TABLE OF CONTENTS
TABLE OF CONTENTS vii
CHAPTER ONE 1
1.0 BACKGROUND OF THE STUDY 1
1.1 STATEMENT OF THE PROBLEM 3
1.2 OBJECTIVES OF THE STUDY 6
1.3 RESEARCH QUESTIONS 6
1.4 RESEARCH HYPOTHESES 7
1.5 SIGNIFICANCE OF THE STUDY 7
1.6 SCOPE OF THE STUDY 9
1.7 OPERATIONAL DEFINITIONS OF TERMS 9
CHAPTER TWO 13
LITERATURE REVIEW 13
2.0 INTRODUCTION 13
2.1 MEANING OF ENVIRONMENTAL ACCOUNTING 13
2.2 SIGNIFICANCE OF ENVIRONMENTAL ACCOUNTING 15
2.3 IMPACT OF ENVIRONMENTAL ACCOUNTING ON THE EXISTING ENVIRONMENT 17
2.4 THE EFFECTS OF ENVIRONMENTAL ACCOUNTING 19
2.5 THE COST OF ENVIRONMENTAL ACCOUNTING TO THE PUBLIC 21
2.6 PROSPECTS AND PROBLEMS OF ENVIRONMENTAL ACCOUNTING 23
2.7 EMPIRICAL STUDIES ON ENVIRONMENTAL ACCOUNTING 25
CHAPTER THREE 44
RESEARCH METHODOLOGY 44
3.0 METHODOLOGY 44
3.1 RESEARCH DESIGN 44
3.2 POPULATION OF STUDY 45
3.3 SAMPLE/SAMPLING TECHNIQUE 45
3.4 MODEL SPECIFICATION 47
3.5 DATA ANALYSIS TECHNIQUES 48
CHAPTER FOUR 52
DATA ANALYSIS AND PRESENTATION 52
4.0 DATA PRESENTATION, ANALYSIS AND INTERPRETATIONS 52
4.1 DATA PRESENTATION 52
4.2 DATA ANALYSIS 60
4.3 DATA INTERPRETATION 63
4.4 DISCUSSION OF FINDINGS 63
CHAPTER FIVE 65
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 65
5.0 INTRODUCTION 65
5.1 SUMMARY OF FINGDS 65
5.2 CONCLUSION 66
5.3 RECOMMENDATIONS 68
APPENDIX I 75
APPENDIX II 76
1.1 BACKGROUND OF THE STUDY
The success of an organization depends largely on the measures it has put in place to support its operations and facilitate the achievement of its objectives. Such measures may include, but not limited to, having policies and procedures for execution of operations, establishing standards for recruitment and competency development of employees, development of policies which govern the behaviour of organizational members, having security measures to guarantee assets protection, establishing proper procedures for record keeping, defining reporting relationships among organizational members, establishing procedures for authorization of transactions and the limits thereon as well as top management supervision. These measures, together with many others, such as internal auditing, budgeting, performance evaluation, etc., that an organization may implement in order to achieve its objectives, constitute the internal control system of the organization (Eke, 2018).
Many business failures around the world, in the recent past, have been partly attributed to internal control failures. It is common knowledge that the collapse of some companies across the world, notable among which are Enron Energy Corporation, WorldCom, Tyco (in the US); Maxwell Communications Corporation, the Mirror Group Newspaper (in the UK); as well as NITEL and NAFCON (in Nigeria) were due to internal control failure and by extension, corporate governance failure (Eke, 2018).
Return on Assets (ROA) is a measure of financial performance and of the operational profitability of an organization in relation to the total assets it has; it reflects an organization’s ability to deploy its assets profitably (Pandey, 2010; Ezirim, 2004).
Historically, the Nigerian oil and gas sector like that of many other developing countries has been dominated by the powerful ‘International Oil and Gas Companies (IOCs). This results in a massive outflow of resources for the payment of training and procurement and remuneration of expatriates (Nwosu, et al., 2006; Atsegbua, 2012). In 2000, the Nigerian National Petroleum Corporation (NNPC) confirmed that the indigenous oil and gas firms had benefited with as little as 5% of the estimated annual contract values of between $10bn and $12bn (Mohammed, 2009; Nwaokoro, 2011). This fact was supported by Frynas and Paolo (2007) who asserted that over 95% of the country’s petroleum production was provided by only five IOCs –Agip, Chevron, ExxonMobil, Shell, and Total. Apart from the capital and technological strength of the International Oil and Gas Companies (IOCs), this may also be connected to the alleged connivance of the IOCs and the Nigerian officials. For instance, it was found that between 1995 and 2004 Halliburton had paid the Nigerian officials a $180 million bribe to secure an LNG contract (George and Lacey, 2006). From the discovery of oil in 1956 to 2006, it was estimated that the value of the Nigeria’s capital flight had amounted to $380 billion with about a 2 million estimated losses in job opportunities (Abdulwahed, 2014). This trend is similar in many other oil-producing developing countries and proves that natural resources can be a curse and not a blessing (Auty, 1994).
To reverse this trend, the local content policy was adopted in Nigeria and elsewhere to boost the participation of indigenous companies in various contracts along the petroleum value chain. This includes oil licensing, exploration, drilling, production and other oil-related activities such as the financial, insurance and legal services. Many oil-producing countries including Nigeria, have adopted the local content as a sustainability policy that ensures the flow of benefit from the petroleum sector to compensate for the negative social, economic and environmental consequences of oil and gas extraction (Schaltegger and Burritt, 2010).
