FACTORS AFFECTING MANAGEMENT ACCOUNTING PRACTICES IN NIGERIA
ABSTRACT
The main objective of this research work are to ascertain the major factors that affect the Management Accounting practices in Nigerian banks. That is why this study was designed to cover both the long and short term quantitative management decision in Nigeria banks. Primary data were collected from managements and staff of the bank through questionnaires, depth interviews, and focus group discussions. The study indicated that the level of adoption of MA practices has i) a strong positive correlation with top management awareness of its relevance and usefulness, ii) a moderate negative correlation with subordination of the MA function to financial accounting, iii) a strong positive correlation with the mode of organizational planning and control, and iv) a moderate positive correlation with a supportive organizational culture. It is important for top management to implement sophisticated MA practices for better decision making and give up its exclusive preoccupation with traditional financial accounting techniques.
The study indicated that the level of adoption of MA practices can be improved by building the right awareness among top management and assigning the MA function its rightful place in organizations
TABLE OF CONTENTS
CHAPTER ONE-INTRODUCTION
1.1    Background to the study-    -    -    -    
1.2    Statement research problem-    
1.3    Objective of the study-    -    -    -
1.4    Statement of research hypothesis-    -    
1.5    Scope of the study-    -    -    -    -    -
1.6    Significance of the study-    -    -    -    
1.7    Limitation of the study-    -    -    -
1.8    Definition of terms-    -    -    -    -    -     
References-    -    -    -    -    -    
CHAPTER TWO-LITERATURE REVIEW
2.1    Introduction-    -    -    -    -    
2.2 Conventional and contemporary management     
accounting thought-    -    -    -    
2.3 Features of management accounting practices
2.4     SMA and contingency theory in the research model
Performed-    -    -    -    
2.5 Principles of comparative management     accounting
2.6    Operationalization of business strategy
 in contingency research-    -    -
2.7 Determinants of and influences on differences     between management accounting processes-    
2.8 Changes in management accounting practices-    
2.9 Factors influencing the choice of
management accounting practices-    -    -    Effectiveness of management accounting
Practices-    -    -    -    -    -    -    -    
References-    -    -    -    -    -    -
CHAPTER THREE-RESEARCH METHODOLOGY
3.1    Introduction-    -    -    -    -    -
3.2    Research design-    -    -    
3.3    Population of the study-    -
3.4    Sampling procedure-    -    -    -    
3.5    The sample -    -    -    -    -
3.6    The research instrument-    -    -
3.7    Measurement of variable-    -    -    -
3.8    Method of data analysis-    -    
3.9    Actual fieldwork-    -    -    -    
CHAPTER FOUR-INTRODUCTION
Data presentation and analysis-    -    -
Data presentation based on the personal data-
Data presentations based on responses
to question related to the factors that
affect management accounting practices in Nigeria
Testing of hypothesis-    -    -    -    
CHAPTER FIVE-SUMMARY OF FINDINGS, RECOMMENDATIONS, CONCLUSIONS
5.1    Summary of findings-        -    -    -    
5.2    Recommendations-    -    -    -    -
5.3    Conclusion-    -    -    -    -    -    -
5.4    Suggestions for future work-    -
Bibliography-    -    -    -    -    -    -    
Appendix-    -    -    -    -    -    -
CHAPTER ONE
INTRODUCTION
1.1    BACKGROUND TO THE STUDY
Since the 80s a new term has been coined in management accounting literature: “Strategic Management Accounting” (SMA) (Simmonds, 1981). Since then an on going debate about what SMA comprises has been originated. It is well accepted that SMA is identified as a generic approach to accounting for strategic positioning (Roslender & Hart, 2003). This wide definition leaves unsolved the problem of defining what is intended with the term “SMA techniques”.
In accounting literature the “external” orientation of Strategic Management Accounting is well established. However it can be interpreted in different ways. Firstly it can be referred to as “competitors”. Simmonds (1981) developed a conceptual framework underlying the importance of competitor information (related to cost, prices, market share and so on) in developing and monitoring business strategy. Later, various authors recognized the value that competitor information plays in achieving a competitive advantage (Jones, 1988; Bromwich, 1990; Ward, 1992; Moon & Bates, 1993). Secondly, the term “external” can be referred to as “suppliers and customers”. In a value chain perspective Shank & Govindarajan (1993b) widely demonstrated the usefulness of external information that enable the company to fruitful exploit linkages with suppliers as well as customers. Ultimately “external” can be referred to the “market”. It means focusing on the product offer to satisfy customer s needs but taking care in the meantime of the product attribute costs (Bromwich, 1990). Moreover it is possible an interpretation as satisfaction of customers needs by achieving a desired target profit/cost (Monden & Hamada, 1991; Morgan, 1993; Ewert & Ernst, 1999) or performance (Narver & Slater, 1990). In general, it has been argued that the “strategic” characteristic embraces those practices highlighting an external or future focus (Cravens & Guilding, 2001; Guilding et al., 2000; Roslender & Hart, 2003).
