PREPARATION OF ACCOUNTING INFORMATION BY MICRO AND SMALL ENTERPRISE OPERATORS: TOOL FOR GROWTH AND SUSTAINABLE ECONOMY IN NIGERIA

By Nnabugwu Chizoba (Development Practitioner/Sustainability Accountant)

Let me start this discourse, by pointing out that organizations like human beings are creatures of habit. For organizations, habits are existing norms and procedures, which may or may not be written. 

Habits are sometimes the fall out of “the way we do things around here”. This dimension to the discourse is essential to this discussion. Over time, the products of “the way we do things here” more often than not develop as a strong component of a system afterwards. On the basis of this, I wish to say:

Inadequate, poor and/or none-availability of Accounting information to monitor, track and effectively evaluate the operations and contributions of Micro and Small businesses in Nigeria is a dangerous habit that have been condoned for long. This habit must be systematically stamped out through the collaborative efforts of appropriate government agencies, Professional bodies and Practitioners; so that Micro and Small enterprises shall grow significantly, in structure and content and contribute meaningfully to the efforts targeted at pushing the economy out of aids dependency; and position it on the path of self-reliance and self-sufficiency.

Let me also draw attention to the fact that the economic system that is operational in Nigeria, allows individuals, groups and companies, etc., to own properties; and to establish and manage business outfits. This is why people engage in the production and distribution of goods and services of their choice. But beyond this, the expectation is that businesses through their operations shall contribute exponentially to the economic growth of the country, impact the citizens; improve their welfare and standard of living. 

Primarily, the motivation for venturing into business is profit making: viewed here as the reward for investing time, energy and financial resources in the pursuit of perceived opportunity or economic advantage. There are also churches, mosques, NGOs and government institutions, whose activities are not geared at profit making, but the provision of benefits to the communities. The benefits of their involvement and gains of their efforts in different communities spread across economic, environmental and social impact. They include but not limited to employment, reduced air pollution and improved air quality, reduction in maternal deaths, improved drinking water, increased child survival rates, good governance, superior education/knowledge acquisition, longer life expectancy, improved relations, and spiritual growth, etc.    

The determinant as to whether one goes for the pursuit of profit making, or settle as a provider of gain to the community, without expecting profit, is choice. The rules are clear. But, for proper evaluation and reliable impact assessment to the society, Accounting information is crucial. 

Accounting information is the provision of accurate and up-to-date financial records of any entity(ies). It (the Accounting information) shows the position or economic health/wellbeing of any entity(ies). These entities cover sole trading businesses, partnerships, co-operatives, companies, associations, churches, mosques, etc.

Accounting information is vital and is provided for:

• Internal purposes, basically as a management tool, the aim of which is to aid decision making
• External purposes, as disclosure to interested parties on the financial affairs/position of an outfit

There is no argument that Micro and Small enterprises development in Nigeria portend good for growth, expansion, diversification and sustainable business activities in the private sector. It is also a matter of fact that most Micro and Small business operators in the country are indeed hardworking, intelligent and focused driven. They are equally keen at excelling in their endeavours. Some have even posted very impressive results at one point or the other. However, something very crucial has been lacking in this critical sub-sector of the Nigerian economy. It is the lack of reliable Accounting information.

Entrepreneurs and business owners yearn to do what they know best: repair cars, organize events as events planners, grill to people’s taste, cook delicious meals as restaurant operators, do great graphic works, landscape, manufacture, own fashion outfits/design and sew etc. This cycle goes on and on, without any consideration or provision to enhance their ability in maintaining accounting records. 

This development is not healthy. It is a harbinger of frustrations and disaster. It requires that very urgent steps are taken to reverse the ugly trend. Though there might be flashes of what many people could qualify as tremendous results occurring in the sub-sector as presently constituted, but I assure you this is only a minute percentage, when compared against what the sub-sector holds for both the individual operators and the entire economy, if effective Accounting information mechanism is properly instituted. The effect will be heavy and significantly rewarding to the economy.

I make this claim sufficiently aware that issues of Record keeping; and Reporting are treated with levity by the business community, especially the Micro and Small business operators in Nigeria. The fact that most of the culprits have been in business for decades makes the situation quite worrisome, especially when it is considered that Record keeping; and Reporting are fundamental to business growth and development.

Interestingly, the five basic accounting principles support and buttress this fact. They are the Principles of Recording; and Reporting. The other three are the Principles of double entry, Profit determination, and Control. From the long title or nomenclature of the Principles, it is obvious that apart from the Principle of Double Entry, the rest are self-defined. In this discourse, I will do a brief summary of the first two principles.

The Principle of Recording emphasizes the inevitability of source documents. The importance of source documents and the role they play in business transactions are in exhaustive, but are summarized here as commanding. They do not only attest to transactions but as a matter of fact confer authority on them. 

Apart from serving as tools to lay claim to the genuineness of entries made or found in accounting records, source documents, show the direction for commencement of enquiry in the event that new approaches are necessary, or that something is fishy and needs to be fixed or investigated. They are also necessary as audit tools. The benefits are huge.

Similarly, the Principle of Reporting demands that accounting information is conveyed in a form that is clear, logical and understandable to persons without accounting knowledge, and that accounting reports must conform to established accounting concepts and conventions.

In conclusion, let me say that the economy stands to benefit tremendously if the operators of Micro and Small businesses engage in record keeping and maintenance of Accounting information. The benefits are huge, perennial, and constantly impacting and sustaining. 

I recommend that the respective Professional bodies and Practitioners must rise to the challenges of growing the economy through the activities of Micro and Small enterprise operations in the country. 

Thank you for visiting our Platformand for being part of our success story. Remember to always live your comments before you finally shut down and to visit us again and again... Ciao!