QUALITY OF ACCOUNTING INFORMATION AND ITS IMPACT ON THE PERFORMANCE OF AGRICULTURAL BUSINESSES: THE CASE OF CDC BOTA PALMS ESTATE MOLIWE IN CAMEROON.

QUALITY OF ACCOUNTING INFORMATION AND ITS IMPACT ON THE PERFORMANCE OF AGRICULTURAL BUSINESSES: THE CASE OF CDC BOTA PALMS ESTATE MOLIWE IN CAMEROON.

CHAPTER ONE:

INTRODUCTION

1.1 Background to the Study

The primary role of accounting is to collect and communicate data that can be used for analysis and decision making (Shane, & Smith, 1995). The way financial data is provided and its content is of primary importance in its communication to information users (Hungerford, 1984). Part of the importance that surrounds data content is that we understand the characteristics that this data encompasses. The challenge to the accounting management, as well as to the senior management of a firm, is to develop strategies to achieve the primary and secondary qualitative characteristics of useful accounting information (Bakasia, 2005). When accounting information has these characteristics, an organization can provide the useful and needed quantitative information to decision makers.

The agricultural sector is one of the important sectors in the Cameroon economy; and a tributary of the Gross Domestic Product (GDP). In fact, the importance of the agricultural sector cannot be assessed through the ratio it form in the economy of the states but that importance comes from its role in providing food security when the prosperity of this sector is attained, thus enhancing the independence of decision-making.

Nowadays, the world is in the era of openness and free trade agreements, an era which requires the development of strategic plans that enable people to stay in situation of competition. We must recognize that trade agreements are unfair to the Third World countries, but the option of turning inward will not be less dangerous than opening up to the other without having the competitive ability, which means an inevitable globalization, therefore, if the agriculture sector, like any other sector, does not exceed the traditional methods of production in all its stages and become a strong competitor, it will erode bit by bit until it vanishes (Ziad, 2014).

Since decisions will be taken properly without the availability of appropriate information, the accounting as an information system is supposed to play an important role in supporting the decision-maker in the agriculture sector in a way no less important than the role of accounting in other sectors, especially the accounting systems in agricultural activities are no different than in any other economic facility, whether industrial, commercial, or service one. It is the measure of the cost, the services design, the planning and control, and the financial reporting on development of the agricultural facilities (Ziad, 2014). This study seeks to establish the relationship between the perceived quality of accounting information and performance of CDC Bota Palms Estate Moliwe.

 

1.2 Statement Of Problem

The quality of accounting information influences decisions made which in turn affect the performance level of small and medium size enterprises. Research on small and medium enterprise development    shows that lack of reliable accounting information provided by small and medium enterprises is a problem in developed and developing countries (UNCTAD, 2001) and that the rate of failure in developing countries is higher than in the developed world (Arinaitwe, 2002). Research further suggests that poor financial management is a major cause of business failure (Berryman, 1993) and that quality information is critical to organizations ‘success in today ‘s highly competitive environment (Hongjiang Xu, 2004).  Poor record keeping and inefficient use of accounting information to support financial decision making are a major cause of the small and medium size enterprises ‘failure (Walton 2000).

The problem of the study is that the researcher believes that the quality of the accounting information gotten from the agricultural sector usually does not match up to standard, which in turn affects the overall performance of the agricultural business. This means that the information resulting from the financial reporting usually serves as little or no support for the decision maker in the agricultural sector of Cameroon especially for the CDC Bota Palms Estate.

The study problem is summed up in trying to answer the following questions:

1. Does CDC Bota Palms Estate Moliwe have quality accounting information?
2. What is the performance of CDC Bota Palms Estate Moliwe based on selected indicators?
3. Is there a relationship between quality of accounting Information and performance of CDC Bota Palms Estate Moliwe?

 

1.3 Objectives of the Study

The purpose of the study was to establish the relationship between quality of accounting information and performance in CDC Bota Palms Estate Moliwe in Cameroon.

Specific objectives

1. To examine the quality of accounting information in CDC Bota Palms Estate Moliwe?
2. To examine performance of CDC Bota Palms Estate Moliwe based on selected indicators.
3. To investigate the relationship between quality of accounting Information and performance on the performance of CDC Bota Palms Estate Moliwe?

 

1.4 Scope Of The Study

The study covered specific aspects of quality of accounting information which include reliability, relevance, understandability (SAC 3, 1990) and accuracy (Hongjiang Xu, 2004) and how this quality affects the level of performance in terms of sales and profitability.

The study is based mainly on the CDC Bota Palms Estate agricultural office operating in Moliwe.

Respondents include the cross-sectional head; departmental heads, managers and team leaders, permanent and temporal staff, accountants, cashiers. The study is focused on exploring the quality and different accounting systems employed by the various agricultural units operating in the CDC Bota Palms Estate Moliwe.

 

1.5 Significance Of Study

1. To provide information to owner-managers towards lasting solutions to poor quality accounting information and potential good performance in CDC Bota Palms Estate Moliwe
2. To enable owner-managers of CDC Bota Palms Estate Moliwe and the general public grasp the value of quality of accounting information as a pillar for sound decision making and good performance in CDC Bota Palms Estate Moliwe.
3. To make contribution to the existing body of knowledge on the quality, practice and policies of accounting systems used by agricultural firms in Cameroon, and thus stimulate further research in both quality of accounting information and performance.

 

1.6 Organisation Of The Study

This study is divided into five chapters. Chapter one introduction comprises of the background of the study, problem statement, objective of the study, research hypothesis, significance of study, and scope of the study and the organisation of the study.

Chapter two reviews literatures and comprises of conceptual issues, theoretical framework and empirical literature.   Chapter three outlines the methodology used in the study and aspects of the area of study, research design, method of data collection, method of data analysis is developed in this chapter. Chapter four presents and analyses the results. Chapter five summarizes major findings, conclusion and Recommendations.

QUALITY OF ACCOUNTING INFORMATION AND ITS IMPACT ON THE PERFORMANCE OF AGRICULTURAL BUSINESSES: THE CASE OF CDC BOTA PALMS ESTATE MOLIWE IN CAMEROON.

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