Recently the relationship between strategy and management control systems (MCS) has also been an issue widely explored. The interest in the topic has been growing since the 1980s, when strategy began to be considered as a contingent variable; surveys and case studies started to investigate the connection between particular elements of the MCS and the specific strategy adopted by the firms (Miller & Friesen, 1982; Govindarajan & Gupta, 1985; Simons, 1987 and 1990; Govindarajan, 1988; Shank & Govindarajan, 1992a; Bruggeman & Van der Stede, 1993; Chenhall & Langfield-Smith, 1998). All of these studies adopted a contingency theory approach to the research.
The proclivity in these types of research is to analyse strategy from the business level; the most widely discussed problem regards the generic constructs of strategy (Miller & Dess, 1993; Kotha & Vadlamani, 1995; Chenhall & Langfield -Smith, 1998; Bouwens & Abernethy, 2000; Chenhall, 2005a). In general, there are four different classifications of business strategy accepted and used in most of this research. We refer to Miles & Snow (1978), Porter (1980, 1985), Miller & Friesen (1982) and Gupta & Govindarajan (1984).
The schemes of Miles & Snow (1978), Porter (1980, 1985) and Gupta & Govindarajan (1984) have attracted most attention. Each of the classification turns out to be very useful in conducting empirical research regarding the relationship between strategy and management accounting/control systems, because it is possible to cluster firms with (apparently) homogeneous features. However these research studies have not generated comparable findings because of the different paths adopted in operationalizing business strategy. The main reason for this, according to Langfield - Smith (1997: p. 212), lies in the different scope and focus used by these typologies. In seeking to integrate the dimensions of strategy Shank & Govindarajan (1992a) found some consistent fit between Porter’s classification and that of Gupta & Govindarajan. They observed that companies pursuing a differentiation and a build strategy faced the same environmental uncertainty; similar considerations could be developed for cost leadership and hold mission follower. A few years later Langfield -Smith (1997), and then Kald et al. (2000), sought to integrate all the three mentioned classifications; they proposed a series of viable combinations among them that needed empirical research to be validated. Some contingent studies have tested the relationship between strategy, MCS and performance (among the others see Simons, 1987; Govindarajan & Fisher, 1990; Chenhall & Langfield-Smith, 1998); but many authors call for research into the role strategy might play also in accounting system design (Dent, 1990; Chapman, 1997; Langfield-Smith, 1997; Chenhall, 2005b; Langfield-Smith, 2005).
In recent years such approaches have influenced research conducted around the factors affecting SMA techniques implementation (Cravens & Guilding, 2001; Guilding et al., 2000; Cadez, 2006), confirming the increasing interest on the assessment of the extension of their use within companies and the factors affecting it.
1.2    STATEMENT RESEARCH PROBLEM
In the light of the above introduction, the following research questions are then stated:
1.    What factors influence the choice of management     accounting practices in these companies?
2.    Does low awareness of the relevance and usefulness of management accounting on the part of top management
3.    Does the subordination of management accounting lead to a low level of adoption of management accounting practices?
4.    Does traditional models of planning and control lead to a low level of adoption of management accounting practices?
5.    Does lack of a supportive organizational culture leads to a low level of adoption of management accounting practices?
1.3    OBJECTIVE OF THE STUDY
In the light of the above, the following objectives are then stated:
To ascertain the factors that influence the choice of management accounting practices in Nigerian banking sector.
To ascertain the types of management information systems that are used within Nigerian backing sector.
To ascertain whether subordination of management accounting leads to a low level of adoption of management accounting practices or not.
To ascertain whether traditional models of planning and control leads to a low level of adoption of management accounting practices or not.
To ascertain whether lack of supportive organization culture leads to low level of adoption of management accounting practices or not.
1.4    STATEMENT OF RESEARCH HYPOTHESIS
1.    H0    There are no factors that influence the choice of     management accounting practices in Nigerian     banking sector.
H1    There are factors that influence the choice of     management accounting practices in Nigerian     banking sector.
2.    H0    Low awareness of the relevance and usefulness of management accounting on the part of top adoption of management accounting practices.
