Accounting information system as a means of Enhancing financial management of transport Company
(a case study of the nigerian railway corporation Enugu)
Accounting information system in a transport organization has been a great problem to the third world countries in general, which Nigeria as a country has its own share. This research work, “Accounting information system in a transport organization, suggests ways of minimizing the effects of the problems of inefficient accounting information. It is believe that an improvement in this regards will enhance the performance of the corporation. To enable the researcher find solution to the problem of this study, some questions were raised in the form of hypotheses, which were developed comprising the null and alternative hypotheses. The methods of data collection were primary and secondary data method. The data collected were analyzed by use of simple percentages while chi-square was used to test the hypothesis formulated for validity. Findings show that accounting information is an indispensible tool in the management of Nigeria Railway Corporation and the activities of unqualified and incompetent accounting officers are responsible for the performance of the accounts departments in Nigeria Railway Corporation. Based on the findings, the researcher concludes that the accountant should put more efforts especially when computing the financial statement since accounts fraud result from ignorant of proper accounting procedures. Since the financial statement are sources of document of accounting information, efforts should be made in generating more relevant, timely, effective and accurate accounting information necessary for prevention or detection of fraud.
Title page i
Approval page- ii
Dedication iii
Acknowledgement — iv
Abstract v
Table of content vi
CHAPTER ONE
1.0 Introduction– 1
1.1 Background of the study– 1
1.2 Statement of problem– 4
1.3 Objective of the study– 5
1.4 Research questions– 6
1.5 Hypothesis of the study- 7
1.6 Significance of the study 8
1.7 Scope and limitation of the study- 8
1.8 Definition of terms- 9
CHAPTER TWO:
LITERATURE REVIEW
2.0 literature review- 11
2.1 The concept of accounting information system– 16
2.2 The importance of accounting information- 19
2.3 The users of accounting information 20
2.4 Criticism of accounting information system in Nigeria Railway Corporation Enugu– 21
2.5 The output of an information and the users.- 24
2.6 The outline of the information generation process and source document- 28
2.7 Application of computer system33
2.8 Accounts department in the Nigeria Railway Corporation Enugu 36
2.9 Functions of the accounts department 38
2.10 Officers of the accounts department 38
2.11 Accounting officers and heads of department-39
2.12 Disagreement between accounts officers and heads of department 39
2.13 Accounting system in Nigeria Railway Corporation– 40
2.14 Capital expenditure budgeting42
2.15 Expenditure checking section-46
Reference
CHAPTER THREE:
RESEARCH DESIGN AND METHODOLOGY
3.1 Research design – 55
3.2 Sources of data – 56
3.3 Research instrument – 57
3.4 Reliability and Validity of research instrument- 58
3.5 Population – 58
3.6 Sample size/ techniques– 60
3.7 Administration of research instrument– 63
3.8 Method of data analysis- 64
3.9 Decision criterion for validity of hypothesis 65
CHAPTER FOUR:
DATA PRESENTATION AND ANALYSIS
4.1 Data presentation– 71
4.2 Testing of hypothesis- 87
CHAPTER FIVE:
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of findings 96
5.2 Conclusion- 98
5.3 Recommendation- 98
Bibliography- 100
Appendix — 102
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The Nigerian Railway Corporation (NRC) has been in existence for years. It is
regarded the largest transport corporation in Nigeria and has a high network
operations.
The Nigerian railway corporation is One Hundred and Fourteen years (114) old
and it runs a unilaterally designed track system of 1067mm charge gauge. Only
30km of its track distribution is in double track and that is within Lagos area.
Nigerian Railway Corporation actually commenced rail business activities with
the construction of the first rail line from Lagos to Ibadan 193m between 1998 and
1901. By 1964 when the construction of 640km Kano-Maiduguri rail line, then
known as Bornu extension, was completed, the present core of the railway network
hard been put in place.
Presently, the railway system is made up of 3’505 route kilometers and 4332
track kilometers. In addition to this is the 19km 1067mm gauge extension from
Port-Harcourt to one deep sea port and the 277km standard gauge rail construction
of 1435mm from Ajaokuta to Warri. Nigerian railway was transformed from its
first and initial name.
“Government Department of Railway” to Nigerian Railway Corporation in
1955 through the instrumentality of the statutory act of parliament which, apart
from changing the name of the railway industry in Nigeria, equally conferred on it
absolute monopoly as the institution recognized by law to carry out railway
services.
The general aim and object of the statutory act of parliament of 1955 for Nigerian
railway is to recognize same as carrying out its function of effecting “carriage of
passenger and goods in a manner that will offer full value for money, meet cost of
operation, improve market share and quality of services, ensure safety of operation
and maximum efficiency, meet social responsibility in a manner that will meet the
requirements of rail after, trade, commerce, industry and general public”.
