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Impact of management accounting on the performance and viability of public-private partnered projects in Nigeria.

INTRODUCTION

Management accounting has been severally defined by different commentaries. In a very simplified sense, management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. In contrast to financial accounting information, management accounting information is: (a) designed and intended for use by managers within the organization, whereas financial accounting information is designed for use by shareholders and creditors; (b) usually confidential and used by management, instead of publicly reported; (c) forward-looking, instead of historical; and (d) computed by reference to the needs of managers, often using management information systems, instead of by reference to financial accounting standards. This is because of the different emphasis: management accounting information is used within an organization, typically for decision-making (Wikipedia, 2009).

According to the Chartered Institute of Management Accountants (CIMA), management accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its Resource (economics) resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities. The Certified Chartered Accountants (ACCA, 1954:3) defined management accounting as the application of accounting and statistical techniques to the specific purpose of producing and interpreting information designed to assist management. The American Institute of Certified Public Accountants (AICPA) states that management accounting as practice extends to the following three areas: (a) strategic management--advancing the role of the management accountant as a strategic partner in the organization; (b) performance management--developing the practice of business decision-making and managing the performance of the organization ; and (c) risk management--contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization (Wikipedia, 2009).

Horngren (1984:3) offered a very succinct and textural definition that sees the discipline as "the process of identification, Measurement, accumulation, analysis, preparation, interpretation, and communication of information that assists executive in fulfilling organization objectives". Two main components of this definition can be distinguished: The one is that management accounting associates with the process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating financial information that will assist management to make financial decisions. The second point relates to the main object of directing the entire activities highlighted earlier towards the attainment of organizational Objectives. In other words, any identified financial information that is measured, accumulated, analyzed, prepared, interpreted and communicated is targeted to helps management to achieve its set organizational objective. Management accounting, in order to accomplish its main purport, borrows techniques from such disciplines as financial accounting, financial management, cost accounting, and economics. With these techniques it attempts to assist management to achieve pre-determined objectives.

There are various objectives firms pursue such as profit maximization, maximization of share holders wealth, increased market share, improving liquidity position of the firm, revenue maximization, and increased earnings per share. It is however underscored by management accounting that amongst all other objectives the firm must at least seek to make the maximum level of profit to justify its existence and before it can pursue any other objective. To this effect, profit maximization, which involves either optimal revenue or minimal operating cost or both compelled management accounting into borrowing a lot from cost accounting. Nworji (1998:16) articulates these points in his rendering of management accounting as a special tool that helps management in its onerous task of decision-making on how best to run an organization to achieve its goal of optimal profitability.

If it is true that management accounting serves the above important function as highlighted in the definitions above, then the use of its tools by managers of firms in developing countries will go a long way to guaranteeing their corporate profitability. Expectedly, both private and public sector organizations and non-governmental projects would benefit immensely by the application of its tools. A major accusation leveled on Nigerian management practice is that many of our business executives, especially, the rich but uniformed may not have been applying these management accounting techniques. This inability may be accountable to supposed suboptimal operations that undermine the maximization of the wealth of the owners by many organizations.

Much work has been done in this respect on private and public sector firms. But nongovernmental projects or at best projects that are characterized by nongovernmental/governmental partnerships are far from being studied in Nigeria. Such projects/organizations would include the Imo Health and Population Project. Imo State is one of the important states of Nigeria that houses over 10 million people and this project is one of the center-pins of the State. What has not been fully determined is the extent to which decisions surrounding the activities of such organizations are powered by management accounting tools and to what effect. It is against this background that this study examines the impact of management accounting on the viability of corporate and unincorporated organizations in Nigeria, using the Imo Health and Population Project as a test case.

In order to further the above cardinal objective, we devoted the next section to explaining some relevant management accounting tools that are available for Nigerian Managers for their scientific use, where a sound bases of arguing that there is utmost need for the application of management accounting analysis in business management is provided. We also made a brief description of the Imo Health and Population Project (IHPP) Owerri, Nigeria. Thereafter in section three we described the methodology for our work. Section 4 contains the presentation and analysis of the primary data obtained from the organization with emphasis on the extent of use of the management accounting tools by the managers. Some other important questions addressed include; how does an average Nigerian business manager know about these all important techniques and how much efforts are being made to keep them a breast of the modern trends? Could it be that they know much about these great techniques, and then, how have they applied and encouraged the application of these techniques? The concluding remarks were made in the last section.

SOME THEORETICAL ISSUES

The Importance of Management Accounting in Business Decisions

If we evoke the definition of management accounting offered by Horngren (1984:3) as "the process of identification measurement, accumulation, analysis, preparation, interpretation and communication of information that assist executives in fulfilling organization objectives"; it is easy to see that the branch of accounting does not in itself provide decisions, but it helps to develop qualitative data which help managers make sound business decisions. However, to do this most effectively, it should work together as a team with the various disciplines mentioned earlier (from which management accounting borrowed) so as to produce a super report to management for sound decision making. Several attempts have been made to solve numerous management problems scientifically and otherwise in the recent past but without success, however, management accounting researchers have supplied some element or degree of orderliness and completeness by their various approaches. They emphasized problems and goals definitions, careful collection and evaluation of data, formulating and testing hypothesis, making forecasting and predictions based on hypothesis, and determining the relationship between data analyzed. In fact Horngren (1984: 3) defined the entire body of accounting as "A formal means of gathering data to aid and co-ordinate collective decisions in light of overall goals or objectives of an organization."

