Effects Of Structural Adjustment Programme On Accounting Principles

This study was carried out on the effects of structural adjustment programme on accounting principles. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of SAP Abia state officials. 136 sample size were calculated for this study using Taro Yamane formula. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables. While the hypotheses were tested using chi-square statistical tool. The result of the findings reveals that neoliberal policies have not benefited the developing nations. The study also revealed that SAPs, both in the 1980s and the 1990s, have had a negative impact on Nigerian economies and populations. Therefore, it is recommended that team more accountants are needed to head our ministries and government parastatals so that the concept of accountability, which is receiving wider acclaim, could be better buttressed in action than in words. And the Central Bank of Nigeria (CBN) should put in place on ingenious foreign exchange mechanism such fixed and floated rate mechanism, which penalises all speculators against the naira with a view to appreciating the naira as quickly as possible. To mention but a few.

Introduction

1.1 Background of the Study

Before the "Structural Adjustment Programme (SAP)" can be clearly defined, one must have a better understanding of the situation into which it was introduced. At the conclusion of a Debate/Symposium on "Devaluation" held in 1982 at the Institute of International Affairs, the consensus emerged that the economic problem of Nigeria was structural.

The intention of SAP is to adjust the structure of the Nigerian economy, but what is the structure of the economy and why does it need adjustment? The relevant dictionary meaning of the word "structure" is "the arrangement or interrelation of all part of a whole".

At the summary of overall economic level which the economist call "The macro level", the structure f the economy is its composition as seen through the shares or proportion of the various component parts or economic aggregated, in the total sum of goods and services produced in a period usually a year.

Therefore, the structure of the economy is shown by the shares of the various economic sectors in the Gross Domestic Product (GDP).

Just like any other theory, accountants have discovered that they need to make certain assumption before they can prepare financial statements. These assumptions, which underline the preparation of financial statements, are also known as principles, postulates, conventions, concepts, and standards etc. The originate from such concepts as entity, going-concern, periodicity realisation, matching, consistency and historical cost concept.

They have been described as the basic points of agreement upon which the preparation of financial statement are based. They act as filters in the process of preparing financial statement and therefore assist immensely in selecting data to be processed and also indicating the processing method and thereby affecting the final result.

Accounting Principles are usually rules and conventions, which have been adopted as a general guide to action by the accountancy profession. These principles are formulated in such a way that the practical details of accounting may differ greatly from one company to another. To ensure acceptance, an accounting principle must be useful in coping with a practical recording problem, it must be reasonably objective, that is, provide a similar answer in the hands of qualified practitioners, and it must be feasible, that is, it should not be expensive to apply.

1.2 Statement of the Problems

This research work tends to give an appraisal on the effect of the SAP on accounting principle. Exchange rate devaluation was considered a setback in the progress of the SAP. Therefore the under listed problem was discovered:

Over emphasis on the restoration of balance of payment

Undermine the economy and limit its role for socio-economic intervention through a fixation on deregulation, privatisation and instability of the economy in the name of "free market"

Exacerbate the disparities between rich the poor by facilitating income concentration by the wealthy and the exclusion of the poor from decisions and control over resources.

Lack of transparency, accountability and public participation in their design and implementation.

Make many necessities inaccessible to local people as currency devaluations drastically reduce buying power in local wages.

1.3 Objectives of the Study

This study aims to find out the objectives which include;

To find out how adopting a more just and equitable approach to resolving the debt crisis can restore the balance of payment

To find out how to increase the role of socio-economic intervention through governmental control and stabilize the economy by eliminating free market trade through inflationary measures like naira devaluation.

To determine what causes inequality in the distribution of income between the classes of individuals and why the poor are excluded from resources control and decisions.

To find out why there is lack of transparency and accountability in SAP designs and implementations.

To evaluate on the inaccessible necessities of the rural migrants caused by currency devaluation which decreases the naira value?

1.4 Research Question

This research attempts to find answers to some nudging questions about the Structural Adjustment Programme on Accounting Principles. This is with the view at highlighting some silent reasons responsible for the ineffective and failing performance of SAP.

Some of the questions to which we seek answers without any form of prevarication include:

Has the Structural Adjustment Programme in commercial sectors improved accounting performance?

How does the Structural Adjustment Programme in accounting department of your company affect the profitability of financial report?

Is there any significant relationship between Structural Adjustment Programme and Second tier Foreign Exchange Market?

What are the peculiar problems faced by commercial sectors in implementing the schemes derived from its structural adjustment?

Does the Structural Adjustment Programme reduce the hardship of the common people.

What are the causes of lack of transparency, accountability and public participation in SAP designs and implementations?

1.5 Research Hypotheses

Hypothesis is a proposition specifying some form of relationship between variables, it is merely and evidence for supporting or rejecting one‟s preconceived ideas or view.

Hypothesis are of two types (H1) which is the alternative hypothesis and it the proposition the researcher which to confirm from the data. It is always expressed in positive term.

The other type (Ho) which is the null hypothesis and it is the logical converse of the alternate hypothesis. It is the negation of the alternate hypothesis; the following hypotheses are formulated as guided to this research studies. However, there are three hypotheses in this research work.

HO: There is no significant effect of the Structural Adjustment Programme in the commercial sector on accounting performance.
H1: There is a significant effect of the Structural Adjustment Programme in the commercial sector on accounting performance.

