ACCOUNTANCY EBELE PROJECT.pdf · a project report in partial fulfillment of the requirement for the award of the degree (masters in business administration) mba in accountancy. department

ONUOHA EBELE GRACE PG/MBA/08/47551

PG/M. Sc/09/51723

BEHAVIOURAL ASPECT OF MANAGEMENT ACCOUNTING IN NIGERIAN

COMPANIES: A STUDY OF ANAMCO, EMENITE NIGERIA PLC ENUGU AND NIGERIAN BREWERIES PLC ENUGU

ACCOUNTANCY

A THESIS SUBMITTED TO THE DEPARTMENT OF ACCOUNTANNCY, FACULTY OF

BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS

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TITLE PAGE

BEHAVIOURAL ASPECT OF MANAGEMENT ACCOUNTING IN NIGERIAN COMPANIES: A STUDY OF ANAMCO,

EMENITE NIGERIA PLC ENUGU AND NIGERIAN BREWERIES PLC ENUGU.

BY

ONUOHA EBELE GRACE

PG/MBA/08/47551

A PROJECT REPORT IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE (MASTERS IN BUSINESS ADMINISTRATION) MBA IN

ACCOUNTANCY.

DEPARTMENT OF ACCOUNTANCY FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA ENUGU CAMPUS.

JUNE 2010

CERTIFICATION

The Researcher do hereby certify as follows:-

That to the best of my knowledge, this is the original work of

the candidate. That the project is in partial fulfillment of the

requirement for the award of the Degree of Masters in Business.

The researcher recognizes that she bears full responsibility

for the content of this work.

………………………………… ONUOHA EBELE GRACE RESEARCHER

DEDICATION

This research work is dedicated to my sons, Chidera

Chimdindu and Chisom and to the Almighty God from whom all

knowledge originate.

ACKNOWLEDGEMENT

A research work of this nature will not be complete without

a note of appreciations to those who contributed in one way or

the other to the success of this work. Prominent among these are

my supervisor, Mrs. E.O Onyeanu who with endurance, patience

and openness endowed in her provided all expert and

knowledgeable advice and guidance required to assemble these

facts; my sweet husband, Mr. Ernest Onuoha for his

encouragement and support and my adorable sons, Chidera,

Chimdindu and Chisom for their understanding.

I have also drawn inspiration from relations, friends and

colleagues too numerous to mention in my academics. To them I

remain eternally grateful. I must however mention the following

from who I received a lot of moral support, Mr Otuya K.C., Mr Agu

C.N and Mrs Umoren E.I.

Special thanks also go to my mum, Mrs Grace Obinwa and

my sisters, Charity, Uju and Ogonna for being there for me and

for their prayers.

Finally I appreciate the God almighty for His protection, love

and mercy throughout this rigorous programme.

Onuoha Ebele Grace 2010

ABSTRACT

This study was carried out by the researcher on accounting system, behavioural content of management accounting system and its concern in planning and control. It also looked at the impact of natural and corporate culture in individual and organizational behaviour in achieving set goals. The purpose of the study was to find out the behavioural implication of budgeting in some companies, investigate how accounting aid management, in motivating employees in an organization and to find out the problem of cost accounting as it relates to performance in achieving set goals. To achieve the purpose of this study, three organizations were selected, seventy- five questionnaires were distributed; twenty-five senior officers were issued questionnaires from each of the selected organizations. Personal interviews and observations were used to gather primary and secondary data which were then analyzed using statistical techniques namely percentages, frequencies and chi-square(x2). The study found out that accounting aids management in motivating employees, participation in budget formulation encourages higher performance in employee and when budgets are related to employees aspiration (attainment) level, better performance is achieved. Another finding revealed from the study was that communication of result to employees plays an important role in moulding the organization’s behavior of the employees towards goals achievement. Finally based on the findings of the test result of the study, conclusions were drawn and recommendations made.

TABLE OF CONTENT

Pages

Title page - - - - - - - - - i

Certification - - - - - - - - ii

Dedication - - - - - - - - iii

Acknowledgement - - - - - - - iv

Abstract - - - - - - - - - v

Table of content - - - - - - - vi

CHAPTER ONE: INTRODUCTION

1.1 Background of the study - - - - - 1

1.2 Statement of the problem - - - - 6

1.3 Objective of the study - - - - - 8

1.4 Research questions - - - - - - 8

1.5 Statement of Hypothesis - - - - - 9

1.6 Significance of the study - - - - - 9

1.7 Scope of the study - - - - - - 10

1.8 Limitations of the study - - - - - 10

References - - - - - - 12

CHAPTER TWO: LITERATURE REVIEW

2.1 Management accounting as a system - - - 13

2.2 Planning and control - - - - - 15

2.3 Budget as a control mechanism - - - 18

2.4 Budgetary control process - - - - 20

2.5 Behavioural context of Management

Accounting System - - - - - 21

2.5.1 Behavioural concern of planning and control - 23

2.5.2 Accounting and Motivation. - - - - 28

2.5.3 Budgeting system; impact on the behaviour of

employee. - - - - - - - 33

2.6 National and corporate culture. - - - 37

2.6.1 Impact of culture in management Accounting

System - - - - - - - - 44

2.7 Cultural and organizational features of Japanese

Management Accounting system. - - - 47

2.8 Nigerian and Japanese Management Accounting

System: Lessons and Application. - - - 51

References - - - - - - - 57

CHAPTER THREE : RESEARCH METHODOLOGY

3.1 Research Design and Method - - - - 59

3.2 Population of the study - - - - - 60

3.3 Sample selection and technique - - - 60

3.4 Data collection - - - - - - - 60

3.4.1 Primary and Secondary Data - - - - 60

3.5 Date Analysis Technique - - - - - 61

3.6 Hypothesis Test Statistics - - - - 61

References - - - - - - - 62

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA

4.1 Prelude - - - - - - - 63

4.2 Data Analysis and Interpretation - - - 63

4.3 Test of Hypothesis - - - - - - 78

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION

AND RECOMMENDATION

5.1 Summary of findings - - - - - 86

5.2 Conclusion - - - - - - - 89

5.3 Recommendation - - - - - - 91

Bibliography - - - - - - - 93

Questionnaire - - - - - - - 97

Chapter One

Introduction

1.1 Background of the Study

The purpose of the management accounting system is to

provide adequate and necessary information that helps the

management to make decisions and create activities that would

enable the organization achieve its set goals and objectives. Thus

management accounting system helps measure and report

financial information, which enable management achieve its sets

goals, objectives and monitor the progress of the organizational

policies to be unplanted.

By its nature, accounting is a behavioral process.

Accountants in the past have dismissed the importance of

behavioral issues as a major consideration in accounting. They

have focused on the financial performance and not on qualitative

factors. The motivation of managers as participants in the

information presentation was not considered and the behaviour

induced by the information presented was ignored. Perhaps, it is

because accountants consciously or otherwise adopted an

attitude that the main thrust of a firm was that of resource

allocation.

In pursuing the goal of profit maximization, the individual,

his perception, aspiration, attitudes, goals and motivation were

ignored.

This traditional approach of accounting has been questioned

especially in the area of management accounting, because of the

evolution of the modern organization theory.

The modern theory of organization view management control

(ie planning, budgeting and control) in three perspectives; the

problem in goal setting, performance evaluation and its impact

and the reporting of relevant data.

The various behavioural model of budget process have dealt

with the problem of agreement between management goals and

standard and the personal goals of the manager/lower workers.

The conflict can exist at any level. Hoopwood’s researches suggest

that there are numerous problems in achieving goals congruence

He concludes that though accounting system of budgeting is often

dominant in setting short-term objectives and goals, it has severe

limitation in achieving the overall objectives of the organization in

the short-term.

The problem of achieving the acceptance of management

standard is complicated by the Accountant implicit assumption

that the standard is good. Budgets and standards are not bad or

good per-se. It is what the worker/manager perceives it to be.

Some researchers have suggested different ways of achieving

goal congruence. Stendry, (1960) highlighted in his study the

importance of worker’s aspiration level in the control system.

Better performance would be achieved by relating budget to

workers aspiration level.

Level of aspiration has been defined in the literature of

psychology as a goal that when barely achieved has associated

with it subjective feeling of success; when not achieved, subjective

feeling of failure (Levin, Fastinger and Sear, 1944)

In effect the projected level of achievement becomes the

aspiration level of mangers in the organization. Consequently, in

a good running organization, managers would therefore induce in

the members of their department, acceptance of the same level of

aspiration.

Becker and Green (1962) stressed the gain from workers’

participation in goal setting. The dysfunctional effect of induced

pressure of budget suggests a participative approach to achieving

congruency between organizational and personal goals.

Participation if perceived by workers/managers as a device

by management to manipulate them make efforts at participation

run the risk of being interpreted as pseudo-participation. This in

turn will lead to workers failure to participate in goal setting in

the manner visualized by Becker and Green.

Studies on managerial motivation view managers as

motivated to achieve two sets of goals-his goal and that of the

firm. His goals are related to income, status, discretional control

over resource allocation and job security. To achieve both sets of

goals, the managers will strive to introduce slack in his operating

environment, thus creating and controlling of slack resources

becomes a means of managers achieving goals congruence.

Schiff and Lewis (1974) found that managers strive and

bargain for slack in budget because slack is perceived as a means

of achieving personal and organizational goals and reducing

uncertainty in attaining planned goals. This kind of uncertainty

avoidance is viewed as the participant’s response to the use of

budget as yardstick for performance evaluation.

Unfortunately, researches suggest that all too often

accounting performance measurement leads to lack of goal

congruence. The reporting system traditionally based on

management by exception highlights only managers mistakes. In

order to resolve the conflict generated by the reporting system,

managers may reject or discredit management standard.

Couched on the above background, since decision making

process is so important in influencing behaviour, the following

conditions are necessary

- Clear and unambiguous goal to be set

- Goal congruence must exist between the employees and

organizational goals.

