UTILIZING ACCOUNTING INFORMATION FOR IMPROVED FUNDS SOURCING AND CAPITAL STRUCTURE DECISIONS OF MASS TRANSIT COMPANIES IN NORTH-CENTRAL NIGERIA

By | June 26, 2016
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Demenongu Wuana, Ph.D

Department of Business Education,

College of Education, Katsina-Ala,

Benue State

sundaywuana@gmail.com

 

 

Abstract

The study determined the utilization of accounting information for improved funds sourcing and capital structure decisions of the BMT companies in the area. The study adopted a descriptive survey design. The population for the study comprised 36 (20 government-owned and 16 privately-owned) bus mass transit companies in Benue, Nasarawa and Plateau States. A total of 72 managers made up of 36 General Managers (GM) and 36 Finance Managers (FM) were involved in the study. A structured questionnaire comprising 27 items was used for data collection. Mean with standard deviation was the statistical tool used in answering the research questions while t-test at 0.05 level of significance was used to test the null hypothesis using the statistical package for social sciences (SPSS) analysis. Major finding were that the BMT company managers in the area did not utilize accounting information for improved funds sourcing and capital structure decisions and  significant mean differences occurred between the ratings of government and privately-owned BMT company managers on the extent of utilization of accounting information for improved funds sourcing decisions. This difference was found to be in favour of the privately-owned BMT managers who utilized accounting information in funds sourcing more than their counterparts in government owned BMT companies. It was recommended among other measures that the management of the mass transit companies in states studied should strictly enforce the use of accounting information in their funds sourcing and capital structure decisions. This, they can do by ensuring that all accounting information relevant to funds sourcing and capital structure decisions are properly accumulated and timely disseminated to persons that make these decisions for and on behalf these companies especially the General Managers and the Finance Managers.

 Key Words: Accounting Information, Financial Management, Funds Sourcing, Capital Structure, Bus Mass Transit.

 

Background

 

As a means of moving people, goods, and services from one place to another, transportation is a prime mover of a nation’s economy. Even the recent advances in the field of electronic communication and the Internet have not weakened the crucial role of transportation to a nation’s economic development. This explains why Agarwal (2002) asserted that a well planned, adequately maintained, efficiently managed and properly operated transport system is a pre-requisite to all sectors of national development.  An important component of transportation the world over is the mass transit system otherwise known as public or mass transportation.

The mass transit system is a means of moving large number of passengers from one place to another in a single vehicle. It refers to public shared transportation in which the passengers do not travel in their own vehicles. The Federal Urban Mass Transit Agency (FUMTA, 1990) identified three categories of mass transit systems in Nigeria, namely the rail mass transit, the ferry mass transit, and the bus mass transit. This study focused on the bus mass transit because it is the dominant mode of mass passenger transportation in Benue, Nasarawa, and Plateau States.

The bus mass transit (BMT) is a system of moving commuters from one destination to another by means of buses of varying sizes – mini buses, medium-sized buses and big buses or coaches. In other words, the BMT is a transport system that comprises motor-buses that convey fare-paying passengers from various origin-locations to various destination-locations. In Nigeria, the BMT constitutes the major mode of intra-city, inter-state and semi-urban transportation. In fact, Olujide and Adeoti (2009) reported that the BMT system meets eighty-five per cent of the commuting needs of Nigerians including those in Benue, Nasarawa, and Plateau States. Public preference for this mode of transportation in the area could be attributed partly to the less government attention in developing the other modes of mass transportation in the country. Other reasons for public preference of the BMT include easy access and flexibility of route selection by commuters. In addition, Olujide and Adeoti (2009) contended that the BMT is the most convenient and cheapest mode of mass passenger transportation in Nigeria in recent times. The above reasons explain why an efficient and reliable BMT system is indispensable to the people of Benue, Nasarawa, and Plateau States.

In order to provide efficient and reliable BMT services to the people, most operators including government-owned BMT outfits have been registered as limited liability companies. Thus, there are basically two forms of BMT companies operating in the area, namely publicly-owned BMTs (owned by state or local/municipal authorities) and privately-owned BMT (owned by individuals and organizations). Mass transportation, however, is not a new development in Nigeria.

