THE ROLE OF COST ACCOUNTING IN THE NIGERIAN PUBLIC SECTOR ABSTRACT This study is motivated by a desire to empirically investigate the role of cost accounting in the Nigerian public sector. In light of the empirical review and other discussions, a number of questions arose as to whether public sector maintain a separate costing department; whether management rely on cost accounting information before making decision; if public sector operate and maintain Activity Based Costing as an aid to internal decision making; as well as to examine if Activity Based Costing system has been as effective tool to aid management decision making in the public sector. The population of this study constitutes the entire staff of the public sector in Nigeria. Questionnaire was administered to one hundred (100) staff of some selected public sector in Edo State. Data was collected and analyzed using the simple percentage, descriptive statistics and chi-square. This study revealed among other things that, management relies on cost accounting information before making decision. Recommendations where however made by the researcher. TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION Background to the Study Statement of the Research Problem Objectives of the Study Hypothesis of the Study Scope of the Study Significance of the Study Limitation of the Study CHAPTER TWO The Framework of Cost and Management Accounting Cost Concepts and Classifications Cost Statements Costing Methods Cost Systems Activity Based Costing System – A Tool to Aid Decision Making Accounting Information for Management Uses of Cost Accounting Information Decision Making: The Ultimate Act of Management Identifying Relevant Costs for Decision Making Types of Management Decisions Methods of Capital Investments Appraisal Investment Decisions and the Accountant Post Audit of Investment Decisions and Appraisal Cost Accounting Systems and Cost Accounting Techniques References CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Introduction 3.2 Research Design 3.3 Population 3.4 Sample Size 3.5 Sampling Technique 3.6 The Research Instrument 3.7 Method of Data Analysis References CHAPTER FOUR: PRESENTATION OF DATA AND ANALYSIS 4.1 Introduction 4.2 Descriptive Statistics 4.3 Test of Hypothesis CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS Introduction Summary of Findings Conclusion Recommendations Bibliography Appendix CHAPTER ONE INTRODUCTION BACKGROUND TO THE STUDY Public service organizations across the globe have been engaged in strategies of Institutional, organizational and managerial change in order to cope with increasing demands for greater financial accountability, efficiency and effectiveness. Generally, governments are implementing numerous market-based and businesslike reforms, broadly known as New Public Management (NPM), aiming at bringing the public sector in line with the private sector. NPM is used as an instrument to introduce market discipline in public bureaucracies as well as to indicate the shift in emphasis from input and process accountability towards output and results-oriented accountability. According to Christiaens et al. (2004; 2007) the governmental accounting reform has often been the first step of government reform and that is why it can be considered as an important condition and prerequisite for the success of other consequent governmental reforms under the transformation wave of NPM, such as organizational and managerial reforms. Therefore, effective and successful implementation of the accounting reform plays an important and dominant role in the implementation and success of other NPM practices and techniques within public organizations. Without an adequate and successful implementation, all the anticipated gains, the presupposed objectives and expectations of the reform will be lost due to the fact the new accounting system will not be able to provide relevant and accurate managerial and financial information to support it (Christiaens and VanPeteghem, 2007). Lucey (1993) identify cost accounting as one of the aspect of the whole subject of accounting. He also opined that cost accounting is a key part of the internal information system of an organization and is equally applicable to public sector. Cost accounting was defined by CIME Terminology as that part of management accounting which establighes budgets and standard costs and actual cost of operations, process departments or products and the analysis or variance, profitability or social use of funds. According to Harper (1995), cost accounting is that aspect of management accounting which is concerned with measuring the economic performance of departments, methods and equipment and of measuring the value of the resources consumed in producing goods and services. Cost accounting has also been defined as the art/science of determining the economic resources used in the production of goods and services. Cost accounting includes both part of management accounting and financial accounting where information is collected and analyzed. Cost accounting basically provides the following as maintained by Ogiedu (2007); (1) The cost of goods and service produces, (2) The cost of various department, sections and units, (3) The revenue earned, (4) The future costs of goods and services to be produced, (5) The comparison of actual costs with budgeted costs and (6) The information needed in order to make considerable decisions about profits and costs. STATEMENT OF THE RESEARCH PROBLEM It will be wrong to assert that cost accounting system do play an effective role in decision making process in public sector. This might be due to the fact that the accounting system could not provide adequate information needed for decision making. Weak accounting system, inexperience personnel, tools used in measuring and analyzing information could be responsible for this problem. It could also be due to the poor arrangement of the management information system or the absence of the accounting system which is seen as at the extreme case. The claim of superiority by the Line manager over the accountant who is a Staff manager could also be responsible for the type of decision arrived at. This study stands to answer the following questions; Does the public sector maintain a separate costing department/ Does management rely on cost accounting information before making decision? Does public sector operate and maintain Activity Based Costing as an aid to internal decision making? Does Activity Based Costing system been an effective tool to aid management decision making in the public sector? OBJECTIVES OF THE STUDY The objective of this study to empirically examine the role of cost accounting in the Nigeria public sector. The specific objectives are: To determine if the public sector maintain a separate costing department. To verify if management rely on cost accounting information before making decision. To find out if public sector operate and maintain Activity Based Costing as an aid to internal decision making. To examine if Activity Based Costing system has been as effective tool to aid management decision making in the public sector. HYPOTHESIS OF THE STUDY The hypothesis for this study is; Hypothesis I H0: Public sector does not maintain a separate costing department. H1: Public sector maintains a separate costing department. Hypothesis II H0: Management does not rely on cost accounting information before making decision. H1: Management relied on cost accounting information before making decision. Hypothesis III H0: Public sector does not operate and maintain Activity Based Costing as an aid to internal decision making.. H1: Public sector operate and maintain Activity Based Costing as an aid to internal decision making. Hypothesis IV H0: Activity Based Costing system has not been an effective tool to aid management decision making in the public sector. H1: Activity Based Costing system has been an effective tool to aid management decision making in the public sector. SCOPE OF THE STUDY It is well known fact around the globe that, there is no limitation to knowledge. As a result of the above fact, the scope of this research will be limited to some selected public sector in Benin City, Edo State. Temporary or in term of time series, a period of five (5) years in used i.e. 2007 to 2011 Geographically, the study will be conducted in Benin City, Edo State. SIGNIFICANCE OF THE STUDY There are several compelling reasons for undertaking this study. It will update existing body of knowledge by going a step forward in filling many of the obvious gaps in the controversy of the role cost accounting in the Nigeria public sector. It is therefore expected that the study findings will be if immense benefit to policy makers, government regulatory agencies, etc. it will also prove very useful to researchers, as well as members of the academia. Besides, the findings of this study will lay the foundation for other academia and research students (both home and abroad) to know what evidence exist in public sector concerning cost accounting. LIMITATION OF THE STUDY In the course of carryout this study, the researcher encountered some constraints such as finance and time. Financial Constraints: Finance is largely needed to tour wider regions or locations just to gather data for processing. But this was not adequately available to sufficiently meet the purpose of this study. Time Constraints: This study coincided with the first and second semester academic demands which made it enormously tasking. More time would have been devoted to critically evaluate the impact of the capital market on Nigerian economy using some basic market indicators.
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AUDIT IN THE NIGERIAN PUBLIC SECTORAUDIT IN THE NIGERIAN PUBLIC SECTOR TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION Background to the Study Statement of the Research Problem The Research Objectives The Research Hypotheses Scope of the Study Relevance and Significance of the Study Limitation of the Study References CHAPTER TWO:... More