Cost accounting is an of import tool in the direction of any concern house or organisation. which includes those in the little scaled industry. In the cause of our research instrument indicated the care of improper and unequal records coupled with the fact that cost methods used. through sometimes effectual. were unconventional. For a little graduated table concern to near net income maximization degree. it must be effectual in cost control processs and appropriate books of histories must be set in topographic point. Since many little graduated table concerns may non be able to afford the employment of qualified and skilled comptrollers. they can subscribe to the services of such professional through consultancy or parttime agreement. The turning concern of every concern depends on how efficient and effectual cost accounting is practiced. The rule of cost accounting is the proviso of elaborate information for planning. control and decision-making. In Nigeria the pattern of cost accounting in little graduated table concern is most clip pick apart. The current province of cost accounting pattern in the informal concern in Nigeria appears inappropriate and hence ineffective. Costing system and the activities or operations of the entities are in no manner related.
However. the usher provided by the costing system seems to be probationary and inaccurate for the taking intent. Preparation of exclusion studies and place statements are non considered necessary. Even when they are prepared. they are non produced at appropriate intervals and early plenty to be valid Africa administrative surveies. No 56. p. …to … cost accounting pattern in the little graduated table industry of Nigeria unfortunately plenty. it is envisaged that this puzzling and ugly state of affairs is non traveling to be ephemeral in malice of its attendant effects. To determine a new directional focal point that will guarantee an efficient and effectual cost accounting pattern in Nigeria’s informal concern sector it require immediate and conjunct attempt. IMPORTANCE OF COST ACCOUNTING SYSTEM An accounting system is a formal agency of assemblage and pass oning informations to assistance and organize corporate determinations in the visible radiation of overall ends or aims of an organisation. The accounting system is the major quantitative information system in about every organisation ( Horngren and Sundem. 1987 ) . The cost accounting system is the nexus between be aftering and control in the decision-making cycle-part of the end product is transferred to the input so that the Establishing rhythm is uninterrupted and interacting ( Ndukwe A. Ukpai. 2003 ) .
Decision theoretical accounts Feedback Implementation PLANNING AND CONTROL CYCLE An effectual cost accounting system provides information for two wide intents: 1. The accretion of cost informations for external coverage. 2. The aggregation of quantitative informations for internal usage by direction in transporting out its map of be aftering. control. determination devising and the preparation of overall policies. Cost accounting system of an administration is the foundation of the internal fiscal information system. Briggs ( 1972 ) realized the importance of cost accounting and stated that without a system of cost histories. it is dubious whether a concern of any seize can last in the intensely competitory competition status of today. but it must be emphasized that merely like no two concern are likewise. even in the same industry. so no ready-made system of cost history can be provided to accommodate each and every concern. The implicit in rules. conventions and objects of all costing system are the same. but the application of these rules and methods by which the objects are to be achieved must change with fortunes. A good cost accounting system should take at carry throughing the undermentioned intents:
1. To uncover beginning of economic systems in production. holding respects to methods. types of equipment. design. end product and layout. daily. hebdomadal. monthly or quarterly information ( studies ) may be necessary to guarantee prompt disciplinary action. 2. To get at the cost of production every unit. occupation. operation. procedure. section or service and develop cost criterions. 3. To supply existent figures of cost for comparing with estimations. and to function as a usher for future estimations. or citations. and to help the direction in their price-fixing policy. 4. To bespeak to the direction any inefficiencies and the extent of assorted signifiers of waste. whether of stuffs. clip. disbursal or in the usage of machine equipment and tools. Analysis of the causes of unsatisfactory consequences may bespeak remedial action. 5. To enter the comparative production consequence of each unit of works and machinery in usage as a footing for analyzing its efficiency ( Owler and Brown. 1984 ) . 6. To show comparative cost informations for different periods and assorted volumes of production end product. And to supply counsel in the development of the concern.