The  bus mass transit system in particular, existed in Nigeria prior to the 1980s and was mainly operated by private operators and some few States government such as Lagos, Rivers, Oyo, Kaduna, and Kano States. Nevertheless, Ikya (1993) stressed that the system of public transportation in Nigeria assumed much significance during the Structural Adjustment Programme era of 1986. During this period, oil subsidy was removed and the local currency, the Naira was devalued giving rise to high cost of imported vehicles and spare parts. Also, rapid urbanization, increased political, economic and social activities gave rise to high demand for public transportation. The few available vehicles in the country then could not cope with the mobility needs of the people. According to Ikya (1993), the Federal Government of Nigeria (FGN) then waded into this mobility crisis by setting up the Federal Urban Mass Transit Programme (FUMTP) in 1988. The FGN also provided soft loans to States, municipal councils, trade unions, and even private entrepreneurs to establish their own mass transit schemes. The presence of these companies in Benue, Nasarawa, and Plateau States significantly boosted the tempo of economic activities in the area.

However, operational efficiency challenges are fast crippling these companies in recent times. This is evident by the frequent break down of their buses on the high way thereby causing a lot of inconveniences to passengers, the drastic reduction in the fleet of buses and the folding up of most of them as a result of poor management especially in the area of finance.

Nwude (2003) defined financial management as the process of planning, acquiring, and using funds in an enterprise in order to realize its set goals with minimum discomfort and maximum benefit to the enterprise and its owners. The focus of financial management, according to Breadley, Myers and Marcus (2009), is how individuals, organizations, governments and companies raise funds/finance and how they utilize it. Financial management, as used in this study, is in the areas of funds sourcing and capital structure decisions of the BMT companies in the area of study.

Funds sourcing is the conscious efforts by managers to raise funds to finance the operations of their companies. According to Pandey (2003), financing decision is so crucial to an enterprise that whenever a firm makes an investment decision, it must at the same time make the financing decision also. For example, if a BMT company decides to acquire additional buses to boost its operations, it must as well decide on ways of financing the acquisition. Funds sourcing as used in this context refer to long term sources of financing the BMT companies.

There are basically two sources of long term financing available to a firm, namely; equity funds and debt funds.  Equity funds are generated from the ordinary shareholders (owners of the company) who receive dividends as return on their investment in the company. Debt funds, on the other hand, are fixed interest-bearing funds supplied by lenders. These include bonds, debentures, preference shares, loans, hire purchase financing, leasing, etc. Since companies in general (including the BMT companies) make use of equity funds as well as debt funds in their financing arrangement, managers of these companies must make capital structure decisions as well.

Capital structure decision, according to Pandey (2003), dwells on determining the appropriate mix of equity and debt funds which a firm uses to finance its operations in the long term. A firm’s capital structure is said to be optimum when the firm selects such combination of debt and equity funds such that the wealth of the firm and that of its shareholders are maximized. At the optimal capital structure level, Mehta (2011) contended that the firm’s cost of capital, the weighted average cost of capital (WACC), of the firm is lowest and the firm’s market price per share is at its peak. There is a relationship between funds sourcing and capital structure decisions.

Funds sourcing and capital structure decisions are closely related in the sense that while sourcing for long term funds, a company must ensure appropriate mix of equity and debt funds and thus, avoid the risk of over relying on one source of financing. Over reliance on debt financing, in particular, is dangerous because it is capable of plunging a company into financial distress. Financial distress is a situation where a company encounters difficulty in honouring debts obligations to creditors which also include servicing debts owed to long term creditors. The extreme form of financial distress is insolvency which could lead a company into liquidation.  Therefore, for the BMT company managers to be able make worthwhile decisions in funds sourcing and capital structure, Nwude (2003) argued that such managers need to be guided by information drawn from the field of accounting.

The American Institute of Certified Public Accountants (2011) defined accounting as a service activity that provides quantitative information which can be used for managerial decision-making. Accounting information, therefore, represents the output from an accounting system that assists managers in making decisions especially financial decisions. Accounting information comes in the form of financial statements, financial ratios, capital budgets, credit ratings, variances, inventory levels, cost and profitability projections, break-even analysis reports, financial plan, etc. It is expected, therefore, that managers of BMT companies in the area should use these accounting information to improve their financial management particularly as it relates to funds sourcing and capital structure decisions.

However, the inefficient operations of the bus mass transit companies in the North-central states of Nigeria particularly in Benue, Nasarawa and Plateau States in recent times point to the inability of managers of these companies to utilize accounting information in sourcing for funds. Also, doubtful is the managers’ ability to use accounting information in the capital structure decisions of these companies so as to protect them from financial distress. Hence the study was designed to determine the extent of utilization of accounting information for improved financial management of the mass transit companies in the area of study.

