FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS

MAKING CASE OF CAMAS GROUP

CHAPTER ONE
GENERAL INTRODUCTION

1.0 Introduction
This chapter discusses the background to the study, statement of the problem, purpose of the study,
research objectives and questions guiding the study, significance and scope of the study and the
definition of key terms.

1.1 Background to the Study

1.1.1. Historical Background

One of the most effective uses of accounting information is decision making. Decision
making has being described as a purposeful choosing from a number of alternative causes
of action.

Accounting is the language of business as it is the basic tool for recording, reporting and evaluating
economic events and transactions that affect business enterprises. It processes all documents of a
business financial performance from payroll, cost, capital expenditure, and other obligation to sale
revenue and owners’ equity. It provides financial information about one’s business to the internal
and external users, such as managers, investors and others. It is sometimes referred to as a means to
an end, with the ending been the decision that is helped by the availability of accounting information.
Management is the act of getting things done through people and materials available, management
can also be seen as the act of working particularly through people for their achievement for the broad
goals of an organizations (Ejiofor 2007). In trying to achieve this goals, the managers have to map
out strategies to find out the accounting information most suitable. Management accounting uses
both financial and non-financial information and is generally intended for the use of internal users
who use the information to make decision that helps achieve the goals and objectives of the
organization. Financial information used by management accountant includes sale growth, profits,
return on capital employed and market shares, non-financial information include production
qualities, performance of competing product and customer’s loyalty. (Melissa 2007). Decision
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making is the process of choosing alternatives courses of action using cognitive processes. Making
FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
MAKING CASE OF CAMAS GROUP
decision is necessary when there is no one clear course of action to follows. Accounting systems
also provides check for the validity through the process of auditing and accountability (Gray et Al
1996). Effective and efficient accounting information plays a central role in management decision
making.

The accounting information provides managers with the necessary information they need.
In this case, it is the accountants that provide the information with which the management
uses for its decision making. Managements can only come up with a good decision if they
are able to get correct accounting information from the accountant. In a situation where the
accountant does not provide correct information: this is bond to affect the decision making
of the management adversely.

The question now is, how business executive know the company is embarking on a
favorable decision or unfavorable one. The answer to this question is based on the
management and the accounting information

According to Ray (1996), most top level business executives have background in
accounting and finance than in any other field. The essence of using accounting information
is to enable managers make wise decision. It is also used (accounting information) to set
up system of internal control to increase efficiency and prevent fraud in companies.

Accounting information aids in profit making, budgeting and cost control. In a company,
it is the duty of the management accountant to see that his company keeps good records
and prepare proper financial regulations. Management accountants also need to keep up
with the latest development in the use of computers and in the computer system design.
Accountants provides many special reports for management, decision making. This
function requires the gathering of both historical and projected data.

Indeed, only a limited number of studies in international management research have focus
on the role utilization of accounting information in the holistic context of decision making
strategies, processes and preferences.

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1.1.2 Theoretical Background
According to Harson, Kernut D. argued that accounting is a service activity, the reports of which
are used in describing the activities and financial states of many different kinds of economic
activities. According to Glantier and Underdown, accounting is moving away from its traditional
procedure base, encompassing record keeping and such related work as the preparation of budget
and final accounts, towards the adoption of a role, which emphasizes its social importance.

According to Littleton (1953), the central purpose of accounting is to make possible the periodic
marching of cost efforts and revenues accomplishments. This concept involves fixed point of
accounting theory, and a bench mark that afford a fixed point of reference for accounting sessions.
Accounting is the art of recording, classifying and summarizing in a significant manner and in terms
of money, transaction and events, which are in part at least of a financial character, and interpreting
the result thereof. (ALCPA, 1961).

Benjamin (1978).reported that the primary function of accounting is to accumulate the

communication information essential to understanding the activities of an enterprise, whether large
or small, corporate or non-corporate, private or public.

Anderson, and Caldwale (1981), suggested that accounting is an information system for measuring,
processing and communicating information that is useful in making economic decision.
Contributing Needles Jr (1981) opined that accounting information is essential to decision system
because it provides qualitative information for three functions: Planning, control and evaluation.