- Good communication channels must exist

- Feedback must be provided to alter decisions quickly for

the interest of the organization

- Relevant information must flow to make best decisions.

It is against this background that this research work will

attempt to shed some light on specific management accounting

systems (budgeting and activity based costing systems), the

impact of budgeting on behavioural aspect of management

accounting and the effect of national and corporate culture on

management accounting system in improving the success of

ABC implementation.

1.2 Statement of the Problem

One of the objectives of management accounting is to

provide information that would help management make

decision(s) and create activities that would help the

organization achieve its goals and also encourage the

employee(s) to work in the best interest of the organization.

Thus, the behavioural issue of employees is an important

aspect of management accounting.

The foremost problem in organizations is that many

accountants do not see behaviour as an important aspect of an

organization. This may be due to the facts that it is only

recently that behavioural implications have been noticed and

that many accountants (Managers) are more interested in

actual performance without knowing that behaviour is actually

one of the motivators to perform.

The second important problem is how to achieve goals

congruence between the objectives of the employees and the

target of the organization. The existence of goal congruence is

to ensure that the employee(s) make quality decision without

any conflict. Where the goals determined by management

conflicts with the personal goals of the individual, it prevents

the set goals from being achieved. Realizing this, managers

now allow for participating management.

The third problem is the establishment of targets for people

in the organizations to achieve. People may look at set target as

something the management has imposed on them, which they

reluctantly have to try and achieve to keep their jobs.

Therefore; for effective decision making, clear and

unambiguous goals have to be set so that employees know

their duties and responsibilities since their attitude towards

the target(s) maybe shaped by the characteristic of the target or

the characteristics of the process by which the targets are set.

The fourth problem is how management motivates

employees knowing full well that people work harder with

incentive. This problem carries with at further problem.

First, selections of the type of that information should be

allowed to reach the employees.

Second, the method of performance evaluation/measures.

Thirdly, the vigour of monitoring and evaluating performance

and finally the process of budgeting to be used to motivate.

This research work will undertake to find out the

genuineness of these problems and seek ways to reducing

such.

1.3 Objective of the Study

Thinking of management accounting system without

understanding behavioural aspect and the impact of national

and corporate culture would be fruitless since decision process

is so important in influencing behaviour. To this end therefore,

the following objectives will constitute the main focus of this

research work viz.

1. To find out the behavioural implications of budgeting in

selected Nigerian Companies.

2. To investigate how accounting aids management in

motivating employees in selected organizations

3. To find out the behavioural problems of accounting as it

relates to employee performance in achieving set goals).

4. To adduce suggestions that will improve employee

participation in planning and control thereby including

higher performance standard.

1.4 Research Question

1. Does budgeting impact on employee’s behaviour?

2. To what extent does accounting aid management in

motivating employee?

3. What behavioural problems are associated with cost

accounting measures for performance evaluation?

1.5 Statement of Hypothesis

1. Accounting does not aid management in motivating

employees in the organization

2. Participation in budget formulation does not encourage

higher performance by employees

3. Better level of performance is not achieved when budget is

related to employee’s aspiration (attainment) level.

1.6 Significance of the Study

Many managers and accountants have overlooked the

impact of behaviour on the achievement of management decision.

They have been more interested in the actual performance

without noting that behaviour is actually one of the motivators to

perform. The study becomes justifiable since it looks into

accounting and motivation as an aspect of behavioural studies in

accounting. This will go a long way in bringing to the notice of

accountants and managers the importance of behaviour in

activity decisions.

It is also common knowledge that top management’s view is

that ability and potential willingness to do a good job is

necessarily limited to a few people at the top. The verification of

the authenticity of this view or otherwise which forms part of the

study makes the study more justifiable.

Moreover, the findings will help managers and accountants

to know the importance of behavioural aspect of an organization

and people affect management accounting system, achievement of

goals and therefore helps decision makers/target setters to adjust

their view and adopt appropriate attitude towards low level

managers and employees.

1.7 Scope of the Study

Because of the wide scope of the research topic, the scope of

the research is limited to planning, control, culture and costing

system like budgeting system, activity based budgeting (advanced

budgeting), activity based costing and a look at the Japanese

management system.

1.8 Limitations of the Study

The under mentioned problems were inherently encountered

in the course of carrying out this research work.

a. The usual difficulties encountered in taking necessary and

important information from any establishment or

organization for fear that the information gathered maybe

used for other purposes.

b. Because of the confidential nature of the subject matter, the

researcher is not allowed access to classified information or

date in selected organizations.

c. The non-availability of materials for the research work was

another limiting factor that militated against the research

work.

REFERENCES:

Stendry A: Budgetary Control and Cost Behaviour (Prentice Hall 1960).

Levin K, Festinger L, Pauline Sear: Personality and Behaviour Disorder (New York: Ronald Press Company, 1994)

Becker Sand Green D “Budgeting and Employee Behaviour” Journal of Business Vol.35 October 1962

Schiff M and Lewin Arie Y: Behavioural aspect of Accounting (Prentice Hall 1974)

Lucey T; Management Accounting

Chapter Two

Literature Review

2.1 Management Accounting as a System

Management accounting as a system consist of input

process and output components. The input system is data from

internal and external sources. The data are manipulated at the

process stage on the basis of economic and mathematical

principles. The manipulation may also have regard to the

accounting principles and organization’s behaviour (Asechemie,

1994).

The output consists of various reports to different

management levels. These reports will contain information for use

in planning, execution and review functions of management and

also act as a feedback for corrective measures.

Measurement –a part of management accounting functions

is the basis of quantitative information. Mock and Grave (1979)

points that the first requirement of measurement is reliability and

the second is validity and argues further that reliability validity,

meaningfulness represents factual view of measurement system.

In the accounting literature, information is said to be relevant

when it has feedback value (i.e. conveys corrective action that

enables corrective actions on the system to be taken) and

proactive value (i.e. can be used to predict the future) Mock and

Grave term this accounting information view as the purposive

view that requires consideration of relevancy and cost

effectiveness of alternative measure. Two intervening variables –

behavioural (Users) constraints and decision concerns, helps

define what information is relevant and cost effective.

Management Accounting can combine the factual and

purposive view to produce a framework for evaluation and choice

of measurement system, which is very important in planning and

control in an organization. In this light, accounting provides

organization with a system of information processing that involves

control in three areas:

(a) The setting of targets as the basis for judgment on whether

actual performance has conformed to plans.

(b) The information processing function which collects data on

actual performance and

(c) Comparing actual with expected target and report deviations

therein to the appropriate manager

2.2 Planning and Control

Planning is not only the most basic of all management

functions since it involves selecting from among alternative future

courses of action. It also determines how the four other functions

of management are implemented. Good planning must consider

the nature of the future environment in which planning, decision

making process and actions are intended to operate since

decision making is the heart of planning (Koontz, 1980)

Copeland and Descher (1981) defined organizational

planning as organizational goal setting. They went further to say

that common organizational goals include profit maximization,

achieving satisfactory level of performance, continual goals

ensuring survival and rendering service by providing goals and

services desired by others. It is with this view that emphasis is

place on budgeting and budgeting control.

Controlling is a management function which according to

Koontz and Whierch is the measurement and correction of

activities and subordination in order to make sure that

organizational objectives and plans are accomplished. Meigs and

Meigs (1977) conclude that managerial control includes;

planning, action reporting and evaluations. They explain that

planning is setting of organizational objectives, standard of

performance and choosing among alternative course of action

while action itself is to see that plans are put into effect and that

policies are adhered to.

Copeland and Descher (1981) emphasized that accounting

provides organization with a formalized system of information

processing that involves control in three areas:

1. The budgeting process which sets the basis for judgment on

whether actual performance has confirmed to plans.

2. The information processing function which collects data on

actual performance.

3. Control which is frequently initiated by accountants who

compare actual with expected targets and reports deviation

therein to the appropriate manager.

Owler and Brown (1983) holds the view that budgeting

control relates expenditure to person(s) who incures it, so that

actual expenses can be compared with budgeted expenses thus

affording a convenient method of control. They further opined

that budgeting control is planning in advance the various

functions of an organization so that its business as a whole can

be controlled. The purpose of establishing control according to

Owler and Brown is to relate responsibility to executive’s

requirement of a policy and continuous comparison of actual with

budgeted result either to secure by individual action policy

objective or its revision. This view conforms to the operational

definition of budgeting control by the institute of cost and

Management Accountants (ICMA).

However, comprehensive planning and control entails a

systematic approach to management. The philosophy emphasizes

the importance and inter-relationship that subsist between the

parts of the system and the whole. It focuses on a quantitative

evaluation of the results of managerial objectives and dynamic

control through the application of management by exception

(MBE) principles. Welsch (1976) documents the following

sequence of step in planning and control.

Evaluation of the potential efforts of all variable on the

enterprise.

Specification by executive management of the broad

objective of the enterprise.

Establishment of specific goals for the enterprise

Development and evaluation of enterprise strategies

Preparation of planning premises

Preparation and evaluation of project plans

Strategy and tactical profit plans

Development of supplementary analysis

Implementation of plans

Development, dissemination and utilization of performance

reports.

Implementation of follow up actions.

2.3 Budget as a Control Mechanism

Management is all about decision making, coordination and

control. Its goal is effective performance/attainment of set goals

at the least possible cost. One mechanism used for ensuring

effective performance is the budget.

Budget is defined as a comprehensive and coordinated plan

expressed in financial term for the operations and resources of an

enterprise for some specific period in the future (Pandey, 1999).

Thus a budget can be viewed as a process of assigning cost to

specific tasks that are planned within a definite time period.

Budget and plans are two sides of a coin that have the

following identifiable processes:

1. The careful appraisal of the contributions of various

business activities to corporate objectives

2. The projection of the prospect of each business activity over

a time period, usually a year;

3. Determination of the attainment of these objectives at

minimum cost.

