with the general procedure for collection of government revenue and this provision stated in the above chapter provides for adequate safeguard for indemnifying condition for collection of revenue, monitoring the collection and ensuring accountability for such collection (FR 311). The financial regulation (311) mandated every revenue collector to submit his cash receipt book for examination to the sub-accounting office to whom he pays to the revenue collected at such fixed internals as the officer may prescribe.
Public funds are not expected to be spent without following the laid down rules and regulation these rules are a guide against extravagant spending, embezzlement and fraud.
All payment are covered by appropriation authority and document accomplishing the payment and validity of all claims must be made for the purpose intended. Also specific directions are given for keeping the departmental vote book (DVEABOOK) and responsibility for expenditure control and other authorities for preparing voucher. The financial regulation (FR510) specifically provides for two key officers to be accountable for what they sign. These are the officers signing the certificate on the vouchers and office controlling the vote.
The sub-accounting office who is referred to have as the officer controlling the vote is equally enjoined to check the accuracy so far as he is in a position to do so before payment (FR519).
This provision states that before naming any payment a sub-accounting officer will satisfy himself so far as he is in position to do so that
a.    The expenditure has been authorized by warrant and the voucher correctly classified in accordance with the estimates.
b.    The information furnished on the voucher is correct in all particular, the certificate on the voucher completed where necessary and the voucher signed by the proper officer.
c.    All proper deduction from salaries or pension on account of contribution, repayment of advances or other liabilities have been duly made.

This is another form of control that is very important in the financial system and in these case gross – root supervision is carried out to ensure that money voted for any department for any purpose is not over spent on any subhead except the subhead it is meant for and this is done by the maintenance of the system of accounting introduced by the treasury. Efforts being made for the proper collection of the revenue and its payment with the treasury.
It is the function of the head of department to fix and control the responsibilities of the officer in charge of the key result area and also closely monitor their performances.

From the above reviews one can clearly understand how the term accounting came into existence and various opinions given by many authors and some school of thought concerning the importance of accounting and the various efforts made by the government and other private organization to ensure its effectiveness on an organization hence, we can say that accounting is the life wire of any organization.
3.0    SUMMARY

The researcher wish to present this chapter the summary of the study.

The aim of this study is to explains and analyze the procedures of government accounting so as to bring into focus, the factors and facts that make accounting an effective instrument for the efficient and effectiveness of any establishment.

From the presentation of the research question and its result one can conveniently say without prejudice that accounting is the life wire of any organization. It contributes a lot in dissemination of financial information and has a great importance in the effectiveness of any organization


From the research study the researcher found out that despite the level of efficiency recorded in the treasury the offices of the department ministries still encounter numerous problems in the course of their work. Delay in the preparation of final accounts, transcript, bank reconciliation, statement and some times the monthly returns are among the constraints that militate against the efficiency and effectiveness of activities at the treasury. This delay in returning paid “payment voucher” and the reluctance exhibition by the ministries in repaying queries.

Sometimes the late receipt of the remittance transfer of fund coupled with the late submission of the related warrants authorizing the expenditure constitute a problem in the effective performance of duties.

Another difficulty discovered is the non availability of adequate materials and equipment  this can be seen in some officers who are packed in one small office and showing one or two tables and equipment like calculators machines most of which are very obsolete now.
Based on the findings, the researcher can then make his recommendation for effective efficient application of accounting for organization effectiveness.

i.    The following recommendation are made courses and other with lower qualification are employed as accounting officers must have to be discounted.  But where this is immeritable, such person need to be adequately retrained to be able to cope with job strain

ii.    Ministries/department operating under the treasury should be enlightened to understand the need for avoiding the delay observed. The treasury must insist that any officer of the ministry who is designated to prepare the accounting document must undergo induction course at the federal treasury training school.

iii.    The researcher strongly recommend an upward review of staff remuneration as motivating factor of the staff.