1.1.3 Conceptual Background

Definition of key terms
1. Decision Making

This is a process of choosing specific cause of action from among many possible
alternatives. Determine ways and means for accomplishing the line of action decided upon
is also a part of the decision making process.

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FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
MAKING CASE OF CAMAS GROUP
2. Accounting

This means the act of recording, classifying and summarizing in a significant manner and
in terms of money, transaction and events which are in part at least of a financial character
and interpreting the result thereof.

3. Information

Data that has been processed to produce meaning relating to a field.

4. Accounting information:

Those processed information relating to accounting.

5. Management

This is a group in a business who have overall responsibility for achieving the company’s
goals

6. Inventory

This is the stock of goods which a firm posses within a accounting period

7. Cost Center

This is the smallest of activities of areas of responsibilities where costs are accumulated.

8. Profit Center

This is a segment of a business that is responsible for both its revenue end expenses,
providing information for such an entity

9. Planning

The use of information supplied by accountants in making decision by which management

formulate objectives for future business of the firm.

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10.Control and Coordination

A process of ensuring that the cause of actions is maintained and that the desire aims are
achieved. This is done through the use of budgets and actual data.

11.Cost Decision

This is the application of and cost of principles, methods and techniques in the
ascertainment of cost and analysis of savings and or excess as compared with the previous
experiences or with standard.

12.Questionnaires

This is a method of data collection in which the research questions and questions on other
relevant issues are put down in a systematic manner.

1.1.4 Contextual Background

During my stay in CAMAS GROUP,

1.2. Statement of the Research Problem

The central concern of management is decision. In making a sound decision the

management needs some valuable and accurate information from the accountant. The
accountant is at the services of the management by providing the management with the
necessary information which they need for decision making.

In recent times, it was observed that cases of mismanagement, fraud and irregularities
prevail in the organization.

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FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
MAKING CASE OF CAMAS GROUP
What then is the role of Financial accounting information in Management decision of
CAMAS? Has the role been affective? Does accounting information control fraud,
mismanagement and irregularities? Does accounting information ensure the efficiency and
effectiveness of management? This study is aimed at providing answers the above
questions.

Purpose of the Study

The purpose of the study is to highlight the impact of Financial Accounting Information in
the decision making made by Logistics Firms and also to disclose the obstacles involved
in the demand and Supply of Financial Accounting Information.

1.3 Objectives of the study

This research is aimed at examining how effective and efficient management apply
accounting information in making business decision in Logistic Company looking at the
case of CAMAS GROUP. The specific objectives include;

a) To identify how Financial Accounting information control Fraud, mismanagement and

irregularities in CAMAS
b) To determine how useful and effective Financial Accounting Information are to decision making
in Logistic companies.
c) To determine the relationship between the neglect of Financial Accounting information and
decision making in a logistics company.

1.4. Research Questions

The study was guided by the following research questions:
a) How Financial Accounting information control Fraud, mismanagement and irregularities in
CAMAS?
b) how useful and effective Financial Accounting Information are to decision making in Logistic
companies?
c) What effect of unavailability of Financial Accounting Information in Logistics Companies?

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MAKING CASE OF CAMAS GROUP
1.5 Research Hypotheses
The null hypothesis is the one stated in a no difference form in effect of one or more
independent variables on the dependent variable and is denoted as Ho. Alternative
hypothesis is the one which predicts a difference and indicate the expected direction of that
difference and is denoted as H1. The hypothesis to be tested in this study are as follows:

H0: Financial Accounting information does not control Fraud, mismanagement and irregularities
in CAMAS.
H1: Financial Accounting information control Fraud, mismanagement and irregularities in
CAMAS.
H0: Financial Accounting information is not effective in decision making in Logistic companies.
H1: Financial Accounting information is effective in decision making in Logistic companies.
H0: There is no relationship between the neglect of Financial Accounting information and decision
making in a logistics company.
H1: There is a relationship between the neglect of Financial Accounting information and decision
making in a logistics company.

1.6. Significance of the study

The findings were of great importance in the following ways:

Accounting information is very important in the life of any business. It is based on this
information that the management will be able to make wise decisions. The accountants
present the accounting information in such a way as to assist management in policy and
decision making in the day to day operations of the company.