An effective accounting system provides information for; (i) Internal reporting to managers for use in planning an controlling routine operations, (ii) External reporting to stockholders, government and other outside parties and (iii) Internal reporting to managers for use in strategic planning, that is, the making of special decisions and formulation of overall policies and long-range plans. Whereas, financial accounting is mainly concerned with external reporting to stockholders, government, and other outside parties, as it has been traditionally oriented towards the historical standardization; management accounting, which is also called internal accounting, is basically concerned with the provision of information, which assists the management with its onerous task of control function and decision-making. The information may be in form of budgets and budgetary control, break ever analysis and profit volume ratio, standard costing, cash planning and management etc. Also, information from financial accounting to third parties, such as shareholders, creditors, government, debtors, bank etc. may be in form of profit and Loss Account and Balance sheet including the relevant notes attached thereon.

In another development, management and cost accounting work in paripasu to enable management to realize the objective of the organization. Management accounting makes full use of costing techniques such as marginal costing, standard costing, total absorption costing, budgets and budgetary control, cash flow etc. It does not under-estimate the importance of costing methods, which include batch costing, job costing, contract costing, unit costing, process costing, operation or service costing etc. It can rightly be stated that applying management accounting in our organizations involves a good working environment and team work of the financial analyst, financial accountant, cost accountant or management accountant, the marketing manager, administrative manager i.e. personnel production manager, the works engineer and other departmental heads not mentioned here but, may be present or existing in an organization. They must work together so as to produce a timely and necessary information required by top management for sound rational decision making. Therefore, the application and success of management accounting in own organization in terms of impacting the profit of the organization is more of a collective efforts of all the departmental heads of the organization, who will in turn give useful and timely instruction to the management or cost accountant, and who then supply top management with the required information that will help management formulate policies and take rational decision making. Management accounting tool when applied and employed does not only reduce the impact of uncertainty in business but it also improves the overall economic well-being of our business.

More forward looking commentaries are more emphatic in brandishing more challenging virtues of the area of accounting. Inter alia, they see management accountants as the "value-creators" amongst the accountants. They are much more interested in forward looking and taking decisions that will affect the future of the organization, than in the historical recording and compliance (scorekeeping) aspects of the profession [See Sharman (2003); Friedl, Hans-Ulrich and Burkhard (2005). Management accounting knowledge and experience can therefore be obtained from varied fields and functions within an organization, such as information management, treasury, efficiency auditing, marketing, valuation, pricing, logistics, etc. The Institute of Certified Management Accountants (ICMA), while trying to bring to light the role of management accounting in organizations explained that "a management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking. Management Accountants therefore are seen as the "value-creators" amongst the accountants. They are much more interested in forward looking and taking decisions that will affect the future of the organization, than in the historical recording and compliance (scorekeeping) aspects of the profession. Management accounting knowledge and experience can therefore be obtained from varied fields and functions within an organization, such as information management, treasury, efficiency auditing, marketing, valuation, pricing, logistics, etc. The basic aims of management accounting include: (a) Formulating strategy, (b) Planning and constructing business activities, (c) Helps in making decision, (d) Optimal use of Resource (economics), (e) Supporting financial reports preparation, and (f) Safeguarding asset. It is not yet well documented whether or not these aims and roles are served and fulfilled in public-private projects and organizations in Nigeria.

Some Tasks and Tools of Management Accounting and Limitations

Accounting literature claims that the primary tasks/ services performed by management accountants include such activities as variance analysis, rate and volume analysis, business metrics development, price modeling, product profitability, geographic vs. industry or client segment reporting, sales management scorecards, cost analysis, cost benefit analysis, cost-volume-profit analysis, life cycle cost analysis, and client profitability analysis. Others include IT transparency, capital budgeting, buy vs. lease analysis, strategic planning, strategic management advise, internal financial presentation and communication, sales and financial forecasting, annual budgeting, cost allocation, and resource allocation and utilization. The degree of complexity relative to these activities is dependent on the experience level and abilities of any one individual. The literature also lists a plethora of techniques or tools which enable management accountants to perform the above tasks. These tools include marginal costing, standard costing, total absorption costing, budgets and budgeting control, cash flow, cost-volume-profit relationship tool such as breakeven, pay back period (PBP), accounting rate of return, net present value (NPV), profitability index (PI), internal rate of return (IRR), contract costing, and service costing. The emphasis of the study is more on the tools than the tasks and services, though both were treated in such details as dictated by the objectives of the work.

In the field of business these tools are offered by management accounting to aid decisions. Some of them that require special but cursorily explanation for the purposes of our study would include total absorption costing technique, marginal costing and budget and budgetary control. Total absorption costing technique is based on the concept that all normal costs of running an enterprise should be charged in some way or other to all the cost units produced, that is, the cost units absorb the total costs. This involves charging cost unit not only with their direct costs but also in addition with a fair share of all the overheads. In recent times however, this technique has only a limited application because of changing mixture of costs. Marginal Costing Technique takes account of only direct cost and variable overheads (indirect) costs. The excess of selling price over marginal cost is termed the "contribution" towards the fixed costs and profit of the undertaking. If the contribution exceeds the fixed expenses or fixed cost, then a profit is recorded. The level of output at which the total contribution just equals the amount of fixed expenses is termed the "break even point" at which neither profit nor loss is incurred.