 

Statement of the Problem

The BMT companies like any other commercial outfit should utilize accounting information as a management tool to improve their financial management. However, the epileptic operations of most of these companies in Benue, Nasarawa and Plateau State in the North-central Nigeria point to the fact those managers of these companies are not taking advantage of this management tool to improve their financial decisions notably in the areas of funds sourcing and capital structure. The collapse of most of these companies in the area in recent times attests to this fact. The study is, therefore, undertaken to answer the question: To what extent do the BMT companies in Benue, Nasarawa and Plateau States utilize accounting information for improved funds sourcing and capital structure decisions?

 

Purpose of the Study                

The main purpose of this study was to determine the utilization of accounting information for improved financial management of mass transit companies in Benue, Nasarawa and Plateau States, Nigeria. Two basic purposes guided the study:

  1. To determine the extent to which BMT companies utilize accounting information to improve their funds sourcing decisions, and
  2. To determine the extent to which BMT companies utilize accounting information to improve their capital structure decisions.

 

Significance of the Study

The findings of this study will be beneficial to the managers of mass transit companies, commuters, providers of finance/creditors (banks and suppliers of vehicle spare parts and fuel), shareholders of mass transit companies in the area and prospective investors in the mass transit business sub- sector.

Research Questions

  1. To what extent do the BMT companies utilize accounting information for improved funds sourcing decisions?
  2. To what extent do the BMT companies utilize accounting information for improved capital structure decisions?

 

Null Hypothesis

Ho1  There is no significant difference between the mean ratings of managers of government and privately-owned BMT companies on the extent of utilization of accounting information for improved funds sourcing decisions.

The null hypothesis was tested at 0.05 level of probability.

 

Methodology

The study adopted a descriptive survey design to illicit the opinions of the BMT managers on the extent to which they utilize accounting information in their financial management decisions in the three states in the North-central Nigeria, namely: Benue, Nasarawa, and Plateau States. The population for the study comprised 36 (20 government-owned and 16 privately-owned) bus mass transit companies in the area. A total of 72 managers made up of 36 General Managers (GM) and 36 Finance Managers (FM) were involved in the study. Owing to the fact the population was accessible and manageable, the entire population was surveyed.

A structured questionnaire comprising 27 items was used for data collection. The questionnaire comprised two sections, A and B. Section ‘A’ requested for the personal data of the respondents while Section ‘B’ contained items meant to answer the two research questions on a 5-point scale with response options of  Very Highly Utilized (VHU), Highly Utilized (HU), Averagely Utilized (AU), Lowly Utilized (LU), and Not Utilized (NU). Three experts, two from Business Education and one from Measurement and Evaluation Departments of the University of Nigeria, Nsukka validated the instrument. The questionnaire was subjected to reliability testing and it obtained a reliability index of .80. Mean with standard deviation was the statistical tool used in answering the research questions while t-test at 0.05 level of significance was used to test the null hypothesis using the statistical package for social sciences (SPSS) analysis. For the research questions, any item with a mean rating of equal to or more than 3.50 was accepted as highly utilized while any item with a mean rating that is less than 3.50 was rejected. For the null hypothesis, if the computed SPSS significant t-test value was above 0.05 and with a t-test decision of “Not Significant” (NS), the null hypothesis was accepted. However, where the SPSS computed significant t-test value equaled to or less than 0.05 and with t-test decision of “Significant” (S), the null hypothesis was rejected.

 

Results

Research Question 1

To what extent do the BMT companies utilize accounting information for improved funds sourcing decisions?

Data collected to answer this research question is presented in table 1 below.

 

Table 1         

              Mean ratings and standard deviations of BMT managers’ extent of utilization

              of accounting information for improved funds sourcing decisions

 

S/N Item Statement N SD Decision
1 The estimated revenue to be generated from the funds that the company is seeking to acquire

 

72 3.06 .92  AU

 

2 The amount of money required for the investment

 

72 2.12 1.15 LU

 

3 The overhead cost (fixed expenses) of operating the investment

 

72 2.17 .99 LU

 

4 The estimated profit from the investment

 

72 2.18 1.13 LU
5 The amount of working capital (cash, spare parts and other consumables) required for the investment to be funded

 

72 3.56  .80 HU
6 The amount of share capital fully paid by shareholders of the company

 

72 2.28 1.20 LU

 

7 The ratio of debts to share capital fully paid by shareholders, that is, debt/equity ratio

 

72 1.26  .93 NU

 

8 The company’s total debts (short-term and long term debts)

 

72 2.21 .96 LU

 

