A Critical Review of the Effect of Good Accounting System in the Growth and Development of Insurance Industry
This study survey critical review of the impact of the good accounting system in the growth and development of insurance industry. The data collected for this research was sources from both primary and secondary data collection method. This section discusses the crucial issues related to insurance accounting. As a preview, our main suggestions that are directly related to the insurance regulatory issues arising in the financial crises are: Financial Planning,Product pricing,Cost control, Cost reduction, Management decision. To correct the detects identified specific recommendation are presented for consideration. To ensure accountability and effective administration in the civil service, all staff performing accounting and have adequate academic and professional qualification. This will equipped them with modern technique and the ability to work with little or no supervision. The recruiting of professional accountant will allow for promotion of government accounts and managerial problems such as poor internal control will be reduce. To prevent the exodus of the recruited professional accountants to the private sector via research for greener pasture, adequate and comparable remuneration should be given to them, firing benefit which is attractive should be provided for them. This make them put their best in the ministry. Finally, the government must endeavour to motivate their workers through the provision of adequate incentives. Prizes bonus corporate recognition and promotion are but a few of the devices that can be used to elicit more positive responses from the civil services. To conclude therefore, it is hoped the finding brought out by the study will be studied and digested by all concerned.
1.1 Background of the Study
Insurance company is a district and specialized account that is always referred to as “specialized account” just like taxation is a specialized area. Though it employs the general accounting principles, concepts and conventions, there are needs for a clear understanding of its preparations.
In the days of T-form presentation of financial statement an insurance company account could be easily recognized from the side of the “T” to which income and expenditure items are posted, they are no in conventional form. The conventional was placing revenue to the right of the “T” insurance company revenue items to the left of the “T” and expenditure items to the right.
Nowdays, there are other features that distinquish accounting system in insurance industry or company or company’s from their accounting system, they are as follows.
i. Requirement by law for remitting of quarterly and annual returns to central banks of Nigeria (CBN) and Nigerian Insurance Company Supervisory Board (NISB).
ii. Requirement by law for conditions of returns to the Nigerian insurance supervision board (NISB) with stated deadline.
iii. Prescription by law of the type and level of level of statement of insurance.
iv. Requirement by law of the maintenance of resources know as “TECHNICAL RESERVES” comprising of insurance fund, reserves for understanding losses reserves for incurred but not reported and contingency reserves. All these are in addition to rendition of the required returns to the corporate affairs commission (CAC) being and incorporated company under in pursuant to the companies and allied matters decree (CAMD) 1991.
From the above, it can therefore he seen that without a proper understanding of intricacies involved in both the interpretation of the decree as well as items that makes up insurance accounts and right treatment is afforded to the financial statement as narrated will not give a true and fair view of the statement of affairs and of profit and loss for the period.
1.9 Statement of the Problem
Same of the problems facing accounting system in insurance industry includes
1) Good accounting system has not ben adequately carried out in insurance accounting system.
2) Inadequate accounting management in insurance industry causes fraud.
3) Financial statement MIS-Interpretation also causes a problem.
1.10 Objective of the Study
The objective of the study as deduced by the ………….. are stated below:
1) To examine why good accounting system has not been adequately carried in insurance.
2) To evaluate how adequate accounting managementinsurance industry can cause fraud.
3) To examine how financial statement mis interpretation can cause problem.
1.11 Research Questions
Some of the research questions are:
1) Why is good accounting system has not been adequately put in place in insurance industry.
2) How is adequate accounting management in insurance industry causes fraud?
3) Do Mis interpretation of financial statement causes problems in accounting system of insurance industry.
1.12 Significance of the Study
Industry keeps graving which shows an increase in the public funds place in another person’s hand in form of premium. There is the need for proper and adequate reporting so that confidence in the industry can be established. Capital market interizalization distress in the economy and subsequence need for merger and acquisition as a means of survival calls for proper understanding as well as to treatment is based, which will used for all these.
1.13 Scope and Limitation of the Study
The scope of this research work is restricted to some selected insurance companies in Enugu.
1) Lead way assurance company
2) Union assurance company
3) Industrial and general insurance company
4) Niger insurance company
Therefore the information gathered will be used as inference to other insurance companies in Nigeria.
The following are the factors that limited the study of this research works:
1) Cost: Lack of fund may affect not only the period of the analyzing the effects of human resources development on the organizational growth and come out of legacy for the posterity one need to travel far and near.
2) Time: Time is as costly as money, it is even easier facing financial problems than time. Time cost is hardly required. Financial market do exist but time existed for time with the school academic, the period for the research work is too short putting other course into the budget.
3) Source of Facts: This research has convinced me that so many authors share almost the same view on this topic “Impact of Human Resources Development on Organizational Growth “ as such are going to a library having about ten textbooks of different authors at least you find out they are saying the same thing but in different tonque invariable you are reading a research work as complied form the review of different authors in the library.
Invariably one can say you are having book or two.
4) Reluctant to co-operate: The management of some business organization are two reluctant to disclose the required information and more so when it comes disclosing the organizational books of record.. the idea equally affects the quality of facts given in the research.
1.8 Definition of Operational Terms
The following definitions are given for reference purposes.
1) Accounting: This is the act and science of recording business transaction in a systematic manner so as to show the financial position of the business anytime needed.
2) Accounting Standard: This are standard issued by professional accounting bodies in Nigerian to regulate the practice of accounting profession such as statement of accounting standard (SAS).
3) Insurance Industry: This is when the insurance transaction is being carried out by the players such as insurance industry’s brokers, agents and insuring public.
4) Economic Growth: A rapid and sustained rise in real output per head and attendant shits in technological economic and demographic characteristics of the society.
5) Economic Development: This is when these things that help to improve the life of the masses are available.
6) Promotion: This can be seen as a result of a successful completion of training or the reward of a brilliant performance of an employee with his working environment.
7) Quarterly: This is when a three month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of divideds.
8) Taxation: This can be seens as a way through which government finances its spending by imposing some charges on its citizens and bustness entities.
9) Financial Statement: This is a document reporting business financial performance and resources
10) Re-search contingency:]
11) Loss: This can be seen a reduction in the value of an investment.
12) Cooperate: This means to be arranged, organized and maintained as a legal corporation.
13) Decree: This can be seen a judgment of a court that announces the legal consequences of the facts found in a case and order that the court’s decision be carried out.