Budget and budgetary control are yet another set of tools of management accounting. There are several definitions of budget by various authors in the field of management accounting. However, the Institute of Cost and Management Accounting (ICMA) articulated a more comprehensive definition of budget as: "A financial and or quantitative statement prepared and approved prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given objective. It may include income, expenditure and the employment of capital". A budget expresses the plan in formal terms and helps to realize the firm's expectations. Basically, there are two types of budgets such as the short term or current year budget, which could be 1 month or six months and one year; and long term or basic budget-established for use over a longer period of time such as 2 years, 5years, or above (Horngren, 2001).

In a bid to expatiate on the potentialities of management accounting tool, its limitations should not be forgotten. Some management decision involves immeasurable factors which imply the lack of information inputs to make this tool useful in practice. Another limitation relates to the fact that many Nigerian managers lack the knowledge and appreciation of quantitative skills that are requisites to obtaining the knowledge of management accounting and its skills. This gap has to be bridged by way of manpower development and training of managers in the relevant areas. In addition, another limitation is total ignorance of the use and application of management accounting tool.

Brief Historical Background of Imo Health and Population Project Owerri

Before we go into the analysis of questionnaire, a brief history of Imo Health and Population Project is given to enable us direct our quest correctly and finally formed a concrete opinion about the organization. The Imo Health and Population Project which received the World Bank assistance to improve health care delivery in Imo State were established in 1986 by World Bank through the World Bank Loan. The 1986 was the preparatory phase of the project while the loan effectiveness was 1989. The loan amount was #25.6m to be financed thus:
World Bank                    75% of the counterpart funding
Federal Government            10% of the counterpart funding.
Imo State Government          9% of the counterpart funding
Local Government Areas        3% of the counterpart funding and finally
Local Autonomous Communities  3% of counterpart funding totaling 100%.


The project is being supervised by the Americans and other World Bank Officials, e.g. The World Bank representative in Nigeria. The World Bank established four committees on

i) Rehabilitation of health centers in Imo State

ii) Population awareness and control

iii) Finance steering committee that sees to the sources and application of fund;

iv) Information Education Communication (I.E.C.) to develop aspect of IEC that will be implemented in the project.

Each of these committees is to articulate a proposed and this is called first pre-appraisal. Later, these committees came out with a working document to fashion their work. After these, the next phase was the appraisal mission. During this period, the committees wrote to the state government for approval and the state government gave preliminary approval after which the agreement on the amount of loan to be used was reached. Later also, a delegation was sent to Washington, U.S.A. e.g. the Perm Secretary, Ministry of Health, The Director of Medical Services, Director of External Borrowing Ministry of Finance and this finally lead to the signing of the World Bank Loan. However the World Bank gave some conditions before the loan agreement was signed. The conditions are:

i) Appointment of a Project Coordinator (PC)

ii) Appointment of a Project Architect,

iii) Appointment of a Community Development Officer,

iv) Opening an Account Equivalent to N100,000.00

However, the objective of Imo State government on the project was to assist in improving the health and nutritional status of people living in Imo State. Also, the federal government objective of the project was to strengthen the capacity of the federal Ministry of the health and ensure;

i) The support of state and local governments in developing strategies and plans of action to implement national health and population policies and

ii) Prepare health and population project for internal and external financing by providing technical assistance and funding for the project preparation.

The project has the following department, the Account Department, Civil Works Administration Department, Public Health Laboratory Department, Essential Drugs (ISEDs) Department, and population control Department all with a total of about 250 staff made up of staff posted from Ministries who are on 'secondment' and project staff who are directly employed by the project. We are concentrating in Accounts Department for this research. The accounts department is headed by the financial controller who could be either a chartered accountant or a government accountant but must be of management level, and then we have the other accountants-in-charge of other charges, main accounts and internal Audit Section with an accountant as the internal auditor. The accountant in-charge of expenditure is also the cost accountant. There is financial management and accounting manual used by the project accountants for the State Health facilities prepared by Lybirands Associates. This accounting manual guides especially the cost accountant in his level of operations and functions.

Budgeting in Imo Health and Population Project

Imo Health and Population Project for instance has various forms of budgets but the financial controller is responsible for the consolidation of all the State's Essential Drugs budgets; population Council budgets all under Imo Health and Population Project and submitting them to the program managers for consideration and approval. Final approval will come from the management committee. Budget thus approved becomes a set of documents against which actual activities will be controlled. Major variations from set standards contained in the budget will be analyzed and reported along with other "management information reports." The various forms of budget in Imo Health and Population Project are as follows: pro-forma income statement, budgeted balance sheet, cash flow budget, statement of sources and application of funds budget, capital expenditure budget, sales budget, drug therapeutic class profitability budget, stock purchases budget, operational statistics budget, creditors aged analysis, budget, manpower & establishment most budget, depreciation budget, departmental and expenses budget. For budgetary control, the organization also makes use of flexible budget.

SOME PREVIOUS EMPIRICAL STUDIES

Several studies have been carried out on the impact of management accounting on aspects of organizational performance and or activities. Some of the current works would include those of Choe (2004), Abdel-Kader and Luther (2008), Chung (2009), Flinkberg and Ronnblom (2009), Lindelof and Lofsten (2006), Scott and Gvilenstedt's (2008), Al-Khadash and Feridun (2006), Handelshogskolan (2009). Smith, Morris, and Ezzamel (2005) and Perera (2004) chose to study the reverse side of our present emphasis such as the impact of organizational change and outsourcing on management accounting. No matter the approach undertaken, these works have relevance to our study and demand our careful review.