7. To bespeak whether the cost of certain portion or constituent made in the mill is such that it would be more economical to purchase from outside beginning. THE SMALL SCALE INDUSTRY ( SSI ) Obviously there is no consensus on the definition. nature or accounts of little graduated table concern worldwide. Considerable fuzziness persist about what the term denotes. Different states. establishments and persons have put forwards assorted descriptions of a little graduated table concern based on some parametric quantities. Economist definition or description of little house attempted to supply the size of what should be a little concern. therefore. “a little concern is one that has merely a portion of its market. is managed in a individualized manner by its proprietor or part-owner and non adequate medium of an luxuriant direction construction and which is non sufficiently big to hold entree to the capital market for the public issue or placing of severity” .
The American little concern disposal ( SMA ) harmonizing to pickles and Abrahamson ( 1976 ) . defined little graduated table concern as “one which is independently owned and operated and non dominated in its field of operation” . Davies ( 1982 ) quoted the American commission for economic development ( CED ) as specifying little graduated table concern as a signifier holding at least two of the following four cardinal factors: 1. Management of house must be independent and normally the troughs are the owners. 2. The country of operation must be chiefly local with workers and proprietors populating in one place or community. 3. Owners supplied capital. 4. The comparative size of the house with its industry must be little when compared with the biggest unit in the field. These steps can be in footings of gross revenues volume. figure of employee and so on. The parametric quantities adopted by any state or establishment besides vary from period to period. Here in Nigeria. the state of affairs is non different. Assorted standards have besides been used for the definition and account of little graduated table concern.
Asechemie ( 1992 ) in seeking to specify the informal sector wrote that the market bargainer. the peddlers on the street. the route side machinist. the route side Barber. the small town husbandman are illustrations of concerns in the informal sector-different theoreticians have characterized it otherwise. depending on their manner of analysis and the accent given to peculiar component of the sector. Oshagbemi ( 1985 ) argued that. the chief standards used throughout the universe to depict small-scale endeavor include: 1. Gross saless volume. 2. Relative size. 3. Number of employees. 4. Independent ownership 5. Initial capital outlay 6. Fiscal strength What is common to the broad scope of information available is the operations in the sector are normally in little graduated table ; that production technique is labour intensive and that ownership is normally private. In most instances the workers in this sector are household members. learners and few paid employees. However. whatever definition or standards that may be specify the informal sector. the informal sector as a construct and economic world has come to remain. The involvement of faculty members and policy shapers in the informal sector arises from the sensed potency of the sector to: a. Develop rural Nigeria. B. Lend to gross domestic merchandise. c. Generate a big volume of employment at low capital cost.
The importance of accounting records and information ( here accounting records include bing records ) to the endurance of these concern administrations can non be overstressed. Nwachukwu ( 1990 ) in this respect wrote that “for an enterpriser. the most import facet of his information comes from fiscal accounting. This in brief is the mark card that consists of balance sheet. income statement and other back uping papers. They are indexs of growing potencies. gaining ability. liquidness and stableness. This point out the of import function played by accounting records in any concern administration no affair the size. There no conventional attack to accounting. old surveies indicated that. the craftsmans apply cost to their merchandise based on discretion. common sense. and sometimes associated with the manner of transporting out their concern. Ukpai ( 1997 ) in the analysis of cost accounting techniques and the benefits in costing of merchandises and services of big graduated table concern every bit good as little graduated table concern. maintained that. for any concern to be a success. at that place has to be a group of people or individual who should be responsible for the accomplishment of ends of the concern.
The enterpriser is the individual responsible for the accomplishment of the small-scale concern. He stressed that cost accounting is the footing of determination devising and planning in order to do net income. Harmonizing to lasser ( 1967 ) half of the little concern failure studied are due to hapless and unequal method of bing of their natural stuffs. labor and operating expense to their merchandise. bad record maintaining and excessively much operating expense ; He went on to emphasize that hapless costing of merchandise and services hinders direction signifier accomplishing their ends. He noted that one of the factors responsible for the unequal costing attack among small-scale concern is unequal cognition of the enterpriser on assorted direction aspects. He farther explained that hapless determination devising by the enterpriser on cost control is the curse of little concern. There is a demand for standardized accounting pattern in the informal sector. Effort besides should be made to convert the participant of the public-service corporation and cost effectivity of the system.