Internal control functions have to be effectively implemented by every firm in the oil and gas sector of Nigerian economy in order to ensure expected results of financial performance that gives rise to improved return on the assets of such entity (Eke, 2018).
1.2 STATEMENT OF THE PROBLEM
Absence of strong control environment has made most firms operating in the oil and gas industry to wind-up, which has also been noticed in recent times. It has been noticed that this has been affecting the return on assets and financial performance generally, of such entities lately.
It has been observed that in most of these oil and gas companies, poor risk management procedures are being applied leading to much unexpected losses. Proper attention has not been given to identifying, assessing and addressing current risks facing such firms. Adequate actions need to be meted against such.
Communication systems are being put to use in the oil and gas sector yet return on assets have not appreciated enough in the last ten years (2008-2017) which has been identified to be as a result of poor information dissemination or erroneous input of data which has caused a lot of unwanted situations for the industry.
1.3 OBJECTIVES OF THE STUDY
This study on internal control and return on assets in the oil and gas sector in Nigeria is primarily aimed at ascertaining if internal control actually impacts on return on assets in the oil and gas sector in Nigeria. This has been sub-divided into the following objectives:
To evaluate the effect of Control environment on the return on assets in the oil & gas sector of Nigeria
To assess the effect of Risk management on the return on assets in the oil & gas sector of Nigeria
To determine the effect of Information and communication system on the return on assets in the oil & gas sector of Nigeria.
1.4 RESEARCH QUESTIONS
The following questions are serving as a guide in achieving the research objectives:
Is there any significant effect of Control environment on the return on assets in the oil & gas sector of Nigeria?
Does risk management affect the return on assets in the oil & gas sector of Nigeria?
Does Information and communication system affect the return on assets in the oil & gas sector of Nigeria?
1.5 STATEMENTS OF HYPOTHESIS
The hypotheses for the purpose of this study are hereby stated in their null forms below:
Ho1: Control environment has no significant effect on the return on assets in the oil & gas sector of Nigeria.
Ho2: Risk management has no significant effect on the return on assets in the oil & gas sector of Nigeria
Ho3: Information and communication has no significant effect on the return on assets in the oil & gas sector of Nigeria.
1.6 SCOPE OF THE STUDY
This study on internal control and return on assets in the oil and gas sector in Nigeria is expected to cover the entire oil and gas companies in the country but has been limited to selected multinational firms in the recent past few years.
1.7 LIMITATIONS OF THE STUDY
Some of the factors that stood as constraints to the researcher during the course of this study include:
Time Constraint: The short duration provided for this work from start to finishing point was a barrier since the researcher also had to attend lectures, write exams and carryout other academic activities within the same period.
Unavailability of Relevant Data: Scarcity of relevant data/information was also a challenge because previous scholars have not been able provide sufficient data on the subject matter.
Respondents’ Attitude: Some respondents the researcher approached in order to obtain data that could be useful in this study declined to release such data since they considered such information to be confidential.
Financial Challenges: The huge amount of money needed for this study from start to finishing point was not so easy to come-by since the researcher had to travel to the offices of concerned organizations and companies in search of relevant data until such data are obtained.
1.8 SIGNIFICANCE OF THE STUDY
This study in essence, is expected to be of great benefits to the management and those in governance of oil and gas companies, the government and regulatory agencies, Investors and the general public as well as future researchers or scholars.
To the management and those in governance (Board of Directors) of oil and gas companies, this work suggests better ways of improving control measures on their operating activities so as to ensure enhanced financial performance in terms of return on assets for the benefit of equity holders and other stakeholders and of such multinationals.
From this study, the government and regulatory agencies have been made to understand the essence of oil and gas sector as well as the need to make healthy policies that would strengthen internal controls in the sector so as to ensure improved performance of oil and gas industry in Nigeria since improvement in their performance will increase Nigeria’s GDP as n indication of economic growth.
To Investors and the general public, the study stands to encourage improved performance in terms of return on assets of the oil and gas sector for their investment, appraisal, environmental and other economic decisions.
This study also serves as a reliable working and educating material to further researchers and scholars who may wish to improve on the findings of the study.
1.9 OPERATIONAL DEFINITION OF TERMS
Assets: According to International Financial Reporting Standards Framework, assets are resources controlled by an entity as a result of past events, from which future economic benefits are expected to flow to the entity.
Control: This is the ability of an entity to direct the use of an economic resource and obtain the (positive or negative) economic benefits that flow from it (International Accounting Standards Board, 2018).
Policies: These are laid down principles of behavior or conduct authorized by the government or authoritative body (American English Dictionary)
Corporate objectives: These are short or long term goals an entity plans to achieve from its business operations.
Performance: Performance can be viewed as a composite reflection of how well an organization attains its objectives (Eke, 2018).
Local Content: This refers to the collection of products, materials and parts that are made by indigenous firms in a country that has foreign companies other than imported.
Sustainability: This is the ability to sustain something. It is also a means of configuring civilization and human activity so that the society, organizations and its members are able to meet their needs and express their greatest potentials while preserving biodiversity and natural ecosystems, planning and acting for the ability to maintain these ideals for future generations (American English Dictionary).
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