9 he name and value of fixed asset(s) to be used as collateral for the amount of loan being sought for

 

72 2.56 .92 AU

 

10 The level of cash available to settle immediate debts (short-term liquidity of the company)

 

72 3.63 .96 HU

 

11 Evidence of the company’s ability to pay interest charges on the funds being sought for out of annual profits

 

72 2.15 1.07 LU

 

12 The cash flow projections indicating how the company will liquidate the loan facility being sourced for

 

72 2.25 1.05  LU

 

13 Projected revenue growth rates of the company

 

72 2.14 1.30  LU

 

14 Projected profit growth rates of the company

 

72 3.06 1.07  AU
15 The company’s credit ratings by other lending agencies or institutions

 

72 2.75 1.00 AU

 

16  Feasibility report of the proposed investment

 

72 2.53 .87 AU
  Cluster Mean   2.49 1.02  LU
           

 

 

Table 1 shows that out of the 16 items listed for funds sourcing, BMT managers rated two items that are highly utilized in funds sourcing decisions, namely; items 5 and 10 respectively with mean ratings of 3.56 and 3.63 in that order. The items represent the amount of working capital required for the investment and the level of cash available to settle immediate debts (short-term liquidity of the company). However, the overall cluster mean of 2.49 falls under lowly utilized (LU) which is below the acceptance region for utilized indicating that the respondents rated the items in this cluster as not utilized (NU) in sourcing for funds. Again, the cluster standard deviation of 1.02 indicates that the respondents’ opinions are far away from the mean

 

.

Research Question 2

To what extent do the BMT companies utilize accounting information for improved capital structure decisions?

Data collected to answer this research question is presented in table 2.

 

Table 2

Mean ratings and standard deviations of BMT managers’ extent of utilization             of accounting information for improved capital structure decisions

 

S/N Item Statement N SD Decision
49 Ascertain the amount of capital provided by the company’s shareholders (equity capital)

 

72 3.28 .91 AU
50 Ascertain the amount of capital to be borrowed from outside institutions (debt capital)

 

72 3.13 .87 AU
51 Refer always to the amount of money the company is permitted by law to borrow (debt bearing capacity of the company)

 

72 1.31 1.18 NU
52 Ascertain the amount of interest the company is capable to pay on borrowed capital (cost of capital)

 

72 2.47 1.06 LU
53 Ascertain the amount of cash available for payment of interest charged on borrowed capital

 

72 2.25 .73 LU
54 Ascertain the value of fixed assets that can be used as collateral for borrowed capital

 

72 3.57 .62  HU
55 Compute the debt to equity ratio to ascertain the proportion of borrowed capital to company’s owned capital

 

72 2.22 .68  LU
56 Compute total debt to total capital ratio to determine whether or not to carry additional debt capital

 

72 1.39 .76 NU
  Cluster Mean 72 2.45 .85  LU

 

 

The results in Table 2 reveal that only two items out of the eight listed items are highly utilized by the BMT managers in their capital structure decision. These were item 54 (ascertain the value of fixed assets that can be used as collateral for borrowed capital) with a mean rating of 3.57 and item 49 (ascertain the amount of capital provided by the company’s equity shareholders). The cluster mean rating of 2.45, however, shows that the respondents lowly utilize (LU) the items in this cluster in capital structure decisions. The standard deviation of .85 indicates that the respondents’ opinions are not far away from the mean.

 

 

Null Hypothesis

Ho1  There is no significant difference between the mean ratings of managers of government and privately-owned BMT companies on the extent of utilization of       accounting information for improved funds sourcing decisions.

The t-test result showing the responses of government and privately-owned BMT managers on the extent of utilization of accounting information for improved funds sourcing decisions is shown in Table 3.

 

Table 3                                                                                                    

           T-test analysis of the mean ratings of government and privately-owned BMT managers on extent of utilization of accounting information for improved funds sourcing decisions

 

S/N Item Statement Managers SD t-cal Df Sig Dec
1 The estimated revenue to be generated from the funds that are being sought for

 

Government

Private

3.13

2.97

.85

0.99

 

.72

 

70

 

.477

 

NS

2 The amount of money required for the investment

 

Government

Private

1.93

2.38

0.92

1.36

 

-1.67

 

70

 

.09

NS
3 The overhead cost (fixed expenses) of operating the investment

 

Government

Private

2.18

2.16

0.96

1.05

 

.08

 

70

 

.94

NS
4 The estimated profit from the investment

 

Government

Private

2.30

2.03

1.26

0.93

 

1.00

 

70

 