The headquarters of the corporation is located at Ebute-metta in Lagos state
while the entire network is for administrative convenience, divided into seven
autonomy districts viz.Lagos (Ebute-Metta junction), west (Ibadan), north (Zaria),
east Enugu), North-west (Minna), north- central (Kanfanchem) and North-east
(bauchi)
The railway system has been undergoing same rehabilitation and
modernization with the full political and financial support of the federal
government through the federal ministry of transport. The rehabilitation of the
railway system includes track spot removal of Lagos to Kano and Maiduguri to
port-Harcourt, supply of 25 new locomotive engines from brazil south America to
boost the registry motive power base of the corporation, up grading of the
signaling and telecommunication system from manual to semi automatic, as well
as rehabilitation of carriage and wagon workshops, re-equipping the workshops,
supply of service support (spare part consumables), strategic rebranding of the
corporation, rehabilitation of stations and marshalling yards inter alia.
Equally, new railway lines are being constructed in standard gauge
(1435mm). These include: Ajaokuta-Warri of 277km, Kaduna-Abuja (Idu) line of
186km while the scope of work for Lagos-Ibadan segment is under review together
with its cost implications.
The Nigerian Railway Corporation has contributed amenably towards the
improvement of social life and the development of the national economy. This is
through to be extended to every part of the country that is the haven stages which
will lead to permanent prosperity confident was such an ultimate triumph of the
railways.
However, regardless of the huge success made by the corporation, it is facing a
hard time.
1.2 STATEMENT OF PROBLEMS
Nigeria Railway Corporation which dominated the transport sector of the economy
in the sixties is presently being delegated by other means of transport such as road
transport, sea, and air transport. The corporation has lost her passengers and freight
mainly to road transport; this is because of inability of the corporation to compute
effectively in order to meet the age longed challenges.
Ordinarily there should have been growth in both road and railway transport but
the railway transport seems neglected. The truth of the matter is not just neglected,
but a problem of cash flow difficulty and management these affect the purchase of
spare parts, repair, payment of salaries, inadequate infrastructure support and
enhance service rendering.
Given the above condition of the Nigerian Railway Corporation in the nations
transport industry, the problem which looks for detailed analysis and solution
includes the following questions.
1. Is the accounting information used in the corporation adequate for
managements short and long term plans?
2. Have the accounting officers in the corporation has the needed professional
skills to cope with demands of the job?
3. Is there any serious effort made by the corporation to boost operation?
4. Do the accounting officers perform their duties without the interference of the
management?
5. What is the mode of approaching the chief accounting officer of the
corporation?
Answer to these questions above constitutes the basic problem of the
researchers work.
1.3 OBJECTIVES OF THE STUDY
Bearing in mind the above mentioned problem study is aimed at finding out among
other things such as:-
1. The organization of accounting department in Nigerian Railway Corporation
with particular interest in the eastern division of the corporation and how the
accounts department contributes to the achievement of overall goals for the
corporation.
2. Whether the accounting information is actually one of the effective
management tools in the railway corporation.
3. Whether the accountants in the corporation adequately perform their duties in
conformity with the statement of accounting standards (SAS)
4. In where the tools of the accounts department to the performance of the
individual workers in term of their output.
1.4 RESEARCH QUESTIONS
Despite the problem mentioned above concerning the Nigerian railway
corporation, these questions are been asked towards their accounting
department.
1. Dose the account department of railway corporation Enugu contribute to the
achievement of the overall goals of the corporation?
2. Is the accounting information actually one of the effective management tools in
the railway corporation Enugu?
3. Dose the accountants adequately perform their duties in conformity with the
statement of accounting standards?
4. What are the tools of the accounts department to the performance of the
individual works in terms of their output?
1.5 HYPOTHESIS OF THE STUDY
The following hypothesis where postulated as a guide to the researcher:
1. Ho:- accounting information is not an indispensable tool in the management of
Nigerian railway corporation.
HI:- accounting information is an dispensable tool in the management of
Nigerian railway corporation.
2. Ho:- The activities of unqualified and incompetent accounting officers are not
responsible for the poor performance of the accounts department in Nigerian
railway corporation.
HI:- The activities of unqualified and incompetent accounting officers are
responsible for the poor performance of the accounts department in Nigerian
railway corporation.
3. Ho:- The absence of computer system application dose not affects the timeless,
accuracy and availability of accounting information in Nigerian railway
corporation.
HI:- The absence of computer system application affects the timeless, accuracy
and availability of accounting information in Nigerian railway corporation.
