CHAPTER ONE
INTRODUCTION
Accounting we know, deal with collecting, analyzing and communicating financial information. The primary purpose of accounting is to assist people who make use this information in making reasonable, updated and well-informed decisions. If the financial information that is conveyed by the users is not reliable and capable of enhancing the quality of decisions made, there would be no point in producing it.
In other to make this information useful, the accountant must be clear for whom the information is being prepared and for what reason the information will be implemented.
The uninterrupted success and improvement in technology has made visible the possibility of originating, generating and using accounting information to tacklethe high level of complicacies in this new era where everyone has a strong desire to win or become better than others of the same kind. An accounting information system (AIS) is one of the most productive decision making tools in dealing with complicacies and the unknown. It is therefore a vital tool of management which provides a systematic and chronological method of collecting and organizing information about the diverse business transactions such that it may be used to assist the management in operating and moving the business forward. Accounting Information System is thereforea significant factor to all profit and non-profit organizations. Accounting information can also be used to transform different business dimensions into a common financial dimension. Accounting information uses officialcategories for gathering and reporting information that brings to existence a common language with which members of the organization can interact and communicate. Generally, accounting system of any organization accounts for the provision ofwell-informed, updated and qualitative information to aid the management in their decision making process. The success or failure of every business lies largely on the quality of decision made by management, and quality of decision made largely depends on the availability of up-to-date and reliable data concerning the business.
Almost all business organizations in Nigeria either profit driven or non-profit driven, engage in decision making on a daily basis in order to keep the organization up to the required standard with recent developments in the business environment they operate. Accounting system provides essential financial information that heightens and improves the quality of decision made by non-profit organizations. For this reason, we can securely conclude that Accounting System is not an end in itself but a route to an end i.e. decision making to fosters corporate performance and financial structure. Business organizations, both profit oriented or are no longer required to make a profit, survive and provide a fair return to investors' on their interest. Meyer (2007) opined that, modern business organizations find itself in the atmosphere of global uncertainties, cut-throat competition locally and internationally and unprecedented change in the economy. For this reason, a great demand is most times placed on the managers of these organizations to make practical and informed decisions if the organization is to move forward and succeed. Howbeit, the qualitative decisions taken by the managementan organization rests upon the importance and accuracy of information made available by accounting systems. An accounting system is one of the most effective, productive decision-making tools of management because it provides a systematic method of gathering and organizing information about the diverse business transactions so that it may be used to foster management in operating the business and moving it forward. Accounting information also help managers understand their tasks more vividly and reduce uncertainty before making any decision. Accounting system produces up-to-date and comprehensible accounting information which are valuable beyond estimation, especially for decision making. In recent times, accounting information system has moved towards becoming systems of information that does not stop at limits of data and financial information, but also it include data and descriptive and quantitative information which is useful in decision making for users distinct with plurality and diversity. For this reason, the role of Accounting Information System on non-profit organizations in Nigeria for effective decision making cannot be over emphasized.
Currently, most non-profit organizations continue to increase spending as a result their budgets continue to rise disproportionately when compared to their income. Moreover, economic conditions and competition create pressures about costs of information. Generally, information system is developed using information technology to aid an individual in performing their job. Therefore, most non-profit organizations focus on developing information system in order to support decision system, communication, knowledge management, as well as many others. The key part of information system needed for financial performance in organization is accounting information.
Moreso, the world and human life has been transformed from information age to a knowledge age (Curtis, 2004), and knowledge has been recognised as the most valuable asset. In fact, knowledge is not impersonal like money and does not reside in a book, a data bank or a software program (Choe, 2002). Choe believed that knowledge is always embodied in a person, taught and learned by a person, used or misused by a person. Accounting information is an unbiased tool for an effective administration and management in achieving organizational performance for both profit and non-profit organisations. Poor accounting information jeopardizes financial effectiveness. The consequence of this has been the current distressed syndrome that most Nigerian companies are facing. Huber (1999) stressed that companies must learn to manage their intellectual assets (i.e. knowledge) in order to survive and compete in the ‘knowledge society’. Indeed, knowledge management is concerned with the exploitation and development of the knowledge assets.
However, there is uncertainty in predicting how growing need for accounting information system will change the productivity and performance of the organization since the Accounting information system provides a base to an organization, to deal with its vendors, customers and employees. The fact that the most Businesses has not incorporated the use of better accounting information systems in their day to day transactions, a number of issues need to be addressed. As accounting gives business information in terms of transactions and in monetary terms.
Based on the fact that the financial accounting is one of the social sciences which aim to serve various needs of the private and public business facilities, it is affected by the changes of the general economic, social, legal and political and political conditions prevailing in each country or certain environment at each period. The accounting information system is resulted by certain requirements which change due to various environmental factors within the economic, social, legal and political environments in which the accountancy works.
It is on these premises that the study wishes to examine the impact of quality of accounting information on financial performance non-profit organization.
The main objective of the study is to examine the impact of accounting information on the financial performance of non-profit organizations. Other specific objectives of the study include;
H0: There are no significant relationship between accounting information and the financial performance of non-profit organization.
H1: There are no significant relationship between accounting information and the financial performance of non-profit organization.
H0: There is no significant relationship between accounting information systems and the organizational performance.
H1: There is significant relationship between accounting information systems and the organizational performance.
The study would be of immense importance to business managers and captains of industries and non-profit organizations as it would reveal the effect of accounting information on the financial performance and productivity of business organizations. The study would also be beneficial to students, researchers and scholars who are interested in carrying out further study on the effect of accounting information system on business organizations.
The study is restricted to the impact of accounting information on the financial performance of non-profit organizations in Nigeria.
Limitation of the study
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.8 Definition of terms
Accountant: An accountant is any person who possesses a professional license to practice accountancy from a recognized professional body and has legal capacity and authority to carry out the duties of accountants in taxation and audit practice.
Financial statement
A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. It also provide information regarding the position and performance of a business, such as its assets, liabilities, equity, income, expenses and cash flow.
Accounting Information Systems
Accounting Information Systems (AIS) are a tool which, when incorporated into the field of Information and Technology systems, are designed to help in the management and control of topics related to organization’ economic-financial area. But the stunning advance in technology has opened up the possibility of generating and using accounting information from a strategic viewpoint (El Louadi, 1998).
Accounting
Accounting is defined as the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information.
Profitability
Profitability is referred to as the ability to make profits progressively over a long period of time. Profits itself has different meaning to the different people.. Profit is also sometimes taken as return accruing to shareholders.
Financial performance
Financial performancewas succinctly defined by Daft (2006) as “the degree to which an organization realized its goals”. However, Mondy, (2000) defined it aptly as “the degree to which an organization produce the intended output”.
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