Based on the information produced, the management will have the benefits on using it to
plan and control their current and future operations. Based on it also they will come up with
their management decision and information of long term plans. The information also will
help the management report historical information to outsiders there is any variance, the
management in charge of accounts will look into it to find out the causes of the variance
and the report to the management based on that report. The management can make a wise

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FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
MAKING CASE OF CAMAS GROUP
decision that will take the cause of the variance into consideration. The use of accounting
information is so important that the management of any organization cannot do without it.

Any organization that does not makes use of accounting information for their decision
making is bound to be running into difficulties that lead to a setback.

1.7 Justification of Study

1.8 Scope of the study

1.8.1 Geographical scope

The research covered the financial statements of CAMAS GROUP located in DOUALA,
LITTORAL REGION. This particular case study was chosen because it was of convenience to the
researcher in terms of its’ type of business, the researchers’ area of residence, language and
availability of data for the research work.

1.8.2 Time scope

The study covered financial Statements generated within the period of 2021 to 2022. This period
being the most recent and given the limited research time frame, the researcher was able to cover
reports of more than two years.

1.9. Organization of Study

The study is divided into five chapters and each of the chapters is divided into subsections.
Chapter one which is titled introduction contains the background of the study, Statement of the
problem, research questions, objective of the study, research hypothesis, significance of the study,

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MAKING CASE OF CAMAS GROUP
Justification of the study, Scope of the study and organisation of the study.

Chapter two is literature review and consists of three sections. Section one is known as
theoretical literature which identifies some theories of pricing and profitability. Section two is
known as conceptual issues and deals with the definition and detail explanation of terms. The last
section is known empirical literature. This section looks at similar studies and summarizes them.

Chapter three is methodology. It focuses on how the research will be carried out. It consists of:
scope and delimitation of the study, research design, method of data collection, population of the
study, sample and sampling technique, research instrument, method of data analysis, validation of
research instruments, validation /reliability of findings and measurability of variables.

Chapter four is called presentation and discussion of results. In this chapter, the researcher
presents the results obtained from the field and uses the results to answer the research questions she
presented in chapter one section four.

Chapter five is titled as summary, conclusion and recommendation is divided in to three

sections. Section one deals with the summary of the findings that is what the study set out to do,
how it was done, and the results obtained is presented. In section two, the researcher makes an over
view of the study and draws the conclusion based on the findings. And lastly, in section three policy
recommendations are made.

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CHAPTER TWO
LITERATURE REVIEW

2.0 Introduction
The purpose of this review is to understand the use of Financial Accounting information
and the role it plays in decision making seeking the option of various authors. The chapter
which the study the hinged: Accounting research has become important in a corporate
world and plays an important role in creating new knowledge with its theoretical frame
work. Theories in accounting research are used to make sense out of and explain the
empirical data that has been collected.

2.1. Review of Literature

In the view of Thomas (2004), financial accounting is the process of designing and operating an
information system for collecting, measuring and recording an enterprises transactions and
summarizing and communicating the results of these transactions to users to facilitate making
financial and economic decisions. It states that the first part of the definition relating to collecting
and recording transactions refers to double- entry book-keeping which consists of maintaining a
record of the nature and money value of the transactions of an enterprise. And the second part of the
definition, relating to communicating the results, refers to preparing final accounts and statements
form the books of account showing the profit earned during a given period and the financial state of
affairs of the business at the and of that period. He also states that the account has been traditionally
regarded as the „holder of the purse Strings‟ and responsible for „Safeguarding‟ the assets of the
business.

2.2. Review of Theories

Gray et al, (1996) distinguishes four main types of accounting theory: classical inductive
theories, income theories, decision usefulness theories, and information economics/agency
theories. These theories try to describe the role of accounting.

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FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
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Classical inductive theories are attempts to find the principles on which current
accounting processes are based Gray et al. (2004) criticizes this approach as it needs a
prior definition of accounting to work with. This limits the range accounting systems that
are considered and gives no basis for normative suggestions for future accounting systems.

Income theories try to identify the real profits of an organization. The problems here
are that you need to define whose income you are measuring, and that limiting income
measurements to things that can be given a price devalue goods and services that are
difficult or impossible to price.