.32

NS
5 The amount of working capital (cash, spare parts and other consumables) required for the investment to be funded

 

Government

 

Private

3.15

 

4.06

.53

 

.80

 

-5.78

 

70

 

.00

 

S

6 The amount of share capital fully paid by shareholders of the company

 

Government

Private

2.33

2.22

1.24

1.16

 

.37

 

70

 

.71

NS
7 The ratio of debts to share capital fully paid by shareholders, that is, debt/equity ratio

 

Government

 

Private

2.25

 

2.28

0.81

 

1.09

 

-.14

 

70

 

.89

 

NS

8 The company’s total debts (short-term and long term debts)

 

Government

Private

1.98

2.50

.73

1.14

 

-2.37

 

70

 

.02

S
9 The name and value of fixed asset(s) to be used as collateral for the amount of loan being sourced for

 

Government

 

Private

3.15

 

4.06

.98

 

.50

 

-4.80

 

70

 

.00

 

S

10 The level of cash available to settle immediate debts (short-term liquidity of the company)

 

Government

Private

2.93

4.50

.57

.51

 

-12.2

 

70

 

.00

S
11 Evidence of company’s ability to pay interest charges on the funds being sought for out of annual profits

 

Government

 

Private

2.15

 

2.16

1.10

 

1.05

 

-.02

 

70

 

.98

 

NS

12 The cash flow projections indicating how the company will liquidate the loan facility being sought for

 

Government

 

Private

2.35

 

2.13

1.19

 

0.83

 

.91

 

70

 

.37

 

NS

13 Projected revenue growth rates of the company

 

Government

Private

1.95

2.38

1.36

1.12

 

-1.38

 

70

 

.17

 

NS

14 Projected profit growth rates of the company

 

Government

Private

2.95

3.19

1.22

.86

 

-.93

 

70

 

.35

NS
15 The company’s credit ratings by other lending agencies or institutions

 

Government

Private

2.98

2.47

.97

.98

 

2.18

 

70

 

.03

S
16 Feasibility report of the proposed investment Government

Private

3.28

3.84

.93

.68

 

-2.89

 

70

 

.05

S
  Cluster t Government

Private

2.56

2.83

.33

.30

 

-3.63

 

70

 

.00

S

 

Table 3 posted the cluster significance value of .00 and a cluster decision of significance (S). This means that on the whole, managers of government and privately-owned companies differed in their opinions on the extent of utilization of accounting information in sourcing for funds. Therefore, the null hypothesis which postulated that there is no difference in the mean ratings of government and privately-owned company managers on the extent of utilization of accounting information in sourcing for funds is rejected. That is, there was a significant difference in the mean ratings of privately-owned and government-owned BMT company managers on the extent of utilization of accounting information for improved funds sourcing decisions. From the cluster means shown in the table, it appears that the difference in the opinions of the two groups of managers is in favour of the privately-owned BMT managers who obtained a cluster mean score of 2.83 whereas their counterparts in government-owned companies got a cluster mean score of 2.56. That is, managers of privately-owned BMTs are utilizing accounting information in sourcing for funds more than managers of government-owned BMTs.

 

Discussion of the Findings    

One of the findings of the study revealed that only two sets of accounting information, the amount of working capital required for the investment to be funded and the level of cash available to settle immediate debts were rated as utilized by the BMT company managers while the rest of the remaining sets of accounting information presented for this purpose were rated not utilized by these managers.

The above finding could be interpreted that the BMT company managers in the area of study are not utilizing accounting information in sourcing for funds. That is, the extent of usage of accounting information in sourcing for funds in these enterprises in the area leaves much to be desired. The few sets of accounting information rated as utilized by managers could be the only accounting information that the accounting systems of these firms generates and/or the only accounting information that managers are familiar with. Be that as it may, it then means that the minimum accounting standards prescribed for companies in Nigeria by various bodies such as the Corporate Affairs Commission (CAC), the Securities and Exchange Commission (SEC), and the Nigerian Accounting Standards Board (NASB), etc. are not strictly followed by the BMT company managers in the area of study. Again, it could be explained that managers who are employed to manage the finances of these companies are not quite knowledgeable in the field of accounting and financial management as a whole or that these managers are not doing their jobs well enough.