4. Formulation and implementation of short-term (tactical) and

long term (strategic) policies.

5. Translation of the objectives/policies into financial terms.

6. Development and introduction of control measures to ensure

that plans/goals are achieved.

7. Revising budget in light of changing circumstances and

experiences.

Implicit in the budget process is the management element of

control. By clearly defining tasks, specifying how they will be

implemented and financed, a budget helps to direct the efforts of

employees towards the achievement of cooperate goals and

objectives.

A budget as a control mechanism entails the setting of

targets to be accomplished, backed by the cost implication,

thereby providing a benchmark for measurement and control of

performance. Additionally, it provides feedback information that

facilitates the taking of corrective measures.

It therefore follows from these that for a budget to achieve its

goal(s), it must receive top management support, have realistic

and achievable goals and clearly assign authority and

responsibility. All stakeholders in the system must participate in

its formulation and implementation where adequate information

must be made available at each of the implementation stage.

2.4 Budgetary Control Process

Ackoff (1970) opined that control process involves four

steps.

1. Predicting the outcome decisions in the form of performance

measurers.

2. Collecting information on actual performance

3. Comparing actual result with predicted performance

4. When decision is shown to have been deficient, correcting

the procedure that produced it and correcting its

consequences where possible.

From the above, it can be deduced that the control process

basically involves resource allocations, performance

measurement against set standard, result feedback,

evaluation of plans, budgets and key constraints depending

on the emerging environment and information and

eventually correcting of deviation (variance) from set

standard.

Consequently, it can be concluded that the end product of

budgeting control process is performance measurement,

reporting of results of measurement process, analysis of

deviation from objectives, plans, policies and standard in

order to determine the underlying courses and follow up to

appraise effectiveness of corrective actions and feedback

information to the planning process to improve planning and

control cycle.

2.5 Behavioural Context of Management Accounting System

Management accounting is to provide information that helps

the management in decision making and create activities that

help the organization to achieve its goal and encourage employees

to work in the best interest of the organization.

Therefore, the behavioural issue of employees is an

important aspect of management accounting. Since the decision

process is so important in influencing behaviour, adequate care

has to be taken so that the best decision is made in management

accounting.

There are two views of organization behaviour :- the

traditional view and the modern model views.

An analysis of this behavioural context would shed light on

the understanding of the behavioural concern of planning and

control (budgeting and budgeting control).

Basically, the traditional view sees profit maximization as

the ultimate goal of the organization. The firm seeks to minimize

cost and maximize profit. People are rewarded and punished by

monetary terms. The major measurement of reward is job

performance. Authority is top down and management takes

different measures when employees do not perform up to

standard.

The modern view of behaviour views goals setting as a much

more difficult task. It is affected by the goals of the individual

leader. The model is suggestive that people are motivated by

monetary and non-monetary terms. It agrees that the motivating

forces of the three Need theory (Maslow Hierarchy of need) and

other psychological factors play a part in influencing behaviour of

employees. As a result the goals of management accounting may

conflict with the personal goal of the individual thereby

preventing goal achievement.

The modern model further states, “The ability and the

potentials willingness to do a good job are not necessarily limited

to a few people at the top but throughout the organization”.

(Management International Review, Wiesbaden 1st Qtr 1992). It is

essential to influence all participants of the organization for a

management to be successful. This goes to show that monetary

term is not a sufficient motivation to employee since it does not

satisfy their social and psychological needs.

Therefore, management accounting system should also be

designed in such a way as to follow present management theories

like participative management and management by objective

(MBO).

2.5.1. Behavioural Concern of Planning and Control

Budgeting involves planning- the establishment of goals

(targets) for people in the organization to achieve. The people’s

attitude towards the target may be fashioned by the

characteristics of the target or the characteristics of the process

by which such target is set. The employees may consider the

targets as too low or too high where they are too low; they may

not want to do more them that low target. If the target is too high,

they deem it unrealistic. Worker’s performance is highest where

target are not too high but challenging. (Locke et al 1981)

Horngren, et al (1997) pointed out that organizations have

successfully used management by objective approach in making

budgeting control achieve its goals. Under this approach, the

managers and subordinates participate in jointly formulating

goals.

In considering human factor in budgeting, Tonye (1983)

noted that no matter how sophisticated a budgeting control may

be, unless human factors are taken into consideration, it may not

succeed in achieving its job.

Human factors in planning and control should be guided by

participation and motivation. Managers’ performances are

evaluated in relation to the set targets. The participation of

managers in setting targets may motivate them to contribute their

best towards achievement of the plans (target) but if they do not

participate, they may regard the plans (targets) as strictly

imposed and will generate a feeling of alienation resulting in

kicking against the plan(s) to the disadvantage of the

organization.

Participative budgeting system in which those who have

responsibility for executing the budget make an input to the

determination of targets are capable of not only avoiding the

feelings of alienation but also brings a greater commitment to

budgeted targets. The greater commitment is explained by the

fact that targets are accepted by workers as their personal targets

and therefore work hard to achieve them in order to avoid

dissonance i.e. discrepancy between free choices and adverse

result. People feel bad when they cannot achieve the goal they set

for themselves; therefore they work hard to achieve set targets.

Christenson, (1982), Evans and Bauman (1983) noted that

participative budgeting is a mechanism of transforming

information possessed by lower level workers to the company.

When lower level workers participate in goal setting, they bring to

bear their knowledge of the operating conditions and other

realities. They may keep this knowledge to themselves if they do

not participate.

It must be noted that, that since the lower level workers are

closer to the operations of the business, they should be given a

say in the control phase of budgeting. The unilateral control

exercised by the “people on top” alone can lead to feeling of

psychological failure in lower worker. Argns (1980).

The psychological failure leads to withdrawal and the

unwillingness to contribute to the process of organizational

learning. This psychological withdrawal and unwillingness of

lower worker to contribute to organization growth is consistent

with the findings that post decisions information from workers

are of value to their employers (Dye 1948)

Profit planning and control techniques establish a system

approach for the involvement of all management level (i.e. all

inclusive management) in the planning process. The active

participation of all managerial level in shaping the desired goals

and the plans for achieving them has a positive behavioural effect

on interest, enthusiasm and morale. Active participation by all

members of management makes them aware of their particular

responsibilities fit into the total operation of the organizations and

of the necessity for inter departmental co-operation.

All writer on budgeting control agrees that managers who

are to operate budgets be made to participate in its drawing as it

will enable them identify with the organizational goal. Budgeting

techniques are themselves free from emotion; however, the

administration of budgets and its control needs selections,

persuasion and intelligent interpretation. A survey of budget

related planning and control policies and procedures concluded

that respondents heavily use budgeting techniques, nevertheless

wide participation of managers and statistical techniques are

rarely used.

As a result of non-participation, many managers regard

budgets negatively. Some studies have shown that participation

leads to more positive correlation of attitude and performance

with participation. If participation must give effective result in

performance, it must be true participation and not pseudo

participation which is described by Argyris as management

discussing budgets with lower level managers with the aim of

obtaining final acceptance of budget and performance level

previously determined by top management.

Finally research has identified various factors which help

organizations to decide whether participation is worthwhile and

how it can be made effective if worthwhile. These factors include

the cultural setting of the organization, management style,

relationship between supervisor and the supervised, the level of

decentralization, the work situation and type of structure and

business. However, from the researches, it is apparent that

participation must be used with care and applied selectively

having regard to behavioural and social factors. On occasions,

imposed budgets and an authoritarian style will lead to high

performance.

2.5.2. Accounting and Motivation

Motivation is the need to achieve a selected target or

objective and the resulting drive and determination that influence

actions directed towards the selected target. It is desirable that

managers are motivated by the budgeting (planning and control)

system and there are some evidence that clearly defined goals and

objective influence motivation in a positive manner (Lucy, 1996).

Motivation which results in positive behaviour towards

achievement of selected target and objective is activated by the

expected subjective benefits from along certains (vroom

expectancy theory, porter and Lawler model). These benefits may

or may not have material bases.

The effect of incentives in motivation cannot be over

emphasized. Research by Stendry et al shows that there are

positive gains in motivation when reward-penalty systems of the

organization are consistent with the control system.

Participation by budget holders in the budget and planning

process is often likely to effect motivation and forge positive

attitude of managers towards achievement of set target. The

process of budgeting maybe used to motivate. Organizational

behavioural literatures agree that democratic (participatory)

structure is more conducive to motivation of managers than an

autocratic one.

Argyris in his research found that often budgets were used

by managers as a pressure device and viewed as a management

policing system. In such a circumstance, budgeting would

naturally have a demotivating effect-the opposite of what is

intended. To foster motivation, acceptance by the manager of the

budgets and the level of performance contained in the budget is

important.

Skinner (1963) in his “Behaviour modification” technique

holds that managers can be motivated by properly designing their

work environment and praising their performance and that

punishment for poor performance produces negative result.

Skinner and his followers far more than praising performance,

analyze the work situation to determine what causes workers to

act the way they do and then initiate changes to eliminate

obstructions to performance.

Specific goals are set with manager’s participation and

assistance. Prompt and regular feedback of result is made

available; performance improvements are rewarded with praise

and recognition where performance does not equal goal, they find

ways to help people and praise them for the good things they do.

Skinner’s approach emphasizes removal of obstruction to

performance, careful planning and organizing, control through

feedback and expansion of communication. It has element of

participation. Japan management system is consistent with

skinner’s modification theory. It is akin to the requirement of

good managing (Koontz et al 1983). This theory is also consistent

with Lewins field theory that sees human behaviour in an

organization as a product of forces that either tends to limit

productivity or motivate individuals to be more productive. The

management can improve productive effort by either reducing

these restraining forces or by strengthening the driving forces.