Decision usefulness theories attempts to describe accounting as a process of providing

the relevant information to the relevant decision making does not mean it is the most useful
tool for deciding. There is also little distinction between information needs and information
wants, Arnold and Hope (1990) define the intention of a communication system as “that
the massage sent the sender… should influence in an appropriate manner the action of the
receiver”. This seems to put accounting on the level of propaganda rather than reporting.

The information economics/agency theories of accounting see accounting information

as a good to be traded between rational agents each acting in their own self-interest.

2.3. Review by Concepts

2.3.1. Concepts of Accounting Information
Accounting information can be classified into two categories financial accounting or
public information and managerial accounting or private information. Financial accounting
include information disseminated to parties that are not part of the enterprise proper-stock
holders, creditors, customers, suppliers, regulatory commissioners, financial analysts, and
trade associations although the information is also of interest to the company’s officers and
managers. Such information relates to the financial position, liquidity (that is, ability to
covert to cash) and profitability of an enterprise. (Rose:2002) managerial accounting deals
with cost profits volume relationships efficiency and productivity, planning control, prize
decisions, capital budgeting, and similar matters. This information is not generally
disseminated outside the company. Whereas the general-purpose financial statements of

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financial accounting are as assemble to meet basic information needs of most external
users, managerial accounting provides a wide variety of specialized report for division
managers, department heads project directors, section supervisors, and other managers.
(Rose: 2004).

Accounting information should include aspects such as flexibility and companies, ability
to adopt to change. The context of the flexibility does not appear in any of the accounting
definition because the definitions were developed during stable periods. The environment
has changed and uncertainty has increased. In view of the fact that flexibility is one of the
outcomes of uncertainty, greater value will be attached to flexibility in organizations
uncertainly situation (Puxty 1993).

2.3.2. Uses of Accounting Information

 The information provided by accounting helps the manager to do things. Robert and
Frank (1980) point out that the information reveals how closely the company’s
objective are being met (score keeping).
 The information directs attention i.e. it answers questions about the operations or
individuals that need attention in order to bring the organization closer to its
objectives.
 The information helps in solving problems i.e. it answers the questions about the best
to perform a specific task of the best solution to a given problem, Garrison (1979)
confirms the first by saying that management uses the information to plan effectively
and focus attention on deviation from plans. It is also used to direct day –to-day
operation and to arrive at the best solution to the operating problems faced by the
organization.

2.3.3. Users of Accounting Information

Accounting information serves as a base for planning and decision making. It provides the
various users the necessary data assistance in this direction. These users according to
needed et al (1984) could be categorized

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a) Management
b) Users with direct financial interest
c) Users with indirect financial interest

1. Management

One cannot conceive any organization that does not have any objective. The primary
objective for any business organization is profit making Hussey, (1978) this responsibility
rests solely on the management. Although other environmental factors may modify the
degree of profit sought, it must be realized that adequate profit is necessary for the survival
and the growth of the business. To achieve the objectives, management must be able to
plan, control and coordinate all the activities of the organization

2. Users with direct financial interest

These classes of information users include

a. Investors (shareholders) and potential shareholders,

creditors and potential creditors and employees of the
organization.
b. Investors and potential investors.

 Shareholders and Potential Shareholders

These are primarily interest in the financial information and management serves as trusts
of the investment of shareholders hare therefore found it necessary to know the
performance of the business in which they have invested. They therefore make use of
accounting information like annual reports and other financial statements.

 Creditors and Potential Creditors

Creditors include debenture holder’s interest and money-lenders who expect returns
information of interest on the debentures or principal creditors and potential creditors alike

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have direct financial interest in the firm.

