THE RELEVANCE OF ACCOUNTING INFORMATION TO FRONTLINE MANAGERS

CHAPTER ONE        

INTRODUCTION

Business firms are established to achieve specific objectives. This may be to maximize profit or its shareholders wealth which is called the end point of planning (koontz. 1980:189). In the pursuit of these objectives, certain persons occupy positions of authority, and are charged with the responsibility or functions of planning, organizing, directing and controlling human and material resources and channeling such towards the actualization of the objectives.

These persons are the managers. In its simplest definition, a manager is any person who gets things done through the efforts of others. (ulayi, 2007:21).

In a typical organizational structure, there are three categories of managers. These are the top, medium and frontline managers. The first group makes strategic decisions by monitoring the external and internal environment of the firm, forecast operation, at the same time make long range plan. The medium level managers make tactical and intermediate plans on how to achieve plans made by the top management while the frontline managers are controllers of operations and implementations. They interact with the workers and understand their problems better. They also understand better the job problems and are also referred to as foremen and supervisors who perform the day-to-day supervisory functions and make adhoc plans to reach objectives at minimal cost (Okorie, 1993:62).

Today’s complexity of business operations claims a leading authority in accounting, has placed users of information about firms in a much less knowledgeable position. Consequently, the necessity of keeping up with business date and other recorded information has not only posses a problem to accountants, but has also exerted great pressure on accounting as an information system (Davidson et al, 1979:11).

Indeed accounting is an information system designed to convey relevant financial information to users. Managers also see non-financial information as relevant in solving their job problems, but they rely more on financial information which is maintained for the purpose of helping management in making decision about the use of economic resources, for effective control of the routing function (Davidson et al, 1979:16).

Financial information provides frontline managers with budgets, forecasts, performance reports and variances with which to evaluate performance and take corrective actions.

This research work will aim at evaluating the relevance of accounting information to frontline managers include; the identification of their jobs problems; causes of such problems and their information needs to solve their problem, the type and nature of information needed, its suitability and extent of usage; the claims of starvation of information; and managers perception of information and how they think their performance can be improved to achieve these, three (3).

1.2      STATEMENT OF THE PROBLEM

This topic “THE RELEVANCE OF ACCOUNTING INFORMATION TO FRONTLINE MANAGERS” was conducted to focus on most important problems facing the frontline managers. These problems include their inability to determine the actual cost of material acquired, quantity supplied and consequently the rate of turnover.

A critical look at the managers in the contemporary times reveals that they are starved of relevant accounting information which will enable them carry out their jobs more effectively. But where such information are provided, they are seen as being so complex by the frontline managers, hence could not be used in computing how much is the actual cost of materials acquired, supplied and the rate of turnover.

Accounting information is a language with which financial data are communicated within and outside business establishments. It produces information for people through people (Daff, 1986:7). It is a life wire without which the current of success can not flow through the line of any business establishment. This description serves to show the important of accounting information in any business firm.

In the same vain, the frontline managers are foremen and supervisors who put management’s plans into actions. They do this by performing the routine functions to allocation individuals with work and seeing “that it is accomplished” (Appleby. 1976:30). The positions of these managers are demanding in view of their functions. It is their function that enables management to control costs, determine unit cost of production, supervise the other ranks and put all managerial plans into action. Without them, all these will become impossible.

1.3       OBJECTIVE OF THE STUDY

The objectives of this study are to:

Identify the types and nature of information needs of frontline managers.

Identify their job problems and how best these problems can be solved.

Identify the uses of this information and their suitability to job description of these managers.

Identify the claims of starvation and neglect of information.

Identify the place of accounting information in supervisory management.

1.4      THE SIGNIFICANCE OF THE STUDY

There are two major facets to view the importance of this study. These form the corporate and academic perspectives.

This study will enable us know how effective and efficient accounting information are needed by this managers, and also clear their protracted arguments, claims and counter claims. It will as well serve as a reference point for future researchers.

1.5      RESEARCH HYPOTHESIS

The statement of hypothesis provides a measurement criterion that keeps a researcher on the main line of the study (Osuala 1982:44). In order words, it is “a speculation on the way the variables of study behave” (Baridam 1990:3). It is a guide on the type of data that is to be collected and the method to be used in their analysis. The need for such guides gives rise to the following hypothesis:

H1. The frontline managers are able to determine the actual cost of material acquired, supplied and the rate of turnover.

H0. The frontline managers are not able to determine the actual cost of material acquired, supplied and the rate of turnover.

H0. The frontline managers are starved of relevant accounting information.

H1. The frontline managers are not starved of relevant accounting information.

H0. The accounting information provided to frontline managers are too complex for them to utilize in determining the actual cost of materials acquired, supplied and consequently the rate of turnover.

H1. The accounting information provided to frontline managers are not too complex for them to utilize in determining the actual cost of material acquired, supplied and consequently the rate of turnover.

1.6      SCOPE AND LIMITATION OF THE STUDY

This study was designed to discuss “the relevance of accounting information to frontline managers” which is a lengthy one. The research will be focused on selected companies located in Enugu. Emphasis will be placed on types, objectives and uses of accounting information. In the business of fulfilling the study objectives, the researcher faced great number of constraints which include: time finance, respondents’ insensitivity and lack of materials, etc.

I wish to point out that despite all these constraints, serious effort were made to ensure that a plausible study was carried out to meet the entire study objectives.