For instance Choe's (2004) study empirically examined and identified specific types of management accounting information as well as conditions of learning facilitators for effective organizational learning under high levels of advanced manufacturing technology (AMT). In this study, the interaction and communication among functions as well as job rotation and experience were considered as the facilitators of organizational learning. Against these backgrounds, this work investigated the relationship between the level of AMT and the amount of management accounting information (i.e. planning and control information and nonfinancial performance information). The empirical results showed that was a significant positive relationship between the AMT level and the amount of information produced by management accounting information systems (MAISs). Significant positive correlations among the amount of information, degree of organizational learning, and production performance were also observed. Choe (2004) also used structural equation modeling and examined causal relationships among AMT level, amount of information, learning facilitators, organizational learning, and production performance. The results led the author to infer that under a high level of AMT, to give rise to a high degree of learning and, consequently, an increase of performance through the provision of information, facilitators of learning must be well-coordinated (i.e. highly utilized), and MAISs must produce a large amount of management accounting information (i.e. planning and control information and nonfinancial performance information).

Abdel-Kader and Luther (2008) were intrigued by the existence of sustained interest in explaining why firms adopt different management accounting practices and thus applied contingency theory to investigate empirically the impact of a range of potentially contingent variables on a broad set of management accounting practices in a sample of companies selected from the UK's largest industry sector. The variables relate to external characteristics, organizational characteristics, and manufacturing or processing characteristics. The method differs from prior studies in not testing association between contingency factors and a single, or a limited number of, accounting practice(s) but in looking for relationships with aggregate levels of sophistication based on the emphasis that respondents place on 38 practices and techniques. Furthermore, the 10 contingency factors considered in this study include two constructs (product perishability and customer power) not previously explored. The results, derived from a large scale questionnaire survey, indicate that differences in management accounting sophistication are significantly explained by environmental uncertainty, customer power, decentralization, size, AMT, TQM and JIT. The data confirms that customer power should be considered as an added external variable in the contingency theory paradigm. Expectations of relationships between competitive strategy, processing system complexity and product perishability, and management accounting sophistication were not, however, supported by the data. The improved understanding of the relationships between 10 contingency factors and management accounting techniques employed contributes to the further development of an integrated contingency framework explaining variations in the investment in management accounting.

Chung's (2009) examined the impact of Management Accounting Systems on Perceived Decision-Relevant Information and Effectiveness. A major focus of the study was to examine the perceived decision-relevant information (PDRI) as an intervening variable between two kinds of management accounting systems (MAS)--broad scope and aggregation (broad scope MAS/aggregation MAS) and managerial performance. The study mainly employed the path analysis, and adopts a questionnaire survey sampling from plant managers and their subordinate in Taiwan's electronic companies listed in Taiwan Stock Exchange Market. Deriving from the 112 effective matched responses, the study revealed a positive relationship between the broad scope MAS and managerial performance, as well as between aggregation MAS and managerial performance. Also, there was a full mediating effect of PDRI between broad scope MAS and managerial performance implying that the relationship between broad scope MAS and PDRI is positive, and the relationship between PDRI and managerial performance is also positive.

Flinkberg and Ronnblom (2009) were concerned with the worry that each time management accounting is mentioned, thoughts immediately go to businesses, because most studies concerning management accounting are done on for-profit organizations to the neglect of not-for-profit ones; where on the other hand, every organization works with management accounting in one way or the other. In view of this worry, they asked the basic research question: how is management accounting used in large elite sports associations? In seeking answer to this question, the attempted to investigate how two large elite sports associations use the traditional tools of management accounting in order to achieve their goals. The study focuses on two of the largest sports associations in Sweden, IFK Goteborg and HV71 on the assumption that large associations, with large budgets, probably use management accounting to achieve their goals. Empirical data was generated by interviewing management accountants at the selected elite sports associations. The results indicated that management accounting is widely used in the studied organizations. For both associations, budget as a tool of management accounting is of great importance, and budgeting seems to have an important role. The organizations are still essentially non-profit organizations, but it does seem to be vital to provide goals and objectives, similar to the way it is done in traditional businesses.

Al-Khadash and Feridun (2006) concerned themselves with the impact of Strategic Initiatives in Management Accounting on Corporate Financial Performance drawing evidence from Amman Stock Exchange. They approached their study by investigating the link between the practice of Activity Based Costing (ABC), Just-in-Time (JIT), and Total Quality Management (TQM) as strategic initiatives and the improvement in corporate financial performance of 56 industrial shareholding companies in Jordan. Ordinary Least Squares Regression analysis was used to test the association between the awareness level of the importance of using the initiatives and the level of adopting these initiatives. It was also used to identify the improvement in return on assets (ROA) as a mean of financial performance which is associated with the initiatives. Analysis showed that 26.8% of the companies under consideration used at least one of the strategic initiatives. In addition, the awareness level of the importance of using the strategic initiatives was found to be significantly high among the financial managers, but such awareness was not reflected in the implementation of these initiatives. Furthermore, strong evidence emerged that the use of strategic initiatives led to improvement in financial performance of the companies under consideration.