3. Users with Indirect financial interest

Changing environment factors have made the society large users of accounting information
it is common knowledge that the government through her agents and the general public
make use of accounting information in their day -to- day activities. These agents include
tax authorities, regulatory agencies, economic planners and other groups.

a) Tax Authority

Tax revenue is one of the major sources of finance of the government. This has prompted
the establishment of internal revenue sections in all levels of government to deal with
matters relating to the assessment and collection taxes. Taxes such as PAYE, value added
tax, (VAT) and excise tax are collected.

b) Regulatory Agencies

These are government agencies set up for the purpose of regulating public corporations and
companies. These agencies make use of accounting information to determine the rate at
which shares should be used.

c) Economic Planner

Government with have to take active part in planning and forecasting information.
Economic planners use accounting information to determine total production inventories,
income, dividend, taxes and other economic statistics. This class of users information is the
general publicity. They are mainly consumers who have the interest in the financial
statement of the firms for the purpose of ascertaining to success of the firm, in their
surroundings

2.3.4. Classification of Financial Statement

According to Diamond (2006), all watchful business owners have an innate sense of how well their
business is doing. Almost without thinking about it, these business owners can tell you any time
during the month how close they are to butting budgeted figures. Certainly, cash in bank plays a
part, but its more than that. Helpful is the nowtine review of financial statements. They are three

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types of financial statements. Each will give important information about how efficiency and
effective the business is operating.

1) INCOME STATEMENT:

The income statement shows all items of income and expense for arts or crafts business. It reflects
a specific time period. So an income statement for the quarter ending March 31, shows revenue and
expense for January, February and March, if the income statement is for the calendar year-ending
December 31, it would contain all the information from January 1 to December 31. Also, its
important to know that the normal accounting period for income statement is 12 months or year.
Income statements are also known as profit and loss account. The button line on an income statement
is income less expenses. If when income is more than expenses, it is known as net profit and when
expense is more than income it is a net loss.

The specimen of an income statement

Turnover x

Cost profit (x)

Gross profit x

Distribution profit (x)

Administration expenses (x)

x
Other operative income
x

Operating profit x

Investment income x

x
Amount written off investment (x)

Interest expenses (x) (x)

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profit activities before tax x

Taxation (x)

Profit on ordinary activities after taxation x

x
Extra – ordinary income

Less: extra –ordinary charges (x) x

Extra-ordinary profit (loss) x

x
Tax on extra –ordinary charges (x)

Activities after taxation x

Appropriations: Transfer

to reserve Dividend – x

Interim paid x
(x)
Final proposed x

Retained profit for the year Retained x

profit brought forward B/F x

Retained profit carried forward C/F x

2) BALANCE SHEET

Accounting is based upon a double entry system. For every entry into the books there has to be an
opposite and equal entry. The net effect of the entries is zero, which results your books being
balanced. The proof of this balancing act is shown in the balance sheet when Asset = Liability +
Equity. The balance sheet shows the health of a business from day one to the date on the balance
sheet. Balance sheet are always dated on the late day of the reporting period. If you have been in
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business since 1st January 2011 and your balance sheet is dated as of 31 December of the current
year the balance sheet will show the results of your operations from 1st January 2011 to December
31, 2011.

Specimen of a balance sheet

Employment of capital x

Fixed assets x

Long-term investments x

Long –term debts (deferred changes) (x) x

Current assets:

Stock and work –in- progress x

Debtors and repayment x

Short –term investment Cash and x

bank x

X
Less: Current liabilities
(
x
)
Net current assts Total xx

assets
x
Long-term liabilities (e.g goodwill)

Accruals and deferred income x

x
Provision for liabilities and charges (
x
)
Total net asset. x

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Capital and Reserves

Share capital x

Reserves x

Shareholders fund x

3) STATEMENT OF CASH FLOWS

The statement of cash flows the ins and outs of cash during the reporting period. You may be
thinking-well who needs that type of report? I will just look at the checkbook. Good point, unless
you are reporting things that don’t immediately affect cash such as depreciation, accounts receivable,
accounts payable. If I could only choose one of those three financial statements to evaluate the ability
of a company to pay dividends and meet obligations (indicating a healthy business), I would pick
the statement of cash flows. The statement of cash flows takes aspects of the income statement and
balance sheet and kind of crams them together to show cash sources and uses for the period.

