CRITICAL EVALUATION OF ACCOUNTING SYSTEM IN NON-PROFIT MAKING ORGANIZATION IN NIGERIA
BACKGROUND OF THE STUDY
Most business organizations either profit driven or not, engage in decision making on a daily basis in order to keep the organization abreast with recent developments in the business environment they operate. Accounting system provides requisite financial information that enhances and improves the quality of decision made by non-profit organizations (Barth, 2001). Hence, it can safely be concluded that Accounting System is not an end in itself but a means to an end i.e. decision making to improve corporate performance and financial structure. Gone were the days when business organizations – profit oriented or not
– were simply required to make a profit, survive and provide a fair return to investors’ on their interest. Meyer (2007) opined that, modern business
organizations find itself in the atmosphere of global uncertainties, cut-throat competition locally and internationally and unprecedented change in the economy. Hence, a great demand is one placed on the managers of these organizations to make pragmatic and informed decisions if the organization is to move forward as the success or otherwise of any organization is one
a function of the sum of the decisions taken in the past (Minton, 2007). However, the
quality of decisions taken by managers and other relevant personnel in the organization rests upon the substance and accuracy of information provided by accounting systems available to them. Non-profit organizations (NPOs) are playing more and more influential and powerful roles all over the world nowadays. From small, local, large, national and international organizations, they cover different aspects of social activities, such as religion, politics, education, health, environment, charity, etc. Accounting for non-profit organizations has become an interesting and important topic. Non-profit organizations incur expenditures when providing services to help people, while they are financed by grants or donations, not by market transactions from selling products or services, which makes their accounting requirements and treatments different from commercial accounting in many ways. Instead of taking interest in the profit erect of revenues and expenditures, non-profit organizations focus on the money erect. In many cases, the incoming resources have their unique usages, which demand separate accounting records. An accounting system is one of the most elective decision-making tools of management, as it provides an orderly method of gathering and organizing information about the various business transactions so that it may be used as an aid to management in operating the business. Accounting information also help managers understand their tasks more clearly and reduce uncertainty before
making their decisions (Chong, 2001). Nicoloau (2000) opined that accounting system produces detailed and comprehensible accounting information which
are an invaluable basis for decision making. In recent times, it has tended to be a system of information that does not stop at limits of data and financial
information, but also it include data and descriptive and quantitative information which is useful in decision making for users distinct with plurality and diversity. Such users include current and potential investors, lenders, suppliers, creditors, customers, governments and the public in addition to the administration, which is its responsibility to prepare the accounting programs and display it, such information must be capable of achieving the goal that it
has been prepared for. Hence the role of Accounting Information System for eective
decision making cannot be over emphasized. It is against this background that the researcher deemed it of pertinent concern to embark on a research exercise to appraise and provide relevant information on critical evaluation of accounting system in non-profit making organizations.
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