Handelshogskolan's (2009) article handled the issue of whether or not the implementing of an Enterprise Resource Planning System (ERPS) have an impact on management accounting and what kind of impact does it have, if applicable. The case companies found revealed that the accounting personnel role has changed from data gatherer to data analyst and therefore also the amount of accountants had decreased in the companies. The operations, earlier on performed by the accountants, was now been automatically performed by ERPS. The managers were still making the decisions based on the reports like previously. The tables of the case companies show that most of the case companies implemented the ERPS not to improve or change accounting processes but to solve logistics problems or to integrate a new system in order to get rid off the old obsolete system. Only few of the case companies had desire to reform their business operations.

The focus of the study by Lindelof and Lofsten (2006) is on the importance of management accounting in small high-tech firms. The study uses data from a sample of 183 small New Technology-Based Firms (NTBFs) in Sweden, gathered from a postal questionnaire. Their observation was that there are a couple of environmental variables that have influenced new technology-based firms. The authors argued that, together with the strategic variables, environmental variables mainly determine the importance of management accounting practices in the firm. Contrary to the finding of previous research, which identified technology as one of the most important factors, the structural model indicated no significant relationships between innovation and development orientation, and the importance of management accounting. Rather, there appeared to be greater emphasis on dynamic hostility, price and cost hostility and aggressive competition that appear to be of particular importance to management accounting in new technology-based firms. Smith, Morris, and Ezzamel (2005) addressed their concerns to provide new empirical evidence on organizational change, outsourcing and the impact on management accounting in three types of organizations: private sector companies, the National Health Service and Local Authorities. Spearman rank correlations were applied to examine three propositions and found that: (i) change in organizational form existed and was related to an increased use of outsourcing or subcontracting; (ii) outsourcing improved organizational flexibility and/or the service of an activity, lead to cost savings, or allowed the organization to focus more clearly on its core business; and (iii) outsourcing promoted change in management accounting. These lead them to conclude that organizational change, as effected by the use of outsourcing, is related to specific changes in the organizations' management accounting systems.

Perera's (2004) paper examined the way in which management accounting practices in a government trading enterprise (GTE) changed in conjunction with the changes in the organization's goals, structure and culture when the organization was undergoing public sector reforms. Data for the study were gathered from multiple sources including semi-structured interviews and documentary analysis. The study suggested that the traditional culture of the organization and the dynamic nature of the structural changes, to a large extent, subdued the effective adaptation of management accounting practices. Scott and Gvilenstedt's (2008) study on strategic management accounting in the knowledge economy was undertaken with the purpose of gaining an understanding on how management control systems are being used in IT consultancy firms and to identify the role it plays within the strategic dimension. A case study approach was utilized, with methods based on a qualitative data generated through semi-structured interviews of 7 respondents from two IT-consultancy firms and one Management Consultant participated. The interviewees possess different positions within the two organizations ranging from top management down through the organizational levels in order to achieve a triangulation of the studied phenomenon. A framework consisting of different perspective on strategic management accounting, performance measurement in professional services, Levers of control and IT-Consultancy was built and used in order to analyze the collected data. The analysis showed that the strategizing process was, for the main part, conducted in the front line of the organization where the consultants interact with the customer on a daily basis. They concluded that given the interaction between strategizing process and management control systems, the management control system was designed in a way that allowed for a clear strategizing activity to take place not only in the lower levels of the organization, but throughout the entire organization.

A critical look at these works underscores a number of concerns: First, the studies were biased to business enterprises. Studies on the imperatives of management accounting on governmental and or not-for-profit organizations are scarcely mentioned except for a few like that of Flinkberg and Ronnblom (2009). Worst still, those that drew evidence from organizations that involve public sector and private sector partnerships such as the present study are even harder to find in empirical literature. Secondly, none of the studies reviewed above attempted to x-ray the impact of the various techniques of management on performance of public-private partnered organizations. The present study approaches the topic form this perspective in attempt to fill the void and also present to the general body of knowledge useful evidence from developing countries such as Nigeria.

METHODOLOGY

Research Design and Tools of Analysis

Apart from the desk research, the empirical dimensions of the study is designed after the quasi-experimental research procedure which is suitable for field studies in finance and business disciplines where respondents' opinion are sought and evaluated for possible inferences. The questionnaire is the active research instrument, and for this study the construction of the questionnaire, in part, followed the Likert scale of rank-observations on a four-point maximum scale. The other part relates to the acceptance/non-acceptance criterion. The study was based on a total population of 20 accountants working in the Project. The analysis of survey data was carried out, first, using simple descriptive statistical techniques involving the construction and analysis of frequency distribution tables, which we afterwards translated into mean scores and percentages, where applicable. The second set of tools of analysis involved the use of the correlation coefficient, T-test, Chi-square test and analysis. The last two helped us to test the relevant hypotheses stated hereunder.

Hypotheses Formulation

Considering the problem highlighted above and currently expressed views of many, we hypothetically express our first operational assumption that:

H0: Less than ten percent (10%) of Nigerian managers apply the management accounting tool in their organizations.

H1: More than ten percent (10%) of Nigerian managers apply the management accounting tool in their organizations.

This hypothesis will assist us generalize the acclaimed hypothesis that management accounting tool is alien to our Nigerian Managers. Our second operational assumption relates the use of management accounting tool to organizational performance and is stated thus:

H0: There is no significant relationship between the application of management accounting tools and organizational performance of public-private-venture projects in Nigeria.

