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RESPONSIBILITY ACCOUNTING: A VERITABLE TOOL FOR ORGANIZATIONAL GROWTH (STUDY OF SELECTED MANUFACTURING COMPANIES PORT HARCOURT)




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RESPONSIBILITY ACCOUNTING: A VERITABLE TOOL FOR ORGANIZATIONAL GROWTH (STUDY OF SELECTED MANUFACTURING COMPANIES PORT HARCOURT)




ABSTRACT
This study x-rayed ‘Responsibility Accounting: As a veritable tool for Organizational Growth”. A Study of selected manufacturing companies in Port Harcourt. The study highlighted the concept of responsibility its benefits and principles, decentralization, dimensions, social responsibility accounting, among others. Structured questionnaires were employed in the course of gathering relevant data for the study. We utilized quasi-experimental research design and specifically, cross-sectional study was adopted in order to show the effect of each dimensions of Responsibility Accounting on each dimension of Organizational Growth. The data collected was analyzed using simple percentage and the four hypotheses formulated was tested using Pearson Product Moment Correlation. The targeted population for the study was 300 out of which a total number of 171 was sampled and used for the study. Our findings revealed that there was a substantial and high relationship between the variables for hypotheses one and two while in hypotheses three and four, a moderate relationship was disclosed between the respective variables. This indeed implies that there is a positive relationship between Responsibility Accounting and Organizational Growth. Based on the findings and conclusion of the study, organization Growth is a function of good and efficient Responsibility Accounting system installed in the organization.


LIST OF TABLES
Table 3.4.1 Questionnaire Distribution and Collection            50
Table 4.1.1 Response Pattern on questionnaire distribution   56
Table 4.2.1 Presentation/Analysis of Data Collected in
questionnaire                                                                           57
Table 4.2.2 Presentation/Analysis of Data Collected in
question 2                                                                                        58
Table 4.2.3 Presentation/Analysis of Data Collected in
question  3                                                                               58
Table 4.2.4 Presentation/Analysis of Data Collected in
question  4                                                                               59
Table 4.3.1 Return on Investment and Turnover                     60
Table 4.3.2 Return on Investment and Market Share                      61
Table 4.3.3 Residual Income and Turnover                             62
Table 4.3.4 Residual Income and Market Share                      63


TABLE OF CONTENTS

Title Page                                                                         i
Declaration                                                                      ii
Dedication                                                                       iii
Acknowledgement                                                            iv
Abstract                                                                           v
List of Tables                                                                   vi
Table of Contents                                                             vii
CHAPTER ONE: INTRODUCTION
1.1   overview of the Study                                               1
1.2   Statement of the Study                                            3
1.3   Purpose of the Study                                                       5
1.4   Research Questions                                                         5
1.5   Statement of Hypotheses                                                 6
1.6   Significance of the Study                                         8
1.7   Limitations of the Study                                          9
1.8   Operational Definition of Terms                                       10
1.9   Organization of the Study                                                12
CHAPTER TWO: REVIEW OF LITERATURE
2.1   Introduction                                                             14
2.2   The Need for Decentralization                                  16
2.3   Definition of Responsibility Accounting                   17
2.3.1 Basic Principles and Benefits of Responsibility
accounting                                                               19
2.3.2 The Need for information about segment
performance                                                                     20
2.4   Dimensions of Responsibility Accounting                        21
2.5   Corporate Social Responsibility Accounting            30
2.5.1 Meaning of Social Responsibility Accounting         31
2.5.2 Objectives of Social Responsibility Accounting               31
2.5.3 The Need for Social Responsibility Accounting               32
2.5.4 Approaches to Social Responsibility Accounting    33
2.6   Organization Growth                                                34
2.7   Stages of Organizational Growth                              36
2.8   Growth: A Function of Leadership                           40
2.9   Action learning: A prerequisite for Organizational
        Growth                                                                     41
2.10 Problems Encountered with Organizational Growth        42
2.10.1 Creativity: A Dynamics to Organizational Growth 43
2.11 Conclusion                                                             45
CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY
3.1   Introduction                                                             48
3.2   Research Design                                                      48
3.3   Study Area                                                               49
3.4   Population of Study                                                 49
3.5   Operational Measurement Variables                                50
3.6   Sampling Procedure/Sample Size                            51
3.7   Instrumentation                                                       52
3.8   Validity of Instrument                                              52
3.9   Reliability of instrument                                          53
3.10 Data Collection Method                                           53
3.11 Data Analysis Technique                                                 55
CHAPTER FOUR: DATA ANALYSIS, INTERPRETATION AND DISCUSSION OF RESULTS
4.1   Introduction                                                                     56
4.2   Presentation/Analysis of Data Collected in Section A             57
4.3   Presentation/Analysis of Data collected in Section B              59
4.4   Hypothesis by Hypothesis, Interpretation and
Summary of Result/Findings                                                   64
4.5   Discussion of Findings                                                    71
CHAPTER FIVE: SUMMARY CONCLUSION RECOMMENDATION AND SUGGESTIONS FOR FURTHER RESEARCH STUDY
5.1   Introduction                                                                     72
5.2   Summary of the Study                                                     72
5.3   Conclusion                                                                      73
5.4   Recommendations                                                           75
5.5   Suggestions for Further Research Study                          76
CHAPTER ONE
INTRODUCTION

