Management Benefits of Accounting Profession to Business Organization



Accounting may be defined as “the process of identifying measuring and communicating economic information judgments and decisions by the users of the information”.

Another earlier definition was advanced in 1961 by AIGPA in the following words “Accounting is the act or recording, classifying and summarizing in a systematic manner and in terms or money transaction and event which are in part at least of a financial character, and interpreting the result therefore.

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Accounting is an old profession and was civilized of the Egyptians, the Greeks and the “Romans “Harrison et al (1977). Tablets and scrolls that haring served to the present day slows that accounting was mainly concerned with records of stewardship, that is with recording the various transfers and dealings of a master.

This passive collections of business facts figurers persisted through many centuries. It was only towards the close of the last century that accounting assumed a more dynamic role in business economic activity since then radical changes have taken place.

Accounting Raymond de Rover, (1956) modern accounting traces its origin to mind 14th centry were the first record of a “Complete book keeping system for Halian Merchants can ve deduced required only limited information about their financial.

Basically, the merchants needed only to know how much was worth at any portfolio in time. This information probably influenced his decision to enter new venture and determined the extent to which he could grant credit to others early accounting transacted this need into records which detailed what the merchant owned (called his assets) and what he owned (termed his liabilities). This system of record keeping continue with minor modificatin to 17th century.


          To management business organization Generation of relevant information function.

Investors have to choose between competing investment options and need relevant economic information in making the investment decision, investments are usually arbitrary  “Sealing of the parts decision. Rather, they involves from a structure, regorus analyses, of economic information about the potential  investment. Event after making the investment the investor still needs information to use in maintaining the activities of the non-owner managers of the investment. As more managers become non-owner of the investment they manage the distance between owners and managers grows and  the need to investors to be able to monitor manager use information about the investments they manage as process of evidence of their stewardship.

In the absences of information to the information to the country, investors have incentives discount, the efficiency and efficient with which their investment are being managed from the point of view of the  owners (Investors) a discounting of the effectiveness of managerial performance would translate into a less favourable  compensation packages for the managers.

The managers, being aware of this potential, have incentive to generate and present information to both investors and managers is therefore clear investors need information for;

  1. Choose between competing investment options and
  2. To monitor adequately the effectiveness of the management team. Managers generate and present financial information as an objective measure of their stewardship. While is the benefits of accounting infrastructure in the generation of accounting information?

Included in the question to be addressed are:

  1. What kind of information should be generated
  2. What gathers and present this information
  3. What kind of training is needed for the information gathers presents?

Business entitles ordinarily present information on the results of their cash flows. To enhance comparability across time they also disclose similar information for a number of years  prior to the current year. This information  is useful in evaluation of the progress of the entity over time. However, it values arguably when the investment decision is a choice between competing investment entities.

A cross sectional comparison, of the  competing business entities would be more appropriate if the information were available. This, would be a need for “Clearing house” “where information on comparable but  entities e.g companies in the same industry can be obtained in an efficient  and relatively expensive manner.

The available of the appropriate mechanism for providing this services is one element of the accounting infrastructure.

  1. Establishing guidelines for accounting reporting. The financial information provided by management terms  is often used by investors for comparative analysis of competing investment options.

The validity of such analyses depends upon, many other things, an assumption that the information provided about the investment option is comparable. Comparability is enhance if it can be established that the information (e.g  financial statement are generated and reported using the same Guidelines.

If the guidelines are uniform, investors confidence is the validity  of analysis based on the financial information is increase.

  1. The asset function. Financial information (in the form of financial statement) about business entities is generated and distributed by the management team of the business entities. This same financial statements also serve as documentary representation of the result of management activities.

Investors who are interested in using this internally  generate information as a basis of making resources allocation decision recognize of this problem.

The necessary effort to address the problem has to take into consideration in the state of audit practice.

The question that needed to be addressed include:

  1. Is there a need for an increase production of qualified auditors.
  2. It so, what should be done to accelerate the production of auditors?
  3. What institution should be charge with this task, should it be the sole responsibility of the institute of chartered.

Accountants of Nigeria (ICAN)or is there some role that can be played by the universities and polytechnics?


Accounting regulators constitute  a component of the accounting infrastructure their impact on the investment climate derives from the economic consequence of their regulatory actions. The potential affects of accounting regulation aggregate investment should be of  interest to both investors and  regulators to investors, the proven effect of planned regulation effect their assessment of the value of their investment. To regulators; an understanding of the economic effect of their regulations is important.

Regulatory actins (e.g the issuance of a new mandatory accounting standard) are assumed to be influenced by account benefit analysis. The theory of regulation suggest that if regulators perceive that the cost of a proposed regulation exceed the social benefits ceteris painful, that regulation would not go forward, thus, when a new regulation is issued, regulators needs to be able to evaluate the actual consequences of the regulation in order to properly evaluate the accuracy of their earlier cost.


Optional resources allocation is enhanced if financial information generated and disclose by business entities is properly interpreted by or for investors.

Most investors would not have the background to interpret aggregate financial statements on their own, financial statements are usually designed to disclose aggregate  entities. However, information that investors would need to be more focused and desegregate  due from financial statements would usually be more helpful to investors.