With the principles, techniques and concepts of good

management an effective management can achieve these and

motivate workers.

Management Accounting may bring about behaviour

modification in organization by aiding management in motivating

people in organization in a number of ways.

First by choice of performance measure. Different

performance measurement call forth different mode of behaviour

from people (Ridgeway 1956). If the performance of a worker is

measured in terms of the weight of output produced, time taken

in production, the cost of the output or the quality of the finishing

of the product, it will make a great difference. The worker will

want to work towards the measure of its performance; it will be

its guide of action for he would like to be seen as performing.

Second, the firmness in the process of monitoring and

evaluating performance can influence motivation. Workers would

tend to be poor in their performance if performance is

infrequently and sluggishly evaluated. The Accountant has to be

tactful, firm, fair and thorough in executing his duties.

Third, by the selection of the kind of information that

reaches the employees. It has been found useful and motivating

to give people information on a company’s problem especially

those in which they are involved (Koontz 1983). Information that

shows correlation between organizational performance and the

welfare of the employee and his remuneration may increase the

employee love for the organization thereby resulting in positive

behaviour towards goal achievement.

Fourth, provision of feedback/information by the

Management Accountant on employee’s performance can motivate

and modify behaviour in the organization either for esteem or

other psychological reasons. Feedback acts as reward or

punishment.

Fifth, Accounting helps in satisfying the physiological

security and belongings need of the employees and thereby

motivating them toward better performance. The Accountant

should ensure accurate and fair computation of employees’

benefits, remunerations and entitlements and their prompt

payment. They should be able to provide security needs by

fostering dialogue between employees and employers or through

good pension scheme provision management and provision of

necessary information in current and relevant issues in the

organization. These may lead to more positive organizational

behaviour.

Accounting may report on the state of motivation in the

organization. This should help the manager in the management of

motivation by reporting on advances made and or threats

suffered. However, traditionally, reporting the state of motivation

has been done only indirectly by looking at statistics on

absenteeism.

Naturally, since motivation is a subject of psychology, one is

tempted to run to experimental psychology for a technique of

measuring the state of motivation. In our context, it would appear

that laboratory experiment using threshold measurement or even

scaling technique may not yield result accurate enough. The

accountant might consider field experiments which should take

place in a realistic everyday situation. With a combination of a

field experimental, design, and a suitable scaling technique for

the responses of the subjects, it may be possible ascertain their

feelings in quantitative terms towards a number of factors related

to the work and building up a composite picture of the state of

motivation for an organization at a particular moment in time.

2.5.3. Budgeting System: Impact on the Behaviour of

Employee.

Researches have shown that the traditional view of

management does have adverse effect on the budgeting system. It

puts intense pressure on the employees and management to work

harder. The inherent danger lies in allowing budgeting goals to

supersede organizational goals. This conflict between partial and

overall control objectives of budgeting, the excessive departmental

interdependence sometimes engendered and the consequent lack

of co-ordination are symptoms of inadequate management since

plans should represent a supporting and interlocking network

and every plan should be reflected in a budget in a systems way

(Koontz and O’ Donnel 1980)

The budgeting system may make managers try to shift

responsibility by hiding the truth, putting the blame on others,

thereby hiding inefficiencies. It often results in padding of the

budget system to achieve expected results. It would not reflect the

actual performance of the employee and therefore would not be a

true assessment of the company (Ching and Hoong, 1999).

A study on the use of highly achievable budget targets

should be used because of the following impacts.

Managers will be more committed towards achieving the

target. This is because people will feel psychologically better when

they see a more plausible goal. Since they believe that such a

target is achievable, they will do more to work towards the target

when a target is seen as impossible, the managers will not bother

about trying to work to reach the target.

The use of achievable budget prevents managers from

engaging in illegal practices to achieve their targets. Managers

may make costly operating decisions such as using unapproved

raw materials or manipulate the accounts to achieve their motives

where target is not achievable.

However, a less achievable target may be desirable in order

to satisfy the inspirational needs (Maslow Hierarchy of needs).

This will be a good motivator for mangers with strong needs for

self-satisfaction. Besides for companies in an uncertain

environment, a highly achievable target may not be the best.

Some companies may seek to be the market leader in their

respective field and highly achievable targets do little to reinforce

their position in the market. Thus less achievable targets will be

used in such situations.

Also traditional budgeting does not account for the

integration of management functions and business processes.

Thus it results in lack of commitment. This is as a result of the

practice of top-down control and emphasis in financial

performance. This causes dysfunctional behaviour that will lead

to poorer performance of employees.

To overcome these negative implications of traditional

budgeting, advanced budgeting techniques (Activity based

budgeting) can be formed. Advanced budgeting helps to create

positive behaviour that works towards common objectives by a

balance set of performance measures. Also a set of measurement

will improve consensus building and decision making. This would

reflect positively on the behaviour of employee (Hung and Chung,

1999)

Besides companies are realizing the importance of new

techniques that blend well into their management structure. Thus

the relative importance of the traditional management systems

such as traditional budgeting system has decreased.

In today’s business world where everything is growing

rapidly, a more immediate and relevant performance measures

are required than are found in the conventional budgeting

systems. There is a need for an open information system such as

additional measures are required which should focus on factors

which drive activities, the quality of the activities undertaken, the

responsiveness to change and so on. Brunson and Fraser in an

article in Management Accounting in January 1991 claimed that

ABB provided stronger links between organization’s strategic

objectives and the objectives of the individual activities within a

business for which departmental managers are responsible. They

pointed out that ABB has the ability to tackle cross-organizational

issues by participative approach and activity analysis technique

all of which promote continuous improvement in performance

and at the same time evaluate the performance of the employees.

2.6 National and Corporate Culture

Management Accounting cannot be examined in isolation of

culture. It is important to take into consideration, cultural

difference in order to be able to consider the applicability of

Management Accounting techniques in Nigeria and other

countries. Management theory assumed that a good manager in

America would also be a good manager in other countries as well.

However, studies of corporation outside that state have

supplemented this view with the understanding that managerial

attitudes, values, behaviour and efficacy differ across national

cultures. Differentiated management practices are required due to

such diversified national cultures. (Gonzalez and McMillan, 1961)

findings show that management is culture bound. On the basis of

2 years study in Brazil that concluded that “American

management experienced abroad provides evidence of our

uniquely American philosophy of management is not universal

but rather a special case”. They emphasized, that aspect of

management which lacks universality has to do with

interpersonal relationships including those between management

and workers, management and suppliers, management and

customers and community, competition and government.

(Oberg, 1963) in his research agrees with Gonzalez and

Mcmillan. It is his believe that the applicability of management

principles maybe limited to a particular culture or situation and

that it maybe fruitless to search for a common set of principles,

absolute or determinate solutions.

Further current example brings out the fact that

management practices are not and should not be uniform as a

result of nation and corporate culture. In the US and UK, firms

the practice pay-for-performance scheme perform better than

their non-Anglo counterparts with similar schemes. Japanese

firms excel when they implement quality circles but their

counterparts in the state cannot deliver the same level of

performance despite countless efforts.

(Hofstede, 1991) defined national Culture as set of values,

beliefs, practices and assumptions learned in early childhood that

distinguishes one group of people from another. National culture

is assimilated into everyday life and it is relatively difficult to

change. Hofstede in 1984 used the five-dipolar dimension to

establish a theory of management cultural difference between

nations.

The five-dipolar dimensions established by Hofstede are

Power distance culture: This is the extent to which people

believe that power and status are distributed and unequal

distributions is accepted as proper way for social systems to be

organized. Power distance influences the structure of formal

hierarchy, the degree of centralization and level of participation in

decision making in organizations. Companies in higher power

distance countries like Latin Europe and Asia tend to be more

centralized and there is less participation in decision making.

Studies conducted discovered that companies in the states

(Low power distance) that advocate employee participation are

more efficient and develop faster than those in higher power

states who discharge participation. It is concluded that

participation is an important dimension of work unit

management.

It is argued that management initiatives such as team

building fail in high power distance cultures because employees

tend to view participation negatively and employees from different

levels feel at ease communicating with one another face to face in

a group. It was concluded that employees in high power distance

culture view participatory management with fear, distrust and

disrespect for it is against the national culture.

Uncertainty Avoidance Culture: This is the extent to which

people are treated to uncertainties, unknown and ambiguous

situations. In organizations, clarity of plans, policies, procedures

and systems help to avoid uncertainty. Reliance on clear

procedure, well known strategies and well understood rules help

employees reduce uncertainty and cope with the discomfort that

comes with unknown and ambiguous situations.

Studies conducted by Schneider and De Meyers in 1991 in

Latin Europe in contrast with those law uncertainty avoidance

countries found that managers responded forcefully and

negatively when there was any organizational redesign and

corporate wide training programs. The managers view changes as

cries and their reaction were more extreme.

A study of French organizations further explains the effect of

uncertainty avoidance at the organizational level. It was noted

that though French companies are somewhat more structured

and hierarchical than American Companies, the former

performance is comparable to that of the later policies and

systems that work well in France a high uncertainty avoidance

country fail to work as effectively in America. Rules are more

effective in France than in US and French employees prefer

certainty of rules while America worker work better under

situation of ambiguity.

Individualism- Collectivism: It is the extent to which identity

is derived from the self versus the collectivity. Cultures that

champion individualism expect people to look after themselves

and their immediate family. As in Nigeria and US, people are

expected to stand to their feet from early age and fend for

themselves. Social status is derived from individual

accomplishment.

Countries that exhibit collectivism culture e.g. Singapore,

Taiwan and South Korea rely on membership in-groups. These

groups include social classes, communities and religions and

extended for identity and status. People are expected to act in

group interest and in turn are protected by the group.

Individualism–collectivism cultural characteristics in organization

translates into individual level rewards autonomy, management

emphasis on work unit solidarity and team-based rewards

(collectivism).

