CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND STUDY
A cooperative society is non-profit oriented organization whose sole purpose is to take care of the needs of the members. Cooperatives are socio-economic organizations. They are founded on the principles of equity and equality. Their decisive aim is to effect social advancement through economic improvement. The success or failure of a cooperative is, therefore, adjudged by its economic performance and its social thrust on the community it serves. The economic performance of the cooperative has to be studied, measured and reported to the members, financing banks, higher level institutions and to the state government. This, in fact, is a statutory requirement and has to be done every year without failure and omission. The economic performance or efficiency of the cooperatives can be ascertained and understood by recording, classifying and summarizing the business transactions in a significant and systematic manner.
The system designed to perform all these tasks is accounting. Measurement of the economic performance is not the only end of accounting. It has to provide accurate and timely information to facilitate decision-making. In fact, the role of accounting information in decision-making becomes crucial, critical and all- important as cooperative organizations become increasingly complex, hierarchical and decentralized. In other words, the demand for management accounting in cooperatives has been gradually increasing. A key challenge facing co-operatives and credit unions is to develop an excellent practice co-operative accounting system that provides a set of measures to account for how credit unions and other co-operatives use their resources to meet all of their core goals, including measures of what constitutes a financially healthy organization that can sustain itself. This co-operative accounting system should allow the co-operative to achieve transparent and open reporting to the board, membership and community. Finally, it should provide management with the measurement tools they need to manage the co-operative on behalf of the members.
1.2 STATEMENT OF THE PROBLEM
Histories of various research have shown that poor improve management and accounting system has been the main cause of the problem of some various cooperative business enterprises, using the early cooperative society as an example, their major problems were characterized /associated with poor management and lack of good accounting record keeping. The abuse case of some voluntary cooperative officers (They practice voluntary unpaid management) has been identified as the effect of poor management and inadequate accounting system. The reasons identified for the poor management and accounting system in the various cooperative societies are presumed to be lack/inadequate training and experience necessary for managing of such task job. This is due to the fact that some cooperative societies are mainly located in the communities or villages where inefficient as their manager who does not have the required training and experience for the job. In this process of research, it has been identified that these problem has led to premature death of some noble societies and further discouraged many people from joining the already functioning cooperative societies since they do not see cooperative as an effective business organization that can last like any other business organization. Effective management of cooperative society is not possible without adequate and up-to-date knowledge of an accounting system.
1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to examine accounting system of cooperative societies. The specific objectives are: 1. To find out if cooperative societies in Ota LGA have a quality accounting system. 2. To identify the challenges of cooperative societies in the keeping of accounting records in ota LGA. 3. To know the impact of accounting system on the profitability of cooperative societies in Ota LGA. 4. To ascertain the type of accounting system adopted by cooperative societies in Ota LGA 5. To examine the effectiveness of accounting system on the management of cooperative societies.
1.4 RESEARCH QUESTIONS
The relevant research questions related to this study are: 1. Do cooperative societies in Ota LGA have a quality accounting system? 2. What are the challenges of cooperative societies in the keeping of accounting records in ota LGA? 3. What is the impact of accounting system on the profitability of cooperative societies in Ota LGA? 4. What is the type of accounting system adopted by cooperative societies in Ota LGA? 5. What is the effectiveness of accounting system on the management of cooperative societies?
