CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
OF STUDY
Before the “Structural Adjustment Programme (SAP)”
can be clearly defined, one must have a better understanding of the situation
into which it was introduced. At the conclusion of a Debate/Symposium on
“Devaluation” held in 1982 at the Institute of International Affairs, the
consensus emerged that the economic problem of Nigeria was structural.
The intention of SAP is to adjust the
structure of the Nigerian economy, but what is the structure of the economy and
why does it need adjustment?
The relevant dictionary meaning of the word
“structure” is “the arrangement or interrelation of all part of a whole”.
At the summary of overall economic level
which the economist call “The macro level”, the structure f the economy is its
composition as seen through the shares or proportion of the various component
parts or economic aggregated, in the total sum of goods and services produced
in a period usually a year.
Therefore, the structure of the economy
is shown by the shares of the various economic sectors in the Gross Domestic
Product (GDP).
Just like any other theory, accountants
have discovered that they need to make certain assumption before they can
prepare financial statements. These
assumptions, which underline the preparation of
financial statements, are also known as principles, postulates, conventions,
concepts, and standards etc. The originate from such concepts as entity,
going-concern, periodicity realisation, matching, consistency and historical
cost concept.
They have been described as the basic
points of agreement upon which the preparation of financial statement are
based. They act as filters in the process of preparing financial statement and
therefore assist immensely in selecting data to be processed and also
indicating the processing method and thereby affecting the final result.
Accounting Principles are usually rules
and conventions, which have been adopted as a general guide to action by the
accountancy profession. These principles are formulated in such a way that the
practical details of accounting may differ greatly from one company to another.
To ensure acceptance, an accounting principle must be useful in coping with a
practical recording problem, it must be reasonably objective, that is, provide
a similar answer in the hands of qualified practitioners, and it must be
feasible, that is, it should not be expensive to apply.
1.2
STATEMENT OF THE PROBLEMS
This research work
tends to give an appraisal on the effect of the SAP on accounting principle.
Exchange rate devaluation was considered a setback in the progress of the SAP.
Therefore the under listed problem was discovered:
i.
Over
emphasis on the restoration of balance of payment
ii.
Undermine the economy and limit its role
for socio-economic intervention through a fixation on deregulation,
privatisation and instability of the economy in the name of “free market”
iii. Exacerbate
the disparities between rich the poor by facilitating income concentration by
the wealthy and the exclusion of the poor from decisions and control over
resources.
iv. Lack
of transparency, accountability and public participation in their design and
implementation.
v.
Make many necessities inaccessible to
local people as currency devaluations drastically reduce buying power in local
wages.
1.3 OBJECTIVES OF THE STUDY
This study aims to find out the
objectives which include;
i.
To find out how adopting a more just and
equitable approach to resolving the debt crisis can restore the balance of
payment
ii.
To find out how to increase the role of
socio-economic intervention through governmental control and stabilize the
economy by eliminating free market trade through inflationary measures like
naira devaluation.
iii. To
determine what causes inequality in the distribution of income between the
classes of individuals and why the poor are excluded from resources control and
decisions.
iv. To
find out why there is lack of transparency and accountability in SAP designs
and implementations.
v.
To evaluate on the inaccessible
necessities of the rural migrants caused by currency devaluation which
decreases the naira value?
1.4 RESEARCH QUESTION
This research attempts to find answers to some
nudging questions about the Structural Adjustment Programme on Accounting
Principles. This is with the view at highlighting some silent reasons
responsible for the ineffective and failing performance of SAP.
Some of the questions to which we seek answers
without any form of prevarication include:
i.
Has the Structural Adjustment Programme
in commercial sectors improved accounting performance?
ii.
How does the Structural Adjustment Programme
in accounting department of your company affect the profitability of financial
report?
iii.
Is there any significant relationship
between Structural Adjustment Programme and Second tier Foreign Exchange
Market?
iv.
What are the peculiar problems faced by
commercial sectors in implementing the schemes derived from its structural
adjustment?
v.
Does the Structural Adjustment Programme
reduce the hardship of the common people.
vi.
What are the causes of lack of
transparency, accountability and public participation in SAP designs and
implementations?
1.5
HYPOTHESES OF THE STUDY
Hypothesis is a
proposition specifying some form of relationship between variables, it is
merely and evidence for supporting or rejecting one‟s preconceived ideas or
view. Hypothesis are of two types (H1) which is the alternative hypothesis and
it the proposition the researcher which to confirm from the data. It is always
expressed in positive term. The other type (Ho) which is the null hypothesis
and it is the logical converse of the alternate hypothesis. It is the negation
of the alternate hypothesis; the following hypotheses are formulated as guided
to this research studies. However, there are three hypotheses in this research
work.
HO: There is no
significant effect of the Structural Adjustment Programme in the commercial
sector on accounting performance.
H1: There is a
significant effect of the Structural Adjustment Programme in the commercial
sector on accounting performance.
(1) HO:
There is no alignment between structurally Adjustment Programme and Second tier
Foreign Exchange Market.
H1:
There is an alignment between structurally Adjustment Programme and Second tier
Foreign Exchange Market.
(2) HO: The Structural
Adjustment Programme decrease the challenges and calls for professionalism in
management
H1: The Structural
Adjustment Programme increases the challenges and calls for professionalism in
management.
1.6 SIGNIFICANCE OF THE STUDY
Structural adjustment
Programmes (SAPs) in this study are meant primarily for accountants and the
economic policies for developing countries that have promoted by the World Bank
and IMF since the early 1980s by the provision of loans conditional on the
adoption of such policies. The research study is also significant to the
government by removing “excess” government control and promoting market
competition as part of the neo-liberal agenda followed by the Bank and, the
Enhance Structural Adjustment facility which is an IMF financing mechanism that
aid the support of the macroeconomic policies and SAPs in low-income countries
through loans or low interest subsidies.
SAP policies reflect
the neo-liberal ideology that drives globalisation. The aim to achieve long
term accelerated economic growth in poorer countries by restructuring the
economy and reducing government intervention. This is done by privatising state
owned industries, including health sector and opening up their economies to
foreign competition.
1.7 SCOPE OF THE STUDY
This study revolves around the effect of
Structural Adjustment Programme on accounting principles, with the Central Bank
of Nigeria Abuja, as the case study. It focuses on the need of the economy to
adopt these certain adjustment programmes to restructure and make policies and
schemes that will improve the economy. The appraisal of the Structural
Adjustment scheme is principally hinged on the problems and challenges ,
facilities, legal framework, personnel, the scheme compliance and corruption.
1.8 LIMITATION OF THE STUDY
The limitation involved
in the course of this research included hostility and non-co-operation on the
part of some of the respondents. The level of ignorance on economic reformation
and illiteracy was very high. Some SAPs officials refused answering the
question they felt would indict them. Also the financial implication was very
high and imposed certain restrictions.
The constraint of time was also a
limiting factor as all the areas of interest were not covered as they would
have been adequate.
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