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PROJECT TOPIC:  APPLICATION OF RESPONSIBILITY ACCOUNTING ON NIGERIAN BANKS PERFORMANCE
Department:  Accounting
AMOUNT:  20,000
FORMAT:   MS WORD
PAGES:  95
 
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APPLICATION OF RESPONSIBILITY ACCOUNTING ON NIGERIAN BANKS PERFORMANCE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.1    Background to the study

An organization uses various techniques of costing such as Standard Costing, Budgetary Control for Control of Costs and so on. Under these costing techniques, focus is given on the cost and not on the person who has the authority to control the costs. In every well-structured organization like banks , the responsibilities of every person's actions are clearly defined and a manager is engaged in every section of actions of the organization. Every such person is accountable to his/her superior authority for the responsibility assigned to him/her. Responsibility Accounting may be defined as a system of control where a responsibility is assigned to different executives of a concern for control of cost or increase of revenue. It is one of the basic components of a good control system. In this system, an executive is held responsible only for those activities for which he/she has been delegated a responsibility.

In responsibility accounting, the debate as to the scope of appropriateness of responsibility continues to rage. Bevan and Messner (2008) identify that much of the debate revolve around the controllability principle which states that managers should be made responsible only for those activities, objectives or outcomes with which they have influence or control. Consequently, the issue of the appropriate measurement and evaluation of the controllability principle has not been clearly defined. The issue of stewardship and scarcity of resources have born the need of attaching responsibility to all activities, especially those entrusted to resource management. Although, cost accounting systems were designed to accumulate cost for the purpose of ascertaining product and period costs but they failed to identify individual managers who incurred these costs. Responsibility accounting seeks to hold managers accountable for a specified set of activities or decisions and indecision in connection with specified objectives based on their actual performance. Responsibility accounting is an indispensable tool in managing cost especially in large organization which is practicing decentralization. To hold managers accountable, there is a need to measure and evaluate their performance based on specified objectives (Bevan & Messner, 2008; Fowzia, 2011)

The responsibility accounting system is designed to report and accumulate costs by individual levels of responsibility. Each supervisory area is charged only with the cost for which it is responsible and over which it has control. There are three basic types of responsibility centers: cost centers, revenue centers, and investment centers. When budgeted amounts are compared with actual amounts and deviations are found, responsibility accounting can be used to find the causes of such deviation and hence improve the function.

1.2    Statement of the problem

The Banking Supervision Department (BSD) of the CBN has since 1990 noted that it is the examiners’ task to prevent bank failures by identifying bank problems at an early stage to allow for intervention and/or corrective action before the situation gets out of hand (CBN, 1990). In going about this task, bank examiners carry out appraisals of the quality of a bank’s assets. To this end, the CBN issued a circular where it addressed requirements for asset classification and disclosure, provisioning, interest accruals and off-balance sheet engagements. Given the broad range of stakeholders to whom banks are ultimately answerable, from depositors and shareholders to employees and regulators – and in light of the impact that these institutions can have upon, not only the financial but also the real economy, it is quite obvious to say that banks are pivotal to any country’s growth and development. Wilson (2006) says banks occupy a delicate position in the economic equation of any country such that its performance, either good or bad, invariably affects the economy of the country

CBN (2009) says full disclosures are the mandatory financial, operational and management information, which financial institutions are required to disclose in the rendition of their periodic returns to the regulatory authorities and the public. The process has to do with ensuring the integrity of data in the rendition of reports to the supervisory authority and the public in order to enable them ascertain the true financial position and performance of deposit money banks. Financial reports of Nigerian companies have been found to be deficient over time (Wallace, 1988; Adeyemi, 2006; Nzekwe, 2009), in the sense that they lack vital information that will enable stakeholders make informed decisions. Apart from the studies conducted by the World Bank (2006), disclosure practices by Nigerian companies had been empirically investigated by Wallace (1988), Okike (2000), Adeyemi (2006), Ofoegbu and Okoye (2006) and Umoren (2009). Their observation is quite similar in that they all found the Nigerian corporate reporting practices to be deficient. Current developments in the banks make this study necessary and desirable now. This study is intended to fill this gap.

 

1.3 Aims and objectives

The aim of this study was to investigate the application of responsibility accounting on Nigerian banks performance.

The specific objectives therefore are:

i.                    To examine if there exist significant relationship between cost control and Return of assets(ROA) in Banks

ii.                  To examine if there exist significant relationship between revenue control and return of equity(ROE) in Banks

iii.                To examine if there exist significant relationship investment control and return of investment (ROI) in Banks.

iv.                To examine if there exist significant relationship between cost control and Return of assets(ROE) in Banks

v.                  To examine if there exist significant relationship between revenue control and return of assets(ROA) in Banks

vi.                To examine if there exist significant relationship investment control and return of assets (ROA) in Banks.

 

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