Masculinity – Feminimity:- Masculine culture are characterized

by assertiveness, performance, success and competition.

Feminine cultures are associated with personal relationships,

quality of life, and service. In masculine societies like Japan and

the US, woman play a different role as compared to feminine

countries like the Netherlands and Sweden.

Hofstede (1991) has shown that rewards given on the basis

of monetary terms, if properly allocated transcends to a higher

performance in the US work unit. Further, it shows that another

management technique is suited for masculine culture as

compared to feminine culture in MBO.

Long Term versus Short Term Orientation: In this last

dimension, Hofstede refers to a country’s time orientation i.e.

whether long term or short term. This dimension is known as

Confucian dynamism. Long term oriented culture countries are

found in Asia including the four little dragons of Hong Kong,

Taiwan, South Korea and Singapore. These cultures are

characterized by patience, perseverance, respect for one’s elders

and ancestors and a sense of obedience and duty towards the

larger good.

Countries like the west which are classified as short term

oriented favours past and present values like those associated

with respect and the honoring of social obligations.

Therefore in long term cultured countries, management

practices favour provision of long-term employment and planning

rather than short term. However, this dimension is relatively new

with little or no empirical evidence to substantiate the efficacy of

long-term orientation and performance.

With some knowledge of the various dimension of national

culture, we would be able to gain some insight into corporate

structure of organizations.

Corporate culture can be defined as the values, norms, beliefs,

assumptions and practices held by the employees including the

managers of an organization. It can therefore be concluded that

the corporate culture of a company is somewhat similar to the

national culture. This proposition is based on the fact that the

employees of a company are the natives of the country. This is

even more important in the present world of globalization where

multi-national companies span across countries with different

national culture.

2.6.1 Impact of culture on Management Accounting Systems.

Studies done on the success/failure of the implementation

of Management Accounting System, such as costing systems

considering the impact of national and corporate culture has

based more on the relationship between national culture and

activity-based costing (ABC) system.

Brewer (1998) tried to identify the relationship between

international cultural diversity and ABC success. He used the

Hofstede’s taxonomy of work related cultural values to draw

prediction with regards to the possible impact of national culture

on ABC implementation. He used the Harris Semi-conductors

(HS) plant in the US and Malaysia to make comparison on the

success of ABC implementation which gives that both countries

has diverse national cultures.

The several predictions formulated by Brewer in his study

were based on the dimension of national culture and the six

factors which numerous ABC literatures views as contingent to

the success of ABC. The six factors and the relevant predictions

in the study are:-

An organization having top-level managers committed to the

ABC project.

An organization providing its employees adequate training in

ABC.

An organization encouraging its employees to become cross-

functional, team oriented generalists who can exploit ABC

process orientation instead of individual oriented specialist.

An organization whose employee compensation is related to

activity based team oriented performance metrics.

Organization empowering front line workers who have

understood the process well.

An organization and its members having a long-term view of

the ABC project instead of asking for immediate short term

result.

Prediction 1: A company that relies upon top-level managers to

champion an ABC initiative in a strong “top down” fashion will

generate more defensive behaviour in low power distance

cultures, thereby reducing ABC success relative to high power

distance cultures.

Prediction 2: ABC’s inherent cross-functional team based

approach to work feature will result in more defensive behaviour

in individualist cultures, hence lowering ABC success relative to

collectivist cultures when cross-functional team co-operatively

work as in groups.

Malaysia is considered a high power distance/collectivist

culture while US is considered a low power distance/individualist

culture. Although the US is classified as a low Confucian

dynamism cultures, Malaysia, because of diverse ethnic groups

has not been classified with respect to Confucian dynamism. The

result of the study revealed that ABC was relatively more

successful in Malaysia plant compared to those in the US.

This result does provide some insight to cultural context

that must be considered in implementing ABC. Japan wrote

another success story on itself on strategic cost management. A

country with a high power distance, collectivist, masculine and

high Confucian dynamism culture, Japan strive to perform well

as to achieve success. They recognized that as the best way to

their product and not attempt to reduce them after production.

This is the fundamental of Japanese cost management system,

the majority of the product costs are “designed in”. As a result

effective cost control programs focus on the design beside the

manufacturing phase of the products life cycle.

The Japanese Management Accounting System shifted from

the conventional feedback oriented technique to the feed forward

oriented techniques like target costing, total quality management

and value engineering.

2.7 Cultural and Organizational Features of Japanese

Management Accounting System.

What is critical in the Japanese Management Accounting System

is its difference in orientation.

The Japanese Management Accounting System is a combination

of seven different management techniques;

Target Costing

Value engineering

Inter-organizational cost management systems

Product costing

Operational Control

Kaizen Costing

Total quality Management

Target costing is a system of costing that determines the product

cost after factoring in the target price and target margins. The

target cost is then further broken into component and material

level so that purchase price of those items can be determined.

The established market costs derived from estimates of a

competitive market price. These costs are usually below currently

achievable cost based on standard technologies and processes.

Managers can set benchmarks to measure incremental progress

towards meeting the targets cost objectives; thus Japanese

Management Accounting Incorporates commitment to meet the

required price for market success whether or not that price is

supported by current manufacturing practices.

Value engineering involves a systematic inter-disciplinary

examination of factors which affect the cost of a product. Value

engineering formulates ways to achieve specified target at the

required quality standard and target cost. Very similar to target

costing, it is applied at the design stage of a product development.

This technique of cost management is the Japanese organized

way for a firm to meet its target cost.

Inter-organizational cost management system advocates the

development of effective supply chain. The distinction between the

organization and its suppliers is blurred by this system. It

involves sharing of research resources and sending of a firm’s

staff to another firm for a period of time. Such measures are

simply aimed at reducing duplication of resources so that costs

are reduced thereby increasing competitiveness in the industry.

Product costing is a kind of costing found in Western Firms

(e.g. Nigeria). However, the difference is that in JMA its role is

reduced due to the existence of target costing. Operational

control is where individuals are made to control the cost which

they are responsible for. For this purpose, responsibility centers

are set up to concern itself with how well costs are controlled and

analyzed in terms of variance analysis.

Kaizen means global, unending improvement, doing

incremental improvement setting and achieving even higher

standards. When applied to the work place, it means continuing

improvement involving every top management, managers and

workers (Letza and Bakare, 2002). Kaizen costing is an

application of Kaizen technique to reduce the cost of components

and products by a pre-determined amount. The focus of Kaizen is

on the processes instead of the individual products.

Kaizen has on its own generated a process oriented way of

thinking and a management system supports people process-

oriented efforts for improvement. This technique like other

Japanese costing technique is in- group based. Kaizen is a sharp

contrast to Nigeria management system or practice where

individuals are singled out and rewarded for results forgetting

that achievement of such result was made possible by group work

(collective efforts and contributions).

Total quality management (TQM) is a management

technique or method which improves the effectiveness, flexibility

and competitiveness of a business as a whole. A method of

removing waste by the involvement of all in improving the way

things are done in an organization.

TQM requires the commitment of all staff, a culture of right-

first-time, good communication and three major components;

documented quality system, statistical process control (SPC)

methods and teamwork for improvement (Letza and Bakare,

2001).

2.8 Nigerian and Japanese Management Accounting System:

Lesson and Applications of JMA in Nigeria.

It is very important to take into account the cultural differences

in order to be able to consider the lesson and applicability of

Japanese management technique in Nigeria.

Some of the major differences in the Japanese and Nigerian

Management Accounting System are examined, as adopted from

Letza and Bakare in the Nigeria Accounting April/June 2001.

Difference on the Role of Accounting.

Japanese companies seem to use accounting systems more

in motivating employees to act in accordance with long term

manufacturing strategies than provide senior management with

precise data of costs, variance and profits. For companies to

sustain competitive advantage, employees must continually be

innovative and this requires motivation. Accounting plays more of

influencing role than an informing role. The different form of

information produced by accounting are integrated into strategic

plans at top level; operative plans at the middle level and at the

lower level, financial objectives are translated into physical target

that can be understood and achieved by supervisors and workers.

Hence accounting is accorded no privileged separate status as the

provider of management information and control.

Unlike in Nigeria, Japanese companies do not let the

accounting procedures determine how they measure and control

organizational activities. They use their management control

system to support and reinforce their manufacturing strategies.

Accounting policies should be subservient to corporate strategies

and not independent of it.

Therefore, the Japanese demonstrate that JMA can play

significant role in integrating the innovative efforts of employees

with the company’s long term strategies and goals. Thus

Accountants themselves are integrated into decision processes.

Differences in Roles and Career Path of Management

Accountants:

Another potential difference is the role and career path of

management or cost accountants. Most accountants in Nigerian

Companies are trained in Universities and Polytechnics and their

career paths typically have an accounting instead of general

management emphasis.

The biggest variance among Nigerian accountants may be

the type (financial, cost, audit) rather than amount of accounting

experience. In contrast, Japanese cost accountants tend to be

non- accountants or generalists by university training and job

experience. Employees are moved through a variety of functions

during their career at the firm.

Moreover, in contrast to Nigeria, cost accounting system in

Japanese firms tends to be manned by employees with no

proprietary interest in perpetrating the accounting culture or

profession. Thus they may be more responsive and inclined to

designs, operate or accept changes in cost accounting systems

targeted at promoting the interest of the firm rather than the

accounting profession.

Differences in the use of Standard Costing

Nigerian companies emphasize the use of standard costing

to control manufacturing cost after the fact whereas Japanese

companies stress the proactive use of management accounting to

promote process and product innovation.

National Electric Company (NEC) revises its cost standards

every six months in order to take into account continual changes

and cost improvement unlike Nigerian companies that find it

extremely difficult and expensive to implement a system update

annually.

Indeed in Japanese companies standard cost systems are

aimed for budget concerns and not used for management control

as in most Nigeria companies.