For the intent of this survey. the state is divided into ( 3 ) three industrial zones. viz. : Western zone. Eastern zone and Northern zone. This is to guarantee dependability. Therefore. the mark population of this survey consist of all the craftsman in the Eastern industrial zone. This is the population to whom the findings of the survey are held to be applicable. The accessible population on the other manus consists of all craftsmans in Nnewi. Aba and Port Harcourt. engaged in: 1. Furniture doing 2. Welding 3. Block modeling 4. Panel whipping concern. 5. Leather bag doing 6. Shoe doing 7. Tailoring ( Dress doing ) 8. Motor vehicle care ( Mechanics ) 9. Glazing ( Aluminium fiction and glazing ) 10. Refrigeration and Air-conditioning care. Nnewi. Aba and port Harcourt represent the industrial Centres of the Eastern zone. where craftsmans tend to constellate. From the above-named accessible population. samples of 15 craftsmans were selected utilizing non-probability sampling method. The principle behind the pick of this sample method is to ease questionnaire disposal and to ease aggregation for the intent of informations analysis. Determination ANALYSIS AND DISCUSSIONS
The survey revealed that most of the craftsmans did non maintain explicit record of any sort as indicated in table 1 below.
Table 1: care of bing records | OPTION| Industry| YES| NO| TOTAL| Furniture makers| -| 15| 15| Mechanics | -| 15| 15| Welders| -| 15| 15| Dress makers| 5| 10| 15| Block moulders| -| 15| 15| Aluminium fabrication/Glazier| 2| 13| 15| Refrigeration / air conditioning| -| 15| 15| Panel besters | -| 15| 15| Shoe shapers | 3| 12| 15| Leather bag makers| 3 | 12| 15| Entire | 13| 137| 150| % | 9| 91| 100| Beginning: field work. ( Dr. Lawyer C. Obara ) 1998.
Table 1: show that the option “no” 137 or 91 per cent responses. Through treatments. it was discovered that some did non maintain record because they were non literates ; others because they did non believe the size of the concern was big plenty to justify explicit record maintaining. Those who kept records did so on occupation orders. debts owed and owing. gross revenues. accoutrements ( stock list ) . and hard currency. None of them. nevertheless. maintain this full scope of records. On the bing method adopted by the craftsmans. this survey revealed that the pattern of the craftsmans conformed with the conventional cost accounting pattern. in which each industry adopted a system curious to the industry. Most of the craftsmans interview adopted the method. which conformed to the patterns of the industry.
DISCUSSION OF FINDINGS There are a good figure of control systems within an entity. But. cost accounting systems is a comparative. and proctors all other control systems. Cost accounting system is cardinal. It is the foundation of the internal information system. Thurs. the cost accounting pattern in the informal sector in Nigeria can be assessed under the undermentioned major countries. INVENTORY CONTROL SYSTEM It is good observed in Nigeria that the informal concern concern deficiency specific stock list control method. The rate if finding of shop points of course varies with stuffs concerned. The fact nevertheless. remains that the longer an point is held in stock the more hazard there is of impairment. For this remarkable ground. it is an simple regulation of good costing system that stock should be issued on the footing on first-in-first-out ( FIFO ) . The oldest stock is disposed off first. Our probe revealed that the informal concern sector did non adhere to this rule ; Probably. due to miss of professional cognition. This rule though simple in theory. is hard to implement in pattern without equal professional cognition. Probes further reveal that when new cargos of goods arrive. the easiest thing the craftsmans do is to set them on top of points already in stock.