1.1   OVERVIEW OF THE STUDY
Every organization is a complex system made up of, energized and lubricated by a series of integrated and interdependent sub-systems. These sub-systems may have divisions within them, some minor and others major, depending on the role or task assigned to them. Despite the heterogeneous engage and develop are coordinated towards the actualization of the economic dreams of the entire organization. In the light of this, the task assigned to each sub-system, which represents a task (responsibility) centre must be executed and thereafter evaluated critically in order to ascertain whether or not the result (s) so obtained or achieved are objectively in line with the overall organization standards or subjectively in favour of a particular responsibility centre at the detriment of others.
Also, a system of responsibility accounting must be designed so as to facilitate the measurement of performance of each responsibility centre. Measuring performance along the lines of managerial responsibility is an essential managerial tool. Thus, a responsibility accounting system holds individual managers accountable for the performance of the business segments under their control. In addition, Meigs and Meigs (1990:966) asserted that such systems provide top management with information useful in identifying the strong and weak segments throughout the business organizations.
Considering the uncompromising benefits of division of labour and specialization, no one segment of an organization can effectively and efficiently use its resources and that of others to develop itself and other sections of the enterprise. Any organization that allows the contrary would certainty face sectional dominance, economic retrogression within the enterprise which resulted from lack of coherence in objective, policy, strategy, and disintegration.
Furthermore, in a typical business organization, administration can be centralized or decentralized. Thus, the possibility of a sound organizational growth depends on the policy of administration. Therefore, any organization that intends to work out its growth strategy form a given responsibility centre (s) must abandon centralization and embrace decentralized operations. In Carl, S.W. et al (2002:902) decentralization involves separating a business into divisions or operating units and delegating responsibility to unit managers. They added that in decentralized business, the unit managers are responsible for planning and controlling the operations of their units. This move must be focused on the overall corporate objective.
All organization progress through a life cycle of growth, maturity, and decline, and in each stage the organizational structure is likely to be different. Jones, G.R. and George, J.M. (2006:213). During the growth state, the organization is expanding rapidly, gaining customs and market share. Growth occurs when an organization is just beginning and products and services are gaining a foothold. It can also take place when a company develops a new product or expands into new markets, nationally or internationally chart will change, expansion in the level of management, as well as creation of new departments.
In the maturity stage, the organization is no longer growing at a rapid rate, but stable in its production and sales. There may be introduced of minor changes to a product or service but would not have major effect on organizational structure. In the decline stage, the organization is losing ground in the market place. It could be that its products or services are becoming obsolete or that its competitors are taking over the market. Dubrin, A.J. (2004:319) noted that in decline, the organization may shed levels of management or positions in all divisions. Work may be outsourced in some areas and thus, deleting them from the organizational structure.
1.2   STATEMENT OF THE PROBLEM
Responsibility accounting and its role in organizations has captured the attention of many studies in the accounting literature in the last few decades. This focus may be due to several reasons among which are: unit manger’s responsibility and authority for cost control, making decisions that affect both cost and revenue (profits) as well as the assets invested in their responsibility centres. Responsibility account collects and reports planned and actual accounting information about inputs of responsibility centres, which is the main focus. (Sikka, P.K 2004:174)
It should also be noted that each segment of the organization has its own objectives which is peculiar to its activities and upon which it is going to be evaluated. Consequently, competition for excellence and productivity is bound to occur among the responsibility centres which would positively affect the organization. Thus, the growth and development of the organization largely depends on how effective and efficient the responsibility centres carried out their respective activities
Therefore, the accounting system must be designed as to suit the existing structure of the organization. As noted earlier, responsibility must be coupled with authority. A person is obliged to perform his duties only when he is conferred with adequate powers to do so. Sikka, P.K. (2004:176) emphasized that sound organizational structure, with clear-cut assignment of authorities and responsibilities should exist for the successful functioning of the responsibility accounting system. When the organization is not in order, it will miserably fail to work. Responsibility accounting system therefore, depends basically on the assigned responsibilities and authorities such that the performance of each manager or responsibility centre is evaluated on such factors.