Difference in Determination of Product Prices

Japanese companies conduct a market driven prices as seen

in their target costing/pricing techniques. Nigerian companies

usually adopt a cost plus pricing strategy and are less market

oriented in terms of determining product prices.

Differences in the Use of Non-Financial Measures:

Japanese firms believe that there are relatively small and

slow opportunities for cost reduction in manufacturing via cost

variance. They focus on non- accounting methods like target

costing, value engineering, quality control, just in time inventing

to prevent variance occurrence. They determine market cost from

target costing and invest heavily in pre-manufacturing cost to

reduce cost to this level. Cost reduction is carried out in both

design and production phases. Product pricing is carried out

before product design and creates a “target” to be achieved in

production. These target cost are interim in that Kaizen is

insisted upon. It means that Japanese companies pay

considerable attention to cost reduction in manufacturing and

assembling components over a production run and then greatly

reducing cost in design of the next generation of products.

Japanese companies use non-financial measures to evaluate

performance. The reason for this is to avoid employee’ focus on

cost extensively.

Difference in Design of Management Control System:

Japanese Companies design and operate their management

accounting systems contingent on their competitive strategy,

market competition and organizational culture while Nigerian

Companies design their management control system contingent

on organizational context; such as decentralization and

uncertainty. Nigerian companies have developed very strong link

between financial and management accounting. The result is that

although management accounting assists management by

providing information necessary to enable the management of its

business, it is mainly based on financial accounting practices.

JMA operates mainly on the separation of financial and

management accounting system. Non-Japanese Companies are

directing attention to Japanese Management accounting practices

that have shown their greatest competitive advantage to discover

these differences.

Key dissimilarities are mainly in the relationship of

accounting to other forms of information and of accountants to

other managers. It is important that Nigerian companies consider

the goals, process and context of these practices. Management

accounting is only a component of a firm’s total management

system and its role cannot be understood except it is considered

in its organizational context.

Rather than concentrate on technical refinement or

replacement for conventional accounting practices, Nigerian

companies should study how Japanese successfully married the

conventional accounting, management accounting and non-

financial measures to produce optimum result.

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Chapter Three

Research Methodology

3.1 Research Design and Methodology

In carrying out the research, which is descriptive and

evaluative in nature, the study is designed in such a way as to

enable the researcher conduct field and desk research. A fairly

large sample size was chosen to allow the researcher have a more

reliable data.

In a research of this nature the use of questionnaires as a

means of extracting information cannot be over-emphasized.

Therefore, questionnaires were administered to the respondents

in the study areas. Questionnaires were personally administered

to the respondents.

For the purpose of the study, three organizations were

chosen; all three companies are private businesses.

These are:

Anambra Motor Manufacturing Company Enugu (ANAMCO)

Emenite (Nig) Plc Enugu

Nigeria Breweries Plc Enugu.

For operational convenience, it was decided that equal

number of questionnaires for the selected companies be used. A

total of seventy-five respondents make up the random sample of

respondents from the various companies.

3.2 Population of the Study

The population of the study is all senior officers in the

organization chosen for the study.

3.3 Sample Selection and Technique

In administering the survey instrument used for this study,

a sample of twenty-five senior officers each was selected from the

population in the chosen organizations.

3.4 Data Collection

The data used in this research were obtained from both

primary and secondary sources. Greater part of the data was from

primary source because of the nature of the research.

3.4.1. Primary and Secondary Data

(a) Primary Data

The primary data were sourced through the use of

questionnaire and personal interview.

Personal interviews were conducted to enable for added

information to be obtained and to clarify issues.

(b) Secondary Data

Secondary data were collected from in-depth study of

existing available related literature. These include textbooks,

professional journal, newspapers and periodicals referenced at

the end of the work.

3.5. Data Analysis Technique

This is aimed at showing how the data collected will be

analyzed. Hence we shall be concerned in finding the arithmetic

summation and percentages. Also frequency distribution by

number and percentage of respondents will be used to attach

quantitative characteristics into the numerical form, making

simple the problem of comparison of variables.

3.6 Hypothesis Test Statistics

Analyzing the difference between the observed and expected

frequencies through the use of chi-square statistical method.

Hypothesis of independence for any given two variables was

tested at the 95% confidence level i.e. with a critical value of 0.05.

The difference between the observed and expected

frequencies is measured by the chi-square (x2) statistical formula

X12 = (Oi – ei)2

ei

Where

X12 = Chi square calculated

Q1 = Observed frequency

ei = expected frequency

REFERENCES

Anike O.1: Introduction to Academic Research Method. Grostak Printing and Publication Ltd Enugu. 1998

Orjih J: Business Research Methodology, Meteson Publicity Company 1996.

Chapter Four

Presentation and Analysis of Data

4.1 Prelude

This chapter is concerned with the ways in which the data

collected are ordered, tabulated and analyzed. Out of the seventy

five (75) questionnaires distributed, sixty-seven (67) were

retrieved. These sixty-seven questionnaires represent 90% of the

total number of questionnaires administered.

4.2 Data Analysis and Interpretation

The data analysis will be concerned with finding the

arithmetic summation and percentages. Frequency distribution

by number and percentage of respondent would be used to attach

qualitative characteristics into the numerical form to make single

comparison of variables.

Table 4.1- Response on whether Budgeting aids management

in decision making.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 16 67 17 85 16 70 49 73

No 8 33 3 15 7 30 18 27

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

The analysis shows that 73% of the respondents are of the

opinion that budgeting aids management in decision making.

Therefore the researcher concludes that budgeting is an

important tool that aids management in decision making.

Table 4.2 – Response on Whether Budgeting is often

used by the management to induce pressure on

manager/employees.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 20 83 16 80 20 87 56 84

No 4 17 4 20 3 13 11 16

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

Table 4.2 above shows that 56 or 84% of the respondents

believe that management often uses budgeting system to induce

pressure on managers/employees.

Table 4.3 – Response on the effect such induced pressures

have on employee behaviour.

Option of Response Anamco No %

Emenite No %

NBL No %

Total No %

Pad the System 4 17 3 15 2 9 9 13

Hide the truth 3 13 3 15 4 17 10 15

Demotivates the

employees

6 25 5 25 7 31 18 27

All of the above 11 45 9 45 10 43 30 45

24 100 20 100 20 100 67 100

Source: Field Survey of 2010

From the above table, it is seen that the behaviour of

employees/managers as a result of induced pressure by the

budget include padding the system, hiding the truth and not

giving their best because such induced pressure demotivates the

manager. 45% of the respondents assert to this. The prominent

effect of induced pressure on managers’ behaviour is that of

demotivating the employees from giving their best which is 27%.

Table 4.4 – Response on whether Management can set

Impossible Targets.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 24 100 19 95 17 74 60 90

No - - 1 5 6 26 7 10

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

From table 4.4, 90% of the respondents are of the opinion

that management can on their own set impossible targets.

Table 4.5 – Response on what employees’ attitude towards

achieving such impossible targets are.

Option of Response Anamco No %

Emenite No %

NBL No %

Total No %

Introduction of slack 7 29 7 35 6 26 20 30

Manipulation of Accounts 5 21 4 20 5 22 14 21

Will not border or try to

reach target

2 8 - - 3 13 5 7

Motivated to increase

performance

- - - - - - - -

All of the above 10 42 9 45 9 45 28 42

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

Table 4.5 shows that 42% of the respondents are of the view

that employee’s attitude as a result of setting impossible targets

include introducing slack in the budget, manipulating the

accounts and not bothering to reach target. The most prominent

effect of setting impossible target on the attitude of employees

towards such target is the introduction of slack into the budget

system (30%). It is also observed by the researcher that none of

the respondent believes that impossible targets when set can

increase employee’s performance.

Table 4.6 – Response on whether mangers participate in

budget formulation in respondents establishment.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes

No

24 100

- -

20 100

- -

18 78

5 22

62 93

5 7

24 100 20 100 23 100 67 100

Source: Field survey of 2010

From the above table 4.6, 93% indicate that managers do

participate in budget formulation while 7% think otherwise.

Therefore it may be conclusively said that employees in most

organizations participate in budget formulation.

Table 4.7 - Response on whether Participation by

managers/employees affects motivation and forge positive

attitude.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 18 75 12 60 15 65 45 67

No 6 25 8 40 8 35 22 33

24 100 20 100 23 100 67 100

Source:FieldSurveyof2010

From the table 4.7, 67% of the respondents from the

selected areas of study indicate that participation affects (brings

about) motivation and positive attitude (behaviour). 33% do not

agree that participation motivates managers/employees and forge

positive behaviour towards accepting and achieving set goals.

Table 4.8 – Response on whether participation in Budget

encourages Higher Performance by employees.

Option of Response Anamco No %

Emenite No %

NBL No %

Total No %

Yes 12 50 18 90 17 74 47 70

No 8 33 2 10 6 26 16 24

Depending on organizations structure

4 17 - - - - 4 6

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

Table 4.8 shows that 6% of the respondents believe that the

organization structure determines whether participation will bring

about higher performance while 70% are of the opinion that

participation brings about higher performance in employees

(managers).

Table 4.9 – Response on what employees’ attitudes are if they

perceive their participation in budget as a management

device to manipulate them.

Option of Response Anamco No %

Emenite No %

NBL No %

Total No %

Refuse to participate 4 16 3 15 4 17 11 16

Unwilling to contribute to the process of learning

3 13 4 20 3 13 10 15

Withdraw post decision information

5 21 4 20 3 13 12 18

Reject/discredit mgt standard

6 25 3 15 7 31 16 24

All of the above 6 25 6 30 6 26 18 27

24 100 20 100 23 100 67 100

Source: field Survey of 2010

From table 4.9, the research observed that in area of

sampling that 27% said that employees show all of the above

listed behaviour when they perceive that management uses

participation in budget as a device to manipulate them. 24% of

the respondents believe that employees would reject/discredit

management standards, 18% indicate that employees would

withdraw from management post decision information while 16%

and 15% show that employees would refuse to participate and be

unwilling to contribute to the process of learning in the

organization.