H1: There is a significant relationship between the application of management accounting tools and organizational performance of public-private-venture projects in Nigeria.

ANALYSIS OF DATA AND RESULTS

Preliminary Information

Twenty project managers, currently working on the Imo Health and Population Project, Owerri, were studied using the questionnaire device. Out of the 20 questionnaire sets, all were returned and utilized for this work. The mean age of the accountants and managers studied was 38.18 years while the modal class ranged between 31 and 40 years. This suggested that a good number of the managers had less than 15 year's cognate service experience. This however is not expected to seriously undermine the result of this study in any way. For instance, all the respondents attested to their awareness and or use of Management accounting in decision making.

Awareness and Use of Management Accounting Tools

The study primed the managers studied by asking them of the frequency with which they make general decisions that has one thing or the other to do with management accounting in the operation of the Project. As can be seen on Table 1, the modal frequency was 4 to 6 times or 40% of the distribution in a given accounting period. The maximum number of times ever reached by the managers was 20, which accounted for only 10% of the managers; while the least was once. This implies that the managers do not appear to make decisions using management accounting reports as frequently as may be expected if we consider the importance of the area of accounting in decision making.

A very important research questions asked in the course of the study related to the awareness of management accounting tools on the part of managers of the Imo Health and Population Project. Table 2 reveals the responses of the managers studied. Thirteen management accounting tools were identified by respondents. Generally, the awareness level of the managers is shown to be only 47.31%, with a standard deviation of 3.25 and mean of 9.46. This implies that more than half of the distribution did not support the usually acclaimed awareness of the tools by the managers. Individually, the tools were equally ranked according to their level of awareness by the managers. Among all the identified tools, budgets and budgeting control tool was scored highest in the order of awareness with a percentage score of 75% (mean = 12.19); followed by standard costing, cash flow, and pay back period tools scoring 65% each with a mean of 10.57. Only these four tools scored higher than the observed overall mean of 9.46. Others were score below average. Accounting rate of return and internal rate of return were the least mentioned (scores = 3.25 and 4.88 respectively).

Another related question which was asked the managers was in respect the use and application of the management accounting tool by the managers in decision making. The responses as in Table 3 appear to be consistent with those relating to the question of awareness. For instance, the budget and budgeting tools which was ranked highest in terms of awareness also commanded the highest mention in the matter of use and application (mean score = 3.0). Similarly, standard costing, cash flow and pay back period tools were ranked second with a mean score of 2.6 each. Marginal costing and net present value were ranked third with mean score of 2.2 each. These were used to a moderate extent. As in Table 3, the other tools were not properly used, while the least used technique was the accounting rate of return (mean = 0.80). It does appear that we can safely affirm the there is a very high correlation (r = 0.99) between the awareness of the managers regarding the management accounting tools and their use and application of the tools. This is only true since you can only give what you have and not otherwise.

On the frequency of the application of the tools by the managers, Table 4 summarizes the responses offered by the managers. Accordingly, 55% of them have never applied the tools; 30% only applied the tools once or twice on the job. 5% of the managers applied the tools once or twice in a month, while 10% applied them once of twice in a year. These do not reflect proper use by the managers. What then can we say is responsibly for this lack of proper use by the managers in decision making?

Table 5 summarizes the responses relating to the reasons for poor frequency of application management accounting tools. As in the Table, 15% of the managers think the tools are not applicable to the job, while 40% feel they are not necessary for decision making. 5% of the managers are not aware of the tools entirely; while 15% feel the methods are difficult to apply. About 5% believe that management does not want the tools. Looking at the cross-section of reasons offered, the authors chose to lump the reasons under the umbrella of ignorance. If the knew better, they would have thought differently. A slightly different but complimentary approach was adopted to find out the impact of management accounting by asking questions on the extent the task and or services of management accounting were carried out in the organizations. The responses of the managers studied are summarized in Table 6.

From Table 6, we can easily see that the mean of means is 1.84 or percentage to expected total of 45.88%. This can be interpreted to imply that the managers were able to render about 45% of the expected management accounting tasks and services. This is not surprising since the awareness level of the managers of management accounting tools only averaged 47.31% as can be read from Table 2. On individual considerations, only ten out of the 22 tasks and services identified were ranked moderate extent and above. These, in their order of performance are annual budgeting (Mean = 3.02), cost allocation (Mean = 2.98), resource allocation and utilization (Mean = 2.71), internal financial presentation and communication (Mean = 2.38), and geographic vs. industry or client segment reporting (Mean = 2.31). Others are cost analysis (Mean = 2.30), life cycle cost analysis (Mean = 2.21), variance analysis (Mean = 2.16), cost benefit analysis (Mean = 2.13), and sales management scorecards (Mean = 2.06). The others were poorly rendered in the organizations. From the list of management accounting tasks and services, only annual budgeting was carried out to a great extent followed by cost allocations. The least mentioned services were capital budgeting (Mean = 0.84) and business metrics development (mean = 0.57).

In furtherance of the analysis, the respondents were also asked of their perception on the extent to which the application of management accounting tools affect the profitable performance and viability of their organization. The responses are depicted on Table 7. From the Table, 13% of the managers felt it contributed to a great extent, while 26.09% believed it contributed to a moderate extent. A large percentage of the managers (60.87%) said it contributed poorly to organizational performance. The entire distribution would translate to a mean score of 0.46 or a percentage to maximum expected score of 11.5%. By implication, the managers adjudged management accounting tools to contribute to performance very poorly. This is consistent with the earlier results as described above.