Based on the above, this study explores the interactive relationships among the three basic responsibility centres in an organization and the extent of their contribution towards organizational growth and development.
1.3   PURPOSE/OBJECTIVE OF THE STUDY
Considering the essentials and applicability of this result of the work, in industries and business, the fundamental purpose or objective of the study is determine the extent to which Responsibility Accounting affects Organizational Growth. Others includes the following:
i)      To identify the interacting relationship between Return on Investment and Turnover.
ii)     To ascertain the relationship between Return on Investment and Market Share.
iii)    To find out whether or not there is an interactive force between Residual Income and Market Share.
iv)    To explicitly investigate and determine the nature of relationship between Residual Income and Turnover of an organization.
1.4   RESEARCH QUESTIONS
        With regard to the objectives or rationale behind this study, an attempt will be made to address the following research questions: what is the interactive relationship between responsibility accounting and organizational growth and development? More specifically, we shall endeavor to provide possible solutions to the following questions
i)      What is the relationship between Return on Investment and Turnover?
ii)     What is the interactive relationship between Return on Investment and Market Share of a particular organization?
iii)    What is the relationship between Residual Income and Market Share?
iv)    What is the relationship between Residual Income and Turnover?
1.5   STATEMENT OF HYPOTHESES
A critical analysis and review of the problems associated with                                                                                                                                                                                                                                              Responsibility Accounting and Organizational Growth have necessitated the formulation of the following hypotheses in their null form.
H01:  There is no significant relationship between Return on Investment and Turnover.
H02:  There is no significant relationship between Return on Investment and Market Share of the organization.
H03:  There is no significant relationship between Residual Income and Market Share.
H04:  There is no significant relationship between Residual Income and Turnover.
1.5.1        DISCUSSION OF THE HYPOTHESIS
The conceptual framework seeks to ascertain the interactive relationship between each dimensions of Responsibility Accounting and Organizational Growth within the context of a typical organization.
Hypothesis One: This hypothesis seeks to ascertain the relationship between Return on Investment and turnover. The concern here is whether managerial performance in a responsibility centre leads to increase in turnover or retards it. Hence, it is hypothesized that there is no significant relationship between Return on Investment and Turnover.
Hypothesis Two: In organizational setting; it has been observed that the more an employee makes proper use of his acquired skill, knowledge and expertise in the production process, he is more likely to efficient, ceteris paribus. Therefore this hypothesis sought to determine whether Return on Investment of a given responsibility centre has a common relationship with its share in the market thereby enhancing growth and equality holder’s expectations.
Hypothesis Three: One important variable of organizational growth is the proportion of the market the organization’s product occupies. Therefore, this hypothesis seeks to ascertain the relationship between Residual Income and Market Share. In other words, it intends to establish whether managerial performance of a responsibility centre accelerates the market share of the organization.
Hypothesis Four: this hypothesis seeks to ascertain the relationship between Residual Income and Turnover. Its tries to determine whether managerial performance of a responsibility centre enhances the turnover it generate which will have a positive effect on the expectation of investors.
1.6   SIGNIFICANCE OF THE STUDY
In view of the fact that research is a continuous process, this study was carried out in order to add to the wealth of knowledge gathered so far on responsibility accounting and its position on the life of an organization.
Given the notion that responsibility accounting spurs out the spirit of commitment among the segment managers and their various employees whose performance are evaluated based on the expected organizational growth, empirical evidence confirming this proposition holds vital implications for the centire enterprise- these will be increase in workers’ morale, and organizational efficiency, among others.