However, the findings on the use of accounting information in sourcing for funds in the BMT companies in the area of study are consistent with the views of Agudah (2011) that companies in Nigeria are unable to raise loans from banks and other lending institutions largely because of their inability to present bankable financial proposals. On the other hand, the findings contradict that of Otu (2001) who found that commercial banks rely on the applicants’ financial statements in granting loans and the extent of reliance on this information is high among commercial banks in Ebonyi State, Nigeria. Thus, if the commercial banks in the area of study strictly demand for the applicant’s financial statements in granting loans, the present results on the utilization of accounting information in sourcing for funds by the BMT company managers in Benue, Nasarawa, and Plateau States, Nigeria would have been different.

The study further found that respondents gave not utilized ratings to most of the accounting information that are used for improved capital structure decisions. For instance, accounting information such as the interest the company is capable to pay on borrowed capital – cost of capital; the amount of cash available for payment of interest on borrowed capital; the debt/equity ratio; and the debt capacity of the company, all received not utilized ratings by the respondents.

The above findings on improved capital structure decisions, again, creates a worrisome situation because Pandey (2003) contended that the capital structure decision of a company must take these vital financial information into account for obvious reason that decisions in this area of finance determines the long term solvency of the firm. For instance, the not utilized rating received from the respondents on the company’s debt bearing capacity means that the BMT managers are not aware of the limit the law imposes on their companies’ powers to borrow as enshrined in the articles of association of these companies. Hence most of these managers go on borrowing spree to acquire debt capital on terms and conditions most unfavourable to their companies and thus, plunging these companies into financial trouble.

Again, it was found that a significant difference existed between the mean ratings of government and privately-owned BMT managers on the extent of utilization of accounting information in sourcing for funds. Therefore, the null hypothesis of no significant difference was rejected. The significant difference was found to be in favour of the privately-owned BMTs who obtained higher mean score in utilizing accounting information for this purpose more than their government counterparts. This implies that ownership status has a significant influence on the extent of utilization of accounting information by managers in sourcing for funds in the bus mass transit companies.

The above result is consistent with the view held by Mbaezue (2010) that government-owned companies are different from privately-owned companies in the sense that the former are characterized by inefficient management (including financial management) while the latter are more poised to profit-making and therefore, more efficient in management than their government counterparts. Similarly, Ogunsanya (2004) reported that state-owned mass transits were run at a loss. The reasons include nonchalant attitude to government work by the employees, embezzlement on the part of drivers and conductors, and inadequate response to taking immediate actions on repairs and servicing of vehicles by government parastatals established for such purposes.  Hence, the difference noted between the opinions of government and privately-owned BMT managers on the extent of use of accounting information in sourcing for funds.

However, the fact that managers of government and privately-owned companies did not differ significantly on a good number of the accounting information used in sourcing for funds point to the fact that much is happening in the Nigerian bus mass transit sub-sector to harmonize financial management practices between these two types of companies.

 

Conclusion

          The level of utilization of accounting information for improved financial management in the bus mass transit (BMT) companies is generally low in Benue, Nasarawa and Plateau States of Nigeria. Furthermore, even though there is general low level of utilization of accounting information for this purpose among the BMT companies in the area, the privately-owned companies utilized accounting information more than their government counterparts especially in sourcing for funds.

 

Recommendations

  1. The management of the mass transit companies in Benue, Nasarawa, and Plateau States headed by their Board of Directors (BOD) should strictly enforce the use of accounting information in sourcing for funds by ensuring that all accounting information relevant to funds sourcing are properly accumulated and timely disseminated to the persons concerned with sourcing for funds for the company especially the General Manager and the Finance Manager. The BOD should also ensure, through the establishment of routine supervision measures, that financial information is accorded high priority in all funds sourcing decisions of these enterprises. Furthermore, the BOD could direct management to hire the services of professional accountants to draw up financial proposals for loan applications where it is impracticable for this service to be performed by the company managers. These measures are to ensure that the mass transit companies utilize accounting information to obtain funds as and when needed and on terms and conditions most favourable to them.
  2. Managers of the BMTs in the area of study are urged to adopt the use of computers in processing accounting information. This will guarantee more timely and accurate accounting information that will be supplied by the accounting systems of these companies for the purposes of sourcing for and investing funds profitably in these companies.
  3. Also, managers of BMTs, especially government-owned BMTs, should recruit only qualified and experienced accounting personnel to take charge of their accounting/finance departments. Managers should regularly update the knowledge and skills of their principal accounting/finance officers (the General Managers and Finance Managers) through refresher courses/seminars on the latest technologies of accumulating, processing, and use of accounting information especially in critical areas like funds sourcing and capital structure decisions. This will help to improve the use of accounting information and thus, enhance the quality of financial decisions in these areas of financial management.

 

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