    H1    Low awareness of the relevance and usefulness of management accounting on the part of top adoption of management does not lead to low level of adoption of management accounting practices.
3.    H0    The subordination of management accounting leads to a low level of adoption of management accounting practices.
    H1    The subordination of management accounting does not lead to a low level of adoption of management accounting practices.
4.    H0    Traditional model of planning and control leads to a low level of adoption of management accounting practices.
    H1    Traditional model of planning and control does not lead to a low level of adoption of management accounting practices.
5.    H0    Lack of a subordinative organizational culture leads to a low level of adoption of management accounting practices.
    H1    Lack of a subordinative organizational culture does not lead to a low level of adoption of management accounting practices.
1.5    SCOPE OF THE STUDY    
This study will cover both short and long term quantitative decisions made in a business environment and how management accounting system is able to provide necessary information to assist in decision making process. Non-quantifiable decisions make in a business environment are not covered in this study because such decisions are not completely objective.
The site of this study is Benin City and the object of the study is banking sector within the metropolis. One of the banks will be taken as our sample size and the selection method is non-probability convenient method. United Bank of Africa (UBA) Plc is therefore, selected as our sample study.
1.6    SIGNIFICANCE OF THE STUDY
With the wave of galloping inflation which translates to high cost of resources sweeping the national economy, it is obvious and pertinent for a business organization operation in this volatile environment to have in place mechanism that could counter this mess and make the business to consciously information of the best alternative before engaging into “to hold, buy or sell decision”. Management accounting system come into play in such circumstances as it provides relevant and reliable information for the above purpose. Hence, this study will be of immense significance to both small, medium and large business enterprise. This study will also pave way to future researchers interested in this line of thought.
1.7    LIMITATION OF THE STUDY
The major limitations encountered in the process sof writing this project work include the following:
The sample size: It was recognized that the sample size selected were not large enough to represent banks in Benin City.
Sampling Method: Convenience method which is a non-probability sampling method which is often subjective, also serves as a limitation to this study.
Policy of the respondent companies: Some of the questionnaires were not properly attended to perhaps, in order not to encroach to the corporate culture of the firm.
Working Convenient and Time Limit: Probability to source for more and current information both from the internet and library prevent the easy research on this project.
1.8    DEFINITION OF TERMS
Change Management: Change management refers to the practice within organization of responding to external and internal pressures by changing procedures, organizational structures, people, business processes, resource utilization (either on or all of these) to maximize competitive and/or organizational advantage in the modern turbulent environment.
Leadership: Leadership refers to the role of leaders in organization a traditional leader is a person in an organization position of authority whose responsibility is to find effective, pragmatic soldiers to organizational problems in which ethics plays no part.
Management: Management refers to the process that those persons with designated positional authority within an organization exercise decision-making responsibility to control and coordinate the functions of the enterprise to ensure that the managerially agreed strategic goals and directions are achieved. The traditional approach is a strongly embedded commends control structure.
Management Accounting: Management accounting is the use of privilege accounting data not available to external users by organizational decision makers (usually senior and middle management) to inform internal decisions-making, both operational and strategic.
Managerialism: Managerialism is the introduction to the public sector of private sector management concept and approach.
New Public Management: (NPM) is the rewarding and reconceptualization of managerialism such that public institutions have to be more accountable for public resources and show that their organization outcomes are worth the investment of funds by the tax payer and society.
Strategic Planning: Strategic planning is where senior management evaluate and analyze the internal and external business environment and construct strategic decision alternatives. The final strategic option is then identified, selected and implemented.
REFERENCES
Automobile companies, journal of management accounting research, fall, 16-34.
Bromwich M., (1990). The case for strategic management accounting: the role of accounting information for strategy in competitive markets, accounting, organizations and society, 15 (1/2), 27-46.
Chenhall R.H., Langfield-Smith K., (1998). The relationship between strategic priorities, management techniques and management accounting: an empirical investigation using a system approach, accounting, organizations and society, 23 (3), 243-264.
Ewert R., Ernst C., (1999). Target costing, co -ordination and strategic cost management, European accounting review, 8 (1), 23-49.
Govindarajan V., Fisher J., (1990). Strategy, control systems, and resource sharing: Effects on business-unit performance, the academy of management journal, 33 (2), 259-285.
Langfield-Smith K., (1997). Management control systems and strategy: a critical review, accounting, organizations and society, 22 (2), 207-232.
Miles R.E., Snow C.G., (1978). Organizational strategy, structure, and process, McGraw-Hill, New York.
Monden Y., Hamada K., (1991). Target costing and kaizen costing in Japanese.