Above all, business organizations, students, lecturers, businessmen and women as well as researchers in management and behavioural sciences will benefit immensely as this study will contribute to their wealth of experience and knowledge in responsibility accounting as an indispensable ingredient for organizational growth, and will also arouse thoughts in creative and conscious individuals as a foundation for further research.
1.7   LIMITATION OF THE STUDY
A limitation would be anything that falls outside the control of the researcher and which may affect the internal validity of the study. This study is designed to cover all manufacturing organizational in Port Harcourt municipality so as to collect sufficient data on the interactive relationship between responsibility accounting and organizational growth. This intended scope could not, however, be attained because of cost of data collection and heterogeneous location of the selected organizations for the study.
The survey therefore, will cover few manufacturing industries in Port Harcourt city. Data collected from these manufacturing organizations were generalized to be a true representation of a other parts of the city not covered.
The sensitive nature of the sample elements also hindered the findings. There was difficulty in getting access to these organizations and their employees to understand the academic nature or demand of the study. For instance, some of the employees reasoned that their response may be implicating. This was discovered through the poor rate of response to the distributed questionnaires. Also, some of the sampled organizations were pessimistic at the beginning as they thought that the study may endanger employee- management relationship or it could lead to evolutionary thoughts in the organization.
The attitude of most enterprise managers towards giving out information in good time was yet another limitation. These mangers were reluctant to disclose information concerning their companies due to fear of redundancy or giving sensitive information which their competitor’s will use to benchmark them. It was after proper discussion and conviction on the rationale behind the study that their fears were erased.  
Despite these limitations, financial assistance were rendered from benevolent spirits while the low literate ones among the employees were given thorough explanation on how to fill the structured questionnaires.
1.8   OPERATIONAL DEFINITION OF TERMS
Responsibility Accounting: This is system of accounting in which costs and revenues are analyzed in accordance with areas of personal responsibilities so that performance of the budget holders can be monitored and evaluated in financial terms.
Responsibility Centre:  This is a segment or sub-unit of an organization under the control of a manager who is held responsible for the activities of that centre. It could also referred as a sub-system.
Division of Labour: This is the breaking down of production processes into stages of various dimension, each stage of which handled and controlled by a specialists who is also accountable to it.
Decentralization: In an organization, Decentralization is the process whereby top management permits and encourages responsibility centres to function as autonomous operating units.
Centralization: This is an organization where top management maintains all decision-making authority at the corporate level and disallows responsibility centres from existing as autonomous operating units.
Cost Centre: Is a responsibility centre whose manager exerts influence over costs but not over the revenue that may be generated by the centre or the investment that generates the revenues.
Investment Centre: This refers to a responsibility centre whose manager makes all decisions that relate to the centre. The manager is given the authority to control the costs and revenue as well as the investment that generates the revenue.
Profit Centre: Is a responsibility centre whose manager is given the responsibility for controlling not only costs but also revenues.
Return on Investment (ROI): A measure of performance for an investment centre. It is determined by dividing the investment centre’s assets into its income.
Controllable Items/Activities: These are activities, items or tasks over which a manager had significant though not complete, influence within a given time span.
Cost Control: This refers to the ability of management to monitor and supervise expenditures (recurrent and capital) in order to ensure that things are going according to plan and that actual results (cost incurred) are obtained for comparison against planned results so that appropriate corrective action(s) can be taken on the variance that is bound to arise.
1.9   ORGANIZATION OF THE STUDY
This study is organized into five chapters. Chapter one deals with the context of the problem, statement of the problem, purpose of the study, research questions, hypotheses, significance of the study, definition of terms, and the limitations of the study.
Chapter two deals with the review of related literature on the area of the study, while chapter three is on research design, sampling procedure/sample size determination, data collection method, and data analysis technique among others.
Chapter four deals with the presentation and analysis of data collected, and lastly, chapter five presents the discussion, conclusion, summary and recommendations for further research study.





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