Conclusively, it shows that employees do show traits of

behaviour ranging from withdrawal from participation to rejecting

management standard. However, the most singular attitude

shown by the survey is that of rejecting and discrediting

management standard. Table 4.3 correlates this.

Table 4.10 – Response on whether employees achieve better

level of performance when budget is related to employees’

aspiration (Attainment) level.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 15 63 19 95 19 83 53 79

No 9 37 1 5 4 17 14 21

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

From table 4.10, the researcher observed that 79% of the

total respondents from the selected companies confirmed that

better level of performance is achieve by the employees when

budget (targets) are related to their aspiration level. This

confirmation is prominent in all selected companies.

Table 4.5 correlates this ascertion where we observed that

impossible targets lead to introduction of slacks, manipulation of

accounts by employees and also employees not brothering to

reach set targets.

Table 4.11 – Response on whether cost Accounting plays

important role in performance measurement and evaluation.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 14 58 13 65 18 78 45 67

No 10 42 7 35 5 22 22 33

24 100 20 100 23 100 67 100

Source; Field Survey of 2010

From table 4.11, it is observed that 67% of the respondents

from the sampled areas for study indicate the important role of

cost accounting in measurement and evaluation of performance.

However for a figure as high as 33% of respondents not to have

seen any important role being played by cost accounting is a

subtle indication that cost accounting method of performance

evaluation is not seen as wholesome by employees.

Table 4.12 – Response on whether there are potential

behavioural problems in cost accounting management by

exception reporting system which highlights manager’s

failure only.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 24 100 20 100 23 100 67 100

No - - - - - - - -

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

From the table above, all respondents from the selected

companies for study indicate that there are potential behavioural

problems in cost accounting management by exception reporting

system of highlighting only managers’ failure.

Table 4.13 – Response on what these behavioural problems

are:-

Option of Response Anamco No %

Emenite No %

NBL No %

Total No %

Managers concentrate

on how many times

they missed forget

4 16 4 20 3 13 11 16

Doubt the validity to

mgt target

3 13 3 15 3 13 9 13

Lack of commitment 3 13 1 5 2 9 6 9

All of the above 14 58 12 60 15 65 41 62

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

From table 4.13, 62% of the respondents from the selected

organizations say that the likely behavioural problems of cost

accounting reporting system are that of managers concentrating

on the number of times they missed target, doubting the validity

of set standards or budgets and lack of commitment.

Table 4.14 – Response on whether Accounting aids

management in motivating employees.

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 15 63 18 90 20 87 53 79

No 9 37 2 10 3 13 14 21

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

It is observed from table 4.14 that the respondents

overwhelmingly believe that accounting aids management in

motivating employees. In all 79% of the respondents assert this

fact while 21% do not believe that accounting can aid

management in motivating employees.

Table 4.15 – Response on how accounting aid management in

motivation of employees

Option of Response Anamco No %

Emenite No %

NBL No %

Total No %

Its choice of

performance Measures

5 21 4 20 5 22 14 21

Its process of monitory

& evaluating

performance

5 21 5 25 3 13 13 19

Kind of feedback it

provides

6 25 6 30 5 22 17 25

All of the above 8 33 5 25 10 43 23 35

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

Table 4.15 shows that 35% of the respondents believe that

accounting aid management in motivation of employee through a

combination of its choice of performance measure, monitoring

process, feedback/kind of information it provides. 25% believe

that is can motivate through the kind of information/feedback it

provides the employees while 18% and 21% believe that it is

through its choice of performance measure and monitoring and

evaluating performance that accounting motivates employees.

Table 4.16 – Response on whether failure to communicate

knowledge of result affects performance and motivation

(morale).

Option of Response

Anamco No %

Emenite No %

NBL No %

Total No %

Yes 14 58 13 65 16 70 43 64

No 10 42 7 35 7 30 24 36

24 100 20 100 23 100 67 100

Source: Field survey of 2010

Table 4.15 shows that 64% of the total respondents believe that

failure to communicate knowledge of result that is feedback of

performance to the employees adversely affect performance and

motivation (morale) of the employees.

Table 4.17 - Response on what role communication of

result plays in employee behaviour.

Option of Response Anamco No %

Emenite No %

NBL No %

Total No %

Helps to reinforce or

extinguish previous

behaviour

7 29 6 30 7 31 20 30

Helps employees feel

subjective failure or

success through

punishment or reward

4 17 3 15 4 17 11 16

Helps increase learning

& confidence

6 25 5 25 4 17 15 23

Helps increase

performance due to

increased motivation

7 29 6 30 8 35 21 31

24 100 20 100 23 100 67 100

Source: Field Survey of 2010

From table 4.17 30% of the respondents believe that

communication of results helps the employee to either reinforce

or extinguish his previous behaviour, 16% state that it will help

employee feel subjective failure or success, 23% indicate that it

increases the learning and confidence in the employee while 31%

believe that it will help increase performance of the employee

because of increased motivation.

However looking at the table of respondents from each

organization selected for the study, it can be concluded that the

three major ways communication (feedback) of result impact on

the employee behaviour are.

1. It helps him reinforce/or extinguish previous behaviour

either because of the reward/or punishment that goes with

favourable or adverse performance.

2. It may help in increasing learning and confidence level. This

maybe as a result of the report shifting the cause of failure

and encouraging employees where they have done well

3. It may help increase performance due to increased

motivation as correlated in table 4.14

4.3 Test Of Hypotheses

The hypotheses formulated in chapter one should undergo

empirical testing. The data collected and presented were

subjected to statistical tests using chi-square (x2) test.

The Chi-Square Test (X2)

The chi-square as a statistical tool is used to test if an observed

set of values differ significantly from what was expected. The

formula for computing the chi-square is given as

X2 = (oi – ei)2

Ei

Where = Summation Sign

Oi = Observed Frequency

ei = Expected frequency

Decision Rule

1. Reject Ho : If x2cal > X2

2. Reject Hi : If x2cal ≤ x2 tab

We shall assume a five (5%) level of significance for the three (3)

hypotheses.

Hypothesis 1

Ho: Accounting does not aid management in motivating

employees in the organization.

This is represented in the contingency table in table 4.18

Table 4.18 – Response on whether accounting aids

management in motivating employees

Option of Response

Anamco No 0i

Emenite No 0i

NBL No 0i

Total No

Yes 15 18 20 53

No 9 2 3 14

24 20 23 67

Source: Extracted from table 4.14

Table of Expected Frequency

Option of Response

Anamco (ei)

Emenite (ei)

NBL (ei)

Yes 19.0 15.8 18.2

No 5.0 4.2 4.8

24.0 20.0 23.0

Where ei = x 24 67 = 18.99 or 19.0

ie FR X FC N

Where FR = Frequency of Row

FC = Frequency of Column

N = Total no of Respondents.

Observation Oi Expected (ei) Oi – ei (Oi – Ei)2 (Oi – ei)2 /ei

15 19.0 -4 16 0.84

18 15.8 2.2 4.84 0.31

20 18.2 1.8 3.24 0.18

9 5.0 4 16 3.20

2 4.2 -2.2 4.84 1.15

3 4.8 -1.8 3.24 0.68

X2 6.36

Therefore, X2 cal = E(Oi – ei)2

ei

Degree of freedom = (r – 1) (c – 1)

Where r = row

c = column

Degree of freedom = (2 -1) (3 – 1) = 1 X 2 = 2

Level of significance = 0.05

X2 tab = 5.99

Decision:

Since the observed chi-square 6.36 is greater than the

theoretical of 5.99, we therefore reject the null hypothesis which

states that accounting does not aid management in motivating

employees in the organization and accept the alternative

hypothesis which states that accounting aids managements in

motivating employees in the organization.

Hypothesis 2

Ho = Participation in budget formulation does not encourage

higher performance by employee.

The above statement of assumption is presented in contingency

table 4.19 below.

Table 4.19 – Response on whether participation on budget

encourages higher performance by employee.

Response Anamco No (Oi) Emenite No. (Oi) NBC (Oi) Total (Oi)

Yes 12 18 17 47

No 8 2 6 16

Depends

on orgs

structure

4 - - 4

24 20 23 67

Source: Extracted from table 4.8

Expected frequency table

ANAMCO

ei

EMENITE

ei

NBL (ei)

Yes 16.9 14.0 16.1

No 5.7 4.8 5.5

Dep. On structure 1.4 1.2 1.4

24 20 23

Observation Oi Expected (ei) Oi – ei (Oi – Ei)2 (Oi – ei)2 /ei

12 16.9 -4.9 24.01 1.42

18 14.0 4 16 1.14

17 16.1 0.9 0.81 0.05

8 5.7 2.3 5.29 0.93

2 4.8 -2.8 7.84 1.63

6 5.5 0.5 0.25 0.05

4 1.4 2.6 6.76 4.83

Θ 1.2 1.2 1.44 1.20

Θ 1.4 1.4 1.96 1.40

Σ 12.65

Level of significance = 0.05

Degree of freedom = (3 – 1) (3 – 1) = 4

X2 tab = 9.488

X2 cal = 12.65

Decision:

The computed X2 is 12.65 while the theoretical X2 is 9.49.

Therefore the theoretical X2 is less than the observed. We

therefore reject the null hypothesis which says that participation

in budget formulation does not encourage higher performance by

employees and accept the alternative hypothesis which states

that participation in budgeting encourages higher performance

by employees.

Hypothesis 3

Ho: Better level of performance is not achieved when

budget is related to employees’ aspiration (attainment) level.

This assumption is also represented in the contingency table

4:20.

Table 4:20 – Response on whether better level of performance

is achieved when budget is related to employees’ aspiration

(attainment) level.