Hypothesis Testing

The first hypothesis stated that less than ten percent (10%) of Nigerian managers apply the management accounting tool in their organizations. Giving the parameters observed from the study i.e., mean and our standard deviation for the sample being 47.31% and 3.25% respectively, we use the T-test at 90%, 95%, and 99% levels of significance for a one tailed test at n - 1 (i.e. 13 - 1 = 12) degrees of freedom. The critical values of T at the respective levels of significance are: t .90 = 1.36; t. 95 = 1.78; and t. 99 = 2.68. Then given our hypothesis i.e. Ho; [[mu].sub.2] < [[mu].sub.i] i.e. less than 50% of Nigerian Managers apply management accounting tools in their job; and Hi: [[mu].sub.2] > 1 i.e. more than 50% of Nigerian manager apply the tool on their job; our decision rule would be: Accept Ho if tc < t.90, t. 95, or t.99 otherwise, we reject the Ho and accept the H1. [[mu].sub.1] = 50% as claimed by hypothesis while [[mu].sub.2] = 47.31% as given by our study. To compute our tc we have: (10 - .6.92)/3.25/[square root of 19] = 0.19. Therefore, since our tc = 0.19 and is less than the critical value t.99 of 2.68; t.95 of 1.78; and t.95 of 1.36, we accept it 90%, 95%, and 99% levels of significance, respectively. We thus infer that less than 10% of our Nigerian managers apply the management accounting tools on the job based on the evidence obtained from a survey of Imo Health and Population Project, Owerri.

The second hypothesis states that there is no significant relationship between the application of management accounting tools and organizational performance of public-private-venture projects in Nigeria. The data on Table 6 assists us to test this hypothesis. From the evidence, the managers believed that the use of management accounting tools contributed only 11% of the performance of the organization (mean score = 0.46 or percentage-to-maximum-expected-score of 11.5%). By implication, the managers adjudged management accounting tools to contribute to performance very poorly. This is consistent with the earlier results as described above. It is not surprising because what one is ignorant of, he cannot be in the position to fully appreciate its importance. We do not bother with the details of applying statistical test tool since the score is evidently too low to warrant further test. We simply infer that by their judgment, management accounting tools are not significantly related to the managerial performance of public-private projects in Nigeria.

CONCLUDING REMARKS

The study reveals, among others, that the managers studied do not appear to make decisions using management accounting reports as frequently as may be expected, if we consider the importance of this area of accounting in decision making. The awareness level of the managers of the Imo Health and Population Project in respect of management accounting tools is shown to be too poor to support meaningful managerial performance. Among all the identified tools, budgets and budgeting control tool was scored highest in the order of awareness followed by standard costing, cash flow, and pay back period tools. Other identified tools were score below average. Accounting rate of return and internal rate of return were the least mentioned.

In respect of the use and application of the management accounting tool by the managers in decision making, the budget and budgeting tools, which was ranked highest in terms of awareness, also commanded the highest mention in the matter of use and application; while the least used technique was the accounting rate of return. It does appear that we can safely affirm that there is a very high correlation (r = 0.99) between the awareness of the managers regarding the management accounting tools and their use and application of the tools. This is only true since you can only give what you have and not otherwise. On the frequency of the application of the tools by the managers, the evidence does not reflect proper use by the managers. What then can we say is responsibly for this lack of proper use by the managers in decision making? Looking at the cross-section of reasons offered, the authors chose to lump the cardinal reasons advanced by the managers studied under the umbrella of ignorance. If they knew better, they would have used the tools more frequently and effectively.

The extent the application of management accounting tools would affect the profitability of their organization would not be perceived differently by the managers if they were consistent in their responses; and they were. By implication, the managers adjudged management accounting tools to contribute very poorly to managerial performance. It is not surprising because what one is ignorant of, he cannot be in the position to fully appreciate its importance. Corroborating the above result is the finding on the extent of carrying out of management accounting tasks and services in the organizations studied. From the list of 22 management accounting tasks and services identified by the managers studied, only annual budgeting was carried out to a great extent followed by cost allocations. The least mentioned services were capital budgeting and business metrics development. In general, the organizations witnessed the rendering of only about 45% of the expected management accounting tasks and services. The results of the test of the first hypothesis led us to infer that less than 50% of our Nigerian managers apply the management accounting tools on the job based on the evidence obtained from the survey of Imo Health and Population Project, Owerri. From the analysis of the second hypothesis, we simply infer that, by the judgment of the managers studied, management accounting tools are not significantly related to the managerial performance of public-private projects in Nigeria. These results call for serious concern in the operation of projects in a developing country such as Nigeria.

By way of recommendation, since the major factor that impedes the use of these management accounting tools is ignorance, it is only proper to recommend that comprehensive and relevant education of management staff of these organizations be pursued vigorously. Thus, it will not be out of place if our chartered accounting bodies mount nationwide campaigns on the use and application of management accounting tools and the associated benefits in managerial decisions and performance. Seminars, workshops and other similar training programs can be organized by financial consultants for our Nigerian managers, with relevant topics in Management accounting being their main points of focus. These can be done at least twice every year to enhance their skills and update their knowledge. This will in no small measure create a high degree of awareness on the use, contributions and applications of these management accounting tools.