1.6 SIGNIFICANCE OF THE STUDY
The role of accounting information in the management of large business
organization cannot be over emphasized. It is based on the fact that the research is
to study and appraise accounting information system as a tool of management
using the Nigerian Railway Corporation Enugu as a possible ways of minimizing
the problem for better and enhanced performance as the corporation.
The knowledge about these problems and their way out will help remedy other
transport corporation in similar state. This study is to make recommendation that
would boost the operation performance of the account department in the Nigerian
Railway Corporation Enugu if being implemented. Beside, the study of this work
is to help as well as serve as a term of reference for those who may be interested in
using it.
1.7 SCOPE AND LIMITATION OF THE STUDY
This study is on the Nigerian Railway Corporation Eastern division, the limitation
of this study in Nigeria railway corporation eastern division Enugu. This is due to
some constraints; those constraints were financial difficulties which prevented the
running down from one relevant railway corporation division to another for
sources of information necessary for this study.
Another constraints are the time limit within my disposal, the demand from the
academic activities and limit within this study is to be presented constitute the
constitutes
1.8 DEFINITION OF TERMS
FRIGHTS: This is the volume of revenue acquired by all haulage of goods by the
good train.
PASSENGERS FARE: This complies of the returns made from ticket sales and
penalties by defaulting passengers.
LOLLING STOCK: This include the entire carrying system which is made up of
the locomotive engine, coaches, wagons, (both covered and uncovered) and tanks.
They are used in the haulage of goods and in carrying passengers.
LOCOMOTIVE ENGINE: This is the enquire mechanism at the head of the
rolling stock that pulls then along the truck in the movement of goods and
passengers trains.
COACHINGS: These are revenue from country’s produce, luggage, parcel and
livestock.
Accounting information system as a means of Enhancing financial management of transport Company:
An Accounting Information System (AIS) plays a crucial role in enhancing the financial management of a transport company. Here’s how Accounting Information System can be effectively utilized to improve financial management in this specific industry:
- Expense Tracking and Cost Control: Accounting Information System helps track expenses related to vehicle maintenance, fuel, repairs, and other operational costs. It allows for real-time monitoring of expenses and helps identify cost-saving opportunities.
- Revenue Management: Accounting Information System can capture and process revenue data from various sources such as ticket sales, cargo fees, and leasing agreements. This helps in optimizing pricing strategies and maximizing revenue streams.
- Budgeting and Forecasting: Transport companies can use Accounting Information System to create detailed budgets and financial forecasts. This allows for better financial planning and allocation of resources, reducing the risk of overspending or underinvestment.
- Cash Flow Management: Accounting Information System provides real-time insights into cash flows, helping the company ensure that there is enough liquidity to cover operational expenses, repay debts, and invest in new assets.
- Asset Management: Transport companies often have a significant investment in vehicles and infrastructure. Accounting Information System can track the depreciation and maintenance costs of these assets, helping in asset management decisions, such as when to repair or replace vehicles.
- Inventory Management: For transport companies that carry inventory (e.g., spare parts, fuel, goods in transit), Accounting Information System can help optimize inventory levels to reduce holding costs while ensuring timely availability.
- Regulatory Compliance: The transport industry is subject to various regulations related to taxation, safety, and environmental standards. Accounting Information System can assist in ensuring compliance with these regulations by accurately recording and reporting financial data.
- Cost Allocation: Accounting Information System can allocate costs to specific routes, services, or customers, providing insights into the profitability of different aspects of the business. This information can guide strategic decisions.
- Financial Reporting: Accounting Information System generates financial reports that are vital for internal management as well as for external stakeholders like investors, lenders, and regulatory authorities. Accurate and timely reporting enhances transparency and credibility.
- Risk Management: Accounting Information System can help identify financial risks, such as currency fluctuations, interest rate changes, or rising fuel prices. By providing data for risk assessment, it enables the company to implement risk mitigation strategies.
- Automation: Automating routine accounting tasks, such as data entry and reconciliation, reduces the risk of errors and frees up staff to focus on more strategic financial activities.
- Integration with Other Systems: Accounting Information System can be integrated with other systems like GPS tracking, scheduling software, and maintenance management systems. This integration provides a comprehensive view of operations and finances, aiding decision-making.
- Security and Fraud Prevention: Robust Accounting Information System systems include security measures to protect financial data from unauthorized access and fraud, which can be particularly important in the transport industry.
In summary, an Accounting Information System is a powerful tool for enhancing financial management in a transport company. It provides accurate, timely, and actionable financial data that supports decision-making, cost control, and regulatory compliance, ultimately contributing to the company’s overall financial health and sustainability.