Accounting Information And Monetary Policy Development In Nigeria

Project and Seminar Material for Accountancy / Accounting

Accounting Information And Monetary Policy Development In Nigeria


Abstract


This study is on the accounting information and monetary policy development in Nigeria. The total population for the study is 200 staff of CBN, Rivers state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, accountants, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Chapter One


Introduction

1 1.Background of the Study

Monetary policy deals with the discretionary control of money supply by the monetary authorities in order to achieve the desired economic goals. However, there are two views on the efficiency of monetary policy, and these are the Monetarist and Keynesian view. The Keynesian view is that monetary policy should be directed towards interest rates rather than money supply and that the monetary policy should be subsidiary to fiscal policy (Cole, 2007).

Whiles the Monetarist also recommends that the control of money supply should be the main concern of the money authorities. But it should be noted that monetary policy has a central role in macroeconomic management primarily because of the close relationship between the monetary aggregate and economic activity (Milton Friedman 2007).For both developing and developed countries, small and medium scale firms play important roles in the process of industrialization and economic growth. Apart from increasing per capita income and output, Small Medium businesses create employment opportunities, enhance regional economic balance through industrial dispersal and generally promote effective resource utilization considered critical to engineering economic development and growth. However, the seminal role played by Small Medium businesses notwithstanding its development is everywhere constrained by inadequate funding and poor management.

In this dynamic world, the role of Banks, whether in a developed or developing economy consists of financial intermediation, provision of an efficient payment system and serving as conduit for the implementation of monetary policies, it has been postulated that if these functions are efficiently carried out, the economy would be able to mobilize meaningful level of savings and channel these funds in an efficient and effective manner to ensure that no viable project is frustrated due to lack of funds. The role of banks in economic development has been richly articulated in literatures. Pioneer contribution of Schumpeter was of the view that financial institutions are necessary conditions for economic development. Valentine and Mason (1997:1), in the bid to throw more light on how the banking sector exhibit or justify their strength of necessity and importance, said that it is an established fact that banking consists of three basic functions namely; the acceptance of deposits from customers, the transfer of these deposits from one account to another and the lending of money by way of loan or overdraft to customers. By this daily deposits accepted are credited and money withdrawn is debited.

An efficient manual accounting system has been in use before the use of computer came into place. Customers deposit money with banks either with the use of cheque or passbooks (for the operators of the current and savings account respectively). Account operators issue cheques to people, instructing the bank to pay a named person a specific sum of money on their behalf. When the branch of each bank receives the cheque, they had to authorize payment of the amount and also debit the customers account. This arrangement was satisfactory when the daily number of cheques and their users were relatively very small. The system began to break down when a larger number of people started making use of the banking services. This made the manual system of keeping customers account an increasingly difficult and expensive task. The above development prompted the use of computer to overcome the above problems. The use of computer is still very new in our society; the computer technology emerged in the late 1940’s in the advanced countries of America and Europe and was introduced into Nigeria in the 1970’s by the multinational corporations like UAC, NCR, etc. while the banks embraced it in the early 80’s. Banking industry has in the past suffered a great number of loses through fraud such that a lot of them now face serious financial problem/hardship and eventually were forced to fold up. The industrial and commercial Banks (1947-1952) are typical examples of banks that failed as a result of Fraud.


1.2 Statement of Problem

There are some problems that rose from the fusion of accounting information and Monetary Policy Development fields in accountants’ point of view; one of these problems is that computerized systems are at constant risk of hackers, power failures, Money not deposited with Banks, Foreign Banks, Large Non-monetized Sector, High Liquidity, viruses, loss of information, Undeveloped Money and Capital Markets, Small Bank Money and Money not deposited with Banks.

Another issue is the relatively high cost of Accounting Information Expert systems, besides, these systems must be up to date, and usually, the firm’s staff needs some sort of special training courses for effective use of the system.
There are also some security issues that are mainly summarized with computer fraud risk. Some pointed out that sometimes human error might not be identified as quickly, hence there must be some sort if validation for records input need for accuracy. Sometimes there might be some difficulties in understanding accounting information systems’ expert systems, and there must be some specified adaption or set up for the business so it does not cause chaos to the accounts.


1.3 purpose of the Study

The main aim of the study is to examine the role accounting information systems have played in the development of monetary policies in Nigeria. Specific objectives of the study are:

  1. To examine the role of accounting information system in the development of monetary policies in Nigeria.
  2. To find out challenges associated with the use of accounting information systems in the development of monetary policies in Nigeria.
  3. To proffer solutions to identified challenges (if any) from the study.