Cash flow operating activities:

Operating profit before tax x

Equity interest in (undistributed earnings)

Loss of associated companies (net of tax) (x)

Net (Deficit) /surplus on consolidation/

Additional acquisition x

Depreciation of fixed assets x

Provision for unfounded retirement benefits x

Profit on sale of fixed assets (x)

Profit on sale of investment (x)

Interest on loans x

18 Interest on bark deposits (x)

FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
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Cash flow before charges in working capital x

Change in working capital (x)

Increase in stocks (x)

(x)
increase/Decrease in debtors and prepayment

Increase in creditors x
x
Increase/ (decrease in other provisions x

X
Taxation payment
(x)

Retirement (x)

Net cash inflow /(out flow ) from operation captivities Cash x1

flow from investing activities

x
Purchase of fixed assets Acquisition of
(x)
subsidiary company Proceeds from sale
x
of fixed assts
(x)
Investment in associate and other company

Proceeds from sale of investments Interest x

recorded on bank deposits Net cash flow x

for investing activities Cash flow financial x2

activities

Proceeds from issue of shares and debenture x

Redemption of preference shares and debenture (x)

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Dividend paid (x)

Interest paid (x)

Withholding tax paid (x)

Other long-term debts granted (repaid) x

Net cash flow from financial activities x

4) THE STATEMENT OF RETAINED EARNINGS

The statement of retained earnings shows the breakdown of retained earnings. Net income for the
year is added to the beginning of year balance, and dividends are subtracted. This results in the end
of year balance for retained earnings. Remember that expenses, revenues and dividends impact
retained earnings. Since net income equals revenue minus expenses, we need to include dividends
when computing end of period retaining earnings, plus net income and minus dividends.

2.3.5. Relationship among the Statement of Financial Position, Income Statement, Statement
of Cash Flows and Statement of Retained Earnings.

As mentioned above, the balance sheet shows the financial position at a point in time. It therefore
cannot contain information that is related to some period, such as sales or wages expense. It is a
common practice to include beginning of a period balance sheet as well as an end period balance
sheet in a financial report. This way the reader can form an opinion about how the firms financial

position has changed. The cash flow statement and the income statement-statement both give
information about the firms performance over the period, albeit from different angles. The cash flow
statement explains the change in cash. In other words, it explains how the beginning of period cash
has turned into the end of period cash by differentiating between operating, investing and financial
activities. The income statement shows a presentation of the sales, the main expenses and the
resulting net income over the period. Net income is based on accounting principles which gives
guidance/rules on when to recognize revenues and expenses, whereas cash from operating activities,
obviously is cash based. As dividends do not reduce net income, the income statement does not

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always explain the change in retained earnings over the year (Net income always equals the change
in retained earnings when no dividend is paid out). The statement of retained earnings is included
to show how equity has changed because of net income and possible dividend payments. It shows
the beginning value of retained to which net income is added and dividends subtracted, resulting in
end of year retained earnings.

2.3.6. TYPES OF MANAGEMENT DECISIONS

In view of Emekekwue (2005), management in a business organization refers to group of

people (managers) who are responsible for day-today-day operation of the enterprise. They
are responsible for planning, coordinating or organizing, controlling and decision making
and are technically referred to as the management team. Management decision is basically
in the nature of solutions to problems. Management is an inseparable part of the other
functions of management as stated above. That it, it will be impossible to make an exhaustive
list of different types of that management decisions of business organization faces because
the problem that give rise to them are varied and wide. However, it is possible to identify
this basic types of management decision. They include:

1. STRATEGIC PLANNING DECISION:

This is a process of deciding on the organization, on changes in these objectives and the
sources used to attain these objectives and the policies that are to govern the acquisition and
deposition of these resources. Strategic planning involves choosing objectives and planning
how to achieve is done with a view to long term future, its consequences and result might
also be short-term. Strategic planning decision is largely a process of formulating plans, but

it also include an important element of control. The information needed to arrive at this type
of decision is also known as strategic information.

2. MANAGEMENT CONTROL DECISION:

Management control decisions are taken within the framework of strategic law and objectives
which has previously been made or set. It ensures that resources are obtained and used
effectively and efficiently in the accomplishment of the organizational objectives. Efficiency
means that resources (input) are put into a process to produce the optimum (maximum)

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amount of output. Effectiveness means that the resources are acted to desired ends.
Management control decisions are semi structured. The type of information required at this
level is tactful information.

