The Role of Accounting in National Development

“THE ROLE OF ACCOUNTING IN NATIONAL DEVELOPMENT”, shows how accounting play a major role in the sustenance of economic viability, political stability and social harmony in any given state or nation.  The reason for this obvious fact as regarding our national development is not farfetched considering the enormous multisectoral dimension of Nigerian economic activities both in the public and private sector. Accounting come in as the tool that measures the profitability/viability a project with an economic system.

In most developing countries, accounting is not adequately developed to serve the contemporary function recognized in developed countries as providing useful information to users.

Indeed, the accounting function in these developing countries does not go beyond the basic entry bookkeeping system. This and other characteristics that constitute the gap between the countries that acquire accounting knowledge and the countries that do not, have widely attracted a lot of interest among countries themselves, the international community band accounting researchers.

Glanlier (1976) defines accounting as the systematic collection, summarization, and analysis and reporting of data in a form suitable and under stable to prospective users. Accounting is the process of recording, sorting and summarizing data related to business transactions and events. It is also concerned with reporting and interpreting the data of the society.

The Role of Accounting in National Development

Accounting performs a critical function in an economy. Since the information it generates serves society by allowing for increases in the efficiency of resource allocation among competing interests. This function is performed in market oriented economies as well as in centrally planned economies.

Generally, it involves some other related discipline as budgetary control taxation, cost and management accounting, financial management, auditing and quantitative techniques. Accounting come in as the tool that measures the profitability/viability a project with an economic system.

Accounting records provide information that may be used within the business and which may be relied on by businessmen while making investment decision.  The problem with most potential investors in the development nations is they are mostly illiterates and therefore required the services of any accountant and financial analyst to help access possible areas of investment.

Since development project entails projection into the future, it is essential that public officers; and employees in the private sector appreciate the need a transaction and necessary statistics as to enable the proper ;evaluation of past. Records with what obtains presently in order to reasonably project into the future.

Some of the practical ways in which accounting can be and is known to have been used not only for a decision making but also importantly to achieve desired results include.

  1. Economic planning
  2. Capital formation
  3. Accountability
  4. Taxation
  5. Accounting for social purposes.

 

Accounting has many roles to play in the development of every economy. The growth and development of every economy hinges on how resources are judiciously managed and multiplied. Accounting is all about cost savings which can be said to be the backbone of economic growth and development. Some of the roles of accounting in economic development are listed below:

1. INVESTMENT APPRAISAL FUNCTION: without investments, the economy will not develop and grow. Investment appraisal is the process of evaluating an investment opportunity in the face of both financial and other non-financial factors in order to determine the worthwhileness of the investment opportunity.

2. PREPARATION OF FINANCIAL STATEMENTS: Accounting makes it possible for business owners to no longer be present in their business for it to strive. This is made possible by the entity concept in accounting which allows business be different from owners. The only way that owners of business can monitor what is happening in their business is to have a representation of activities through the financial statements of the company. This financial statement is only prepared by the accountants.

3. COST SAVINGS: There is an old adage that one does not get rich by earning and throwing away. Same goes to economic development. Costs must be minimized for the economy to grow and develop. It is the main role of accountants to lead the park of cost savers. Knowledge acquired from cost and management accounting is the most powerful tool that accountants need to give management the best advice on cost saving.

4. FRAUD FIGHTING: The world economy has lost so much from the activities of fraudsters. If the activities of fraudsters are not put under check, economic development will be stalled as no meaningful economic development will take place in an environment where misappropriations and embezzlement is all we hear in the news on a daily basis. Accountants are trained to be at the front seat in the fight against fraud in our time.

5. RENDERING OF FINANCIAL SERVICES: It is a well-known fact that economic development and growth will not be achieved if finances are not well managed. Accounting renders financial services to business owners and the community at large

6. PLANING: Accounting helps an economy to plan how to mobilize its resources because accounts conducts feasibility studies and reports from the feasibility reports. These activities of planning how to mobilize resources and utilize resources and ensuring the adequate reward system is in place, will enable an economy to achieve the threes of economy, effectiveness and efficiency.

7. ADEQUATE RETURN AND REWARD: Accounting helps to ensure adequate reward and returns are produced from the activities of an economy. This reward and economy will not only be produced but must be seen by stakeholders to have been produced.

8. OPTIMUM LEVEL OPERATION: Accounting helps an economy to operate at optimum level. This is because accountants ensure that resources is obtained economically and used effectively and efficiently.

9. PREPARATION F NATIONAL INCOME AND BUDGET: Accounting helps an economy to prepare the national income and national budget. Without accounting, a nation will not be able to ascertain the quantum of productive activities going on in the economy.

In summary, accounting will not only ensure that there is adequate planning of an economy, it will also see to the optimal utilization of the resources of that economy, proper accountability for actions of managers, adequate guide to investors, and also ensure the effective generation of government revenue through taxes and other sources.

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