Consequently. when issues are to be made. they merely take required quantites from the top of the heap. The pattern has resulted in some stock list points going disused hence. loss of part. MATERIAL Storage It is observed that the function of cost accounting in the country of stuff direction has been despised by the craftsmans in Nigeria. Our probe reveal that a huge sum of stock lists are ruined in every financial twelvemonth because of bad storage. The storage of stuff involves the physical detention every bit good as the saving. It is good observed that that some entities expose points to risky clime conditions. This negative attitude has resulted in the wastage. rusting and vaporization. On farther probe. we found out that the storage jobs of some of the entities studied were caused by incorrect planning. misapplications of stuffs direction rule. change of stuffs direction processs and deficiency of professional advice. Caravans are used as stored by some craftsmans. These trains are non good ventilated as they lack Windowss and air-conditioners. In most instances there are no humidness and temperature control devices. worst still. most of these trains were found to hold holes in them at the sides and besides on top.
These holes allow plague and moistness to come in. It is the demand of a good cost accounting pattern that unauthorized entry or motion in the shop should be disallowed. It is the contention of research workers that such no entry steps should besides be applicable to plagues as they can do a great trade of harm to stock lists. LOCATION SYSTEM Improper system is at discrepancy with good rule of cost accounting pattern. The end product is really low and should be avoided every bit much as possible. Materials should be arranged good in the shop so that there is a specific location to heighten retrieval when necessary. In our probe. we found it hard to specify the location system. To use decently recognized system of stock location is a must if the information sec must increase productiveness. The importance of cognizing rapidly where to happen every individual point of stock the minute it is required can non be observed. DECISION MAKING PROCESS In the country of decision-making cost accounting if adequately and decently applied should supply information sing which merchandises to bring forth among options. Decision impacting pricing. selling a merchandise at separation point or processed farther. deputing a merchandise line and do or purchase determinations are all end product of good cost accounting pattern.
Contrary to the above. the craftsmans make concern determination by intuition. utilizing a “trial and error” attack. It is the pattern among the craftsmans to ever use subjective agencies of decision-making. They avoid quantitative and analytical agencies doing determination. All attempts are ever directed towards immediate maximization of net income without sing the variables that bear on such nonsubjective maps. They barely achieve this nonsubjective because of the said cardinal restraints. It is worthy of note that this restraint if non decently checked could take to a company’s ultimate prostration. Some of the statements of the craftsmans are that. to bring forth dependable information for better concern opinion is dearly-won in footings of money and clip. They went farther to asseverate that merely large corporations. governmental entities and other formal outfits can afford to take attention of such necessities. However. acute perceivers of the sector know excessively good that these alibis are every bit frivolous as they are flimsy. It is an incontestable fact that the aim of all concern projects is to bring forth income. which is greater than the associated cost of production.
But the fact remain that the consequence of deficiency of good articulated information and proper process for analyzing information variable for effectual decision-making can destroy the corporate being of an entity. In other words these restraints can halt or cut down the normal concern activities so that the articipated income will either cease or curtail because the earning capacity of the entity has been impaired. CONCLUSION In the cause of this work we province that cost accounting does non hold a cosmopolitan definition and his pattern is ever scarce. ( table 1 ) proved this claims. We besides discuss in inside informations the ground why the pattern of cost accounting is non so popular in little graduated table concern in Nigeria. The current province of cost accounting pattern in the informal concern in Nigeria is really hapless and this has caused obsolescence and impairment of stock lists. The state of affairs is farther worsened by dubious and inaccurate cost informations. which are non merely erroneous but besides misdirecting following misapplication of bing rules.
In position of these facts. the undermentioned suggestions are advanced with a position to change by reversaling the state of affairs at a minimum cost. a. At operational and tactical direction degree. there is a demand for staff to undergo preparation in the usage of computing machine for a new orientation as to how to use computing machine to determination doing for enhanced productiveness. B. Rigorous attachment to professional’s instructions particularly in regard of stock list. c. The entities should seek to increase the figure of qualified comptrollers and professional directors presently with them. The end product of these people is extremely honoring. d. It is of import that stock list necessitating similar status be stored together to concentrate the attempts and resources required to protect them from the jeopardies of the environment. e. There is a demand for timely and regular readying of ad-hoc agenda study and of class. exclusion study in state of affairss. which do non conform with antecedently. defined parametric quantities or norms. f. Those comptrollers or professional employed should be employed based on virtue ; nepotism should non be the yardstick for employment.