Response Anamco (Oi) Emenite (Oi NBC (Oi) Total (Oi)

Yes 15 19 19 53

No 9 1 4 14

Total 24 20 23 67

Source: Extracted from table 4:10

Table Of Expected Frequency

Response Anamco (ei) Emenite (ei) NBC (ei)

Yes 19.0 15.8 18.2

No 5.0 4.2 4.8

Total 24.0 20.0 23.0

Observation Oi Expected (ei) Oi – ei (Oi – Ei)2 (Oi – ei)2 /ei

15 19.0 -4 16 0.84

19 15.8 3.2 10.24 0.65

19 18.2 0.8 0.64 0.04

9 5.0 4.0 16.0 3.20

1 4.2 -3.2 10.24 2.44

4 4.8 -0.8 0.64 0.13

Σ 7.30

Level of significance = 0.05

Degree of freedom = 2

X2 tab = 5.99

X2 cal = 7.30

For the test of X2 at the level of 0.05 significance, the

calculated X2 is 7.30 while the theoretical is 5.99. As a result, we

reject the null hypothesis which states that better level of

performance is not achieved when budget is related to employee’s

aspiration (attainment) level and accept the alternative hypothesis

which states that better level of performance is achieved when

budget is related to employee’s aspiration (attainment) level.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Summary of findings

The following are the findings of the study.

Budgeting is a very important tool that aids management in

their decision making function. Management often use

budgeting to induce pressure on managers and /employees.

When budget induces pressure on managers/employees, it

impacts on their behaviour in any if the following ways:

- Managers/employees may begin to pad the system by

introducing stacks into the budgeting system and

manipulations of accounts.

- Hiding the truth of the real situation by shifting

responsibilities.

- Due to the highly demonstrating effect of induced pressure,

employees do not give their best to achieve the budget

targets.

- When management set target that are impossible to achieve,

the employee attitudes/behaviour towards achieving such

targets range from that of introduction of slack,

manipulation of accounts, feeling of unconcern by not

bothering to even achieve such target. The most incredible

finding about setting of impossible (unachievable) targets is

that it does not impact in any way on managers/employees

to increase their performance level in order to achieve set

target. This perhaps is because such targets are not related

to employee’s level of aspiration.

- When budget targets are related to employees aspiration

(attainment) levels better level of performance by the

employees/managers is achieved. Thus allowing for targets

to be easily achieved.

- When employees/managers who are the budget holders

participate in budget formulation, it helps motivate and

forge positive attitude (behaviour) in them towards achieving

set targets. This positive attitude consequently brings about

higher performance in employees/managers.

- Participation in budget formulation helps managers or

employees to adjust their behaviour/attitude towards

accepting existing methods of cost and production control.

- Management can use managers/employees participation in

budget formulation as a device to manipulate them. When

the employees perceive their participation as phony, they

may react to management and the budgeting system in any

of the following ways.

- Outright refusal to participate in the formulation of budget.

- Participate but be unwilling to contribute to the process of

learning in the organization.

- Withdraw all post decision informulation that could help

management in the formulation of future budgets.

- Constantly discredit and reject standards set by the

management.

- Accounting (especially cost accounting) plays an important

role in performance measurement and evaluation. As much

as cost accounting play such an important role,

employees/managers do not see it as wholesome because its

management by exception reporting system has a lot of

behavioural problems that impact seriously and negatively

on the behaviour of employees/managers. Some of the

potential behavioural problem are that

managers would concentrate more on how many times they

missed targets them on how well they performed over the

long run.

- Managers may begin to doubt the validity of the standard or

budget that has been set.

- Performance of employees may become poorer as a result of

frustration due to exception reporting of failure and not

success knowing fully well that failure is accompanied with

blames/punishments.

- It may lead to lack of commitment in the part of the

employees.

- Accounting aids management in motivating managers and

employees through; the kind of information/feedback it

provides, its choice of performance measurement and

evaluation process and its monitoring and evaluation

process.

5.2 Conclusion

Goals must not only be set but also achieved. Budget is a

combination of the goal-setting and goals achieving machine. The

goal-setting machine set goals that are to increase profit and the

goal achieving machine endeavour to achieve the set goals. In

order to facilitate coordination and planning, the critical steps

between the setting of goal and its achievements are the

acceptance of goal by goal-achieving machine, that is the budget

individual. If the budget individual can be persuaded or

convinced to accept the set goal, his behaviour can be relied upon

to achieve the goals.

Evidence showed that goals significantly affect performance,

that participation in goal setting has discernable direct effect on

performance and on the goal level set.

Accounting can act as a motivating factor and can induce

better performance if information is promptly given to

managers/employees. Also a successful participative budget

induces motivation and goal acceptance. It provides information

to associate rewards or punishment with performance, which

leads to a new aspiration level and motivation that set the stage

for the next participation budget.

If accounting is to assist in the development of better

managerial accounting techniques, greater effort must be

made to utilize findings from behavioural sciences. The

implementation of accounting techniques requires proper

consideration of human element – how the individual

interact with the system.

5.3 Recommendation

Based on the findings of the study, the following

recommendations are made:

Management should encourage participative management

in budgeting in the organization. It can benefit from

participation effects since participation can be grafted into

existing procedures or changes where necessary. It also

changes efficiency, motivation and productivity.

The impact of the form of feedback of cost accounting

reports and the behavioural resolution of its dissonance is

clear. Therefore, it is recommended that accounting reports

should be designed to provide positive reinforcement to the

employees as well as make management aware of poor

performance. The process of reporting in order to

avoid/change a situation where dissonance may be present

should take into account not only the need for information

for decision making but also the clues signs for decision

making.

budget is to be used as a control device as well as motivating

device, it should be tied to the level of aspiration

(attainment) cycle rather than time schedule.

There should be frequent comparison of performance and budget

including communicating result (feedback) to the employees. This

recommendation is made for three reasons:

If performance is slightly above budget level ie target

expectation, the level of aspiration will increase and budgets

can and should be revised otherwise employees would

perform at budget level while they can perform at a higher

level.

If performance is slightly below targets expectation but

changes may not be necessary but feedback so that

employees will continue to strive to achieve budget level.

If performance is well below budget level, budget should be

raised downwards, if not employee’s level of aspiration will

fall and viewed as unattainable. If budget is raised

downwards and employees perceive it as attainable,

maximum outfit will be achieved again.

To design appropriate system, the accountant must not only

consider the data the user need to solve a problem but also

the manner and form the data is communicated will affect

the user’s behaviour in achieving the problem solving

solution.

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Graduate vol. v No. 1983. University of Lagos.

Appendix

Department of Accountancy School of Post-Graduate Studies, University of Nigeria, Enugu Campus.

Dear Sir/Madam,

I am an MBA Accounting student of the University of

Nigeria, Enugu Campus undertaking a research on “Behavioural

Aspect of Management Accounting”.

I solicit your co-operation and implore you to kindly

complete the questionnaires below as objective as possible as the

success of the research work will depend largely on your answer

The data obtained are required for academic work and shall

be treated with strict confidence.

Onuoha Ebele G. Researcher

Questionnaire Name

Company

Position held

1. Do budgeting in your opinion aid management in decision

making Yes [ ] No [ ]

2. Do you in any way think that the budgeting system is often

used by management to induce pressure on

manager/employees? Yes [ ] No [ ]

3. If yes, what effect does such induced pressure have on

employee’s behaviour

(a) To pad the system

(b) To shift responsibility by hiding the truth.

(c) It de-motivates the employees from giving their best.

(d) All of the above.

4. Do you in your opinion think that management through

budgets can set impossible targets?

Yes [ ] No [ ]

5. If yes, what are employees attitude towards achieving such

impossible target.

(a) Introducing slack by using unapproved materials

(b) Manipulate the accounts to achieve their motives

(c) Will not bother to try reaching target.

(d) All of the above.

(e) Motivated to increase performance.

6. Do managers (employees) in your establishment participate

in budget formulation?

Yes [ ] No [ ]

7. Do participation by manager/employees in budget

formulation affect motivation and forge positive attitude

towards accepting and achieving set targets

Yes [ ] No [ ]

8. Do participation in budget formulation encourage higher

performance by employees? Yes [ ] No [ ]

Depending on organization structure [ ]

9. What is the likely employee’s attitude if they perceive their

participation in budget as a management device to

manipulate them?

(a) Workers will interpret efforts at participation as phony and

therefore refuse to participate.

(b) Unwilling to contribute to the process of organizational

learning.

(c) Withdraw post decision information from management.

(d) Will reject or discredit management’s standard.

(e) All of the above.

10. Do employees achieve better level of performance when

budget is related to employee’s aspiration (attainment) level?

Yes [ ] No [ ]

11. Does cost Accounting play important role in performance

measurement and evaluation Yes [ ] No [ ]

12. Are three potential behavioural problems in cost accounting

management by exception reporting system which highlights

manager’s failure only?

Yes [ ] No [ ]

13. If yes, what are the likely behavioural problems?

(a) Managers may concentrate more on how many times they

missed target than how well they performed over the long

run.

(b) May doubt the validity of the standard or budget

management has set.

(c) May lead to lack of commitment on the part of the

employees.

(d) All of the above.

14. Do accounting aid management in motivating employees?

Yes [ ] No [ ]

15. If yes how does accounting aid management’s motivation of

employees?

(a) By its choice of performance measure

(b) Through its process of monitoring and evaluating

performance.

(c) By the kind of information/feedback it provides the

employees.

(d) All of the above.

16. Failure to communicate knowledge of result (i.e. feedback)

will adversely affect performance and motivation (morale).

Do you agree? Yes [ ] No [ ]

17. What role does communication of result play in employee’s

behaviour?

(a) It helps them reinforce or extinguish previous behaviour.

(b) It helps employees feel subjective failure or success through

punishment or reward.

(c) It helps them increase learning and confidence.

(d) It helps increase performance due to increased motivation.