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Chinedu B. Ezirim

University of Port Harcourt, Nigeria

Edith A. Amuzie

Office of the Accountant General Owerri, Imo State

Emmanuel N. Emenyonu

Southern Connecticut State University, New Haven

Chinedu B. Ezirim is a Professor of Finance, University of Port Harcourt, Nigeria. He is a Member of the Academic Board of the European Business Competence License that sits in Germany and Austria. He has published several articles in International Journals and presented papers in many International Conferences.

Edith A. Amuzie is a Director in the Office of the Accountant General, Ministry of Finance, Owerri, Imo State. She is also a Doctoral candidate of the Department of Finance, University of Port Harcourt.

Emmanuel N. Emenyonu is a Professor of Accounting, Southern Connecticut State University, New Haven, CT. He is also the Chair of the Department of Accounting of the same University.
Table 1
Frequency managers make general decisions based on Management
Accounting Reports

Frequency              Respondents    %

1 to 3 times           6              20
4 to 6 times           8              40
7 to 10 times          4              20
11 to 20 times         2              10
More than 21 times     0              0
Total                  20             100

Source: Computed from Questionnaire Responses

Table 2
Awareness of Management Accounting Tools by Managers

Tools                             Aware    Exp.     Mean     A as % of
                                  (A)      Total    Score    Total

Marginal Costing                  11       20       8.94     55%
Standard Costing                  13       20       10.57    65%
Total Absorption Costing          7        20       5.69     35%
Budgets and Budgeting Control     15       20       12.19    75%
Cash Flow                         13       20       10.57    65%
Cost-Volume Profit Relationship   8        20       6.50     40%
Pay Back Period (PBP)             13       20       10.57    65%
Accounting Rate of Return         4        20       3.25     20%
Net Present Value (NPV)           11       20       8.94     55%
Profitability Index (PI)          7        20       5.69     35%
Internal Rate of Return (IRR)     6        20       4.88     30%
Contract Costing                  8        20       6.50     40%
Service Costing                   7        20       5.69     35%
Total /Mean                       123      260      9.46     47.31%
Standard Deviation                3.25              3.25

Source: Computed from Questionnaire Responses

Table 3
Extent of Use or Application of Management Accounting Tools

Tools                              Total    Expected    Mean
                                   Score    Total       Score

Marginal Costing                   242      440         2.2
Standard Costing                   286      440         2.6
Total Absorption Costing           154      440         1.4
Budgets and Budgeting Control      330      440         3.0
Cash Flow                          286      440         2.6
Cost-Volume Profit Relationship    176      440         1.6
Pay Back Period (PBP)              286      440         2.6
Accounting Rate of Return          88       440         0.8
Net Present Value (NPV)            242      440         2.2
Profitability Index (PI)           154      440         1.4
Internal Rate of Return (IRR)      132      440         1.2
Contract Costing                   176      440         1.6
Service Costing                    154      440         1.4

Source: Computed from Questionnaire Responses

Table 4
Frequency management accounting tools are applied

                                 NO           %

Never applied on the job         11           55
1 or 2 times on the job          6            30
1 or 2 times a week              0            0
1 or 2 times in a month          1            5
1 or 2 times a year              2            10
Total                            20           100%

Source: Computed from Questionnaire Responses

Table 5
Reason for not applying the Tools on the job

                                        NO           %

Not applicable to the job               3            15
Not necessary for decision making       8            40
Not aware of the tools entirely         5            25
The methods are difficult to apply      3            15
Management do not want the tools        1            5
Total                                   20           100%

Source: Computed from Questionnaire Responses

Table 6:
Extent of Carrying out Management Accounting Tasks / Services

Tasks/Services                         Total    Expected       Mean
                                       Score    Total Score    Score

Variance Analysis                      238      440            2.16
Rate & Volume Analysis                 198      440            1.8
Price Modeling                         216      440            1.96
Product Profitability                  180      440            1.64
Geographic vs. Industry or             254      440            2.31
  Client Segment Reporting
Sales Management Scorecards            227      440            2.06
Cost Analysis                          253      440            2.30
Cost Benefit Analysis                  234      440            2.13
Cost-volume-profit Analysis            123      440            1.12
Life cycle cost analysis               243      440            2.21
Client Profitability Analysis          201      440            1.83
IT cost Transparency                   125      440            1.14
Capital Budgeting                      92       440            0.84
Buy vs. Lease Analysis                 106      440            0.96
Strategic Planning                     173      440            1.57
Strategic Management Advise            196      440            1.78
Internal Financial Presentation and    262      440            2.38
  Communication
Sales and Financial Forecasting        100      440            0.91
Annual Budgeting                       332      440            3.02
Cost Allocation                        328      440            2.98
Resource Allocation and Utilization    298      440            2.71
Business Metrics Development           56       440            0.57

Source: Computed from Questionnaire Responses

Table 7
Extent Management Accounting Tools contribute to Viability and
Performance

                     Frequency    Degree    Score    %

Very Great Extent    0            4         0        00.00
Great Extent         1            3         3        13.04
Moderate Extent      3            2         6        26.09
Poor Extent          14           1         14       60.87
No Extent            2            0         0        00.00
Total                20           10        23       100.0

Source: Computed from Questionnaire Responses
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Author:Ezirim, Chinedu B.; Amuzie, Edith A.; Emenyonu, Emmanuel N.
Publication:International Journal of Business, Accounting and Finance (IJBAF)
Geographic Code:6NIGR
Date:Dec 22, 2010
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