3. OPERATIONAL CONTROL DECISION:

This type of management decision that ensures that specific tasks are carried out effectively
and efficiently. It focuses on individual task and is carried out with strictly defined guideline
issued by strategic planning and management control decision. Many operation control
decision can be automated or programmed control. Programmed controls exist where the
relationship between input and output are clearly defined, so an optimal relationship can be
specified for every activity.

2.3.7. EFFECT OF FINANCIAL ACCOUNTING INFORMATION ON

MANAGEMENT DECISION

The accountant in the organization of business is a member of the top decision making
process. Although the accounting does not control in terms of line authority (accounting
is a staff function). As chief information officer, he or she is in position to exercise
control in very special way. This through the reporting and interpreting of data needed
in decision making. By the supplying and interpreting of relevant and timely data, the
accountant exerts influence on decision and plays a key part in directing an organization

towards objectives. The effect of financial accounting reporting on management

decision according to Ugwu (2003), is that accounting reports affect financial decision
making because money is the economic fuel that supports business initiatives. He states
that most decisions are based on financial report as business activities revolve around

money. It has been emphasized that in large part, the quality of management decision
will be a reflection of the quality of accounting and other information which it receives.
Simply put bad or wrong information will generally lead to bad decision. The accounting
information provided in the financial report by the accountant is essentially financial in
nature, helping management to do principally three things. Plan effectively and focus
attention or plan. Direct day-to-day operations. Arrive at the best solution to the
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operating problems faced by the organization.
FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
MAKING CASE OF CAMAS GROUP

A) PLANNING EFFECTIVELY:

The plans of management are expressed as budgets and term budgeting is often applied
to management generally. Budgets are usually prepared on an actual basis (half yearly
or quarterly budgets do exist) and the desires and goals of management in specific
quantitative term, planning is to be followed by physical action. Once the budgets have
been set, the board of directors and the management team will need information inflows
that will indicate how well the plans are materializing or otherwise. Financial reports
provides this information need. It offers all the assistance needed by supplying
performance reports hat will help the management focus on problems. The performance
reports which reveals the existence of problems or otherwise, directs on existence of
problem or otherwise, direct on the course of action to be taken by management decision
in this regard again, becomes obvious. Financial report supplied by the accountant as
information are a form feedback to management, directing their attention towards those
part of the organization whose managerial time can be served and where it can be served
and where it can be used most effectively.

B) DIRECTING OPERATIONS

Management has a constant need for information in routine conduct of day-day-day

operations. For example, pricing new items going onto display show will depend on
financial reports to ensure that the price relationship are in harmony with the marketing
strategies adopted by the firm. The work of accountants is the provisions of accounting

information (the preparation of financial report) and the management are connected in
the conduct of day-to-day operations.

SOLVE PROBLEMS

Information is often a key in the analysis of alternative methods of solving problems.

Financial accounting is generally responsible for gathering the available cost and benefit
data and for communicating. It is a useful firm to the appropriate authority. Decision to
either reduce price or increase advertisement or to do both the face of increasing

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FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
MAKING CASE OF CAMAS GROUP
competition, in order to maintain market share of its product, a firm will depend on
information on the lost benefit data, provided by the accountant. This information is not
often readily available information, in fact in financial accounting a large amount of
special analytical work and forecasting is done in other needed data like this. Finally and
essentially, financial reporting must be in a summary firm. Accounting system handles
numerous amounts of details in recording of day-to-day transactions. As they appear,
this details may not be of interest to a manager but his interest is in the summaries that
are drawn from the records (financial reports) and it is on these that he or she relies on.

2.4. Review by Objectives

1. To identify how Financial Accounting information control Fraud, mismanagement and

irregularities in CAMAS
2. To determine how useful and effective Financial Accounting Information are to decision
making in Logistic companies.
3. To determine the relationship between the neglect of Financial Accounting information and
decision making in a logistics company.

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FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT DECISIONS
MAKING CASE OF CAMAS GROUP

CHAPTER THREE
METHODOLOGY

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FINANCIAL ACCOUNTING INFORMATION AS AN AID TO MANAGEMENT
DECISIONS MAKING CASE OF CAMAS GROUP

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