1.5 Research Hypothesis

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0: There is no significant relationship Between Accounting information systems and monetary policy development in Nigeria.

H1: There is significant relationship Between Accounting information systems and monetary policy development in Nigeria.

H02: There are no challenges associated with the use of accounting information systems in the development of monetary policies in Nigeria.

H2: There are challenges associated with the use of accounting information systems in the development of monetary policies in Nigeria.


1.5 Significance of the Study

This study would enable the researcher to pass their experience on the subject matter i.e. the problems and prospects of computerized accounting system in Nigeria banks to the concerned organization i.e. CBN so as to enable them be more conversant with any problem that might be identified as a result of the use of the computerized accounting system. The findings of this research work will also serve as reference for academic endeavour to lecturers and students and also help customers of banks who would want to know about some advantages and disadvantages (if any) of the use of the computerized accounting system. This study focuses on identifying the benefits that accurse to Nigeria banks as a result of the use of the computerized accounting system. It also tries to figure out any problem associated with the use of this system. Considering the time frame within which this work is to be completed and other factors; the researcher has decided to limit is work on the CBN Rivers State.


1.6 Scope and Limitation of the Study

The general scope of this study covers Accounting Information and Monetary policy development in Nigeria. The geographical scope is Rivers State of Nigeria. The units of analysis cover CBN in Rivers State. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


1.7 Definition of Terms

Monetary Policy:

This refers to the combination of measures designed to regulate the value, supply and cost of money in an economy.

Computer:

This is defined as electronic machine that accept data (in raw form) and instruction through special input and devices and after processing in its internal memory, produces a meaningful output and also computer can be defined according to the Oxford Dictionary as an electronic machine that can be supplied with a programme and can store and recall information and perform various processes on it.

In addition to that, computer is an electro-mechanic device which is capable of accepting data, processing data, and brings out result meaningful way.

Financial Control:

This is the regulation of the flow of money through the enterprise and in particular, with ensuring that cash is always available to pay debt when fall due.

Accounting:

Is the act of recording, classifying, selecting, measuring, interpreting and communicating financial data of an organization to enable user make assessment and decisions, is also a discipline which comprises of set of theories and concept for processing financial data into information. Accounting records in monetary terms the flow of economic valve within or between economic entities.

An accountant must not only be interested in record keeping alone but in the application of his professional competency or knowledge and skill in present accounting information to assist management in decision making.

System:

It means the method of unifying personal activities, machine and materials to accomplish the objective of the enterprises.

Data:

These are raw fact and figures that are not correctly being used in a decision process and they usually take the form of historical records that are record and filled without immediate intent to reference for decision making.

Bank:

According to the encyclopedia of the banking and finance, the terms “Bank” in its broadcast senses may be applied to any organization engaged in any or all of the various function of “Bank” i.e. receiving, collecting transferring, paying, lending, investing, dealing, exchange and servicing (safe keeping of deposits custodianship agency, trusteeship) of money and claim both domestically and internationally.

Management:

Can be defined as a co-ordination of the all the resources through planning, organizing and controlling so as to achieve organizational goals. And also can be defined as an effective and efficient utilization of both human and material resource to achieve the desired goal and objective in the organization.

Effective:

This refers to the successor other wise in achieving objectives. It is therefore concerned only with output usually; the objectives of the organization would be specified in more details so that the measure of effectiveness is more useful. The specification are; there will always be capacity for interpretation, as with efficiency, effective is most important thing about financial management, is that the degree of effectiveness says nothing about how much was spend to achieve it either the project services, may have cost what was budgeted or twice what was budgeted or more that what it should have cost.

Evaluation:

Is the act of considering something to decide how useful or valuable it is, or a document in which this is done.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain accounting information and monetary policy development in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of accounting information and monetary policy development in Nigeria


5.2 Summary

This study was on accounting information and monetary policy development in Nigeria. Three objectives were raised which included: To examine the role of accounting information system in the development of monetary policies in Nigeria, to find out challenges associated with the use of accounting information systems in the development of monetary policies in Nigeria, to proffer solutions to identified challenges (if any) from the study. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of CBN, Rivers state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, accountants, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 Conclusion

This study concludes therefore that the inability of monetary policies to effectively maximize its policy objective most times is as a result of the shortcomings of the policy instruments used in Nigeria as such limits its contribution to growth.


5.4 Recommendation

Commercial banks and other financial intermediaries must be forced to ensure compliance with the stipulated prudential guidelines. Any deviation from the set regulations should be punished to serve as a deterrent to others.


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