A role of the accounting infrastructure is to device and support a proper mechanism for the interpretation of financial information. This development of expertise on sophisticated financial analysis is a requirement of the accounting infrastructure.

  1. Institute of charted accountants, her code of ethics in November, 1979, the institute of chartered accountant of Nigeria (ICAN) issued document embodying a code of conduct for its members. This document is titled “Professional conduct of members”

the institute recognize the impracticability  of laying down a set of comprehensive guidelines to regulate audit practice and conduct. The  code of conduct state “Needless to say, it is impossible to lay down a writer code which will always operate fairly and does not leave loopholes for those who are prepared to keep within the letter of the law but cares nothing for its spirit.

This is especially because the drawing up of written code necessary entails stating so much that it is obvious to anyone who has gone through the professional training required for membership.

Nevertheless, it is hoped that the code will assist member in their approach to problem bearing on professional  conduct which they may have to grapple with, in the course of their day to day duties; because of its importance to incoming members, code of conduct is set forth below.

  1. Integrity – An accountants should always act with integrity, honest and maintain a professional attitude, in the performance of his responsibilities.
  1. Maintenance of technical competence every member is expected to carry out his work with due professional skill and care, having regard to generally accepted accounting principles and practice in conformity with standard laid down by the institute from time to time.
  2. Advertisement – A member shall not advertise his professional accounting services to skill subject to the following guidelines.
  3. Provided that his name description and address is not guide undue performance, a member or his firm may place advertisement in the press when.
  1. Seeking staff, a partnership or salaries employment or
  2. Acting on behalf of a client for the purpose of processing personnel.
  3. A member firm is acting for a client in the buying or selling of property of a business.
  4. Announcements is the “Statutes” is permitted for;
  5. The opening of a new office, change in the proprietorship of a firm and change in the address of a firm and amalgamation with another firm.
  6. Sub-contract work- A member may make a direct approach to another member of the profession informing him of the service he offers.
  7. Member appointment – information on the appointment of members to positions of national or local duties as well as to the board of companies may be provided to the press and  professional journalists.

 A member may use his professional designation letter as follows;

  1. When participating on radio or on programmers.
  2. When submitting articles, letters or other contribution to the press.



The association of national accountants of Nigeria is a professional association of Nigerian  citizens. It was founded on 1st January, 1979 to transfer an interest in the management aspect of accounting equipment with internationally accepted standards.

The association has over 450 members in 31 states of the federation of Nigeria. They comprises practicing accountants, accountants general, directors of audit, commissioner for taxes, (Federal inland revenue), chief accountants of reputable companies (companies quoted at Nigerian stock exchange). Senior lecturers in the universities,  polytechnics and colleges of technology.


  1. To unite all Nigeria holding accounting qualification who are being employed as accountants or auditors in the public service of the federation, statutory. Cooperation, industrial and commercial enterprises and in self-employment as practicing
  2. To ensure that its members maintain a reputable minimum standard expected of any professional accountant in all parts of the world.
  3. To develop from time to time world wide acceptable accountancy, auditing and taxation standard with particular regard to the needs of Nigeria.
  4. To regulate the discipline  and  professional conduct of the members.
  5. To promote and project the welfare and interest of the accountancy profession in Nigeria.
  6. Nigerian accounting standard board (NASB) Before the advent of ANAN, ICAN has the necessary powers to regulate practice of professional, it is for a long time merely adopted those standard committee and the institute of chartered accountants in England and Wales on September 9, 1982, however, the institute established the Nigerian accounting standard board (NASB), the NASB has its membership from various sources, the central bank of Nigeria (CBN) Federal ministry of finance; Nigerian Accounting teachers associative (NATA), Nigerian Association of chamber of commerce, industry, mines and Agriculture (NACCIMA) the Nigerian Bankers Employers group, The Nigerian stock Exchange (NSE), the securities Exchange commission (SEC) and of course, predominant from the institute it self.


  1. To formulate and publish in the public interest accounting standard to be observed in the preparation of financial statement to promote the general acceptance and adoption and such standards by propellers and users of financial statements.
  2. To promote and sponsor legislation when necessary in order to ensure that standard developed and published by the board received nationwide  acceptance  and compliance.

Review from fine to board in the light of or changers in the social, economics and political environment .

So far, NASB issued twelve (12) statements of Accounting standard.

SASI.  Disclosure  of accounting policies issued in November  1984 and operative form, January 1985

SAS2:  Information to be  disclosed in financial statement November, 1984 and  operation January 1, 1985.

SAS3:  Accounting for property, plant and equipment November 1984, and operation from January 1985.

SAS 4:  On stock, March, 1986 and effective from January 1987.

SAS 5:  On construction contracts, August 1986, effective from January, 1988.

SAS 6:  On foreign currency conversion and translation June  1988 effective from June 1988.

SAS 7: On accounting for employees retirement benefit, June 1990 and effective from or after January 1991.

SAS 8:  Accounting for depreciation August 1987 effective on January 1990.

SAS 9: Accounting by Banks and Union Bank Financial Institute October, 1990, effective from December 1990.

SAS 10: On lease, March 1991, effective from January, 1992.

SAS 11: Accounting for Deferred Taxes, February  1992, effective on January 1, 1993.

SAS 12:  Accounting for investment, November 1992 effective from January 1994.

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