HO: There is no alignment between structurally Adjustment Programme and Second tier Foreign Exchange Market.
H1: There is an alignment between structurally Adjustment Programme and Second tier Foreign Exchange Market.

HO: The Structural Adjustment Programme decrease the challenges and calls for professionalism in management
H1: The Structural Adjustment Programme increases the challenges and calls for professionalism in management.

1.6 Significance of the Study

Structural adjustment Programmes (SAPs) in this study are meant primarily for accountants and the economic policies for developing countries that have promoted by the World Bank and IMF since the early 1980s by the provision of loans conditional on the adoption of such policies. The research study is also significant to the government by removing "excess" government control and promoting market competition as part of the neo-liberal agenda followed by the Bank and, the Enhance Structural Adjustment facility which is an IMF financing mechanism that aid the support of the macroeconomic policies and SAPs in low-income countries through loans or low interest subsidies.

SAP policies reflect the neo-liberal ideology that drives globalisation. The aim to achieve long term accelerated economic growth in poorer countries by restructuring the economy and reducing government intervention. This is done by privatising state owned industries, including health sector and opening up their economies to foreign competition.

1.7 Scope of the Study

This study revolves around the effect of Structural Adjustment Programme on accounting principles, with the Central Bank of Nigeria Abuja, as the case study. It focuses on the need of the economy to adopt these certain adjustment programmes to restructure and make policies and schemes that will improve the economy. The appraisal of the Structural Adjustment scheme is principally hinged on the problems and challenges , facilities, legal framework, personnel, the scheme compliance and corruption.

1.8 Limitation of the Study

The limitation involved in the course of this research included hostility and non- co-operation on the part of some of the respondents. The level of ignorance on economic reformation and illiteracy was very high. Some SAPs officials refused answering the question they felt would indict them. Also the financial implication was very high and imposed certain restrictions.

The constraint of time was also a limiting factor as all the areas of interest were not covered as they would have been adequate.

1.9 Definition of Terms

Structural Adjustment Programme:

Structural Adjustment is the name given to a set of "free market" economic policy reform imposed on developing countries.

1.10 Organization of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

Summary, Conclusion and Recommendation

5.1 Summary

The Structural Adjustment Programme tagged SAP has undoubtedly affected aspects and sphere of Nigeria socio-economy setup, hence it will not be wrong in the least to say that financial accounting which is the lingua-franca for the expression of economic situations and conditions, has been seriously affected. The principles of economic substance over form objectivity, fairness, materiality and prudence which has been the underlying mainstay, governing the selections of accounting policies used in preparation and presentation of economic realities has been affected by the advent of the Structural adjustment Programme.

The SAP measures born out of desires of the present government to find solution to our economic problem has since inception in June 1986 been condoning several salvoes fired at it by critics who believe it can never work.
Though it cannot be said with precision now how many of our economic problems have been solved or how many more have been created as the case may be but one thing is sure, SAP has affected everybody, very organisations; small or big.

Based on the ever-glaring effects of SAP with the scope of this research work, the problem discovered in the course of this research will b thoroughly analysed and appropriate recommendation given.

5.2 Conclusion

Critically analyzing the Structural Adjustment Programs, this study has argued that neoliberal policies have not benefited the developing nations as they have claimed, but have in actuality ensured a dominant position for developed nations in the global economy. Using Africa‟s experience with SAPs as a general example and Nigeria‟s experience as a specific example, it is clear that many SAPs have not met their objectives as set out by the IFIs when implemented. However, critics who consider SAP just another form of neo- imperialism, would debate as to whether the IFIs" objectives were realistically intended to be met, or whether the conditions were merely implemented to benefit the developed nations who hold power in the IFIs. Looking at SAP policies as a form of neo-colonialism, this study has argued that SAPs, both in the 1980s and the 1990s, have had a negative impact on Nigerian economies and populations. In addition, this paper has outlined some of the changes and improvements made to neoliberal policies and structural adjustment over the past thirty years, as well as some possible future directions of neoliberal development polices, specifically in reference to the alleviation of poverty. Though the International Finance Institutions have made an effort to move towards a focus on poverty-reduction development policies, they still rely on the neoliberal agenda, a reliance that needs to be reconsidered.

5.3 Recommendation

At this juncture, the government should realise that the successful implementation of any programme is a function of accountability, co-ordination and good financial control.

For the programme to succeed, the expertise of accountants should be sort for this great service to the nation.

The way forward is clear the open-minded whose love for the country and its people‟s suffering is greater than his/her interest.

The recommendations are:

More accountants are needed to head our ministries and government parastatals so that the concept of accountability, which is receiving wider acclaim, could be better buttressed in action than in words.

The Federal Government should stop listening to foreign advice on exchange rates due to the fact that, this causes instability in an economy‟s valuation of price and may lead to inflationary crisis.

The Central Bank of Nigeria (CBN) should put in place on ingenious foreign exchange mechanism such fixed and floated rate mechanism, which penalises all speculators against the naira with a view to appreciating the naira as quickly as possible.

The government should allocate more of its budget estimates on the manufacturing and production sector of the economy, thereby reducing the chance of experiencing currency devaluation as a result of import activities.

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